Annual Report2014Profile

Mitsubishi Paper Mills Limited was established by Mitsubishi’s third president, Hisaya Iwasaki in 1898.
Since its founding, the Mitsubishi Paper Mills Group has contributed to the development of publishing,printing and photography media culture through its high value-added printing and communication
paper, and products.
Dedicated to contributing to society by providing customers with products backed by advanced
technological capabilities, we have the following three goals as a Group Philosophy:
1. A corporate group that lives up to the trust of its customers in the world market
2. A corporate group that is always on the leading edge of technology
3. A corporate group that contributes to preserving the global environment and creating a recycling society
Mitsubishi Paper Mills produces and develops not only printing paper, printing plate materials andprinting systems supporting offset and other printing, but also supplies the media for almost all recording
formats, such as pressure-sensitive, thermal, magnetic, electrographic, silver halide photography
and inkjet paper. Furthermore, we are adding functional materials such as chemical paper, highly functional
filters to our operating business domains, and increasing emphasis on research and development
in new business areas.
With production facilities and R&D sites mainly located in Japan and Germany, and sales sites
located in Japan, Germany and the United States, we have positioned ourselves to serve global
markets.

Contents
FINANCIAL HIGHLIGHTS (CONSOLIDATED) ............. 1
MESSAGE FROM THE PRESIDENT ............................ 2
BREAKDOWN OF OPERATIONS BY DIVISION ........... 4
TOPICS ........................................................................ 6
CORPORATE SOCIAL RESPONSIBILITY (CSR) ....... 10
OUR MILLS AND THEIR PRODUCT LINES ............... 12

CONSOLIDATED STATEMENTS OF
CHANGES IN NET ASSETS ..................................... 18
CONSOLIDATED STATEMENTS OF CASH FLOWS.......... 19
NOTES TO CONSOLIDATEDFINANCIAL STATEMENTS....................................... 20
INDEPENDENT AUDITOR’S REPORT ....................... 38

SIX-YEAR SUMMARY (CONSOLIDATED) ................. 13

BOARD OF DIRECTORS, EXECUTIVE OFFICERS ANDCORPORATE AUDITORS......................................... 39

CONSOLIDATED BALANCE SHEETS........................ 14

COMPANY DATA ....................................................... 40

CONSOLIDATED STATEMENTS OF OPERATIONS .. 16
CONSOLIDATED STATEMENTS OFCOMPREHENSIVE INCOME.................................... 17

Mitsubishi Paper Mills Limited and Consolidated Subsidiaries

Financial Highlights (Consolidated)
Millions of yen (1)Thousands of
U.S. dollars (1) and (2)For the years ended March 31
Net sales
Ordinary income
Net income
Net income per share (in yen and dollars)
Cash dividends per share (in yen and dollars)

2014

2013

¥ 207,470
62
280
0.82
−

¥200,850
2,663
1,710
5.00
−

$2,015,842
605
2,725
0.00
−

As at March 31
Total assets
Total net assets
Common stock¥ 258,599
55,58632,756¥265,234
55,37032,756$2,512,623
540,095
318,269

17,987
3,982

17,347
4,133

Number of shareholders
Number of employees

2014

Notes: (1) In this annual report, Japanese yen (in millions) and U.S. dollars (in thousands) are indicated with fractions omitted.
(2) U.S. dollar amounts in this report represent translations of yen amounts at the rate of ¥102.92 = U.S.$1, as of March 31, 2014.

Net Sales

10
11
12
13
14

Ordinary Income

10
11
12
13
14

(¥ Million)(¥ Million)

Net Income(Loss)

10
11
12
13
14

Total Net Assets

10
11
12
13
14

(¥ Million)(¥ Million)

Sales
Composition

219,728
210,846
194,856
200,850
207,470

888

2,116

2,658
2,663

62
(1,597)(14,497)
565
1,710
280

52,117
52,10855,37055,586

Others 3.2%
Speciality Materials
6.3%

Paper & Pulp 76.1%

Imaging Media
14.4%

1

68,709Message from the President
Overview of the Reporting Term
In the term under review, the Japanese economy showed a trend of
gentle recovery, and the short-term business conﬁdence in thepaper and pulp industry is bouncing back. However, the paper andpulp industry remains in the stringent business environment, as thedomestic demand for paper is shrinking structurally because of the
spread of digitization and the industry is being globalized throughﬁerce competitions.
This situation is different from the assumptions in “the First
Medium-term Management Plan,” which was designed for the
emergencies just after the earthquake disaster, and so we revised
strategies, etc. according to the changes in the business environment, produced “the Phase 2 Rolling Plan for the First Medium-termManagement Plan” in November last year, and implemented somemeasures for “strengthening the revenue base for growth.”
As for the mainstay printing paper business, we focused on
maintaining the market conditions by recovering prices from thedrop in the previous term and curtailing production continuously.
Also, as for the imaging media business, we devoted ourselves toenhancing sales activities outside Japan as well as concentratingon the sales promotion of membrane substrate and cabin ﬁlters forautomobiles, etc. in the speciality materials business.
As a result, consolidated net sales increased 3.3% from theprevious term to ¥207,470 million (US$2,012 million).

Kunio Suzuki, President & C.E.O.

As for proﬁts and losses, consolidated ordinary income was¥62 million (US$0.6 million), down 97.7% from the previous term,
because raw fuel prices skyrocketed due to the yen depreciation,
the sales volume of printing paper declined, and the accident
occurred at equipment in a major factory, although there were some
proﬁt increasing factors, including the improvement of productivity
at factories and the reduction in ﬁxed costs, etc. While thesettlement money for ending the lawsuit for claiming damages
regarding the site of the old Nakagawa Mill was posted as a special
loss, the extraordinary income from the sale of investment securities
was posted. Consequently, current consolidated net proﬁt was ¥280
million (US$2 million).
As for the nonconsolidated results of our company, net sales
were ¥115,883 million (US$1,125 million), ordinary loss was ¥3,086
million (US$29 million), and net loss was ¥1,882 million (US$18
million).
In order to strengthen the revenue base, we restructured theHachinohe Mill and the businesses of related subsidiaries on April
1, 2014, and solicited voluntary retirement in the ﬁrst half, toconcentrate on speciﬁc businesses and reduce labor cost.

2Our Goals to Address
In the First Medium-term Management Plan, a period of one and a

promote our characteristic CSR activities, operate and enrich them.

half years from the second half of the term ended March 2012 to the

In the term under review, we set the three primary goals ofterm ended March 2013 was deﬁned as Phase 1 for “restoration,”“improving CS that reﬂects the needs of users,” “enhancing theand a period of two years from the term ended March 2014 to theactivities for eradicating unsafe behavioral disasters,” and “following

term ending March 2015 is deﬁned as Phase 2 for “strengthening

laws and regulations thoroughly,” and pursued them. As forthe revenue base for growth.”

products, we made efforts to enrich environmentally friendly

In Phase 1, we fully restored the Hachinohe Mill in a shortproducts, including FSC forest certiﬁed paper and Thermal

period of time, recovered sales of the printing paper business, andDigiplater. Considering that it is necessary to comply with laws andcurtailed interest-bearing debt, which augmented steeply, earlier

regulations more strictly in the environment surrounding ourthan planned.

company, we established the Legal Affairs Ofﬁce on January 1,

Since the autumn of 2012, imported paper has become

2014.

popular because of the yen appreciation, and the printing paper

In the term ending March 2015, we will focus on the improve-market plummeted. We ﬁrst reduced production output for adjusting

ment of safety performance and the thorough compliance of related

the demand-supply balance, while considering that it was neces-

regulations, set the primary objectives of “enhancing the activities

sary to recover market conditions, and conducted the ﬁrst pricefor eradicating unsafe behavioral disasters” and “following laws andincrease in March 2013. After the ﬁrst price increase, we delineatedregulations thoroughly,” and promote the activities for improving our

the outlook for the business environment and a launch pad for our

corporate value.

business was established. Accordingly, we revised strategies andForecasts

produced the Phase 2 Rolling Plan in November 2013, while

In the Fiscal 2014, we will implement some measures for completing

considering that it was necessary to respond to the changes in thethe Phase 2 Rolling Plan of the First Medium-term Managementbusiness environment. The project period will be till the term endingPlan, and make efforts to improve proﬁtability further. As for

March 2016, and we will carry out the following 5 actions:consolidated results, we estimate that net sales will be ¥220 billion(US$2,095 million), operating income will be ¥4.5 billion (US$42(1) To implement the structural reform of the Hachinohe Millmillion), ordinary income will be ¥2.5 billion (US$23 million), and net(2) To enhance the activities for making inroads into overseas

income will be ¥0 billion (US$0 million).

markets

For the above earnings forecast, it is assumed that exchange(3) To inject resources to the niche markets of promising products

rate will be 105 yen/US dollar and 140 yen/euro.

(4) To promote non-commoditization

The earnings forecast is based on currently available informa-(5) To discuss the start of FIT businesses

tion, and includes risks and uncertainties. Accordingly, there is apossibility that actual results will be different from forecasted values

For the structural reform of the Hachinohe Mill, we decided to spin

due to various factors.

off this section into a separate company, and established MPM
Operation Co., Ltd. on April 1, 2014. For FIT businesses, weestablished an Energy Business Dept. on April 1, 2014, to start aJune 2014

full-scale discussion. In addition, in order to attain the goal ofstrengthening the revenue base, we decided to promote voluntary
retirement from 200 employees in the ﬁrst half.
On the other hand, our corporate group considers that it isnecessary to not only secure proﬁts, but also fulﬁll social responsi-

Kunio Suzuki,
President & C.E.O.

bilities toward various stakeholders, in order for each ﬁrm to survive
as a member of society.
We recognize that the purpose of CSR activities is to improve
our corporate value by winning the trust and sympathy of people,

3

Breakdown of Operations by Division

Paper and Pulp
Divisions

Net sales (¥ Million)
12

156,237

13

157,424

14

161,657

As for our core product, printing papers, we adjusted prices twice

papers and also focused efforts in exporting Production Ink Jet

in the fiscal year under review in Spring and Autumn, due to thepapers by newly-organized International Sales Department.

significant decline of the domestic market in previous year as

As for European subsidiaries, although sales volume ofwell as spiked fuel price mainly effected by continued yen

carbonless copy papers and thermal papers decreased indepreciation. However, both sales volume and amount

Europe as the major market, sales amount increased due to thedecreased mainly because of maintaining reduced production at

yen depreciation.

the main factory, Hachinohe Mill, in order to maintain market

As for commercial pulp, sales volume and amount increased.

conditions.

Consequently, the total net sales of the Paper and Pulp

As for communication papers, both sales volume andDivisions increased 2.7% from the previous term to ¥161,657

amount increased mainly because of sales recovery of copier

Imaging MediaDivision

million (US$1,570 million).

Net sales (¥ Million)
12

39,165

13

39,825

14

41,614In the domestic market, the performance of photographic

Division increased 4.5% from the previous term to ¥41,614

sensitive and platemaking materials was healthy, and sales

million (US$404 million).

amount was nearly equal to that in the previous year.
In overseas markets, photographic sensitive materials wereaffected by the rapid worsening of the market environment ascompetition became fierce, but sales amount increased becauseof the overseas sales promotion of inkjet printing paper and theyen depreciation.
Consequently, the total net sales of the Imaging Media

4

Speciality Materials
Division

Net sales (¥ Million)
10,47812

14,223

13

16,03414

As for non-woven, the sales of our core products, includingConsequently, the total net sales of the Specialty Materials

membrane substrate grew. As for filters, the sales of cabin filters

Division increased 12.7% from the previous term to ¥16,034

for automobiles and filters for home appliances increased,

million (US$155 million).

thanks to sales promotion.
As for rewritable media, the sales of products for overseas
markets increased, but domestic demand declined, and sales
amount decreased slightly.
As for specialty paper, sales amount increased, because of
the sales growth of the base paper for decorative laminates andwall coverings base, etc.

