2011

Profile

Mitsubishi Paper Mills Limited was established by Mitsubishi’s third president, Hisaya Iwasaki.
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 highly functional filters to ouroperating business domains, and increasing emphasis on research and development in new businessareas.
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.............................................. 16

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

CONSOLIDATED STATEMENTS OF CASH FLOWS.............. 17

TOPICS­............................................................................. 5

NOTES TO CONSOLIDATEDFINANCIAL STATEMENTS............................................... 18

CORPORATE SOCIAL RESPONSIBILITY (CSR).................... 8
OUR MILLS AND THEIR PRODUCT LINES.......................... 10
SIX-YEAR SUMMARY (CONSOLIDATED)............................ 11

REPORT OF INDEPENDENT AUDITORS ONCONSOLIDATED FINANCIAL STATEMENTS..................... 31

CONSOLIDATED BALANCE SHEETS.................................. 12

BOARD OF DIRECTORS, EXECUTIVE OFFICERS ANDCORPORATE AUDITORS.................................................. 32

CONSOLIDATED STATEMENTS OF OPERATIONS.............. 14

COMPANY DATA............................................................... 33

CONSOLIDATED STATEMENTS OFCOMPREHENSIVE INCOME............................................. 15

Mitsubishi Paper Mills Limited and Consolidated Subsidiaries

Financial Highlights (Consolidated)Thousands of
U.S. dollars (1) and (2)Millions of yen (1)
2011

2010

2011

For the years ended March 31
Net sales
Ordinary income
Net loss
Net loss per share (in yen and dollars)
Cash dividends per share (in yen and dollars)¥ 210,846
2,116(14,497)(42.39)—¥ 219,728
2,658(1,597)(4.67)—$ 2,535,739
25,452(174,350)(0.51)—

As at March 31
Total assets
Total net assets
Common stock¥ 248,506
52,11732,756¥ 282,131
68,70932,756$ 2,988,652
626,785
393,942

19,311
4,304

19,7404,441

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 ¥83.15 = U.S.$1, as of March 31, 2011.

Net Sales(¥ Million)

07
08
09
10
11

Ordinary Income(¥ Million)

07
08
09
10
11

Net Income(Loss)(¥ Million)

07
08
09
10
11

Total Net Assets(¥ Million)

07
08
09
10
11

244,260
258,536
253,102219,728
210,846

5,270
7,120
4,499
2,658
2,116

7,297
3,654
1,168
(1,597)(14,497)

80,326
79,63670,436
68,70952,117
Others 3.3%

Sales
Composition

Imaging & Development
15.1%

Paper & Pulp 81.6%

Note:	Effective from the year ended March 31, 2007, the Company has applied the “Accounting standards for presentation of net assets in the balance
sheet,” and the “Implementation guidance for accounting standards for presentation of net assets in the balance sheet.”1Message from the President

Kunio Suzuki, President & C.E.O.

Overview of the Reporting Term
The business environment faced by the Group remains very difficult
due to the continuing economic slowdown and the rise in the valueof the yen. To cope with these circumstances, the Group has taken
steps to thoroughly reduce costs, streamline the production systemand produce high value-added products by putting into practice a setof measures we call Enhanced Countermeasures Plan.
However, because of the Tohoku Region Pacific Ocean
Earthquake of March 11, 2011, we have had to suspend operations
after three of our facilities were damaged. The affected facilities
are the Hachinohe Mill (Aomori Prefecture), Kitakami HiTec Paper
Corporation (Iwate Prefecture) and the Shirakawa Plant (Fukushima
Prefecture). Notably, the first floor of our flagship Hachinohe Millwas submerged in water from the massive tsunami after the earthquake. As a result, the mill suffered incredible devastation, including damage to electrical systems and damage and loss of inventories,
especially products and raw materials. Consequently, we established
the Reconstruction Management Headquarters, which is headed by
the president, carried out exhaustive reconstruction efforts, formulated a reconstruction plan, and took steps to achieve full reconstruction as early as possible and to minimize recent losses. Although
Kitakami HiTec Paper Corporation and the Shirakawa Plant
resumed operation in late March, the Hachinohe Mill will likely
require more time to achieving full recovery.
In the Paper and Pulp Divisions, although demand was on track
to a moderate recovery, especially for mainstay commercial printing
paper, the market was soft because of paper imports and other factors. Further, sales decreased following the suspension of operationsat Hachinohe Mill after the earthquake and tsunami. Sales volumes
increased for the Imaging and Development (I&D) Company due
to the launch of new inkjet paper products, overseas marketing

