Annual Report2013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

CONSOLIDATED STATEMENTS OF
CHANGES IN NET ASSETS.............................................. 18

BREAKDOWN OF OPERATIONS BY DIVISION..................... 4

CONSOLIDATED STATEMENTS OF CASH FLOWS.............. 19

TOPICS­............................................................................. 6

NOTES TO CONSOLIDATEDFINANCIAL STATEMENTS............................................... 20

CORPORATE SOCIAL RESPONSIBILITY (CSR).................. 10
OUR MILLS AND THEIR PRODUCT LINES.......................... 12

INDEPENDENT AUDITOR’S REPORT.................................. 34

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

BOARD OF DIRECTORS, EXECUTIVE OFFICERS ANDCORPORATE AUDITORS.................................................. 35

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

COMPANY DATA............................................................... 36

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

Mitsubishi Paper Mills Limited and Consolidated Subsidiaries

Financial Highlights (Consolidated)Thousands of
U.S. dollars (1) and (2)Millions of yen (1)
2013

2012

2013

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)¥ 200,850
2,663
1,710
5.00
—

¥ 194,856
888
565
1.65
—

$ 2,135,567
28,32418,1820.05—

As at March 31
Total assets
Total net assets
Common stock¥ 265,234
56,50732,756¥ 276,305
52,10832,756$ 2,820,146
600,825
348,286

17,347
4,133

18,2784,341

Number of shareholders
Number of employees

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 ¥94.05 = U.S.$1, as of March 31, 2013.

Net Sales(¥ Million)

09
10
11
12
13

Ordinary Income(¥ Million)

09
10
11
12
13

Net Income(Loss)(¥ Million)

09
10
11
12
13

Total Net Assets(¥ Million)

09
10
11
12
13

Sales
Composition

253,102219,728
210,846
194,856
200,850

4,499
2,658
2,116
888
2,663

1,168
(1,597)(14,497)
565
1,710

70,436
68,70952,117
52,10856,507
Others 3.5%
Speciality Materials
5.7%

Paper & Pulp 76.5%

Imaging Media
14.3%

1

Message from the President

Overview of the Reporting Term
The Mitsubishi Paper Mills Group continued to face a difficult
operating environment during the reporting term, mainly due to theimpact of a sluggish economy and increased paper imports on thedomestic printing paper market.
Against this backdrop, with a basic strategy of reconstructing
the printing paper business and strengthening our revenue base for
growth, we took action based on our First Mid-term Management
Plan.
In our Paper and Pulp Division, although we saw decreased production rates at our Hachinohe Mill due to the earthquake disaster inthe previous period, and a substantial decline in sales volumes, wefully recovered during this period and both sales volumes and values
increased. However, with slack domestic demand and further pricedeclines in the second half, conditions turned extremely adverse.
On the other hand, we took steps to improve market conditions
by adjusting production in the summer of 2012 and temporarilysuspending operation of the No. 3 Paper Machine at our flagshipHachinohe Mill in 2013.
In our Imaging Media Division, despite sluggish domestic
demand, sales volumes increased as a result of efforts to expand
sales, mainly of silver halide photography, in overseas markets.
In speciality materials Division, we launched newly developed
Kunio Suzuki, President & C.E.O.

products that leverage our technological capabilities including filters
for automotive air conditioners and non-woven support medium for
RO (Reverse Osmosis) membranes. Moreover, sales value increased
after KJ Specialty Paper Co., Ltd., a manufacturer of chemical andother types of paper, was made a subsidiary in October 2011.
As a result, net sales on a consolidated basis came to ¥200,850
million (US$2,135 million), an increase of 3.1% year on year.
Although earnings declined on deteriorating market conditions
for paper, consolidated ordinary income jumped 200% to ¥2,663
million (US$28 million) thanks to higher productivity, the cost
reducing effects of fixed costs cuts, and other factors. Net income
was ¥1,710 million (US$18 million) on a consolidated basis.
On a non-consolidated basis, the Company posted net sales of¥123,164 million (US$1,309 million), ordinary income of ¥377 million (US$4 million), and net income of ¥433 million (US$4 million).
Mid-term Management Strategy and Issues Facing the Company
The Group’s mid-term management strategy consists of seeing to a
successful conclusion the goals of our First Mid-term Management
Plan (lasting for three and a half years from October 2011 to the endof fiscal 2014).

2• Improve earnings of printing paper businesspursued five basic management policies, 1) strengthening our CSR• Normalize the Group’s financial position

management foundation, 2) promoting environmental management,• Develop new products within each division and nurture them into3) raising customer satisfaction levels by carefully addressing user

new businesses, and achieve further development overseas, cen-needs, 4) taking further measures to ensure that we provide ourtered on emerging nations.

employees with a pleasant working environment, and 5) pursuing

Phase 1 of the First Mid-term Management Plan lasts one and a

activities that contribute to society. Under these policies, we will

half years from the second half of fiscal 2011 up to the end of fiscal

take measures to raise our enterprise value in the areas of com-

2012, and Phase 2 is the fiscal 2013-fiscal 2014 two-year period.

pliance, risk management, safety and hygiene, the environment,

We have positioned this first phase as a period for “reconstruction,”

product safety, product quality, human and labor rights, informationand the second phase as a period for “strengthening our revenue

disclosure, and social contributions.

base for growth.”
Forecasts

In Phase 1, we achieved our objective of the swift reconstructionof the Hachinohe Mill and the recovery of printing paper businessIn fiscal 2013, we will ensure that printing paper price revisions

sales. Nevertheless, as harsh business conditions continued in fiscal

steadily widely disseminated and further improve earning capacity

2012, we suspended operation of the No. 3 Paper Machine at theby taking a variety of measures to strengthen our revenue base for

Hachinohe Mill with the goal of raising production efficiency andgrowth, which is Phase 2 of our First Mid-term Management Plan.

improving market conditions. At the same time, we shifted to prof-

For the Company’s consolidated business performance, we forecast

itable brands, reduced fixed costs, cut inventories, and lowered dis-

net sales of ¥210.0 billion (US$2,210 million), operating income

tribution costs. We plan to reduce sharply increased interest-bearingof ¥4.5 billion (US$47 million), ordinary income of ¥3.0 billion

debt ahead of schedule by curbing investments, reducing assets, and(US$31 million), and net income of ¥2.5 billion (US$26 million).

other means.

Exchange rate assumptions for the above forecast are ¥95/$1 andIn Phase 2, in fiscal 2013, we will steadily raise prices on print-¥125/€1.

ing paper, our highest priority, increase our export ratio, shift to

The Earnings forecast has been made based on information avail-profitable brands, reduce costs, and improve our earning capacity.

able at the time of the forecast and takes into account risk factors

In conjunction with these efforts, we will further reduce interest-and uncertainties. At this juncture, although all potential risks havebearing debt and strengthen our financial position. In addition, webeen factored into the forecast, actual earnings results could vary

will focus on investing management resources to strengthen future

substantially from the forecast due to a variety of factors.

growth fields.
At the same time, we recognize that corporate social responsibility (CSR) activities are a vital means of maintaining the trust

June 2013

and support of our stakeholders, and are therefore enhancing theGroup’s enterprise value. In fiscal 2012, we started suggestion system to gather ideas for the development and provision of services
to help raise customer satisfaction, a top priority. In addition, we
redoubled our efforts to eradicate unsafe practices at production
sites. With regard to products, in addition to taking steps to expand
our lineup of FSC forest-certified paper products and other ecologically friendly products, we have conducted verification tests on a