Other
Divisions

Net sales (¥ Million)
12

19,283

13

16,49314

15,985Due to the decline in sales of subsidiaries in the fields ofengineering, warehousing, and transportation, etc., net sales
decreased 3.1% from the previous term to ¥15,985 million(US$155 million).

5Topics

Progress Made under Medium-term Management Plan
The medium-term business strategy of our corporate group is to complete the Phase 2 Rolling Plan of the First
Medium-term Management Plan produced in November 2013, and we are making efforts to attain the ﬁnal goals forthe term ending March 2016.
The details and progress of the Phase 2 Rolling Plan of the First Medium-term Management Plan are as follows:(1) Schedule and Basic Policies
Schedule of First Medium-term Management Plan
Phase 1

Phase 2

Restoration

Strengthening the revenue base for growth

One and a half years

Three years

Term ended March 2013

Term ended March 2014

Term ending March 2015

Term ending March 2016
Extended for one year

Changes in external environments
The printing paper market has been
considerably stagnant since theautumn of 2012, due to the rapid
increase of imported paper, etc.

Start of the era of U.S. digital printing

Acceleration of the shift from paper
media to electronic media

Restoration of the Hachinohe Mill(printing paper business)

Printing paper
prices raised

Strengthening of the revenue base for growth

New theme

To enhance the activities for making inroads into overseas markets

New theme

To promote non-commoditization

New theme

To inject resources to the niche markets of promising products

New theme

To implement the structural reform of the Hachinohe Mill

Completion

Procurement of funds for restoring Hachinohe

Additional measure

Completion

Continued theme

To downsize employees by soliciting voluntary retirement(term ending March 2015: 200 employees)

To reinforce the fragile financial position

6

(2) Values in the Basic Plan

Net sales

Operating income

Ordinary income

Interest-bearing debt

Term ended Mar. 2014

Term ending Mar. 2015

Upper row: planned

Upper row: planned

Lower row: results

Lower row: forecasted

210 billion yen

220 billion yen

207.5 billion yen

220 billion yen

1.7 billion yen

5.7 billion yen

0.5 billion yen

4.5 billion yen

1 billion yen

3.5 billion yen

0.1 billion yen

2.5 billion yen

150 billion yen

145 billion yen

149 billion yen

145 billion yen

2.8 times

2.6 times

2.8 times

2.6 times

D/E ratio

Exchange rate
Crude oilTerm ending Mar. 2016
Planned230 billion yen

8.5 billion yen

6 billion yen

140 billion yen

2.3 times

Assumed values for
the Phase 2 of theMedium-term plan
(Oct. 2013)

Results for the term
ended Mar. 2014

Assumed values
for the term ending
Mar. 2015

US dollar

100 yen/USD

100.00 yen/USD

105 yen/USD

Euro

125 yen/euro

134.01 yen/euro

140 yen/euro

Australian dollar

93 yen/AUD

93.30 yen/AUD

93 yen/AUD

Dubai$108/BBL$105/BBL$108/BBL(3) Activities for the New Theme 1
To enhance the activities for making
inroads into overseas markets

Target ratio of overseas net sales: 35%

To enter the U.S. digital printing market on a full-scale basis(Production Inkjet paper / distributors in the U.S. / International Sales Dept.)
Promising thermal paper to secure the 3rd largest market share in the world (exerting the synergy between Germany and Japan)

To promote non-commoditization
Increase in the ratio of planographic products / promotion of the shift to communication paper

To inject resources to the niche markets of promising products(China, South Korea, Taiwan, and Mexico, etc.)
Full-scale entry to the functional film field by leveraging new products, such as touch panels
Establishment of cross-border production and selling systems for cabin filters for automobiles
Development of mass-production systems for membrane substrate / global promotion of LiB separators7

(4) Activities for the New Theme 2
To implement the structural reform of the Hachinohe Mill
Economic benefits

Term ending Mar. 2015
1.3 billion yen/year

Term ending Mar. 2016
2.9 billion yen/year

Final economic benefits
5.5 billion yen/year

Reorganization of theHachinohe Mill into
a separate company

0.6 billion yen/year

1.2 billion yen/year

2.6 billion yen/year

Energy saving──

0.1 billion yen/year

0.3 billion yen/year

Improvement of blending
methods, etc.

0.4 billion yen/year

0.9 billion yen/year

1.1 billion yen/year

Improvement of distribution costs

0.1 billion yen/year

0.3 billion yen/year

0.3 billion yen/year

Reduction of other costs

0.2 billion yen/year

0.4 billion yen/year──Energy businesses

Onset of effects from 2017 on

1.2 billion yen/year(5) Regarding the Solicitation of Voluntary Retirement
To reduce the number of employees
4,133 as of the end of Mar. 2013

3,982 as of the end of Mar. 2014

A decrease of 151

3,690 as of the end of Mar. 2015 (planned)

A decrease of about 300(out of which, 200 is the number of voluntary retired employees)

The number of employees will decrease by about 450 in two years.

Economic benefits due to the reduction in labor costs based on voluntary retirement(amount of the effect on the medium-term plan under review)
Term ending Mar. 2015

0.9 billion yen

This will contribute fully to the performancein the term ending Mar. 2016.

Term ending Mar. 2016

1.6 billion yen(6) Strategies for Each Business — Printing Paper Business
Target value for the Printing Paper Division: Operating income for the term ending Mar. 2016: 4.8 billion yen☆ To secure profit by raising product prices
Full exertion of the effects of price increase
Improvement of quantities and combinations

Increase in prices of printing and communication papers☆ To implement the structural reform of the Hachinohe Mill

Reduction in labor costs by reorganizing the Hachinohe Mill into a separate company and restructuring subsidiaries

Establishment of MOC in Apr. 2014

Front-loaded exertion of effects☆ To design and execute global strategies through the establishment of the International Sales Dept. Oct. 2013

Expansion of export of Production IJ (4,000 tons/month for the term ending Mar. 2016)→ To promote market cultivation, expand businesses in the U.S. and Australia, etc., and release new products to diversify the purposes of use
Over 700 tons/month in Mar. 2014

1,800 tons/month for Production IJ

4,000 tons/month for Production IJ

Sales promotion of FSC products, white paperboards for food products, paper for printed books and high-class catalogue paper, etc.
Over 15,000 tons/month for FSC in Mar. 2014

Sales promotion of FSC and new products8(7) Strategies for Each Business — Imaging Business
Target value for the Imaging Media Division: Operating income for the term ending Mar. 2016: 2.3 billion yen☆ To enter growing fields by utilizing our imaging technology
To make inroads into growing fields, including functional films

Start of full-scale delivery in Apr. 2014

Development of production lines in the term ended Mar. 2014

☆ To further enrich existing products

To expand businesses for the Inkjet minilab, which is rapidly growing in the major retail chains in the U.S.

Start of saleWorldwide sales promotion
To enhance the effects of allianceTo strengthen the alliance with FUJIFILM

To increase new customers by producing a wider array of platemaking materials
New lineup of TDP-II

Active promotion outside Japan

Fully process-less CTP system combining the use ofplates and platemaking films☆ New additional strategy: To enter the field of medical device production and sale
To obtain the second-class medical device
marketing authorization holder

To release the indwelling needle
fixating tape “DiaEkur”

To introduce products after thecompletion of development(8) Strategies for Each Business — Speciality Materials Business
Target value for the Speciality Materials Division: Consolidated operating income for the term ending Mar. 2016: 1 billion yen☆ Cross-border production and sale of functional filter products

To concentrate resources to the development of systems for producing cabin filters for automobiles in Japan, China, and Mexico
To steadily increase production andshipment volumes in China (MFZ),
exceeding planned values

To develop supply systems in
Mexico (MPJ) from Jun. 2014

To start global operation basedon the 3 regions☆ To establish a system for mass-producing membrane substrate and sell them globally
To accelerate the sale of RO film supports in China, Europe, the U.S. and South Korea
To receive stable orders frommajor customers

To keep pace with major customers
production increase

Sales promotion and productivity
boost☆ To develop mass-production system of separators for secondary batteries and conduct sales promotion for these products
To establish solid operating basis in the battery market
To accomplish successful entry
in the capacitor market

To collaborate with leading
battery makers

To launch competitive productsin the lithium ion batteries market☆ To promote the export by the major brand of KJ specialty paper

To sell the base paper for decorative laminates by leveraging the yen depreciation, and promote the sales of high-quality masking tape backing in Europe
To release new products

To concentrate on overseas operation

9

To expand to processed products

Corporate Social Responsibility (CSR)
Overview of Our CSR Activities
At the Mitsubishi Paper Mills Group, we recognize that the fulﬁllment of our CSR is vital in winning the trust and understanding of our
stakeholders and thereby enhancing the Group’s enterprise value. Accordingly, we promote distinctive CSR activities while working
to expand and enhance our initiatives in this area.
In ﬁscal 2013 our top priorities were redoubling efforts to eradicate unsafe practices at production sites, raising customer
satisfaction levels by carefully addressing user needs and initiatives to ensure strict legal compliance. With regard to products, wetook steps to expand our lineup of FSC forest-certiﬁed paper products and other ecologically friendly products such as Thermal
DigiPlate System. Furthermore, in response to the company’s environment, the Legal Department was established in January 2014 inrecognition of the need for stricter legal compliance.
In ﬁscal 2014 we will focus on improving safety-related performance and thorough legal compliance, with the priority activities,“redoubling efforts to eradicate unsafe practices at production sites,” and “strict legal compliance.” We will take measures to raise
our enterprise value in the areas of compliance, risk management, safety & health, the environment, product safety, product quality,
human rights & labor rights, information, and social contributions, under the following ﬁve basic policies, 1) strengthening our CSR
Three-and-a-half-year strategic theme

Create conditions for ensuring adequate revenues despite strong yen

management foundation, 2) promoting environmental management, 3) raising customer satisfaction levels by carefully addressinguser needs, 4) taking further measures to provide our employees with a pleasant working environment, and 5) pursuing activities that
contribute to society.

Special Features
Increasing Awareness of the FSC MarkWe attended the Eco Products 2013 held at Tokyo Big Sight in December 2013.
With cooperation from our customers, we collected various products with the FSC
mark that people are familiar with, and displayed them in our booth, in order toshow visitors the dissemination of the FSC mark.

Mori-Smile® Projects

Booth of the Mitsubishi Paper Mills GroupIn August 2001, the Group’s Hachinohe Mill (Aomori Prefecture) became the ﬁrst paper mill in Japan to receive the FSC’s
Chain-of-Custody (CoC) certiﬁcation and has been providing FSC-certiﬁed paper to the present. In addition, we are undertaking
Mori-smile® projects, which apply the Mori-smile® name to our various FSC-certiﬁed forest-based services.

The FSC Certification Forest Supporter System
Companies that use FSC-certiﬁed products pay a certain proportion of the costs of managing the FSC-certiﬁed forests, and theorganizations in charge of managing the certiﬁed forests (local governments) employ these funds to create environmentally soundand economically valuable forest resources. The system allows timber that has been cut as part of the forest management process
to be used as FSC-certiﬁed products. In this way, the system assists in the maintenance of FSC-certiﬁed forests.

Original Brands
Various companies are working to further invigorate forests by following an “afforestation + usage” method in local forests thatinvolves tree-planting under the “OO Forest” and other labels. To this end, we supply “original brand” paper products that use trees
harvested from these forests.

10

The Ecosystem Academy
This is environmental education that aims to include
everything from forestry to manufacturing that utilizes
the forests’ wood, under the theme of “Nature’s
blessing and collaboration between nature andindustry.” The main pillars of the Academy arehands-on-type learning experience sessions, forest
research and survey, and environmental seminars
using FSC certiﬁed forests.