activities, and sales expansion of printing plate materials, especiallyenvironment-friendly CTP printing plates. Sales volumes of specialty materials also increased following the launch of new products
incorporating advanced technology. In contrast, sales volumes ofphotographic base paper and photographic paper remained on a
downward trend because of a global shrinkage in demand.
As a result, sales in the Paper and Pulp Divisions fell 4.0%, year
on year, to ¥210,846 million (US$2,535 million) on a consolidated
basis.
While the cost-lowering effects of rising mill production and
fixed cost cuts pushed earnings upward, consolidated ordinary
income declined 20.4%, year on year, to ¥2,116 million (US$25 million), due to declining printing paper prices, our mainstay product,and sharply rising raw material and fuel prices, pushed earnings
downward. A net loss of ¥14,497 million (US$174 million) was
posted for the reporting term due to an extraordinary loss resulting
from a loss on earthquake disaster of ¥13,314 million (US$160
million).
On a non-consolidated basis, net sales of ¥132,334 million(US$1,591 million), ordinary income of ¥462 million (US$5 million), and a net loss of ¥14,523 million (US$174 million) wereposted.
Mid-term Management Strategy and Issues Facing the Company
The business environment in which the Company operates hasgrown increasingly harsh due to weakening domestic demandcaused by the protracted economic slowdown and the changing
demand structure. Other negative factors include decreasing profitability on exports due to the strong yen and the uncertain directionof the market after the earthquake. Given these conditions, theGroup will institute a new mid-term management plan and present2This, we believe, is the path to greater enterprise value. Also, we
have already begun providing assistance to earthquake and tsunami
devastated areas by sending hygienic paper (toilet paper, etc.) andother goods.
On another front, Mitsubishi Paper Mills has taken over thepaper chemicals business of Kohjin Co., Ltd. Specifically, KohjinCo., Ltd. spun off its Fuji Mill and set it up as a new company.
After the new company was established, Mitsubishi Paper Mills
took over all of its shares. The transfer date was October 1, 2011
and KJ Specialty Paper Co., Ltd. is the new company’s name. We
will integrate KJ Specialty Paper’s high technological capabilities
with our own technological and R&D capabilities to further develop
the paper chemicals business and our existing business fields, andthereby develop into a single large specialty paper business.

its corporate vision internally and externally with the goal of putting the Group’s basic principles into practice and achieving further
growth. In addition, we will continuously review measures suitable
to improving our financial position.
The Tohoku Region Pacific Earthquake of March 11, 2011
inflicted the worst damage the Group has ever suffered since it was
founded. Although we were forced to temporarily suspend operations at Kitakami HiTec Paper Corporation and the Shirakawa
Plant due to earthquake damage, operations resumed in late March.
Our mainstay Hachinohe Mill suffered tremendous damage when
it was hit by the giant tsunami immediately after the earthquake.
Reconstruction work began with the resumption of operations at theenergy plant. In early May, in-house power generation was resumed
and partial supply of electric power to the Tohoku Electric Power
Company was started. In late May, we began sequential operation of
production equipment and expect reconstruction to be completed by
mid November.
Immediately after the earthquake, the Group established aDisaster Management Headquarters, which is headed by thepresident, and it has tried to determine the extent of the damage.
After the extent of the damage was determined, a Reconstruction
Management Headquarters was established, which is also headedby the president, and a reconstruction plan was then drawn up andimplemented throughout the Company. Under the plan, we focusedon the swift reconstruction of our main facilities and the minimization of recent losses. Along with the plan, we are formulating a new
mid-term management plan that outlines the Group’s vision (Pleasesee pages six and seven for details).
In order to fulfill our social responsibilities to all stakeholders, we have positioned CSR activities as the foundation of ourmanagement. Activities during the fiscal year included opening
the Ecosystem Academy, which conducts environmental education
under the theme of “The Bounty of Forests,” enhancing environmentfriendly products such as environment-friendly FSC forest certified
paper and waste paper pulp compound products, and obtaining Eco
Rail Mark certification (the first such certification in the paper andpulp industry).
In the fiscal year ending March 31, 2012, we will recover fromthe disaster as quickly as possible, and make the fulfillment of oursocial responsibilities—including our responsibility to supply customers, contribute to local communities and economies, and ensure
employment—our number one priority. In addition, we will use thismassive disaster as a learning experience, and focus on developinga system for disaster risk. On that basis, we have established threebasic policies of, 1) strengthening our CSR management foundation,2) promoting environmental management, and 3) pursuing CSR
activities. We will pursue activities that raise enterprise value inthe areas of compliance, information disclosure, safety and quality,
human and labor rights, the environment, and social contributions.