Kunio Suzuki

radioactive cesium removal system using magnetic adsorbents andPresident & C.E.O.

worked toward commercialization. We will continue efforts in thisarea moving forward.
In addition to being top priorities in fiscal 2012, we are rigorously dealing with legal compliance and implementing morein-depth measures in fiscal 2013 as well. In fiscal 2013, we have3Breakdown of Operations by Division

Paper and Pulp
Divisions12

156,237

13

157,424Net Sales (¥ Million)
In commercial printing and communication paper – the Paper

volumes decreased, to pre-earthquake levels. As a result, bothand Pulp Division’s mainstay – the domestic market was undersales volume and value increased.

a harsh business environment from the sluggish economy andSales volumes and values at our European subsidiaries boththe increased paper imports, but the earthquake disaster further

increased thanks to increased sales, mainly of thermal paper.

aggravated this. We were then able to gradually start up theSales of pulp increased in both volume and value terms.

mills’ papermaking machines one after another, recovering full

As a result, overall sales in the Paper and Pulp Division

production levels in November. In the second half of the term,increased 0.8% year on year to ¥157,424 million (US$1,673 mil-

we also focused efforts on attempting to push through pricelion) on a consolidated basis.

increases and restore production from fiscal 2011 levels, when

IMAGING MEDIADIVISIONNet Sales (¥ Million)

10
12
11

181,509
39,165
175,71312
13
13

39,825

Amid a continuing decline in global demand for photosensitive

States, our mainstay markets, or the yen’s appreciation through tomaterials, we focuses on expanding sales in emerging markets and as

the end of last year, therefore, sales volumes and values declined.

a result achieved sharp increases in both sales volume and value.

As a result, overall sales in the Imaging Media Division

Sales of inkjet paper increased in Europe, the United States, andincreased 1.7% year on year to ¥39,825 million (US$423 million)

Asia thanks to stronger overseas sales efforts, but sales fell in bothon a consolidated basis.

volume and value terms due to slack domestic demand.
In printing plate materials, although we focused on boostingsales of environment-friendly CTP printing plates, this could notoffset the effects of the economic slump in Europe and the United

10
11

4

Speciality Materials
Division

12

10,47813

14,223

Net Sales (¥ Million)
Sales of home electrical appliance filters for overseas markets

increased 35.7% year on year to ¥14,223 million (US$151 mil-decreased, but increased for filters for automotive air-conditioners.

lion) on a consolidated basis.

Moreover, sales at KJ Specialty Paper Co., Ltd. contributed to afull-year increase in sales value. New products that we developed
and promoted sales of included non-woven support medium for
RO (Reverse Osmosis) membranes, battery separators, air filterswith superior pollen dust trapping performance, and magnetic
sorbents.
As a result, overall sales in the Speciality Materials Division

Other
Divisions12

19,283

13

16,493

Net Sales (¥ Million)
Sales in other divisions declined 14.5% year-on-year to ¥16,493
million (US$175 million), due chiefly to lower sales at our engineering subsidiaries.

10

19,110

11

17,78012135Topics

Progress Made under Mid-term Management Plan
Our facilities in the Tohoku Region were damaged by the Great East Japan Earthquake that occurred on March
11, 2011. In particular, our Hachinohe Mill in Aomori Prefecture suffered extensive damage from the tsunami, andproduction at the mill came to a stop. Although a complete restoration of production activities was achieved by
November, the Company’s financial position was weakened considerably by non-operation and reconstruction
costs incurred during that time.
In October of 2011, we started our First Mid-term Management Plan with the principal goals of achieving a
recovery in sales and restoring our financial position to its former state. The first phase of the plan, “reconstruction,” has been completed. In April of this year, we entered the second phase, “strengthening our revenue basefor growth.”
The following section provides a detailed description of the Mid-term Management Plan and the state of progress in its implementation.

(1) Schedule and Basic Policies
Schedule of First Mid-term Management Plan
Commenced Oct. 2011
First Mid-term Plan

Reconstruction

Second Mid-term Plan

Strengthen revenue base for growth[1 1/2 years]
FY2012 2nd half

FY2012

Strengthen future
growth fields[2 years]
FY2013

FY2014

Basic Policies(1) Quickly recover printing paper business market share, build efficient finishing lines(2) Promptly repay sharply increased interest-bearing debt, normalize financial position(3) Pursue separate business strategies for each segment

6

FY2015~

(2) Basic Plan Values(¥ Billion)
FY2011
Plan
Results

Net sales

Operating income

Ordinary income

Interest-bearing debt

D/E ratio*

200.0
194.9
3.0
2.2
1.0
0.9
170.0
158.0
3.7 times
3.2 times

1H

2H

Results

Results

101.4

99.5

1.9

1.4

1.3

1.4

FY2012FY2013

FY2014

Plan

Plan

Plans

Results

Forecast

Forecast

230.0

29.1 decrease

200.9
7.5

4.2 decrease

3.3
4.5

1.8 decrease

2.7
170.0

163.5

240.0

210.0
8.0

10.0

4.5
5.0

7.0

3.0
160.0

150.0

150.0

145.0

3.4 times

3.0 times

2.6 times

2.9 times

2.7 times

2.4 times

14.7 decrease

155.3

3.4 times

235.0*D/E ratio = interest-bearing debt/shareholders’ equity
FY2012 Summary

Although reconstruction from the earthquake disaster was largely achieved ahead of

We will review afterschedule, net sales and earnings came in substantially below target due to greater-

determining market trends such as

than-expected changes in the external environment (downslide in market conditions

price increases for printing paper

for printing paper, stagnant economic growth in China, etc., worsening Japan-China(as of 2Q FY2013)

relations, etc.)(3) Breakdown of Progress by Theme➀ Quickly recover printing paper business market share, build efficient finishing lines•Although Hachinohe Mill reconstruction was completed ahead of schedule, profitability decreased due to printing paper pricedecreases following higher paper imports, slack demand, etc.
•Invest in finishing line efficiency
PPC finishing line (operating since Jan. 2013)/Large cutter (operation slated for Jun. 2013)➁ Promptly repay sharply increased interest-bearing debt, normalize financial positiona) Normalize earning power•Thoroughly reduce fixed processing costs· Reduce costs through greater efficiency at each Mill and subsidiary· Relocate head office and consolidate subsidiaries (July)· Reduce staff by 420 people over a two-year period beginning from March 31, 2011b) Secure adequate cash flows•The reconstruction fund procurement contract ended in fiscal 2011
•March 2013, obtain top environmental rating from Development Bank of Japan

7

Procure funds at preferential interest rates

(4) Breakdown of Progress by Division
Printing Paper Business
Three-and-a-half-year strategic theme

Expand earnings amid market in which demand is maturing○ FY2012: Priority strategies’ results•Built efficient finishing lines at Hachinohe Mill
(Improved efficiency and quality in production of PPC and flat printing paper sheets)
Installed PPC finishing line (operating since Jan. 2013); Install large cutter (operation slated for Jun. 2013)•Improved logistics capabilities(established direct transport system, maintain inventories at ideal minimum level)

Imaging Business
Three-and-a-half-year strategic theme

Create conditions for ensuring adequate revenues despite strong yen○ FY2012: Priority strategies’ results•Further developed marketing capabilities in overseas markets (established sales channels in emerging nations)Sales of photographic paper increased significantly in India, the Middle East, Africa, Latin America, etc. Develop sales
channels for inkjet and other paper in emerging nations.
•Build stronger alliance with Fuji Film
Expand base paper business, also start new initiatives and steadily increase alliance results

Specialty Materials
Three-and-a-half-year strategic theme

Speed up growth, selectively focus appropriation of management resource○ FY2012: Priority strategies’ results•Stabilized production and expand sales of new brand non-woven fabric productsCompleted shift to new paper machines for water treatment-related products and battery separator-related products.
Expanded sales globally.
•Launched aggressive marketing of automotive-use cabin air filters
Began supplying to major automakers. Expanded sales globally.