Thermal DigiPlate System
Thermal Digiplate is the world’s ﬁrst complete processless platesetter andﬁlm imager. The thermal head works directly on thermal-sensitive paper tocreate sharp images. It uses less energy compared to other printing
technologies, and it also comes in a compact package. The environmentalload is further reduced because there is no need for chemical development,
toner or ink ribbons.

TopicsVisit by Managing Director of FSC International
On March 11, 2014, Mr. Kim Carstensen, Director General of FSC International,
made a courtesy visit to the headquarters of Mitsubishi Paper Mills Limited.
After viewing our FSC-certiﬁed products in the gallery on the 11th ﬂoor of
the headquarters, Mr. Kim exchanged opinions with President Suzuki, Representative Director Mizuno and others, regarding the future activities of FSC
International and on how to further increase awareness of FSC.
In front of FSC-certiﬁed products(From left to right: Mr. Maezawa, Executive Director of FSC
Japan; Mr. Kim, Director General of FSC International;
President Suzuki; Mr. Ota, Chairman of FSC Japan;
Representative Director Mizuno)

After the meeting, Mr. Kim, Managing Director of FSC
International, presented President Suzuki with a Letter ofGratitude in recognition of the long effort the company has put
into FSC.

Mitsubishi Paper Mills Receives DBJ’s Highest Environmental Responsibility Rating Two Years in a Row
Our company received the highest environmental responsibility rating from the Development Bank of Japan (DBJ) for two years in a
row for the following measures:(1) Conducting assessments and accurately understanding the relationship between our business and ecosystem services(2) Understanding our business’s impact on natural capital, including the supply chain, and(3) Establishing a system for checking sustainability in the entire process, including wood chips and pulp.

11

Our Mills and Their Product Lines

SHIRAKAWA SITE

KITAMI HITEC PAPER CORP.

HACHINOHE MILL

Address:

Address:

Address:

3, Maeyamanishi, Nishigo-mura,Nishi-Shirakawa-gun,
Fukushima 961-8054
Telephone: +81-248-22-8111
Products: Transformer board

35, Sasanagane, Aisari-cho,
Kitakami-shi, Iwate 024-0051
Telephone: +81-197-67-3211
Products: Bleached kraft pulp,
Hygienic paper, Photographic
basepaper, etc.

Kawaragi-Aomoriyachi,
Hachinohe-shi,
Aomori 039-1197
Telephone: +81-178-29-2111
Products: Bleached kraft pulp,
Coated printing paper,
Uncoated printing paper,White card board, etc.

KJ SPECIALTY PAPER CO., LTD.
FUJI MILL
Address:

TAKASAGO MILL
Address:

105, Sakae-machi, Takasago-cho,Takasago-shi, Hyogo 676-8677
Telephone: +81-794-42-3101
Products: Carbonless paper, Thermal paper,
Inkjet paper, Specialty paper, Non
Woven Fablics, etc.

KYOTO MILL
Address:

6-6, Kaiden 1-chome,
Nagaokakyo-shi, Kyoto 617-8666
Telephone: +81-75-951-1181
Products: Color photographic paper, Graphic arts
materials, Inkjet photo paper, etc.

7-1, Shinbashicho, Fuji-shi,
Shizuoka 417-0004
Telephone: +81-545-52-4075
Products: Base paper for decorative
laminates, Impregnateddecorative sheet,
Base paper for wall paper,
Stencil paper

Overseas
Mitsubishi HiTec Paper Europe GmbH Flensburg Mill
Address: Husumer Strasse 12 D-24941
Flensburg, Germany
Telephone: +49-461-8695-204
Products: Thermal paper, etc.
(Flensburg, Germany)

Mitsubishi HiTec Paper Europe GmbH Bielefeld Mill
Address: Niedernholz 23, D-33699 Bielefeld,
Germany
Telephone: +49-521-2091-401
Products: Carbonless paper, Thermal paper,
Inkjet paper(Bielefeld, Germany)

MP Juarez LLC
Address: Ave. Valle del Cedro #1551 Paraq. Ind Intermex
C.P. 32690 Cd. Juarez. Chih., Mexico
Telephone: +1-915-534-8230 (U.S. Head Office)Products: Inkjet paper(Juarez, Mexico)Zhuhai MPM Filter, Ltd.
Address: #17 Yijing Lane, Pingsha Town, Jinwan District,Zhuhai, Guangdong, China
Telephone: +86-756-8895033
Products: Various filters(Zhuhai, China)

12

Six-Year Summary (Consolidated)Thousands of
U.S. dollars

Millions of yen

For the years ended March 31

Net sales
Operating income
Ordinary income
Net income (loss)
Net income (loss) per share (in yen and dollars)
As at March 31
Total assets
Total net assets

2014

2013

2012

¥ 207,470
473
62
280
0.82

¥200,850
3,332
2,663
1,710
5.00

¥194,856
2,164
888
565
1.65

¥210,846 ¥219,728 ¥253,102
7,110
4,253
3,477
4,499
2,658
2,116
1,168
(1,597)(14,497)
3.41(4.67)(42.39)$2,015,842
4,603
605
2,725
0.00

¥ 258,599
55,586¥265,234
55,370¥276,305
52,108¥248,506
52,117¥294,254
70,436$2,512,623
540,095

13

2011

2010

¥282,131
68,70920092014

Mitsubishi Paper Mills Limited and Consolidated Subsidiaries

Consolidated Balance Sheets
As at March 31, 2014 and 2013
Thousands of
U.S. dollars (Note 2)

Millions of yen
2014

2013

2014

¥ 8,382¥5,337$81,447

42,424
3,271

46,6462,523

412,206
31,79045,696(264)

49,170(392)

443,996(2,570)Inventories
Deferred income taxes (Note 16)
Other

45,431
51,8791,261
2,372

48,77752,381
1,225
1,599

441,425
504,080
12,25623,052

Total current assets

109,328

109,321

1,062,262

Land
Buildings and structures
Machinery and equipment
Construction in progress
Leased assets
Other

23,19898,410362,157
1,107
3,086
10,17022,626
95,322346,782
1,639
2,675
9,492

225,400
956,182
3,518,822
10,76329,992
98,818Less: Accumulated depreciation
Accumulated impairment losses

498,130(373,785)(540)

478,540(351,882)(540)

4,839,979(3,631,804)(5,248)123,805

126,117

1,202,926

19,213
1,015
815
471
(1,055)
1,657
3,347

24,101
1,014
808−(1,076)
1,615
3,332

186,681
9,867
7,922
4,579
(10,251)
16,10532,52825,46529,796

247,433¥ 258,599¥265,234$2,512,623

ASSETS

Current assets:

Cash and bank deposits (Note 3 (12))
Receivables:
Trade notes and accounts (Note 11)
Other
Less: Allowance for doubtful accounts

Property, plant and equipment (Note 4):

Net property, plant and equipment

Investments and other assets:
Investments in securities (Notes 4, 12 and 13)
Investments in unconsolidated subsidiaries and affiliated companies
Long-term loans
Net defined benefit asset (Note 15)
Less: Allowance for doubtful accounts
Deferred income taxes (Note 16)
Other
Total investments and other assets
Total assets
The accompanying notes are an integral part of these ﬁnancial statements.

14

Thousands of
U.S. dollars (Note 2)

Millions of yen
2014

2013

2014

¥ 53,227
20,675378¥58,086
16,574321$517,172
200,892
3,675

26,074
4,388
6,969
390
3,090

26,850
3,424
7,633
264
3,807

253,344
42,63767,715
3,796
30,025

115,194

116,962

1,119,259

74,417
1,864
−
54
206
8,872
487
877
1,037

79,998
1,716
8,473
55
101
−
620
873
1,061

723,066
18,115−533
2,004
86,204
4,736
8,521
10,08487,81892,901

853,267

32,756
7,523
9,164
(141)

32,756
7,523
8,883
(138)

318,269
73,102
89,041(1,375)49,30249,024

479,038

Accumulated other comprehensive income:Net unrealized gains on available-for-sale securities
Translation adjustments
Accumulated remeasurements of defined benefit plans

2,804
1,576
(924)

3,775
626
(897)

27,247
15,318(8,981)

Total accumulated other comprehensive income

3,456

3,504

33,585

2,827

2,841

27,47255,58655,370540,095¥ 258,599¥265,234$2,512,623

LIABILITIES AND NET ASSETS
Current liabilities:

Short-term bank loans (Note 12)
Current portion of long-term debt (Note 12)
Lease obligations
Payables:Trade notes and accounts (Note 12)
Other
Accrued expenses
Income taxes payable
Other
Total current liabilities

Long-term liabilities:
Long-term debt (Note 12)
Lease obligations
Accrued retirement benefits for employees (Note 3 (14) and 15)
Accrued retirement benefits for directors and statutory auditors
Reserve for loss on dissolution of employee pension fundNet defined benefit liability (Note 3 (14) and 15)
Deferred income taxes (Note 16)
Asset retirement obligations
Other
Total long-term liabilities
Contingent liabilities (Note 5)
NET ASSETS
Shareholders’ equity:
Common stock:
Authorized: 900,000,000 shares at March 31, 2014 and 2013
Issued: 342,584,332 shares at March 31, 2014 and 2013
Capital surplus
Retained earnings
Less: Treasury stock, at cost
Total shareholders’ equity

Minority interests in consolidated subsidiaries
Total net assets
Total liabilities and net assets
The accompanying notes are an integral part of these ﬁnancial statements.

15

Mitsubishi Paper Mills Limited and Consolidated Subsidiaries

Consolidated Statements of Operations
For the years ended March 31, 2014 and 2013
Thousands of
U.S. dollars (Note 2)

Millions of yen
2014

2013

2014

¥ 207,470
178,273¥200,850
168,126$2,015,842
1,732,151

29,19732,724

283,690

28,72329,391

279,086

473

3,332

4,603

614
(2,440)
(241)
3,099
(65)
(36)
199
889
(464)
(2,027)1,304

656(2,634)
(210)
825
(33)
(21)
33
236
−
−
551

5,968
(23,710)(2,348)30,114
(639)
(357)
1,933
8,645
(4,515)(19,699)
12,670

829

(594)

8,062

1,303

2,737

12,666

Income taxes:
Current
Deferred (Note 16)

484
341

480
420

4,709
3,314

Income before minority interests
Minority interests in income of consolidated subsidiaries

825
477
197

901
1,836
126

8,024
4,642
1,916

¥ 280

¥1,710$2,725Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income
Other income (expenses):
Interest and dividend income
Interest expense
Losses on disposal of property, plant and equipment (Note 6)
Gains on sales of investments in securities
Write-downs of investments in securities
Special severance payments
Gain on negative goodwill (Note 17 (5))
Subsidy income (Note 7)
Cost for business structure reform (Note 8)
Legal settlement (Note 9)
Other, net
Total
Income before income taxes and minority interests

Net income
The accompanying notes are an integral part of these ﬁnancial statements.

16Mitsubishi Paper Mills Limited and Consolidated Subsidiaries

Consolidated Statements of Comprehensive Income
For the years ended March 31, 2014 and 2013
Thousands of
U.S. dollars (Note 2)

Millions of yen
2014

2013

2014

Income before minority interests
Other comprehensive income:Net unrealized gains on available-for-sale securities
Translation adjustments
Remeasurements of defined benefit plans
Share of other comprehensive income of companies accounted forby the equity method¥ 477¥1,836$4,642

(972)
861
(209)

2,105
399
(702)

(9,448)
8,371(2,037)

169

72

1,646

Total other comprehensive income
Comprehensive income

(150)
326

1,874
3,711

(1,467)
3,174

88
¥ 238

3,400
¥311

856
$2,318Comprehensive income attributable to
Mitsubishi Paper Mills Limited
Comprehensive income attributable to minority interests

Yen

Amounts per share:
Net income — basic (Note 3 (11))
Cash dividends applicable to the year
The accompanying notes are an integral part of these ﬁnancial statements.