Forecasts
Moving forward, the harsh operating environment is expected tocontinue for some time due to Japan’s uncertain economic future
resulting from the Tohoku Region Pacific Ocean Earthquake andsharply rising raw materials and fuel prices. However, from late
May we will resume operation of production equipment at theHachinohe Mill based on the reconstruction plan instituted after
the disaster, and set up a system for the production of mainstay
products.
Regarding next fiscal year’s consolidated business performance,
although the Company will face a harsh earnings environment in thefirst half of fiscal 2011, we expect to be profitable in the following
divisions in the second half because of the system that we have set
up to achieve full production. For full fiscal 2012, we anticipate net
sales of ¥200 billion (US$2,439 million), operating income of ¥3.0
billion (US$36 million) ordinary income of ¥1.0 billion (US$12
million) and a net loss of ¥3.0 billion (US$36 million). Exchange
rate assumptions for the above forecast are ¥82/$1 and ¥120/€1. The
Earnings forecast has been made based on information available
at the time of the forecast and takes into account risk factors anduncertainties. At this juncture, although all potential risks have beenfactored into the forecast, actual earnings results could vary substantially from the forecast due to a variety of factors.

June 2011

Kunio Suzuki
President & C.E.O.

3

Breakdown of Operations by Division

Paper and Pulp
Divisions

Net Sales (¥ Million)

10

181,50911

175,713in the communication paper business also decreased for thesame reason.
Sales volumes at our European subsidiary were largely
unchanged from the previous fiscal year, but earnings were up
due to the previous fiscal year’s restructuring. Sales volumes
and values both increased for pulp sold on the market.
As a result, overall sales in the Paper and Pulp Divisions
decreased 3.2%, year on year, to ¥175,713 million (US$2,113
million) on a consolidated basis.

In the Paper and Pulp Divisions mainstay commercial printing
paper, although demand for commercial printing paper (forflyers, catalogs and pamphlets) gradually recovered, overall
demand increased only slightly owing to the rapid appreciationof the yen beginning from the second half, and environmentalrelated policies having run their course. Also, the market was
soft due to the effects of paper imports. Subsequently, sales
volumes decreased after the suspension of operations at ourflagship Hachinohe Mill due to the earthquake in March. Sales

Imaging and development
Division

Net Sales (¥ Million)

10

49,761

11

48,374

sales of our environment-friendly Thermal Digiplate®, sales
declined year on year owing to the strong yen, price decreases
for existing products, and other factors. In specialty materials,
we increased sales by launching new products with proprietary
technologies, such as filters for water treatment including
reverse osmosis membranes, flame-resistant construction board
material, high-performance secondary battery separators, andhumidifier elements.
As a result, overall sales in the I&D Business decreased
2.8%, year on year, to ¥48,374 million (US$581 million) on aconsolidated basis.

Sales volumes and values both increased for inkjet paper thanks
to new product launches and overseas marketing activities. In
the Photosensitive Materials Division, amid a continuing global
decline in demand, as a result of focusing on overseas sales
expansion of photosensitive paper, mainly in emerging countries, sales volumes decreased only slightly. Nevertheless, sales
declined significantly because of price declines from the strong
yen and increasing competition. Both sales volumes and valuesof photosensitive paper dropped substantially mainly due to thestrong yen and the earthquake disaster. In printing plate materials, despite a year-on-year sales volume increase from boosting

Other
Divisions

Net Sales (¥ Million)

10

19,110

11

17,780

Sales in Other Divisions declined 7.0%, year on year, to¥17,780 million (US$213 million), due to lower sales at ourengineering subsidiary and the earthquake disaster.