KJ Specialty Paper
Three-and-a-half-year strategic theme

Create synergy, develop overseas○ FY2012: Priority strategies’ results•Efficient operation of shared sales channels by KJ Specialty Paper and MPM (discuss cooperation in sales and production)
Began cooperating within MPM Group in overseas markets

German Operations
Three-and-a-half-year strategic theme

Utilize weak euro to stimulate exports○ FY2012: Priority strategies’ results

Strong sales in Europe (imports down due to depreciating euro, etc.)
Strengthened export sales, especially special thermal paper products for outside euro-zone

8(5) Business Themes in Phase 2
Printing Paper Business – Priority Strategies for FY2013<Restore printing paper prices>○ Reduce inventories, continue manufacturing consistent with demand<Increase exports>○ Increase exports of industrial inkjet paper and thermal paper<Reconstruct value chain at Hachinohe Mill where production has been cut back>○ Shift to profitable brands (promote non-commoditization)

 xpand sales of products that leverage MPM’s strengths (FSC products, white paperboard for food use, book paper,E
paper for high-class catalogs○ Further strengthen supply chain structure (just-in-time manufacturing/sales)<Rigorously reduce mill costs and streamline>○ Reduce distribution costs (raise drop shipment rate, rationalize inventories)○ Promote energy conservation○ Realize effects from start-up of PPC finishing line and large cutter<Reinforce competitiveness of German business/Use as global strategic base>Imaging Business – Priority Strategies for FY2013<Establish earnings structure aided by weak yen>
○ Fortify overseas sales and secure earnings

Expand sales in Europe and U.S. leveraging product appeal and secure earnings by developing emerging markets withgrowth potential○ Strengthen alliance with Fuji Film
Build stronger alliance and increase efforts in each imaging field○ Launch new products and enter new fields
Strengthen new product initiatives
Enter new fields leveraging imaging technology

Speciality Materials – Priority Strategies for FY2013<Expand sales of new products and increase overseas sales>○ Produce cabin air filters overseas/Establish sales system○ Increase variety of water treatment-related products and expand globally○ Roll out new secondary battery separator product○ Start decontamination business<Strengthen earnings based for existing products>○ Further fortify KJ Specialty Paper’s earnings structure○ Commercialize glass non-woven fabric product and new construction material product○ Roll out functional filters including PM2.5 countermeasures9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 understandingof our stakeholders and thereby enhancing the Group’s enterprise value. Accordingly, we promote distinctive CSR activities whileworking to expand and enhance our initiatives in this area. In fiscal 2012 our top priorities were establishing a suggestion system
to gather ideas for the development and provision of services to help raise customer satisfaction, and redoubling efforts to eradicate
unsafe practices at production sites. With regard to products, we took steps to expand our lineup of FSC forest-certified paper products and other ecologically friendly products. We also conducted testing to verify the commercial viability of a radioactive cesium
removal system using magnetic adsorbents. Looking ahead, we will continue CSR-related initiatives regarding our products.
In addition to our top priorities for fiscal 2012, in fiscal 2013 we will strengthen initiatives to ensure strict legal compliance inan effort to return to the fundamental reasons for establishing the CSR Committee in April 2008. This involves pursuing five basic
management policies:
1) strengthening our CSR management foundation, 2) promoting environmental management, 3) raising customer satisfaction levels
by carefully addressing user needs, 4) taking further measures to provide our employees with a pleasant working environment, and5) pursuing activities that contribute to society. Under these basic policies, we will take measures to raise our enterprise value inthe areas of compliance, risk management, safety & health, the environment, product safety, product quality, human rights & laborrights, information, and social contributions.

Special Features
Mori-Smile® Projects
In August 2001, the Group’s Hachinohe Mill became the first paper mill in Japan to receive the FSC’s Chain-of-Custody (CoC) andhas been providing FSC-certified paper to the present. In addition, we are undertaking Mori-smile® projects, which apply the Morismile® 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
As a result of the Great East Japan Earthquake in 2011, the Ecosystem
Academy was unable to undertake any hands-on-type learning experience
sessions or environmental seminars during fiscal 2011. In fiscal 2012,
however, we conducted afforestation activities at a Company-owned
FSC-certified forest in Nishigo Village, Fukushima Prefecture as well as
environmental seminars, hands-on-type learning experience sessions, wild
bird watching and vegetation surveys.

Afforestation participants

Thermal DigiPlate
Thermal Digiplate is an environmentally friendly, complete 2-up digital
offset plate making system ideal for printers with duplicator or 2-up presses.
Thermal fusing technology is used to create a high-contrast image on
the plate without chemical development, wash-off or ablation. Requiring
absolutely no chemicals, toner or ink ribbon, it is easy to maintain and is lesscostly. Compared with metal thermal CTP systems, Thermal DigiPlate isboth energy saving and compact.

TopicsMitsubishi Paper Mills Receives DBJ’s Highest Environmental Responsibility Rating
Mitsubishi Paper Mills received an “A” rating from the Development Bank of Japan Inc. (DBJ)—the highest possible under the
DBJ’s environmental responsibility rating system—for the following measures:(1) Sales expansion by clearly articulating the features of its ecologically friendly products(2) Sustainable use of forest resources by actively pursuing FSC forest certification(3) Implementation of ecosystem preservation measures through Mori-smile® projects in cooperation with stakeholders

Eco-Products 2012
In the Group’s booth at Eco-Products 2012, one of Japan’s largest
environmental exhibition held at Tokyo Big Sight from December 13 to 15,
2012, we introduced our various efforts to promote Mori-smile® projects
to everyone based on the concept of “using and cultivating healthy forests”
through FSC certification.
The booth displayed at Eco-Products 2012 featured a tunnel within asimulated forest that enabled visitors to experience the entire forest cycle,
from afforestation to product use, in order to convey the concept of “futureoriented paper manufacturing.”
At Eco-Products 201211

Our Mills and Their Product Lines

Shirakawa SITE

Kitakami 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.

­­ SPECIALTY PAPER Co., Ltd.
KJ
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.

7-1, Shinbashicho, Fuji-shi,
Shizuoka 417-0004
Telephone: +81-545-52-4075
Products: Base paper for decorative­­Kyoto Milllaminates, Impregnateddecorative sheet,
Address:
6-6, Kaiden 1-chome,
Base paper for wall paper,
Nagaokakyo-shi, Kyoto 617-8666
Stencil paper
Telephone: +81-75-951-1181
Products: Color photographic paper, Graphic arts
materials, Inkjet photo paper, etc.