17

U.S. dollars (Note 2)

2014

2013

2014

¥ 0.82
−

¥5.00
−

$0.00
−

Mitsubishi Paper Mills Limited and Consolidated Subsidiaries

Consolidated Statements of Changes in Net Assets
For the years ended March 31, 2014 and 2013

Millions of yen
Shareholders’ equity

Commonstock

CapitalsurplusRetainedearnings

Net
Total
Minority
unrealized
accumulated
Accumulated
interests ingains onother
TreasuryTotalstock, shareholders’ available-for-sale Translation remeasurements of comprehensive consolidated Total net
adjustments defined benefit plans income
subsidiaries assets
securities
at costequity342,584,332 ¥32,756¥19,716¥(4,989)¥(137) ¥47,345¥1,949¥189−¥2,138¥2,624 ¥52,108

32,756

19,716(30)(5,019)

(137)

(30)
47,315

1,949

189

(354)
(354)

(354)
1,784

(79)
2,544

(464)
51,644

(1)

1,710
(1)

(1)

1,709

1,826
1,826

436
436

(543)
(543)

1,720
1,720

297
297

−
1,710
(1)
2,017
3,726

¥(138) ¥49,024¥3,775¥626¥(897)¥3,504¥2,841 ¥55,370

(48)
(48)

280
(2)
(61)
216

Number ofshares in
issue

Balance at April 1, 2012
Cumulative effect of changes in accounting policies
Balance at the beginning of the term reflecting the change of accounting policies
Changes during the year:
Transfer from capital surplus to accumulated deficit
Net income
Acquisition of treasury stock
Changes in items other than shareholders’ equity
Total changes during the year
Balance at April 1, 2013
Changes during the year:
Net income
Acquisition of treasury stock
Changes in items other than shareholders’ equity
Total changes during the year
Balance at March 31, 2014

Total accumulated other comprehensive income(12,193)

12,193
1,710−(12,193)

13,903

342,584,332 ¥32,756¥7,523¥8,883

−

(2)

280
(2)

(2)

277

(971)
(971)

950
950

¥ (141) ¥ 49,302¥ 2,804¥ 1,576

280
−

−

−

280

342,584,332 ¥ 32,756¥ 7,523¥ 9,164(26)(26)¥ (924) ¥ 3,456

(13)
(13)

¥ 2,827 ¥ 55,586

Thousands of U.S. dollars
Total accumulated other comprehensive income

Shareholders’ equity

Commonstock

CapitalsurplusRetainedearnings

Net
Total
Minority
unrealized
accumulated
Accumulated
interests ingains onother
TreasuryTotalstock, shareholders’ available-for-sale Translation remeasurements of comprehensive consolidated Total net
adjustments defined benefit plans income
subsidiaries assets
securities
at costequity342,584,332 $318,269$73,102$86,315$(1,350) $476,337

Number ofshares in
issue

Balance at April 1, 2013
Changes during the year:
Net income
Acquisition of treasury stock
Changes in items other than shareholders’ equity
Total changes during the year
Balance at March 31, 2014

2,725
−

−

2,725

342,584,332 $318,269$73,102$89,041−

The accompanying notes are an integral part of these ﬁnancial statements.

18$36,688$6,085$(8,720) $34,053

(24)

2,725
(24)

(24)

2,700

(9,440)(9,440)

9,233
9,233

(261)
(261)

(468)
(468)

$(1,375) $479,038$27,247$15,318$(8,981)$33,585$27,605 $537,996

(133)
(133)

2,725
(24)
(601)
2,099

$27,472 $540,095

Mitsubishi Paper Mills Limited and Consolidated Subsidiaries

Consolidated Statements of Cash Flows
For the years ended March 31, 2014 and 2013

Thousands of
U.S. dollars (Note 2)

Millions of yen
2014

2013

2014

I Cash flows from operating activities:
Income before income taxes and minority interests
Depreciation and amortization
Accrued retirement benefits for employees
Increase in liabilities for net defined benefit liability
Decrease in assets for net defined benefit asset
Accrued retirement benefits for directors and statutory auditors
Interest and dividend income
Interest expense
Subsidy income (Note 7)
Gain on negative goodwill (Note 17 (5))
Gains on sales of investments in securities
Losses on disposal of property, plant and equipment (Note 6)
Cost for business structure reform (Note 8)
Legal settlement (Note 9)
Decrease in trade accounts receivable
Decrease (increase) in inventories
Decrease in trade accounts payable
Other, net¥ 1,303
11,214(7,697)
6,858
65
(1)
(614)
2,440
(889)
(199)
(3,099)
241
464
2,027
4,901
3,208
(2,095)(2,585)¥2,737
11,137
79
−
−
(9)
(656)
2,634
(236)
(33)
(825)
210
−
−
3,516
(5,109)(4,431)
1,074$12,666
108,961(74,792)
66,641638(10)(5,968)23,710(8,645)(1,933)(30,114)
2,348
4,515
19,69947,627
31,170(20,364)(25,122)

15,543645
889(2,499)(328)−(2,027)

10,086631
792(2,584)(578)(1,078)−151,0266,267
8,645(24,288)(3,196)−(19,699)

Net cash provided by (used in) operating activities

12,222

7,269

118,755

II Cash flows from investing activities:
Acquisition of property, plant and equipment
Proceeds from sales of property, plant and equipment
Purchases of investment securities
Proceeds from sales of investment securities
Purchases of shares in an affiliated company and subsidiaries
Loans madeProceeds from collection of loans
Proceeds from collection of security deposits
Other, net(6,525)
72
(40)
5,976
(78)
(365)
355
−
171

(16,474)
55
(32)
3,840
(44)
(540)
351
464
197

(63,399)
699(388)
58,073(764)(3,555)
3,458
−
1,663

Net cash (used in) provided by investing activities(433)(12,182)(4,213)(6,081)
14,361(16,747)
−
(367)
(30)
(24)

(9,847)27,542(19,688)
(650)
(324)
(1)
(4)

(59,085)
139,544(162,721)−(3,567)
(296)
(234)

(8,888)(2,973)(86,360)

244
3,144
5,237

51
(7,835)
13,073

2,372
30,55450,893Sub-totalInterest and dividends received
Proceeds from subsidy (Note 7)
Interest paid
Income taxes paid
Loss on natural disaster paid
Pay of legal settlement (Note 9)

III Cash flows from financing activities:
Decrease in short-term bank loans
Proceeds from long-term debt
Repayment of long-term debt
Redemption of bonds
Repayment of lease obligations
Acquisition of treasury stock
Payments of cash dividends by subsidiaries to minority shareholders
Net cash (used in) provided by financing activities
IV Effect of foreign currency translation on cash and cash equivalents
V Net increase (decrease) in cash and cash equivalents
VI Cash and cash equivalents at beginning of year
VII Cash and cash equivalents at end of year (Note 3 (12))
The accompanying notes are an integral part of these ﬁnancial statements.

19¥ 8,382¥5,237$81,447

Mitsubishi Paper Mills Limited and Consolidated Subsidiaries

Notes to Consolidated Financial Statements
1. Basis of Presenting the Consolidated Financial Statements
The accompanying consolidated ﬁnancial statements of Mitsubishi Paper Mills Limited (the “Company”) and its subsidiaries
are prepared on the basis of accounting principles generally accepted in Japan, which are different in certain respects as toapplication and disclosure requirements of International Financial Reporting Standards, and are compiled from the consolidated
ﬁnancial statements prepared by the Company as required by the Financial Instruments and Exchange Law of Japan.
Certain items presented in the consolidated ﬁnancial statements submitted to the Director of Kanto Finance Bureau (a regional
branch organization of the Ministry of Finance in Japan) have been reclassiﬁed for the convenience of readers outside Japan.

2. United States Dollar Amounts
The Company maintains its accounting records in yen. The dollar amounts included in the accompanying consolidated ﬁnancial
statements and notes thereto represent the arithmetical results of translating yen to dollars on the basis of ¥102.92 = U.S.$1, theexchange rate prevailing as of March 31, 2014. The inclusion of such U.S. dollar amounts is solely for convenience and is notintended to imply that yen amounts have been or could be readily converted, realized or settled in U.S. dollars at that rate or any
other rate.

3. Summary of Significant Accounting Policies(1) Scope of consolidation
The Company had 35 subsidiaries as of March 31, 2014 (35 as of March 31, 2013). The accompanying consolidated ﬁnancial
statements include the accounts of the Company and 25 (25 for 2013) of its subsidiaries for the year ended March 31, 2014
(together, hereinafter referred to as the “Companies”).
The accounts of the remaining 10 (10 for 2013) unconsolidated subsidiaries for the year ended March 31, 2014 have been
excluded from consolidation since the aggregate amounts of these subsidiaries in terms of combined assets, net sales, retained
earnings and net income were immaterial in relation to those of the consolidated ﬁnancial statements of the Companies.
Mitsubishi Paper Holding (Europe) GmbH and other four (4 for 2013) subsidiaries are consolidated using the ﬁnancial
statements as of the respective ﬁscal year end which falls on December 31 and necessary adjustments are made to their adjustments are made to their ﬁnancial statements to reﬂect any signiﬁcant transactions from January 1 to March 31.
(2) Consolidation and elimination
For the purposes of preparing the accompanying consolidated ﬁnancial statements, all signiﬁcant intercompany transactions,account balances and unrealized proﬁts among the Companies have been eliminated.
Elimination of investments in shares of consolidated subsidiaries, together with the underlying equity in net assets of such
subsidiaries, has been made to include equity in net income of subsidiaries subsequent to the respective dates of acquisitionin the consolidated statements of income. Any difference between the cost of an investment in a subsidiary and the amount ofunderlying equity in net assets of the subsidiary, unless speciﬁcally identiﬁed and reclassiﬁed to the applicable accounts fromwhich the value originates, is treated as goodwill or negative goodwill. Goodwill and negative goodwill (only incurred before
March 31, 2010) are amortized over ﬁve years on a straight line basis.
Assets and liabilities of subsidiaries are remeasured based on their fair value at the date of acquisition of control of thesubsidiaries.
(3) Investments in unconsolidated subsidiaries and affiliates
The Company had 12 afﬁliates as of March 31, 2014 (12 for 2013). 2 afﬁliated companies were accounted for by the equity
method.
However, the remaining 10 (10 for 2013) subsidiaries and 10 (10 for 2013) afﬁliates did not have a material effect on net
income and retained earnings in the accompanying consolidated ﬁnancial statements and, therefore, these investments have been
carried at cost.
(4) Financial instruments(i) Derivatives
All derivatives are stated at fair value, with changes in fair value included in net income or loss for the year in which they arise,
except for those that are designated as “hedging instruments.”(ii) Securities
Securities other than equity securities issued by subsidiaries and afﬁliates are classiﬁed into three categories: trading, held-to-matu-