4

Topics

Effects of the Tohoku Region Pacific Ocean Earthquake
Because of the Tohoku Region Pacific Ocean Earthquake of March 11, 2011, we have had to suspend operations at three of our facilities that suffered damage — the Hachinohe Mill (Aomori Prefecture), Kitakami HiTec Paper Corporation (Iwate Prefecture) and the
Shirakawa Plant (Fukushima Prefecture).
Below are specific time schedules for reconstruction.

(1) Major Damage and Progress in Reconstruction
Earthquake and Reconstruction Status
Tohoku Region Pacific
Earthquake

Massive tsunami hits Mill’s ground floor, stopping all machines
Hachinohe Mill

March 11, 2011, 2:46PM

Target: Full resumption of 7 paper machines and 3 coaters
Intensity 5 upper*
Massive tsunami(over 8 meters high)Full operation from
April 14

Kitakami HiTec Paper

Intensity 5 upper*
seismic center

Full operation fromMarch 24

Operatingstatus

Early Apr.

Power plant restarted

Early May

Power supply to Tohoku Electric Power, Inc.

End May

PM No.1, 2 and CM No.2 restarted

15%

Mid Jun.

PM No.7 restarted

35%

Mid Jul.

PM No.3 and CM No.3 restarted

55%

End Aug.

PM No.4 with on-machine coater restarted

70%

End Spt.

PM No.5 and CM No.5 restarted is planned

90%• Resumption almost complete• Ready to begin production on main products line

Shirakawa Plant

Nov.
Intensity 6 lower*

100%

PM No.6 restarted is planned

Complete resumption* on Japanese seismic scale

Mid-term Management Plan
In the current fiscal year, our main priority has been reconstruction of facilities damaged in the Great East Japan Earthquake. With works
progressing smoothly at Hachinohe Mill, we compiled the first part of our new mid-term management plan on 26 August 2011. This is aframework for establishing a firm earnings base during and after the reconstruction effort. The basic policies and numerical targets are
as follows.

(2) Basic Policies
First Mid-term Management Plan – Basic Policies
First Mid-term Plan
FY2011 2nd half

FY2012

Reconstruction

Second Mid-term Plan

FY2013

FY2014

Strengthen revenue base for growth[1 1/2 years][2 years]➀ Quickly recover printing paper business market share, build efficient finishing lines➁ Promptly repay sharply increased interest bearing debt (¥30 billion), normalize financial positiona) Normalization of earnings ◆ Sales recovery◆ Reform fixed cost structureb) Cash reserve◆ Inventory reduction◆ Zero-based budgeting of capital investment

5

FY2015~Strengthen growth sectors

➂ Policies by business segment◆ Printing paper business – Maintain profitability, expand revenue opportunities◆ Imaging business – Maintain revenue structure, develop overseas markets◆ New business development – Accelerate growth, prioritize business resource investments◆ German operation – Maintain stable operation, increase prices◆ KJ Specialty paper – Achieve synergistic effects, develop overseas markets◆ Emerging countries – Invest business resources(3) Basic Plan Values
Basic Plan Values(Unit:100 million yen)

1st half

2nd half

FY2011FY2012FY2013

FY2014

Sales

900

1,100

2,000

2,300

2,350

2,400

Operating Income

(5)

35

30

75

80

100

Ordinary Income

(15)

25

10

45

50

70

Interest Bearing Debts

—

—

1,700

1,700

1,600

1,500

D/E Ratio

—

—

3.7

3.4

3.0

2.6

4,380

4,275

4,186

4,186

Employees
FY2011FY2012-FY2014

US$

¥82/$

¥80/$

Exchange rate€

¥120/€¥115/€

AUS$¥86/A$¥85/A$

Oil

Dubai$115/BBL$110/BBL

Dividend payments to be resumed(4) Financial Summary
Financial Summary
Interest-bearing debt andinterest-bearing debt/sales ratio

Hachinohe reconstruction andfunds for interest-bearing debt repayment(Unit:100 million yen)

(%)

2,000

100

81

74

65

69

New borrowing
Germany

80

Profit for theperiod Japan

63
60

Depreciation

1,500

1,700

1,700

40

1,600

1,435

1,500

20

FY2010FY2011FY2012FY2013

FY2014

0

300

175

200

Repayment

180 people Natural attrition(Employees resigning at
Maintenance /426 mandatory retirement age,
Renewalhiring restrictions)