Overseas
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

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)(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

Zhuhai MPM Filter, Ltd
Address:#17 Yijing Lane, Pingsha Town, Jinwan District,		Zhuhai, Guangdong, China
Telephone: +86-756-8895033
Products: Various filters(Juarez, Mexico)(Zhuhai, China)

12

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

Millions of yen
2013

2012

For the years ended March 31
Net sales
Operating income
Ordinary income
Net income (loss)
Net income (loss) per share (in yen and dollars)¥ 200,850
3,332
2,663
1,710
5.00

¥ 194,856
2,164
888
565
1.65

As at March 31
Total assets
Total net assets¥ 265,234
56,507¥ 276,305
52,108

	

13

2008

2013

¥ 210,846 ¥ 219,728 ¥ 253,102
3,477
4,253
7,110
2,116
2,658
4,499
(14,497)(1,597)1,168(42.39)(4.67)
3.41¥ 258,536
9,302
7,120
3,654
10.99

$ 2,135,567
35,43328,32418,1820.05¥ 248,506
52,117¥ 303,052
79,636$ 2,820,146
600,825

2011

2010

¥ 282,131
68,7092009¥ 294,254
70,436

Mitsubishi Paper Mills Limited and Consolidated Subsidiaries

Consolidated Balance Sheets
As at March 31, 2013 and 2012

Millions of yen

Thousands of
U.S. dollars (Note 2)

2013

2012

2013

¥   5,337¥ 13,306$     56,756

46,646
2,523

50,121
2,651

495,977
26,83649,170(392)

52,773(493)

522,813(4,178)Inventories
Deferred income taxes (Note 15)
Other48,77752,381
1,225
1,599

52,27946,1031,393
3,013

518,635
556,952
13,02917,002

Total current assets

109,321116,096

1,162,376

Property, plant and equipment (Note 4):Land
Buildings and structures
Machinery and equipment
Construction in progress
Leased assets
Other

22,626
95,322346,782
1,639
2,675
9,492

22,36993,814335,370
3,199
2,381
9,328

240,576
1,013,534
3,687,216
17,43528,448100,934

Less: Accumulated depreciation
Accumulated impairment losses

478,540(351,882)(540)

466,463(336,685)(574)

5,088,146(3,741,444)(5,743)

126,117

129,203

1,340,958

24,101
1,014
808(1,076)
1,615
3,332

23,852
1,026
469(1,229)
2,547
4,338

256,267
10,791
8,591(11,445)
17,17135,43529,79631,005

316,812¥ 265,234¥ 276,305$ 2,820,146

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

Net property, plant and equipment

Investments and other assets:
Investments in securities (Notes 4, 11 and 12)
Investments in unconsolidated subsidiaries and affiliated companies
Long-term loans
Less: Allowance for doubtful accounts
Deferred income taxes (Note 15)
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
2013

2012

2013

¥ 58,086
16,574321¥ 67,572
20,338307$   617,616
176,229
3,422

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

36,528
3,974
9,420
316
5,426

285,488
36,411
81,161
2,808
40,487

116,962

143,885

1,243,625

79,998
1,716
7,336
55
101
620
873
1,061

68,573
1,728
7,257
65
—
171
869
1,645

850,599
18,24978,008
595
1,081
6,593
9,285
11,283

91,76480,312

975,695

32,756
7,523
8,913
(138)

32,756
19,716(4,989)(137)

348,286
79,996
94,778(1,477)49,05447,345521,583

3,775
626

1,949
189

40,148
6,659

4,402

2,138

46,807

3,050

2,624

32,43356,507

52,108600,825¥ 265,234¥ 276,305$ 2,820,146

LIABILITIES AND NET ASSETS
Current liabilities:
Short-term bank loans (Note 11)
Current portion of long-term debt (Note 11)
Lease obligations
Payables:Trade notes and accounts (Note 11)
Other
Accrued expenses
Income taxes payable
Other
Total current liabilities
Long-term liabilities:
Long-term debt (Note 11)
Lease obligations
Accrued retirement benefits for employees (Note 14)
Accrued retirement benefits for directors and statutory auditors
Reserve for loss on dissolution of employee pension fundDeferred income taxes (Note 15)
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, 2013 and 2012
Issued: 342,584,332 shares at March 31, 2013 and 2012
Capital surplus
Retained earnings (deficit)
Less: Treasury stock, at cost
Total shareholders’ equity
Accumulated other comprehensive income :Net unrealized gains on available-for-sale securities
Translation adjustments
Total accumulated other comprehensive income
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, 2013 and 2012

Thousands of
U.S. dollars (Note 2)

Millions of yen
2013

2012

2013

¥ 200,850
168,126¥ 194,856
163,507$ 2,135,567
1,787,624

32,724

31,349347,943

29,391

29,185

312,510

3,332

2,164

35,433656(2,634)
(210)
825
(33)
(21)
—
33
—
—
236
—
551

589
(2,299)
1,844
(31)
(752)
(224)
(5,544)871
2,106(3,217)
1,543
1,851
(367)

6,983
(28,009)(2,233)
8,782
(355)
(233)
—
360
—
—
2,513
—
5,867

Total

(594)

(3,629)(6,325)

Income (loss) before income taxes and minority interests

2,737(1,465)

29,107

480
420

344
(1,944)

5,111
4,471

901
1,836
126

(1,600)
134
(431)

9,583
19,524
1,342¥   1,710¥     565$     18,182

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income
Other income (expenses):
Interest and dividend income
Interest expense
Gains (losses) on disposal of property, plant and equipment (Note 6)
Gains (losses) on sales of investments in securities
Write-downs of investments in securities
Special severance payments
Loss on natural disaster (Note 9)
Gain on negative goodwill (Note 16 (6))
Effect of partial cancellation of retirement benefit trust (Note 14)
Loss on termination of qualified retirement pension plan (Note 14)
Subsidy income (Note 7)
Insurance income (Note 8)
Other, net

Income taxes:
Current
Deferred (Note 15)
Income before minority interests
Minority interests in income (losses) of consolidated subsidiaries
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, 2013 and 2012

Thousands of
U.S. dollars (Note 2)

Millions of yen

Income before minority interests
Other comprehensive income:Net unrealized gains on available-for-sale securities
Translation adjustments
Share of other comprehensive income of companies accounted forby the equity method
Total other comprehensive income
Comprehensive income
Comprehensive income attributable to
Mitsubishi Paper Mills Limited
Comprehensive income attributable to minority interests

2013

2012

¥ 1,836¥ 134$ 19,254

2,105
399

101
(176)

22,388
4,252

72

(19)

766

2,577
4,413

(95)
39

27,40746,931

3,973¥   440531¥ (492)42,250$ 4,681

Yen

Amounts per share:
Net income — basic (Note 3 (10))
Cash dividends applicable to the year
The accompanying notes are an integral part of these financial statements.