20

rity or other securities. Marketable securities classiﬁed as other securities are carried at fair value with changes in unrealized
holding gain or loss, net of the applicable income taxes, included directly in net assets. Non-marketable securities classiﬁed asother securities are carried at cost. Cost of securities sold is determined by the moving average method.
(iii) Hedge Accounting
Unrealized gains or losses arising from changes in fair value of derivative ﬁnancial instruments designated as “hedging
instruments” are carried as an asset or a liability until the losses or gains on the hedged items or transactions are recognized.
In accordance with the exceptional measure under the Japanese Accounting Standard for Foreign Currency Translations,the Companies do not record certain forward exchange contracts at market value but translate the underlying foreign currency
denominated assets or liabilities using the contractual rate under these contracts as long as such contracts meet the criteria for
applying hedge accounting under the Japanese Accounting Standard for Financial Instruments.
Furthermore, in accordance with the special measure under the Accounting Standard for Financial Instruments, theCompanies do not record certain interest rate swap arrangements at market value but charge or credit net cash ﬂows arising fromthe swap arrangements to interest arising from the hedged borrowings, as long as these arrangements meet the speciﬁc criteria
under the standard.
(5) Inventories
Finished products, merchandise and work in process are primarily stated at lower of cost or market, cost being determined by
the average method and other inventories are stated at lower of cost or market, cost being determined by the moving averagemethod.
(6) Property, plant and equipment
Mainly depreciation excluding for leased assets is computed by the straight-line method for property, plant and equipment. But
in part, depreciation of machinery held by the head ofﬁce of the Company and certain consolidated subsidiaries is computed by
the declining-balance method. Estimated useful lives of assets used in computing depreciation are as follows:
Buildings and structures...................... 31 to 47 years
Machinery and equipment............................ 12 years
Leased assets under ﬁnance lease agreements of the Company and its domestic consolidated subsidiaries, which do not
stipulate the transfer ownership of the leased assets to the lessee, are depreciated principally over the lease term by thestraight-line method with no residual value except for the following transactions. Lease transactions which have been entered into
before April 1, 2008 and do not stipulate the transfer of ownership of the leased assets to the lessee have been accounted for as
operating leases.
(7) Allowance for doubtful accounts
The Company and the domestic consolidated subsidiaries provide the allowance for doubtful accounts based on the bad debt loss
ratio derived from their own loss history plus the amount of uncollectible receivables estimated on an individual basis.
Overseas consolidated subsidiaries provide the allowance for doubtful accounts based on methods prescribed by theirrespective countries’ regulations.
(8) Accounting method for retirement benefits(i) Method of attributing the projected beneﬁts to periods of service
As for the calculation of retirement beneﬁt obligation, the point standard is mainly used for including estimated retirement beneﬁts ina period till the end of this consolidated ﬁscal year. Some consolidated subsidiaries adopt the simpliﬁed method for calculating theliabilities and costs for retirement beneﬁts, while deﬁning the term-end privately necessary payment for retirement beneﬁts asretirement beneﬁt obligation for the lump-sum severance pay plan, and deﬁning the actuarial obligation in the latest pension ﬁnancecalculation as retirement beneﬁt obligation for the corporate pension plan.
(ii) Amortization of unrecognized prior service cost
Unrecognized prior service cost is amortized on a straight-line basis over a term that does not exceed the average remaining
service period of the employees who are expected to receive beneﬁts under the plans (10 to 15 years).
(iii) Amortization of unrecognized net actuarial gain or loss
Unrecognized net actuarial gains or losses are amortized from the year following the year in which such gains or losses arerecognized on a straight-line basis over a term that does not exceed the average remaining service period of the employees whoare expected to receive beneﬁts under the plans (10 to 15 years).
(9) Reserve for loss on dissolution of employee pension fund
The Company and certain domestic consolidated subsidiaries reserve for loss on dissolution of employee pension fund.

21

(10) Translation of foreign currency financial statements (accounts of overseas subsidiaries and affiliates)
The ﬁnancial statements of overseas consolidated subsidiaries are translated into Japanese yen at the exchange rates prevailingat the respective balance sheet dates of those subsidiaries for assets and liabilities, and at the historical exchange rate for capital
accounts and retained earnings. All income and expense accounts are translated at the average rates of exchange during the ﬁscal
year of those subsidiaries. The resulting translation adjustments are included in net assets.
(11) Net income or loss per share
Net income or loss per share is based on the weighted average-number of common shares outstanding less the number oftreasury stock during each year, appropriately adjusted for subsequent free distributions of common shares.
(12) Cash and cash equivalents
Cash and cash equivalents in the consolidated statements of cash ﬂows are composed of cash on hand, bank deposits that areable to be withdrawn on demand and short-term investments with original maturities of three months or less that are exposed toa minor risk of ﬂuctuation in value.
A reconciliation of cash and cash equivalents in the accompanying consolidated statements of cash ﬂows and cash and bankdeposits in the accompanying consolidated balance sheets at March 31, 2014 and 2013 is shown below:
Thousands of
U.S. dollars

Millions of yen

Cash and bank deposits
Time deposits with maturities of over 3 months
Cash and cash equivalents

2014

2013

2014

¥ 8,382−¥ 8,382¥5,337(100)¥5,237$81,447−$81,447(13) Dividends
The Corporation Law of Japan (the “Law”) provides that an amount equal to 10% of the amount to be distributed as distributionsof capital surplus (other than the capital reserve) and retained earnings (other than the legal reserve) be transferred to the capitalreserve and the legal reserve, respectively, until the sum of the capital reserve and the legal reserve equals 25% of the common
stock amount. Such distributions can be made at any time by resolution of the shareholders, or by the Board of Directors if
certain conditions are met, however neither the capital reserve nor the legal reserve is available for distributions.
(14) Accounting changes(i) Accounting Standard for Retirement Beneﬁts
Effective the year ended March 31, 2014, the Company has applied “Accounting Standard for Retirement Beneﬁts” (ASBJ
Statement No. 26), and “Guidance on Accounting Standard for Retirement Beneﬁts” (ASBJ Guidance No. 25), both issued on May
17, 2012.
Under the current requirements, actuarial gains and losses, past service costs and transitional obligation that are yet to berecognized in proﬁt or loss are not recognized in the balance sheet, and the difference between retirement beneﬁt obligations andplan assets (hereinafter, “deﬁcit or surplus”), adjusted by such unrecognized amounts, is recognized as a liability or asset.
Under the revised accounting standard, actuarial gains and losses, past service costs and transitional obligation that are yet tobe recognized in proﬁt or loss shall be recognized within equity (accumulated other comprehensive income), after adjusting for tax
effects, and the deﬁcit or surplus shall be recognized as a liability (net deﬁned beneﬁt liability) or asset (net deﬁned beneﬁt asset).
The revised accounting standard does not change how to recognize actuarial gains and losses, past service costs andtransitional obligation in proﬁt or loss. Those amounts would be recognized in proﬁt or loss over a certain period. However, actuarial
gains and losses, past service costs and transitional obligation that arose in the current period and have not yet been recognized in
proﬁt or loss shall be included in other comprehensive income, and actuarial gains and losses, past service costs and transitional
obligation that were recognized in other comprehensive income in prior periods and then recognized in proﬁt or loss in the current
period shall be treated as reclassiﬁcation adjustments.
As a result, as of March 31, 2014, the Companies recorded net deﬁned beneﬁt asset of ¥471 million ($4,579 thousand), net
deﬁned beneﬁt liability of ¥8,872 million ($86,204 thousand), increased accumulated other comprehensive income by ¥144 million($1,401 thousand) and decreased minority interests by ¥54 million ($533 thousand).
(ii) Revision to “Employee Beneﬁts” of IAS No. 19
For some overseas consolidated subsidiaries, the revised “Employee Beneﬁts” of IAS No. 19 (revised on June 16, 2011) has been
applied since the consolidated ﬁscal year starting on January 1, 2013, changing the methods for calculating and indicating22

unrecognized actuarial difference.
This revision to the accounting policy is retroactively effective, and this revision applied retroactively to the consolidated
ﬁnancial statement for the previous consolidated ﬁscal year, but its effect is minor.
(15) Reclassification
Certain reclassiﬁcation have been made to the prior years’ consolidated ﬁnancial statements to conform to the presentation for theyear ended March 31, 2014.
(16) Additional information
At the meeting of the board of directors held on Mar. 31, 2014, we resolved to solicit voluntary retirement as follows:
1. Reason for soliciting voluntary retirement
Our corporate group is proceeding with the First Medium-term Management Plan for recovering from the Great East Japan
Earthquake and then growing further. In order to secure cost competitiveness amid the stringent business environment, we
implemented some measures, including cost reduction, the suspension of new graduate recruitment, labor cost curtailment, andthe restructuring of group companies. However, the business environment still remains harsh, because the markets of the existing
businesses, including the Paper and Pulp business, have shrunk and proﬁtability has declined due to ﬁerce competition, etc.
In this circumstance, our corporate group decided to solicit voluntary retirement for optimizing personnel of our group as partof business structural reform.
2. Outline of the solicitation for voluntary retirement(i) Target companies: Our company and consolidated subsidiaries inside Japan(ii) Target people: Full-time employees at the age of over 39 as of Apr. 1, 2014(iii) Number of retiring employees: About 200(iv) Solicitation period: Jul. 1–8, 2014 (scheduled)(v) Date of retirement: Aug. 20, 2014 (scheduled)(vi) Preferential treatment: An additional amount will be added to an ordinary retirement beneﬁt. In addition, we will assist voluntarily
retiring employees in ﬁnding another job through re-employment support ﬁrms.
3. Estimated loss
The cost for the additional amount arising out of this solicitation will be posted as an extraordinary loss in the ﬁnancial statement for
the term ending Mar. 2015. Its effects on extraordinary losses and ﬁnancial results will be studied carefully while considering
voluntarily retiring employees, and estimates will be announced immediately after the study.
4. Others
Including the retiring employees through this solicitation, about 300 full-time employees of our corporate group are estimated toresign in the term ending Mar. 2015.

4. Assets Pledged as Collateral
Assets pledged as collateral primarily for short-term loans, long-term debt and debentures at March 31, 2013 and 2012 were as
follows:
Thousands of
U.S. dollars

Millions of yen

Buildings and structures
Machinery and equipment
Land
Other
Investments in securities

2014

2013

2014

¥ 19,458
43,086
10,514
178
3,532¥20,654
48,44010,514223
3,418$189,064
418,637
102,157
1,733
34,318¥ 76,769

23¥83,251$745,911

5. Contingent Liabilities
As at March 31, 2014 the Companies were contingently liable for guarantees of loans, primarily of their employees and unconsolidated subsidiaries and afﬁliates, in the aggregate amount of ¥2,296 million ($22,317 thousand), and also liable for a recourse
obligation of credit securitization in the aggregate amount of ¥1,874 million ($18,209 thousand).

6. Disposal of Property, Plant and Equipment(1) Gains on disposal of property, plant and equipment
Main items under gains on disposal of property, plant and equipment were as follows:

Thousands of
U.S. dollars

Millions of yen
2014

¥ 25

Land

2013

2014

¥19

$246

(2) Losses on disposal of property, plant and equipment
Main items under losses on disposal of property, plant and equipment were as follows:

Thousands of
U.S. dollars

Millions of yen

Machinery and equipment
Scrapping and removal expenses

2014

2013

2014

¥ 109
146

¥87
120

$1,0681,428

7. Subsidy Income
Previous consolidated ﬁscal year (April 1, 2012–March 31, 2013)
The domestic consolidated subsidiaries have received subsidies for the purpose of repairing or replacing facilities at the Company’s
Hachinohe Mill, that were damaged by the Tohoku region Paciﬁc Ocean earthquake.
Consolidated ﬁscal year under review (April 1, 2013–March 31, 2014)
The subsidy income includes the subsidy for projects promoting domestic location given to the Company’s Hachinohe Mill andconsolidated subsidiaries.

8. Cost for Business Structure Reform
The cost for business structure reform includes the special retirement beneﬁt for the transfer of employees to the new subsidiary
MPM OPERATION Co., Ltd. through the restructuring of the Hachinohe Mill.

9. Legal Settlement
The legal settlement are the settlement money for the damage suit that had been ﬁled by the Urban Renaissance Agency and wasunder dispute.