OthersNumber of employees at term-end(Figures for the next two years are targets)

5,000
4,577

4,632

Decrease of over 300 people
4,441

4,370

4,240

4,000

0

Mar. 2009
Mar. 2010(Sept. 2009)

3,000

6

(Unit:100 million yen)Hachinohe
265
120
people Retirementsreconstruction
in 2009

Total
866of 300 people
Decrease(Persons)

1,000

Personnel Decrease Plan〈Purpose〉〈Funds〉Mar. 2011(target)Mar. 2012(target)110
Additionalrunning costs

110

Extraordinary
loss and tax

146

Total 866

Progress under Enhanced Countermeasures
The effects of our strengthened measures are shown below. The themes of the old plan are unchanged and have been incorporated into
the first part of the new mid-term plan.
Effects of Enhanced Countermeasures
Effects (¥100 million)
Production system restructuring

Rigorous cost
reductions

Overseas
operations

Personnel
streamlining

Other (energy,
depreciation, etc.)

total

5

11

6

11

10

43

1st half result

2

8

6

9

3

28

2nd half result

5

21

1

7

4

38

Disclosed on Nov. 16, 2010

(5)

(17)

(2)

(3)

(7)

(34)

Fiscal Year result

7

29

7

16

7

66

Initial targets for fiscal year ended
March 31, 2011 (146th period)

New challenges resulting from reconstruction plan implementation
General Overview of Enhanced Countermeasures
1. Efficient production system

5. Launch new products]S hut down No. 12 Paper Machine at Takasago Mill,transferred production to Hachinohe Mill] Expand sales of Thermal Digiplate, expand development offunctional non-woven fabric

2. Thorough cost minimization

6. Stabilize and capitalize on overseas operations] Relocation of I&D personnel completed]A chieved cost-cutting targets at Hachinohe and Takasago
mills] Restructuring of German operations

7. Realize benefits of alliances] Realize benefits of alliances with Fuji Film and Oji Paper(further strengthen alliances)

3. Headquarter expenses sharply reduced]R eview headquarter and affiliate organizations and achieve
workforce reduction targets] Review research system] Themes completed by March 31, 2011
] Themes carried out on a continuous basis
since March 31, 2011

4. Shift to high value added products]P aper for digital printing, FSC certified paper, expand useof forest thinnings (further sales expansion)

7

Corporate Social Responsibility (CSR)

The Mitsubishi Paper Mills Group regards CSR activities as the core management issue to fulfill its social responsibilities to its stakeholders. In the current fiscal year, the Group has launched a range of initiatives, including the establishment of the Eco-System Academy,
where the Company provides ecological education under the theme of the “gift of the forests,” the enhancement of environmentfriendly products, such as FSC™ certified paper and products with a high recycled pulp content, and the acquisition of Eco Rail Markcertification—a first for a company in the pulp and paper industry in Japan—as part of our commitment to environment-friendly railtransportation.
Going forward, we will place top priority on recovering from the damage wrought by the Great East Japan Earthquake as quickly as
possible and fulfilling our social responsibilities, such as supplying products to customers, making contributions to local communities andthe economy, and securing jobs. Learning from this disaster, we will work to counter vulnerability to disasters and other risks. On thatbasis, we will step up activities to bolster our corporate value in terms of compliance, disclosure, safety and quality, human rights andlabor relations, the environment, and community contributions. We will do this by following three basic policies: (1) strengthening our
CSR management foundations, (2) promoting environmental management, and (3) supporting community contribution activities. We havealso provided support to disaster areas, such as dispatching sanitary paper products (toilet rolls, etc.).