17

2013

2012

¥ 5.00—¥ 1.65—2013

U.S. dollars (Note 2)2013$ 0.05—

Mitsubishi Paper Mills Limited and Consolidated Subsidiaries

Consolidated Statements of Changes in Net Assets
For the years ended March 31, 2013 and 2012

Millions of yen

Shareholders’ equity

Total accumulated other comprehensive income

Commonstock

CapitalsurplusRetainedearnings

Net
Total
unrealized
Accumulated Minority
interests in
Treasurygains on
other
Total
stock, shareholders’ available-for-sale Translation comprehensive consolidated Total net
subsidiaries
assetsat costsecurities
incomeequityadjustments

Balance at April 1, 2011
342,584,332 ¥ 32,756
Changes during the year:
Net income
Acquisition of treasury stock
Disposal of treasury stock
Increase due to change in scope of consolidation
Changes in items other than shareholders’ equity
Total changes during the year——
Balance at April 1, 2012
342,584,332 ¥ 32,756
Changes during the year:
Transfer from capital surplus to accumulated deficit
Net income
Acquisition of treasury stock
Disposal of treasury stock
Increase due to change in scope of consolidation
Changes in items other than shareholders’ equity
Total changes during the year——
Balance at March 31, 2013
342,584,332 ¥ 32,756¥ 19,717¥ (5,577)¥ (136)¥ 46,758

(1)
0

565
(1)
0
22

(0)
¥ (137)587¥ 47,345

Number ofshares in
issue

565
(0)
22
(0)
588
¥ 19,716 ¥ (4,989)(12,193)

12,1931,710(1)(12,193) 13,903¥ 7,523 ¥ 8,913(1)¥ (138)¥ 1,794155
155¥ 1,949

¥ 378

(189)
(189)
¥ 189

¥ 2,173(34)(34)¥ 2,138¥ 3,185¥ 52,117

(561)
(561)
¥ 2,624

565
(1)
0
22
(595)
(8)
¥ 52,108426
426¥ 3,050

—
1,710
(1)
—
—
2,689
4,398
¥ 56,507

1,710
(1)
—
—
1,709
¥ 49,054

1,826
1,826
¥ 3,775

436
436
¥ 626

2,263
2,263
¥ 4,402

Thousands of U.S. dollars
Shareholders’ equity

Number ofshares in
issue

Commonstock

CapitalsurplusRetainedearnings

Net
Total
unrealized
Accumulated Minority
interests in
Treasurygains on
other
Total
stock, shareholders’ available-for-sale Translation comprehensive consolidated Total net
subsidiaries
assetsat costsecurities
incomeequityadjustments

Balance at April 1, 2012
342,584,332 $ 348,286 $ 209,642 $ (53,050) $ (1,466)
Changes during the year:
Transfer from capital surplus to accumulated deficit(129,645) 129,645
Net income
18,182Acquisition of treasury stock(11)
Disposal of treasury stock
Increase due to change in scope of consolidation
Changes in items other than shareholders’ equity
Total changes during the year—
— (129,645) 147,828(11)
Balance at March 31, 2013
342,584,332 $ 348,286 $ 79,996 $ 94,778 $ (1,477)
The accompanying notes are an integral part of these financial statements.

18

Total accumulated other comprehensive income$ 503,412$ 20,726$ 2,013$ 22,739$ 27,900$ 554,053

4,533
4,533
$ 32,433—
18,182(11)——
28,60046,772$ 600,825

18,182(11)——
18,171$ 521,583

19,422
19,422$ 40,148

4,645
4,645
$ 6,659

24,06724,067$ 46,807

Mitsubishi Paper Mills Limited and Consolidated Subsidiaries

Consolidated Statements of Cash Flows
For the years ended March 31, 2013 and 2012

Millions of yen

I

Cash flows from operating activities:
Income (loss) before income taxes and minority interests
Depreciation and amortization
Loss on natural disaster (Note 9)
Accrued retirement benefits for employees
Accrued retirement benefits for directors and statutory auditors
Interest and dividend income
Interest expense
Subsidy income (Note 7)
Insurance income (Note 8)
Gain on negative goodwill (Note 16 (6))
Losses (gains) on sales of investments in securities
Write-downs of investments in securities
Gains (losses) on disposal of property, plant and equipment (Note 6)
Decrease (increase) in trade accounts receivable
Increase (decrease) in inventories(Decrease) increase in trade accounts payable
Other, net
Sub-totalInterest and dividends received
Proceeds from insurance income (Note 8)
Proceeds from subsidy (Note 7)
Interest paid
Income taxes paid
Loss on natural disaster paid (Note 9)
Net cash provided by (used in) operating activities

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
Net cash (used in) provided by investing activities

III Cash flows from financing activities:
Decrease in short-term bank loans
Decrease in issuance of commercial paper
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
Other, net
Net cash (used in) provided by financing activities

IV Effect of foreign currency translation on cash and cash equivalents
V Net (decrease) increase 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 (11))
The accompanying notes are an integral part of these financial statements.

19

Thousands of
U.S. dollars (Note 2)

2013

2012

2013

¥ 2,737
11,137
—
79
(9)
(656)
2,634
(236)
—
(33)
(825)
33
210
3,516
(5,109)(4,431)
1,041
10,086631—
792(2,584)(578)(1,078)7,269¥ (1,465)
9,576
5,544
1,884
(58)
(589)
2,299
(1,543)(1,851)
(871)
31
752
(1,844)(5,331)(3,680)7,515(5,464)
4,901
586
2,032
987
(2,279)(494)(7,663)(1,929)$ 29,107(16,474)
55
(32)
3,840
(44)
(540)
351
464
197
(12,182)(9,718)
2,212
(176)
138
(1,629)(4)
91—
65(9,021)(175,162)
591(347)
40,830(476)(5,742)
3,736
4,938
2,104
(129,527)(9,847)—27,542(19,688)
(650)
(324)
(1)
(4)
—
(2,973)51(7,835)
13,073¥ 5,237(7,204)(1,000)37,114(13,053)
(100)
(318)
(1)
(4)
0
15,432
(2)
4,478
8,594
¥ 13,073(104,701)—
292,846(209,336)(6,911)(3,447)(11)(52)—(31,613)543(83,308)
139,000$ 55,692

118,418—842(104)(6,983)28,009(2,513)—(360)(8,782)355
2,233
37,389(54,328)(47,117)
11,073
107,240
6,714
—
8,425
(27,478)(6,149)(11,462)
77,290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 ¥94.05 = U.S.$1, theexchange rate prevailing as of March 31, 2013. 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, 2013 (36 as of March 31, 2012). The accompanying consolidated financial
statements include the accounts of the Company and 25 (26 for 2012) of its subsidiaries for the year ended March 31, 2013
(together, hereinafter referred to as the “Companies”). On January 1, 2013, consolidated subsidiary Hokuryo Forest Products
Co., Ltd. was dissolved following the merger into consolidated subsidiary Hachinohe Forest Products Co., Ltd., with thesurviving company renamed Shin-Hokuryo Forest Products Co., Ltd. on the same date. As a result of this change, the number ofconsolidated subsidiaries decreased by one.
The accounts of the remaining 10 (10 for 2012) unconsolidated subsidiaries for the year ended March 31, 2013 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 2012) 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, 2013 (12 for 2012). 2 affiliated companies were accounted for by the equity
method.
However, the remaining 10 (10 for 2012) subsidiaries and 10 (10 for 2012) 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.”20

(ii) Securities
Securities other than equity securities issued by subsidiaries and affiliates are classified into three categories: trading, held-to-maturity
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 as other 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 the straight-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 their respective countries’ regulations.

(8) Accrued retirement benefits to employees
The Company and the domestic consolidated subsidiaries provide accrued retirement benefits to employees based on theestimated actuarial present value of the projected benefit obligation and the estimated fair value of plan assets.
Overseas consolidated subsidiaries provide accrued retirement benefits to employees based on the method prescribed bytheir respective countries’ regulations.
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). Unrecognized net
actuarial gains or losses are amortized from the year following the year in which such gains or losses are recognized on astraight-line basis over a term that does not exceed the average remaining service period of the employees who are expected toreceive 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 based on
the resolution of special dissolution held on December 19, 2012.