2410. Other Comprehensive Income
The following table shows reclassiﬁcation adjustment for each component of other comprehensive income for the year ended
March 31, 2014:

Thousands of
U.S. dollars

Millions of yen

Net unrealized gain (loss) on available-for-sale securities
Amount arising during the year
Reclassification adjustments for gain and losses included in net income
Amount before tax effectTax effectTotal
Foreign currency translation adjustment
Amount arising during the year
Reclassification adjustments for gains and losses included in net income
Amount before tax effectTax effectTotal
Remeasurements of defined benefit plans
Amount arising during the year
Reclassification adjustments for gains and losses included in net income
Amount before tax effectTax effect
Total
Share of other comprehensive income of investments for which the equity method is applied
Amount arising during the year
Reclassification adjustments for gains and losses included in net income
Total
Total other comprehensive income

25

2014

2013

2014

¥ 1,533(3,043)¥3,372(102)$14,895(29,568)(1,510)537¥ (972)

3,269(1,164)¥2,105(14,672)
5,224$(9,448)

¥ 861
−

¥399
−

$8,371
0

861
−
¥ 861

399
−
¥399

8,371
−
$8,371¥ (316)106¥(702)−$(3,075)
1,038

(209)
−
¥ (209)(702)−¥(702)(2,037)−$(2,037)

¥ 169
−

¥72
−

$1,646
−

169

72

1,646

¥ (150)¥1,874$(1,467)11. Leases
Finance leases, except those leases for which the ownership of the leased assets is considered to be transferred to the lessee, of
which transaction date is on or before March 31, 2008 were as follows:(1) Equivalent of purchase price, accumulated depreciation and net book value of leased assets
2014
Machineryandequipment

Purchase price equivalent
Accumulated depreciation equivalent
Net book value equivalent

¥ 38
34

¥3

Millions of yen

Other

Total

¥ 24
24

¥ 62
59

¥0

¥3

Thousands of U.S. dollars
2014

2013

Machineryandequipment

Other

Total

¥52
43

¥39
34

¥92
78

¥9

¥5

¥14

(2) Lease commitments

Machineryandequipment

Due within one year
Due after one year

2013

¥3
−

¥10
3

¥3

Total

¥14

(3) Lease expenses and depreciation equivalents

Lease expenses
Depreciation equivalents

¥ 10
10

26

$241
238

$611
573

$2

$37

2014

$37
−

$37

Thousands of
U.S. dollars

Millions of yen
2014

$35

Total

Thousands of
U.S. dollars

Millions of yen
2014

$370
335

Other

2013

¥18
18

2014

$99
99

12. Financial Instruments(1) Summary of financial instruments(i) Policy regarding ﬁnancial instruments
To carry out its capital expenditure plans to develop its paper, pulp, photosensitive material products and other manufacturing
activities, the Group raises the funds it needs principally through bank loans and issuance of corporate bonds. Temporary
surpluses are managed as short-term deposits, and temporary working capital is procured through bank loans and issuance ofcommercial paper. The Company has a policy of not entering into any speculative derivative transactions and only enters into
derivative transactions to avoid exposure to interest-rate risk on loans.
(ii) Details of ﬁnancial instruments and related risk and management of risk
Trade notes and accounts receivable are exposed to the credit risk of customers. In accordance with the internal policy for credit
risk management regulations, the Group manages both the due dates and balance of such transactions by customer, and has
systems to accurately assess the credit status of its major customers at any time.
Receivables in foreign currencies originating overseas businesses are exposed to foreign exchange-rate risk. The majority ofthese risks are diminished through the use of a balance of accounts payable denominated in foreign currencies.
Investment securities are exposed to risks of changes in market prices. However, market prices of the shares held for
operational purposes are periodically reviewed.
Trade notes and accounts payable are obligations due within one year. Some of these obligations are denominated in foreign
currencies in connection with imports of raw materials, and are exposed to exchange-rate ﬂuctuation risk. The Company hedges
against risk regarding net receivables and payables denominated in foreign currencies using forward exchange contracts.
Short-term borrowings are raised mainly in connection with business activities, while long-term debt, corporate bonds andlease obligations related to ﬁnance lease transactions are the main means for procurement of funds needed for capital expenditures.
In most cases, the repayment date is within ﬁve years from the balance sheet date.
For some long-term debt with ﬂoating interest rates exposed to interest-rate ﬂuctuation risk, the Company uses derivativetransactions (interest-rate swaps) for hedging purposes.
For derivative transactions, the Company uses forward exchange contracts to hedge against exchange-rate risk affecting
trade notes and accounts receivable and payable denominated in foreign currencies, and interest rate swap transactions to hedge
interest rate ﬂuctuation risks on loans. We do not assess the effectiveness of our hedging strategies, since all derivative transactions
meet the conditions for special accounting treatment for interest rate swaps.
For carrying out and managing derivative transactions, the Company adheres closely to internal policies delimiting theauthority for engaging in such transactions. To reduce credit risk in using derivatives, the Company works only with the ﬁnancial
institutions with good credit-ratings.
The Company is exposed to liquidity risk in its payables and borrowings. Risk-management methods including compilationof a monthly cash ﬂow plan are used to mitigate the risks by each Group company.
(iii) Additional notes on the fair value of ﬁnancial instruments, etc.
Calculations of the fair value of ﬁnancial instruments are based on their quoted market prices, as well as their reasonably
estimated fair value when the quoted market prices are not available. Since various assumptions and factors are reﬂected inestimating the fair value, different assumptions and factors could result in different fair value. In addition, the contract values ofderivatives in Note 13. Derivatives are not necessarily indicative of the actual market risk involved in derivative transactions.
(2) Fair value of financial instruments
Book value, fair values and differences between them as of March 31, 2014 are as follows. The following table does not include
ﬁnancial instruments for which the fair value is extremely difﬁcult to determine (please refer to note below).

27

Millions of yen
2014Book value

Fair value

Difference

Trade notes and accounts receivable
Investments in securities
Available-for-sale securities
Total of assets¥ 42,424¥ 42,424¥−

18,60661,031

18,60661,031−−

Trade notes and accounts payable
Short-term bank loans (excluding current portion of long-term debt)
Long-term debt (including current portion of long-term debt)
Total of liabilities

26,01453,227
95,093
174,335

26,01453,22795,021
174,262

−
−
(72)
(72)

¥−

¥−

¥−

Derivative transactions

Thousands of U.S. dollars
2014

Trade notes and accounts receivable
Investments in securities
Available-for-sale securities
Total of assets

Trade notes and accounts payable
Short-term bank loans (excluding current portion of long-term debt)
Long-term debt (including current portion of long-term debt)
Total of liabilities
Derivative transactions

Book value

Fair value

Difference$412,206$412,206$−

180,788592,995

180,788592,995−−

252,763
517,172
923,958
1,693,894

252,763
517,172
923,251
1,693,186

−
−
(707)
(707)

$−

$−

$−

Millions of yen
2013

Book value

Fair value

Trade notes and accounts receivable
Investments in securities
Available-for-sale securities
Total of assets¥46,646¥46,646¥−

23,471
70,11823,471
70,118−−Trade notes and accounts payable
Short-term bank loans (excluding current portion of long-term debt)
Long-term debt (including current portion of long-term debt)
Total of liabilities

26,792
58,086
96,573
181,452

26,792
58,086
97,020181,900

−
−
447
447

¥−

¥−

¥−

Derivative transactions

Difference(i) Trade notes and accounts receivable
Because these are settled in a short period of time, fair value approximates book value. Accordingly, fair value is recognized asbook value.
(ii) Investment in securities
Fair value of investment in securities is based on quoted share prices at stock exchanges, and bond prices are based on indicative
published prices in the papermaking sector.
(iii) Trade notes and accounts payable
Because these are settled in a short period of time, fair value approximates book value. Accordingly, fair value is recognized asbook value.
(iv) Short-term borrowings
Because these are settled in a short period of time, fair value approximates book value. Accordingly, fair value is recognized asbook value.

28

(v) Long-term debt
The fair value of long-term debt is calculated by discounting the total principal and interest using the assumed interest rate given
equivalent new borrowings.
For long-term debt with ﬂoating interest rates, loans are subject to special settlement for interest swaps. The fair value iscalculated by discounting the total principal and interest (including interest-rate swap) using the interest rate reasonably estimatedgiven equivalent new borrowings. The amount also includes the total current portion of long-term debt of ¥20,675 million($200,890 thousand).
(vi) Derivatives
Please see Note 13.
Unlisted equity securities (in the amount of ¥1,622 million ($15,760 thousand) on the consolidated balance sheet) are notincluded in available-for-sale securities, due to the difﬁculty of measuring their fair value as the stock has no quoted share priceand future cash ﬂow cannot be predicted.

Thousands of
U.S. dollars

Millions of yen

Unlisted equity securities

2014

2013

2014

¥ 1,622¥1,645$15,760

Planned repayment of debentures, long-term debt, lease obligations and other interest-bearing liabilities after the balance sheet
date (consolidated basis).

Millions of yen
2014

Short-term bank loans
Debentures
Long-term debt
Lease obligations
Total

Due within
1 year

1-2 years

2-3 years

3-4 years

4-5 years

Over 5 years¥ 53,227−
20,675378¥−−
20,500361¥−−
27,077
331

¥−
−
9,458
316

¥−
−
10,462
302

¥−
−
6,918
551

¥ 74,281¥ 20,861¥ 27,409¥ 9,775¥ 10,765¥ 7,470

Thousands of U.S. dollars
2014

Short-term bank loans
Debentures
Long-term debt
Lease obligations
Total

Due within
1 year

1-2 years

2-3 years

3-4 years

4-5 years

Over 5 years$517,172−
200,892
3,675$−−
199,1883,512$−−
263,094
3,222$−−
91,902
3,078$−−
101,661
2,939$−−
67,2195,362$721,739$202,700$266,316$94,981$104,601$72,581Millions of yen
2013
Due within
1 year

1-2 years

2-3 years

3-4 years

4-5 years

Over 5 years

Short-term bank loans
Debentures
Long-term debt
Lease obligations¥58,086−
16,574321¥−−
19,852
293¥−−
20,378273¥−−
25,641
243

¥−
−
4,287
234

¥−
−
9,840
670

Total

¥74,983¥20,146¥20,652¥25,884¥4,521¥10,51029

13. Investments in Securities
The acquisition cost, carrying amount, gross unrealized holding gains and gross unrealized holding losses for securities with fairvalue by security type at March 31, 2014 and 2013 are summarized as follows:
Millions of yen

Available-for-sale securities:

2014

Acquisition

Carrying amountGross unrealized
holding gains

Gross unrealized
holding losses¥ 14,086¥ 18,606¥ 4,960¥ 439¥ 14,086−

Equity securities
Government bonds and local government bonds¥ 18,606−¥ 4,960−¥ 439−

Thousands of U.S. dollars
2014

Acquisition

Carrying amountGross unrealized
holding gains

Gross unrealized
holding losses$136,865$180,788$48,198$4,274$136,865−

Equity securities
Government bonds and local government bonds$180,788−$48,198−$4,274−

Millions of yen
2013

Equity securities
Government bonds and local government bonds

Acquisition

Carrying amountGross unrealized
holding gains¥17,441¥23,471¥6,853¥17,4319¥23,4619¥6,8530Gross unrealized
holding losses

¥822
−

¥822

14. Derivatives(1) Transactions not subject to hedge accounting
No applicable transactions(2) Transactions subject to hedge accounting(i) Currency-related
No applicable transactions(ii) Interest-rate related
Hedge accounting

Type of derivative

methodtransaction, etc.

Main targets of hedging

Contract value

Contract value of instruments due within morethan a year

Special settlement ofInterest rate swap trans-interest rate swap

actions,ﬁxed payments,

Long-term debt

variable receivables¥55,584 million¥46,957 million$540,069 thousand$456,254 thousand

Transactions subject to special settlement for interest rate swaps are settled as a combined sum with the long-term debt being
hedged so the fair value is included in the fair value of the long-term debt.