Distinctive CSR Activities
Since 2009, when our basic CSR stance was developed, we have been working on the Distinctive CSR Activities of Mitsubishi
Paper Mills program. The main theme of these activities is sustainability. We aim to become a company that fulfills its responsibilities to society and is valued through corporate activities that contribute to sustainability.
The Group operates businesses that use timber as the primary material. We have been seeking FSC certification based on ourbelief that sustainable forest management is necessary for wood to be a renewable resource, and have been procuring all our timberin accordance with the FSC certification standards. Also, to encourage the greater adoption of the FSC certification system inJapan, we have participated in the support system for FSC certified forests and the Forest Neighborhood Association, mainly inIwaizumi-cho, Iwate Prefecture. In 2010, we also commenced a forest environment education program at the Eco-System Academyin Nishigo-mura, Fukushima Prefecture, to convey to the next generation the importance of properly managing forests. We also ran
a booth at the COP10 exhibition and the Eco-Products 2010 exhibition. As part of our distinctive CSR activities, we hope to contribute to the sustainability initiatives of our stakeholders, including customers and local communities, through the proper managementof forests from a medium- and long-term perspective.

Eco-System Academy
The Eco-System Academy is an environmental education
program that is based on the “gift of the forests and collaboration of nature and industry.” Its focus is on forestry and woodbased manufacturing. With a principal goal of encouraging
understanding of the importance of preventing global warming
and preserving biodiversity, this program began its activities
in May 2010 with experience-based learning, forest research,and environmental seminars as its main features, from thestandpoint of forest conservation by a paper manufacturer.

8

COP10 Exhibition
We ran a booth together with Mitsubishi Paper Sales Co., Ltd. (Nagoya
Branch), at the Messe Nagoya, an environment and energy exhibition heldin the Chubu region from October 27- 30, 2010. As biodiversity efforts
attracted attention in events held in conjunction with the 10th meeting of
the Conference of the Parties to the Convention on Biological Diversity(COP10) held in Nagoya, we presented our FSC certified paper and support
system for FSC certified forests as an effort to support our users.

Eco-Products 2010 Exhibition
In our booth at Eco-Products 2010, one of Japan’s largest environmental
exhibition, held at Tokyo Big Sight from December 9-11, we introduced the
Eco-System Academy and the FSC certified paper that will contribute to theenvironment, for instance in forest conservation and biodiversity conservation through the use of paper.

Activities to Prevent Global Warming
Eco Rail Mark Certification
The Eco Rail Mark is a certification given to products or companies thatuse Earth-friendly rail transportation systems that meet or exceed certain
standards. In October 2010, Mitsubishi Paper Mills made history by becoming the first company in the pulp and paper industry in Japan to receive thiscertification.

9

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.

Takasago Mill­­Kyoto Mill

Address:

Address:

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

6-6, Kaiden 1-chome,
Nagaokakyo-shi,
Kyoto 617-8666
Telephone: +81-75-951-1181
Products: Color photographic paper, Graphic arts
materials, Photo Inkjet 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 Guang­dong Province, China
Telephone: +86-756-8895033
Products: Various filters(Juarez, Mexico)(Zhuhai, China)

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

Millions of yen
2011

2010

2009

2008

2007

2006

2011

For the years ended March 31
Net sales
Operating income
Ordinary income
Net income (loss)
Net income (loss) per share (in yen and dollars)¥ 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

¥ 244,260
7,256
5,270
7,297
22.44

¥ 228,495
6,484
4,774
7,225
22.16

$ 2,535,739
41,82225,452(174,350)(0.51)

As at March 31
Total assets
Total net assets¥ 248,506
52,117¥ 303,052
79,636¥ 320,603
80,326¥ 314,869
76,680$ 2,988,652
626,785¥ 282,131
68,709¥ 294,254
70,436

Note:	Effective from the year ended March 31, 2007, the Company has applied the “Accounting standards for presentation of net assets in the balance sheet,” andthe “Implementation guidance for accounting standards for presentation of net assets in the balance sheet.”	Furthermore, the Company presented its net assets in the balance sheets using the new presentation method as of March 31, 2006 to conform to the current
year’s presentation.

11

Mitsubishi Paper Mills Limited and Consolidated Subsidiaries

Consolidated Balance Sheets
As at March 31, 2011 and 2010

Millions of yen

Thousands of
U.S. dollars (Note 2)

2011

2010

2011

¥    8,878¥    7,269$   106,779

42,1684,276

48,022
2,488

507,137
51,42746,444(497)

50,510(756)

558,565(5,980)Inventories
Deferred income taxes (Note 13)
Other45,94741,288702
616