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, 2013 and 2012 is shown below:
Millions of yen
2013¥ 5,337(100)¥ 5,237

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

Thousands of
U.S. dollars

2012

2013

¥ 13,306(233)¥ 13,073$ 56,756(1,063)$ 55,692(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) Change in Depreciation and Amortization Method
In accordance with an amendment of the Corporation Tax Act of Japan, the Company and its domestic consolidated subsidiaries
have changed the depreciation and amortization method from the year ended March 31, 2013 for tangible fixed assets acquired on
or after April 1, 2012. This change had a minimal impact on consolidated operating income, ordinary income and income before
income taxes and minority interests for the year ended March 31, 2013.
(ii) Accounting Standard for Accounting Changes and Error Corrections
Effective the year ended March 31, 2012, the Company has applied “Accounting Standard for Accounting Changes and Error
Corrections” (ASBJ Statement No. 24), and “Guidance on Accounting Standard for Accounting Changes and Error Corrections”(ASBJ Guidance No. 24), both issued on December 4, 2009.

(15) Reclassification
Certain reclassification have been made to the prior years’ consolidated financial statements to conform to the presentation for theyear ended March 31, 2013.
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:
Millions of yen

Buildings and structures
Machinery and equipment
Land
Other
Investments in securities

22

Thousands of
U.S. dollars

2013

2012

2013

¥ 20,654
48,44010,514223
3,418¥ 83,251¥ 18,029
19,416
9,542
42
2,702
¥ 49,734$ 219,613
515,046
111,791
2,379
36,351$ 885,183

5. Contingent Liabilities

As at March 31, 2013 the Companies were contingently liable for guarantees of loans, primarily of their employees and unconsolidated subsidiaries and affiliates, in the aggregate amount of ¥2,387 million ($25,380 thousand), and also liable for a recourse
obligation of credit securitization in the aggregate amount of ¥2,184 million ($23,227 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:
Millions of yen

Land

Thousands of
U.S. dollars

2013

2012

2013

¥ 19

¥ 2,154$ 206(2) Losses on disposal of property, plant and equipment
Main items under losses on disposal of property, plant and equipment were as follows:
Millions of yen

Machinery and equipment
Scrapping and removal expenses

Thousands of
U.S. dollars

2013

2012

2013

¥ 87
120

¥ 154
132

$   9271,278

7. Subsidy Income

Previous consolidated fiscal year (April 1, 2011–March 31, 2012)
The Company and 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, 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.
8. Insurance Income

Previous consolidated fiscal year (April 1, 2011–March 31, 2012)“Insurance income” refers to insurance payouts relating to damage suffered from the Tohoku region Pacific Ocean earthquake.
Consolidated fiscal year under review (April 1, 2012–March 31, 2013)
Not applicable
9. Loss on Natural Disaster

The Company recorded a loss due to the Tohoku region Pacific Ocean earthquake, and the components of loss on natural disaster are
as follows. The provision of reserve for loss on natural disaster is included under these expenses.
Millions of yen
2013

¥—
—
—
—
¥—

Restoration costs
Inventory valuation losses
Fixed costs during the suspension of operations
Others
Total

23

2012

¥   618
754
4,038
134
¥ 5,544

Thousands of
U.S. dollars
2013

$—
—
—
—
$—

10. Other Comprehensive Income

The following table shows reclassification adjustment for each component of other comprehensive income for the year ended March
31, 2013:
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 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

2013

2012

2013

¥ 3,372(102)
3,269(1,164)¥ 2,105¥ (851)
784
(67)
168
¥ 101

$ 35,853(1,085)34,768(12,379)$ 22,388¥   399—399—¥   399¥ (176)—(176)—¥ (176)$ 4,252—
4,252—$ 4,252¥ 72—
72¥ 2,577¥ (37)
17(19)¥ (95)$    766—
766$ 27,407

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
Millions of yen
2013

Purchase price equivalent
Accumulated depreciation equivalent
Net book value equivalent

Machineryandequipment

Other

¥ 52
43
¥ 9

¥ 39
34
¥ 5

Thousands of U.S. dollars
2013

2012

Total

Machineryandequipment

Other

¥ 92
78
¥ 14

¥ 62
43
¥ 18

¥ 117
97
¥ 19

Total

Machineryandequipment

Other

Total

¥ 179
141
¥ 37

$ 560
464
$ 96

$ 424
370
$ 54

$ 985
834
$ 150

(2) Lease commitments
Millions of yen

Due within one year
Due after one year
Total

Thousands of
U.S. dollars

2013

2012

2013

¥ 10
3
¥ 14

¥ 23
14
¥ 37

$ 109
41
$ 150

(3) Lease expenses and depreciation equivalents
Millions of yen

Lease expenses
Depreciation equivalents

24

Thousands of
U.S. dollars

2013

2012

2013

¥ 18
18

¥ 44
44

$ 200
198

Non-cancelable operating lease commitments were as follows:
Millions of yen

Due within one year
Total

Thousands of
U.S. dollars

2013

2012

2013

¥—
—

¥ 0
¥ 0

$—
—

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.

25

(2) Fair Value of Financial Instruments
Book value, fair values and differences between them as of March 31, 2013 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).
Millions of yen
2013

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¥ 46,646¥ 46,646¥ —23,471
70,11826,792
58,086
96,573
181,452¥      —

23,471
70,11826,792
58,086
97,020181,900¥      —

—
—
—
—
447
447
¥ —

Thousands of U.S. dollars
2013

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$   495,977$   495,977$     —

249,566
745,544284,875
617,616
1,026,828
1,929,320$        —249,566
745,544284,875
617,616
1,031,588
1,934,080$        —

—
—
—
—
4,760
4,760
$     —

Millions of yen
2012

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¥ 50,121¥ 50,121¥—

21,802
71,92430,62367,572
88,261
186,457¥      —

21,802
71,92430,62367,57288,314
186,510¥      —

—
—
—
—
52
52
¥—

(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.

26

(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 is calculated 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 ¥16,574 million($176,229 thousand).
(vi) Derivatives
Please see Note 13.
Unlisted equity securities (in the amount of ¥1,645 million ($17,491 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

2013

2012

2013

¥ 1,645¥ 3,076$ 17,491

Planned repayment of debentures, long-term debt, lease obligations and other interest-bearing liabilities after the balance sheet
date (consolidated basis).
Millions of yen
2013

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¥ 58,086—
16,574321¥ 74,983¥     ——
19,852293¥ 20,146¥     ——
20,378273¥ 20,652¥      —
—25,641243¥ 25,884¥     ——
4,287
234
¥ 4,521¥      —
—
9,840
670
¥ 10,510

Thousands of U.S. dollars
2013

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$ 617,616—
176,229
3,422$ 797,268$      —
—211,0813,125$ 214,207$      —
—216,676
2,910$ 219,587$      —
—272,6312,587$ 275,219$      —
—45,583
2,495$ 48,079$      —
—104,626
7,132$ 111,758

Millions of yen
2012

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¥ 67,572
650
19,688307¥ 88,218¥     ——
24,150278¥ 24,428¥     ——
13,394245¥ 13,639¥     ——
10,442223¥ 10,666¥     ——
8,463
197
¥ 8,661¥     ——
12,122783¥ 12,90627

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, 2013 and 2012 are summarized as follows:
Available-for-sale securities:
Millions of yen
2013

Equity securities
Government bonds and local government bonds

Acquisition

Carrying amountGross unrealized
holding gains¥ 17,431
9¥ 17,441¥ 23,461
9¥ 23,471¥ 6,8530¥ 6,853

Gross unrealized
holding losses

¥ 822
—
¥ 822

Thousands of U.S. dollars
2013

Equity securities
Government bonds and local government bonds

Acquisition

Carrying amountGross unrealized
holding gains$ 185,342
101$ 185,444$ 249,460
106$ 249,566$ 72,865
4$ 72,870

Gross unrealized
holding losses$ 8,747—$ 8,747

Millions of yen
2012

Equity securities
Government bonds and local government bonds

Acquisition

Carrying amountGross unrealized
holding gains

Gross unrealized
holding losses¥ 19,0329¥ 19,041¥ 21,792
9¥ 21,802¥ 3,8940¥ 3,895¥ 1,134—¥ 1,134

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.
Special settlement ofinterest rate swap

Main targets of hedging Contract value

Interest rate swap trans- Long-term debt
actions, fixed payments,
variable receivables

Contract value of instruments due within morethan a year

¥45,085 million¥38,384 million$479,372 thousand$408,123 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.