30

15. Retirement and Pension Plans
Our company and consolidated subsidiaries adopt reserve-type and non-reserve-type deﬁned beneﬁt and deﬁned contributionplans for the retirement beneﬁts of our employees.
In the deﬁned beneﬁt pension plan (reserve-type), employees will receive lump-sum payments or pensions, which arecalculated based on their salaries and employment periods.
In the lump-sum retirement beneﬁt plan (non-reserve-type), employees will receive lump-sum retirement beneﬁts, which arecalculated based on their salaries and employment periods. Our company and some consolidated subsidiaries establish retirement
beneﬁt trusts for the lump-sum retirement beneﬁt plan to make it reserve-type.
In addition, additional retirement beneﬁts may be paid, at the time of the retirement, etc. of our employees.
In the deﬁned beneﬁt pension and lump-sum retirement beneﬁt plans adopted by some consolidated companies, thesimpliﬁed method is used for calculating the liabilities and costs for retirement beneﬁts.
As for deﬁned contribution plans, our company and some consolidated subsidiaries establish the deﬁned contribution pension
plan, while the other consolidated subsidiaries subscribe to Smaller Enterprise Retirement Allowance Mutual Aid System.

For the year ended March 31, 2014
The detailed notes relating to retirement beneﬁt plan for ﬁscal period ended March 31, 2014, were as follows:
The schedule of the deﬁned beneﬁt obligation at March 31, 2014, was as follows:

As of April 1, 2013
Current service cost
Interest cost
Actuarial losses
Benefit paid
Other

As of March 31, 2014

Millions of yen

Thousands of
U.S. dollars

2014

2014

¥ 21,329
1,144
309
407
(2,427)
777$207,24111,118
3,003
3,961(23,590)
7,550¥ 21,539$209,284

Millions of yen

Thousands of
U.S. dollars

2014

2014

¥ 13,327
12
596
108
(211)

$129,496
121
5,796
1,058
(2,054)

Millions of yen

Thousands of
U.S. dollars

2014

2014

¥ 738
90
(110)
(22)

$7,177875(1,072)(220)

The schedule of the pension assets at March 31, 2014, was as follows:

As of April 1, 2013
Expected return on pension assets
Actuarial losses
Contributions by the employer
Benefit paid
As of March 31, 2014

¥ 13,834

The schedule of the net deﬁned beneﬁt liability for simpliﬁed method was as follows:

As of April 1, 2013
Periodic benefit cost
Benefit paid
Contribution to systems
As of March 31, 2014

¥ 695

31

$134,419$6,760

The reconciliation of the deﬁned beneﬁt obligations and pension assets to the liabilities and assets on retirement beneﬁts
recognized in the consolidated balance sheet as of March 31, 2014, was as follows:

Funded defined benefit obligations
Pension assets

Millions of yen

Thousands of
U.S. dollars

2014

2014

¥ 14,683(14,144)$142,667(137,429)

8,400

81,625539
7,861

Unfunded defined benefit obligations

Net amount of liabilities and assets recognizedin consolidated balance sheet

8,872
(471)

Retirement benefit liabilities
Retirement benefit asset

Net amount of liabilities and assets recognizedin consolidated balance sheet¥ 8,400

5,237
76,387

86,204(4,579)$81,625

The proﬁts and losses related to retirement beneﬁts for ﬁscal period ended March 31, 2014, were as follows:
Millions of yen

Thousands of
U.S. dollars

2014

2014

Current service cost
Interest cost
Expected return on pension assets
Actuarial loss recognized in the year
Prior service cost recognized in the year
Periodic benefit cost in simplified method¥ 1,144
309
(12)
100
(93)
90

Periodic benefit costs of retirement benefit plan

$11,118
3,003
(121)
974
(906)
875

¥ 1,537$14,943

Millions of yen

Thousands of
U.S. dollars

2014

2014

¥ (209)$(2,037)

Millions of yen

Thousands of
U.S. dollars

2014

2014

¥ 427
(1,598)$4,158(15,531)¥ (1,170)$(11,373)

Irregular premium severance pay: ¥484 million ($4,707 thousand) was posted as an extraordinary loss.

The breakdown of items in other comprehensive income was as follows:

Actuarial loss
The breakdown of items in accumulated other comprehensive income was as follows:

Unrecognized prior service cost
Unrecognized actuarial loss

The breakdown of pension assets by major category as of March 31, 2014, was as follows:
2014

General account of life insurance
Bonds
Equities
Other

45%
29%
24%
2%

100%

32

The items of actuarial assumptions as of ﬁscal period ended March 31, 2014, were as follows:
2014

Discount rate
Expected long-term return on plan assets

0.6~3.4%
0.0~2.0%

The necessary contribution to the deﬁned contribution plan of our company and consolidated subsidiaries is ¥324 million($3,128 thousand).
As for the multi-employer pension plan (comprehensive employees’ pension system) used by some consolidated subsidiaries,
its importance is not signiﬁcant, and so its notes are omitted.

For the year ended March 31, 2013
The detailed notes relating to retirement beneﬁt plan for the year ended March 31, 2013, were as follows:
Millions of yen
2013

Projected benefit obligations
Fair value of plan assets¥(22,963)
14,223Funded status of the plans
Unrecognized net actuarial
Unrecognized prior service cost (reduction of the obligation)(8,740)640(374)

Accrued retirement benefits¥(8,473)

The net periodic retirement beneﬁt cost for the years ended March 31, 2013 included the following components:
Millions of yen
2013

Service cost
Interest cost
Expected return on plan assets
Amortization of net actuarial gain
Amortization of prior service cost (reduction of the obligation)¥1,497
421
(9)
(121)
(93)
¥1,694

Assumptions used in calculation of the above information were as follows:

Millions of yen
2013

Discount rate
Expected rate of return on plan assets
Method of attributing the projected benefits to periods of service
Amortization of unrecognized prior service cost
Amortization of unrecognized net actuarial gain or loss

33

0.6~1.1%
2.0%
mainly on a points basis
10~15 years
10~15 years16. Deferred Income Taxes
At March 31, 2014 and 2013, signiﬁcant components of deferred tax assets and liabilities were as follows:
Millions of yen

Deferred tax assets:
Accrued enterprise taxes
Accrued expenses
Accrued retirement benefits to employees
Net defined benefit liability
Allowance for doubtful accounts
Loss on revaluation of fixed assets
Unrealized gains on property, plant and equipment
Tax loss carryforwards
Other
Gross deferred tax assets
Valuation allowanceThousands of
U.S. dollars

2014

2013

2014

¥ 70
620
−
2,989
542
578
215
8,137
8,759

¥64
854
3,430
−
608
679
191
7,471
8,848

$687
6,031
−
29,047
5,268
5,619
2,094
79,064
85,10821,913(16,810)

22,148(16,313)

212,922
163,331

5,103

5,835

49,590

Deferred tax liabilities:
Reserve based on Special Taxation Measures Law
Unrealized gains on available-for-sale securities
Liability adjustment account
Other

(24)
(1,610)
(658)
(378)

(26)
(2,148)(1,030)
(410)

(237)
(15,648)(6,400)(3,677)

Net deferred tax assets¥ 2,431(2,672)(3,615)

Total deferred tax assets

Total deferred tax liabilities¥2,220(25,964)$23,625

For the year ended March 31, 2014 and 2013, a reconciliation of the statutory tax rate to the effective tax rates was as follows:
2014

38.0%
7.1
(3.7)
4.8
(1.8)
40.8
(20.1)(1.7)

Statutory tax rate
Permanently non-deductible expenses
Permanently non-taxable income
Per capita inhabitants’ taxes
The effect of tax rate changes
Valuation allowance
Unrealized gains (losses)
Other

Effective tax rates

63.4%

2013

38.0%
2.8
(2.7)
2.3
(11.3)
6.5
(0.7)
(2.0)
32.9%

17. Segment Information(1) Reportable segment information
The Company’s reportable segments are components for which discrete ﬁnancial information is available and which are regularly
reviewed by the Board of Directors to determine resource allocation and evaluate business results.
The Company’s businesses are divided into segments, which handle speciﬁc products and carry out comprehensive strategy
planning in Japanese and overseas markets.
The Company consists of three reportable segments, identiﬁed by product portfolio, which are classiﬁed as the “Paper andPulp Segment,” the “Imaging Media Segment” and the “Speciality Materials Segment.”
The “Paper and Pulp Segment” develops writing and printing paper, premium-quality paper and pulp. The Imaging Media
Segment handles product portfolios, including photo-sensitive printing plates, inkjet paper, photographic materials. The
Speciality Materials Segment handles speciality and other product portfolios.

34

Millions of yen
Reportable segments
Year ended March 31, 2014

Sales
Sales to unaffiliatedcustomers
Intersegment sales andtransfers
Total sales

Segment income

Segment assets
Amortization
Investment in equity-method
affiliates
Increase in tangible andintangible fixed assets

Paper
and Pulp

Imaging
Media

Speciality
Materials¥ 157,974¥ 29,886¥ 13,019 ¥ 200,880

3,683

11,727¥ (1,806)¥ 1,526

161,657

3,015

41,614

16,034
¥ 294

Total

18,426219,307¥ 13¥ 15,380 ¥ 259,044
506
11,044

Other

Total

Adjustments¥ 6,589 ¥ 207,470
9,395

15,985¥ 463¥ − ¥ 207,470

27,821(27,821)

¥ 477

¥ (3)

235,292

Consolidated(27,821)−

207,470¥ 473¥ 201,995
8,443¥ 41,668
2,094¥ 10,866 ¥ 269,910 ¥ (11,311) ¥ 258,599
254
11,298(84)
11,214

488

−

−

488

−

488

−

488

4,348

1,659

483

6,491

105

6,596

(101)

6,494

Adjustments

Consolidated

Thousands of U.S. dollars
Reportable segments
Year ended March 31, 2014

Sales
Sales to unaffiliatedcustomers
Intersegment sales andtransfers
Total sales

Segment income

Segment assets
Amortization
Investment in equity-method
affiliates
Increase in tangible andintangible fixed assets

Paper
and Pulp

ImagingMedia$1,534,921$290,389

35,788113,950

1,570,709

Speciality
Materials

Total

Other

Total

$126,503 $1,951,814 $64,027 $2,015,842
29,296

179,035

91,287$133$4,504(270,322)

−

$(34)

$4,603

155,800$1,962,644
82,040$404,860
20,347$149,441 $2,516,947 $105,585 $2,622,532 $(109,908) $2,512,623
4,922
107,309
2,474
109,784(823)
108,961

4,747

−

−

4,747

−

4,747

−

4,747

42,24916,122

4,698

63,0701,025

64,096(989)

63,106$14,828$2,8602,286,165$2,015,842

404,339$(17,555)

2,130,849 155,315

270,322$−$4,638(270,322) 2,015,842(i) The storage and transport business as well as the engineering business are included in “Other.” They are not included in thereportable segments.
(ii) Adjustments are:• Adjustments and eliminations for segment income include ¥21 million ($208 thousand) of elimination of inter-segment income andloss and ¥(24) million ($(242) thousand) of corporate expenses, which are general and administrative expenses and are notallocable to the reportable segments.
• Adjustments and eliminations for segment assets include ¥19,751 million ($191,907 thousand) of corporate assets and ¥(31,062)
million ($(301,815) thousand) of elimination of inter-segment assets.
• Adjustments and eliminations for amortization of ¥(84) million ($(823) thousand) is elimination of inter-segment.
• Adjustments and eliminations for increase in tangible and intangible ﬁxed assets include ¥(101) million ($(989) thousand) ofelimination of inter-segment increase in tangible and intangible ﬁxed assets.
(iii) Segment income is adjusted with consolidated operating income.