28

15. Accrued Retirement Benefits

Employees of the Company and the domestic consolidated subsidiaries excluding directors and statutory auditors, with more than one
year of service are generally entitled to lump-sum retirement benefits determined by reference to the current basic rate of pay, length ofservice and conditions under which termination occurs. In addition, the Company and certain consolidated subsidiaries have funded otherdefined benefit plans.
Thousands of
U.S. dollars

Millions of yen

Projected benefit obligations
Fair value of plan assets
Funded status of the plans
Unrecognized net actuarial
Unrecognized prior service cost (reduction of the obligation)
Accrued retirement benefits

2013

2012

2013

¥ (23,079)
14,223(8,856)
1,893(374)¥ (7,336)¥ (19,841)
14,030(5,811)(1,003)(442)¥ (7,257)$ (245,400)
151,232(94,167)
20,136(3,977)$ (78,008)

The net periodic retirement benefit cost for the years ended March 31, 2013 and 2012 included the following components:
Thousands of
U.S. dollars

Millions of yen

Service cost
Interest cost
Expected return on plan assets
Amortization of net actuarial gain
Amortization of prior service cost (reduction of the obligation)
Effect of partial cancellation of retirement benefit trust
Loss on termination of qualified retirement pension plan

2013

2012

¥ 1,497
421
(9)
(121)
(93)
—
—
¥ 1,694¥ 1,540
341
(83)
(55)
(133)
(2,106)
3,217¥ 2,7192013$ 15,922
4,480
(101)
(1,293)(992)——$ 18,016

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

29

2013

2012

0.6~1.1%
2.0%
mainly on a points basis
10~15 years
10~15 years

1.5~1.9%
2.0%
mainly on a points basis
10~15 years
10~15 years16. Deferred Income Taxes

At March 31, 2013 and 2012, significant components of deferred tax assets and liabilities were as follows:
Thousands of
U.S. dollars

Millions of yen
2013

2012

2013

Deferred tax assets:
Accrued enterprise taxes
Accrued expenses
Accrued retirement benefits to employees
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 allowance
Total deferred tax assets¥     64
854
3,430
608
679
191
7,471
8,848
22,148(16,313)5,835¥     80
1,091
3,317
451
932
164
13,0169,448
28,502(21,913)6,589$    684
9,087
36,472
6,470
7,228
2,031
79,442
94,085
235,501(173,454)
62,046

Deferred tax liabilities:
Reserve based on Special Taxation Measures Law
Unrealized gains on available-for-sale securities
Liability adjustment account
Other
Total deferred tax liabilities
Net deferred tax assets(26)(2,148)(1,030)(410)(3,615)¥ 2,220(27)(987)(1,380)(425)(2,820)¥ 3,768(277)(22,841)(10,952)(4,367)(38,438)$ 23,607

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

2013

2012

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

—
—
—
—
—
—
—
—
—

Notes were omitted in the previous fiscal year due to the posting of loss before income taxes and minority interests.
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.

30(2) Changes in reportable segments
Until the previous fiscal year, reportable segments comprised the Paper and Pulp Segment, Imaging and Development (I&D)
Segment and Other Segment. However, organizational changes resulted in the abolition of the Imaging and Development (I&D)
Segment, which has been reorganized into the Imaging Media Segment and Speciality Materials Segment. Segment information
for the previous fiscal year has been prepared according to the new segment classifications.
In accordance with an amendment of the Corporation Tax Act of Japan, the Company and its domestic consolidated subsidiaries
have changed their depreciation and amortization method from the year ended March 31, 2013, for tangible fixed assets acquiredsince April 1, 2012. The depreciation and amortization method for the reportable segments has been changed in accordance withthis amendment of the Corporation Tax Act. This change had minimal impact on the earnings of each reportable segment.
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

Adjustments

Consolidated¥ 153,706¥ 28,737¥ 11,438¥ 193,883¥ 6,966¥ 200,850¥      —

¥ 200,850

3,717
157,424¥   2,167¥ 201,167
8,347

11,08839,825¥    538¥ 47,020
2,110

2,785
14,223¥    299¥ 14,877480

17,591
211,474¥   3,005¥ 263,064
10,9389,526
16,493¥    379¥ 11,467
282

27,117
227,967¥   3,384¥ 274,532
11,220(27,117)—(27,117) 200,850¥     (52) ¥   3,332¥ (9,298) ¥ 265,234(83)
11,137

488

—

—

488

—

488

—

488

5,686

1,085

306

7,078

55

7,134

(65)

7,068

Adjustments

Consolidated

Thousands of U.S. dollars
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

$ 1,634,311 $ 305,556$ 121,622 $ 2,061,490 $ 74,077 $ 2,135,567 $      — $ 2,135,567

39,531 117,898
1,673,842 423,455$     23,051 $   5,725$ 2,138,937 $ 499,949
88,75022,43829,613
187,043 101,288
288,332 (288,332)—
151,236 2,248,533 175,366 2,423,899 (288,332) 2,135,567$   3,183 $     31,959 $   4,031 $     35,990 $     (557) $     35,433$ 158,186 $ 2,797,074 $ 121,934 $ 2,919,009 $ (98,862) $ 2,820,146
5,112
116,301
3,004
119,305(887)
118,415

5,195

—

—

5,195

—

5,195

—

5,195

60,45911,5403,261

75,262595

75,857(701)

75,156(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 ¥(25) million ($(273) thousand) of elimination of inter-segment
income and loss and ¥(26) million ($(283) thousand) of corporate expenses, which are general and administrative expenses andare not allocable to the reportable segments.
• Adjustments and eliminations for segment assets include ¥18,283 million ($194,404 thousand) of corporate assets and¥(27,581) million ($(293,267) thousand) of elimination of inter-segment assets.
• Adjustments and eliminations for amortization of ¥(83) million ($(887) thousand) is elimination of inter-segment.
• Adjustments and eliminations for increase in tangible and intangible fixed assets include ¥(65) million ($(701) thousand) ofelimination of inter-segment increase in tangible and intangible fixed assets.
(iii) Segment income is adjusted with consolidated operating income.

31Millions of yen
Reportable segments
Year ended March 31, 2012

Paper
and Pulp

Sales
Sales to unaffiliated customers ¥ 152,766Intersegment sales andtransfers
3,471
Total sales
156,237
Segment income (loss)¥   1,364
Segment assets¥ 205,836
Amortization
6,909
Investment in equity-method
affiliates
488
Increase in tangible andintangible fixed assets
19,472

Imaging
Media

Speciality
Materials

Total

Other

Total

Adjustments

Consolidated¥ 26,304¥ 7,942¥ 187,013¥ 7,843¥ 194,856¥       —¥ 194,856

12,86039,165¥   (134)¥ 45,063
2,189

2,536
10,478¥    451¥ 14,732
221

18,868205,881¥   1,681¥ 265,632
9,319

11,43919,283¥    666¥ 12,909331

30,308225,165¥   2,348¥ 278,542
9,651(30,308)—(30,308) 194,856¥    (184) ¥   2,164¥ (2,236) ¥ 276,305
(75)
9,576

—

—

488

—

488

—

488

592

2,200

22,266142

22,409(279)

22,130(i) T he 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 ¥(152) million of elimination of inter-segment income and lossand ¥(32) million of corporate expenses, which are general and administrative expenses and are not allocable to the reportablesegments.
• Adjustments and eliminations for segment assets include ¥22,753 million of corporate assets and ¥(24,990) million of elimination of inter-segment assets.
• Adjustments and eliminations for amortization of ¥(75) million is elimination of inter-segment.
• Adjustments and eliminations for increase in tangible and intangible fixed assets include ¥(279) million of elimination of intersegment increase in tangible and intangible fixed assets.
(iii) Segment income (loss) is adjusted with consolidated operating income.

(3) Geographical information(i) Net sales to third parties by countries or areas grouped according to geographical classification for the years ended March 31,
2013 and 2012 are as follows:
Millions of yen

Japan
EuropeAsia
North America
Other
Consolidated

Thousands of
U.S. dollars

2013

2012

2013

¥ 141,565
27,48913,486
10,2258,082¥ 200,850¥ 141,415
27,025
9,934
10,074
6,407¥ 194,856$ 1,505,212
292,287
143,397108,72985,939$ 2,135,567

Net sales information above are based on customer location.
(ii) Property, plant and equipment by countries or geographical areas at March 31, 2013 and 2012 are as follows:
Millions of yen

Japan
EuropeNorth America
Consolidated(4) Impairment loss on fixed assets by reportable segments
Not applicable

32

Thousands of
U.S. dollars

2013

2012

2013

¥ 116,108
9,911
97¥ 126,117¥ 119,836
9,284
82¥ 129,203$ 1,234,537
105,384
1,036$ 1,340,958

(5) Amortization and balance of goodwill
Millions of yen
Reportable segments
Year ended March 31, 2013

(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

¥ —
—

¥ —
—

¥ —
—

¥ —
—

¥ —
—

¥ —
—

¥ —
—

¥ —
—

108
¥ 136

—
¥ —

—
¥ —

108
¥ 136

96
¥ 3

205
¥ 140

—
¥ —

205
¥ 140

Thousands of U.S. dollars
Reportable segments
Year ended March 31, 2013

(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$     ——$ ——$     ——$ ——$     —
—

$ —
—

$ —
—

$ —
—

1,152
$ 1,451—$ ——$     —

1,152
$ 1,451

1,027$     39

2,179
$ 1,490

—
$ —

2,179
$ 1,490

Millions of yen
Reportable segments
Year ended March 31, 2012

(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

¥ —
—

¥ 22
—

¥—
—

¥ 22
—

¥ —
—

¥ 22
—

¥—
—

¥ 22
—

108
¥ 244

—
¥—

—
¥—

108
¥ 244

96
¥ 100

205
¥ 345

—
¥—

205
¥ 345

(6) Information relating to gain on negative goodwill by reporting segment
Millions of yen
Reportable segments
Year ended March 31, 2013

Paper
and Pulp

Imaging
Media

Speciality
Materials

Total

Other

Total

Adjustments

Consolidated

Gain on negative goodwill

¥ 33

¥—

¥—

¥ 33

¥—

¥ 33

¥—

¥ 33

Thousands of U.S. dollars
Reportable segments
Year ended March 31, 2013

Paper
and Pulp

Imaging
Media

Speciality
Materials

Total

Other

Total

Adjustments

Consolidated

Gain on negative goodwill

$ 360

$—

$—

$ 360

$—

$ 360

$—

$ 360

Millions of yen
Reportable segments
Year ended March 31, 2012

Paper
and Pulp

Imaging
Media

Speciality
Materials

Total

Other

Total

Adjustments

Consolidated

Gain on negative goodwill

¥ 29

¥0

¥ 841

¥ 871

¥—

¥ 871

¥—

¥ 871

Previous consolidated fiscal year (April 1, 2011–March 31, 2012)
Regarding the Speciality Materials Segment of Mitsubishi Paper Mills, on October 1, 2011 the Company acquired KJ Specialty Paper
Co., Ltd. and made it into a wholly-owned subsidiary. Gain on negative goodwill accruing from this acquisition was ¥841 million.
Consolidated fiscal year under review (April 1, 2012–March 31, 2013)
Regarding the Paper and Pulp Segment of Mitsubishi Paper Mills, on January 1, 2013, the consolidated subsidiary, Hokuryo Forest
Products Co., Ltd., acquired the consolidated subsidiary, Hachinohe Forest Products Co., Ltd., with the surviving company renamed
Shin-Hokuryo Forest Products Co., Ltd. on the same date. Gain on negative goodwill accruing from this acquisition was ¥33
million ($360 thousand).

33

Mitsubishi Paper Mills Limited and Consolidated Subsidiaries

Independent Auditor’s Report34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

Hiroshi Nozawa

Kazuhisa Taguchi

Shinichi Suzuki

Director andSenior Managing
Executive Officer

Director and Managing
Executive Officer

Director and Managing
Executive Officer

Managing Executive Officer

Director and Senior Managing
Executive Officer

Outside Director

Executive Officers

President and Chief Executive
Officer

Kunio Suzuki
President

Representative Director andSenior Managing Executive
Officers

Masami Mizuno

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

Mitsuo Ushijima

In charge of Paper Div. and German
Operations; General Manager, Paper Div.

Tomohisa Shinagawa

Kanji Itakura

Senior Executive Officers

Supervisor, Finance & Accounting Dept.

Kiyoshi Maeda

Director and Managing
Executive Officers

General Manager, President’s Office

Naoya Tashiro

Hiroshi Nozawa

General Manager, Kitakami Div.; Deputy
General Manager, Imaging Media Div.;
President & CEO, Kitakami Hitec Paper
Corp.

In Charge of General Affairs & Personnel
Dept.

Kazuhisa Taguchi

Kiyoharu Yamada

Supervisor, Kitakami Div. andTechnology & Environmental Dept.;
In charge of Imaging Media Div. andIntellectual Property Dept.; General
Manager, Imaging Media Div.

Deputy General Manager, Paper Div.

Yoshihiko Hibino

Head, Hachinohe Mill; Deputy General
Manager, Paper Div.

Managing Executive Officer

Yutaka Oka

Shinichi Suzuki

President, Mitsubishi Paper Holding(Europe) GmbH (Germany)

In charge of Technology & Environmental
Dept.

Director and Executive Officer

Junji Harada

In charge of Speciality Materials Div.;
General Manager, Speciality Materials
Div.

Masaki Shuto

General Manager, Finance & Accounting
Dept.

Akira Takeuchi

Deputy Head, Hachinohe Mill andGeneral Manager, Equipment Planning
OfficeTsuneaki Handa

President & CEO, Diamic Co.,Ltd.

Nobuhiro Sato

General Manager, BusinessCommunication & Specialty Paper Sales
Dept.

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

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

Corporate Auditor

Kenji Oka

Outside Corporate Auditors

Yasuharu Takamatsu
Koji Kaihotsu(as of June 27, 2013)35

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)+81-3-5600-1479 (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)+81-3-5600-1418 (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 2013. 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.

36

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.
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)