35

Millions of yen
Reportable segments
Year ended March 31, 2013

Sales
Sales to unaffiliatedcustomers
Intersegment sales andtransfers
Total sales

Segment income

Segment assets
Amortization
Investment in equity-method
affiliates
Increase in tangible andintangible fixed assets

Paper
and Pulp

Imaging
Media

Speciality
Materials

Total

Other

Total

¥153,706¥28,737¥11,438¥193,883¥6,966

3,717

11,0882,785

17,591

95,260157,424

39,825

14,223

211,474¥201,167
8,347¥47,020
2,110¥14,877
480

488

−

5,686

1,085

¥2,167¥538

Adjustments

Consolidated¥200,850¥−¥200,850

27,117(27,117)−

16,493

227,967¥263,064
10,938¥11,467282¥274,532
11,220

−

488

−

488

−

488

306

7,078

55

7,134

(65)

7,068

¥299

¥3,005¥379¥3,384(27,117)¥(52)

200,850¥3,332¥(9,298) ¥265,234(83)
11,137(i) The storage and transport business as well as the engineering business are included in “Other.” They are not included in thereportable segments.
(ii) Adjustments are:• Adjustments and eliminations for segment income (loss) include ¥(25) million of elimination of inter-segment income and loss and¥(26) million of corporate expenses, which are general and administrative expenses and are not allocable to the reportablesegments.
• Adjustments and eliminations for segment assets include ¥18,283 million of corporate assets and ¥(27,581) million of eliminationof inter-segment assets.
• Adjustments and eliminations for amortization of ¥(83) million is elimination of inter-segment.
• Adjustments and eliminations for increase in tangible and intangible ﬁxed assets include ¥(65) million of elimination of intersegment increase in tangible and intangible ﬁxed assets.
(iii) Segment income is adjusted with consolidated operating income.
(2) Geographical information(i) Net sales to third parties by countries or areas grouped according to geographical classiﬁcation for the years ended March 31,
2014 and 2013 are as follows:

Thousands of
U.S. dollars

Millions of yen
2014

Japan
EuropeAsia
North America
Other

Consolidated

2013

2014

¥ 146,547
30,21812,08010,708
7,915¥141,565
27,48913,486
10,225
8,082$1,423,897
293,612117,377
104,046
76,908¥ 207,470¥200,850$2,015,842

Net sales information above are based on customer location.
(ii) Property, plant and equipment by countries or geographical areas at March 31, 2014 and 2013 are as follows:
Thousands of
U.S. dollars

Millions of yen
2014¥ 111,779
11,900125

Japan
EuropeNorth America

Consolidated¥ 123,805

36

2013

¥116,108
9,911
97¥126,1172014$1,086,077
115,626
1,222$1,202,926

(3) Impairment loss on fixed assets by reportable segments
Not applicable(4) Amortization and balance of goodwill
Millions of yen

Reportable segments

Year ended March 31, 2014

Paper
and Pulp

Imaging
Media

Speciality
Materials

Total

Other

Total

Adjustments

Consolidated(Goodwill)
Amortization
Balance as of March 31

¥−
−

¥−
−

¥−
−

¥−
−

¥−
−

¥−
−

¥−
−

¥−
−

(Negative goodwill)
Amortization
Balance as of March 31

105
¥ 30

−
¥−

−
¥−

105
¥ 30

3
¥−

109
¥ 30

−
¥−

109
¥ 30

Thousands of U.S. dollars

Reportable segments

Year ended March 31, 2014

(Goodwill)
Amortization
Balance as of March 31(Negative goodwill)
Amortization
Balance as of March 31

Paper
and Pulp

Imaging
Media

Speciality
Materials

Total

Other

Total

Adjustments

Consolidated

$−
−
−
1,027
$298

$−
−

$−
−

$−
−

$−
−

$−
−

$−
−

$−
−

−
$−

−
$−

1,027
$298

35
$−

1,063
$298

−
$−

1,063
$298

Millions of yen

Reportable segments

Year ended March 31, 2013

Paper
and Pulp

Imaging
Media

Speciality
Materials

Total

Other

Total

Adjustments

Consolidated(Goodwill)
Amortization
Balance as of March 31

¥−
−

¥−
−

¥−
−

¥−
−

¥−
−

¥−
−

¥−
−

¥−
−

(Negative goodwill)
Amortization
Balance as of March 31

108
¥136

−
¥−

−
¥−

108
¥136

96
¥3

205
¥140

−
¥−

205
¥140

Total

Adjustments

Consolidated

Total

Adjustments

Consolidated(5) Information relating to gain on negative goodwill by reporting segment

Millions of yen

Reportable segments

Year ended March 31, 2014

Gain on negative goodwill

Paper
and Pulp¥ 198

Imaging
Media

Speciality
Materials¥0¥−Gain on negative goodwill

Paper
and Pulp$1,932

Imaging
Media

Speciality
Materials

$1

¥ 199

$−

Total

$1,933Gain on negative goodwill

¥−

¥ 199

¥−

¥ 199

Other

$−

$1,933$−$1,933

Millions of yen

Reportable segments

Year ended March 31, 2013

Other

Thousands of U.S. dollars

Reportable segments

Year ended March 31, 2014

Total

Paper
and Pulp

Imaging
Media

Speciality
Materials

Total

Other

Total

Adjustments

Consolidated

¥33

¥−

¥−

¥33

¥−

¥33

¥−

¥33

37

Mitsubishi Paper Mills Limited and Consolidated Subsidiaries

Independent Auditor’s Report38Mitsubishi Paper Mills Limited

Board of Directors, Executive Officers and Corporate Auditors
Managing Executive Officers

Kunio Suzuki
President and Chief Executive
Officer

Masami Mizuno

Mitsuo Ushijima

Representative Director andSenior Managing Executive
Officer

Representative Director andSenior Managing Executive
Officer

Kanji Itakura

Kazuhisa Taguchi

Hiroshi Nozawa

Naoya Tashiro

Director andSenior Managing
Executive Officer

Director andSenior Managing
Executive Officer

Director and Managing
Executive Officer

Managing Executive
OfficerPresident and Chief Executive
Officer

Director and Senior Managing
Executive Officers

Outside Director

President

Supervisor, Finance & Accounting
Dept.

Senior Executive Officers

Kunio Suzuki

Representative Director andSenior Managing Executive
Officers

Masami Mizuno

Supervisor, President’s Office and Raw
Materials & Purchasing Dept.; In charge ofInternal Audit Dept.; Director responsible for
Corporate Social Responsibility

Mitsuo Ushijima

Supervisor, German Operations; In charge ofPaper Div. ; General Manager, Paper Div.

Kanji Itakura

Kazuhisa Taguchi

Tomohisa Shinagawa
Kiyoshi Maeda

General Manager, President’s Office

Kiyoharu Yamada

Supervisor, Kitakami Div. Energy Business
Dept. and Technology & Environmental Dept.; General Manager, Raw Materials &In charge of Imaging Media Div. and Intellectual Purchasing Dept.
Property Dept.; General Manager, Imaging
Yutaka Oka
Media Div.
In charge of German Operations; Deputy
General Manager, Paper Div. General
Director and Managing Executive
Manager, International Sales Dept.
Officer
Director and Executive Officer
Hiroshi Nozawa
In charge of General Affairs &Junji Harada
Personnel Dept. and Legal Dept.
In charge of Speciality Materials Div.; General
Manager, Speciality Materials Div.

Tsuneaki Handa

President & CEO, MPM Operation Co.,Ltd.
Head, Hachinohe Mill; Deputy General
Manager, Paper Div.

Nobuhiro Sato

General Manager, Business Communication & Specialty Paper Sales Dept.

Makoto FujitaHead, Kyoto Mill; Deputy General
Manager, Imaging Media Div.

Yukihiro TachifujiHead, Takasago Mill; Deputy General
Manager, Paper Div., Imaging Media Div.
and Speciality Materials Div.

Shimpei Yamada

General Manager, Ink Jet & Photo Sales
Dept.

Managing Executive Officer

Executive Officers

Corporate Auditor

In charge of Energy Business Dept. andTechnology & Environmental Dept.
General Manager Kitakami Div. Deputy
General Manager, Imaging Media Div.

General Manager, Finance & Accounting
Dept.

Outside Corporate Auditors

Naoya Tashiro

Masaki Shuto

Akira Takeuchi

General Manager, Energy Business dept.

Kenji Oka

Yasuharu Takamatsu
Koji Kaihotsu
Tsuyoshi Inoue(as of June 27, 2014)39

Mitsubishi Paper Mills Limited

Company Data

Established:
April 1, 1898
Head Office:2-10-14, Ryogoku, Sumida-ku, Tokyo 130-0026, Japan
Telephone:+81-3-5600-1488 (Information)+81-3-5600-1481 (President’s Office)+81-3-5600-1459 (Commercial Printing Paper Sales Dept.
Paper Division)+81-3-5600-1463 (Business Communication & Specialty Paper
Sales Dept. Paper Division)+81-3-5600-1464 (Sales Administration Dept. Paper Division)+81-3-5600-1536 (International Sales Dept.)+81-3-5600-1479 (Ink Jet & Photo Sales Dept. Imaging MediaDivision)+81-3-5600-1475 (Graphic Systems Sales Dept. Imaging MediaDivision)+81-3-5600-1471 (Speciality Materials Division)+81-3-5600-1453 (Purchasing Dept.)+81-3-5600-1454 (Forestry Dept.)
Facsimile:+81-3-5600-1489 (Information)+81-3-5600-1489 (President’s Office)+81-3-5600-1467 (Commercial Printing Paper Sales Dept.
Paper Division)+81-3-5600-1468 (Business Communication & Specialty Paper
Sales Dept. Paper Division)+81-3-5600-1469 (Sales Administration Dept. Paper Division)+81-3-5600-1539 (International Sales Dept.)+81-3-5600-1418 (Ink Jet & Photo Sales Dept. Imaging MediaDivision)+81-3-5600-1413 (Graphic Systems Sales Dept. Imaging MediaDivision)+81-3-5600-1419 (Speciality Materials Division)+81-3-5600-1451 (Purchasing Dept.)+81-3-5600-1451 (Forestry Dept.)
Sales Branch:
Osaka

Disclaimer Regarding Forward-Looking Statements
This material contains forward-looking statements relating to thebusinesses and prospects of the Company. These statements are basedon our expectations at MAY 2014. and are subject to the risks anduncertainties that may affect our businesses, which could cause actual
results to differ materially from those anticipated.
We will not be liable for any damage or loss incurred by you arisingout of or in connection with this material.

40

Corporate Research Center:
Tsukuba R&D Laboratory
Kyoto R&D Laboratory
Process Development Laboratory
Mills:
Takasago, Kyoto, Hachinohe
Major Affiliates:
Domestic

Mitsubishi Paper Sales Co., Ltd.
Ostrich Dia Co., Ltd.
Toho Tokushu Pulp Co., Ltd.
Hachinohe Paper Processing Co., Ltd.
Shin-Hokuryo Forest Products Co., Ltd.
Hachiryo Co., Ltd.
Hokuryo Co., Ltd.
Hakuryo Co., Ltd.
Takasago Paper Processing Co., Ltd.
Kitakami HiTec Paper Corp.
Diamic Co., Ltd.
Pictorico Co., Ltd.
Asahi Diazo-Sensitive Paper Co., Ltd.
Kyoryo Chemical Co., Ltd.
Naniwa Express Co., Ltd.
Mitsubishi Paper Engineering Co., Ltd.
Ryoshi Co., Ltd.
MPM Shared-service Co., Ltd.
MPM CAE Center Co., Ltd.
KJ Specialty Paper Co., Ltd.
Ryoko Co., Ltd.
MPM Operation Co., Ltd.
Overseas

Mitsubishi Paper Holding (Europe) GmbH (Germany)
Mitsubishi Paper GmbH (Germany)
Mitsubishi HiTec Paper Europe GmbH (Germany)
Mitsubishi Imaging (MPM), Inc. (U.S.A.)
MP Juarez LLC (Mexico)
Zuhai MPM Filter, Ltd. (China)

2-10-4 Ryogoku, Sumida-ku,
Tokyo 130-0026, JAPANURL http://www.mpm.co.jp/