49,75450,996
1,611
909

552,584
496,552
8,446
7,408

Total current assets

97,432

110,540

1,171,770

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

20,941
94,007
332,542
560
2,394
9,425

22,77596,442
343,461
430
2,684
9,883

251,852
1,130,581
3,999,305
6,743
28,797
113,350

Less: Accumulated depreciation
Accumulated impairment losses

459,871(341,504)(574)

475,678(344,532)(1,712)5,530,631(4,107,092)(6,908)

117,792

129,433

1,416,630

21,438
1,400
569
(479)
2,531
7,819

29,152
1,624
725
(276)
2,731
8,200

257,832
16,8486,844(5,762)30,45094,03833,28042,158400,251¥ 248,506¥ 282,131$ 2,988,652

ASSETS
Current assets:
Cash and bank deposits (Note 3 (11))
Receivables:
Trade notes and accounts (Note 9)
Other
Less: Allowance for doubtful accounts

Net property, plant and equipment

Investments and other assets:
Investments in securities (Notes 4, 9 and 10)
Investments in unconsolidated subsidiaries and affiliated companies
Long-term loans
Less: Allowance for doubtful accounts
Deferred income taxes (Note 13)
Other
Total investments and other assets
Total assets
The accompanying notes are an integral part of these financial statements.

12

Thousands of
U.S. dollars (Note 2)

Millions of yen
2011

2010

2011

¥ 75,596
1,000
12,482294¥ 79,902
9,000
13,913570$   909,156
12,026150,119
3,537

20,980
3,193
8,483
227
7,439
3,427

23,239
4,053
9,803
501
—
3,247

252,320
38,404
102,030
2,735
89,474
41,214133,124

144,232

1,601,022

52,251
1,868
5,373
111
201
826
2,630

55,679
2,573
6,526
113
1,038
—
3,258

628,401
22,47264,621
1,346
2,425
9,943
31,63363,264

69,190760,845

32,756
19,717(5,577)(136)

32,756
19,7178,919(133)

393,942
237,125(67,078)(1,647)46,75861,259562,342

1,794
378

2,951
937

21,578
4,555

2,173

3,888

26,133

3,185

3,560

38,30952,117

68,709626,785¥ 248,506¥ 282,131$ 2,988,652

LIABILITIES AND NET ASSETS
Current liabilities:
Short-term bank loans (Note 9)
Commercial paper
Current portion of long-term debt (Note 9)
Lease obligations
Payables:Trade notes and accounts (Note 9)
Other
Accrued expenses
Income taxes payable
Reserve for loss on natural disaster (Note 3 (13))
Other
Total current liabilities
Long-term liabilities:
Long-term debt (Note 9)
Lease obligations
Accrued retirement benefits to employees (Note 12)
Accrued retirement benefits to directors and statutory auditors
Deferred income taxes (Note 13)
Asset retirement obligations (Note 3 (14))
Other
Total long-term liabilities
Contingent liabilities (Note 5)
NET ASSETS
Shareholders’ equity:
Common stock:
Authorized: 900,000,000 shares at March 31, 2011 and 2010
Issued: 342,584,332 shares at March 31, 2011 and 2010
Capital surplus
Retained deficit (earnings)
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.

13Mitsubishi Paper Mills Limited and Consolidated Subsidiaries

Consolidated Statements of Operations
For the years ended March 31, 2011 and 2010

Thousands of
U.S. dollars (Note 2)

Millions of yen
2011

2010

2011

¥ 210,846
173,381¥ 219,728
177,810$ 2,535,739
2,085,165

37,46541,917450,573

33,987

37,663

408,751

3,477

4,253

41,822561(2,343)
1,298(357)(1,328)
—
—
(305)
(28)
(13,314)641(2,742)
(625)
865
(49)
(646)
(1,491)
(189)
(390)
—

6,750
(28,185)
15,613(4,296)(15,983)——(3,672)(336)(160,132)

(684)
424

—
184

(8,236)
5,109

Total

(16,078)(4,444)(193,369)

Loss before income taxes and minority interests(12,601)(191)(151,547)

442
1,276

605
517

5,319
15,353

1,718(14,320)
177

1,123(1,314)283

20,672(172,219)
2,131(1,597)$ (174,350)

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)(Losses) Gains on sales of investments in securities
Write-downs of investments in securities
Losses on business restructuring
Impairment loss on property, plant and equipment
Special severance payments
Loss on liquidation of a subsidiary
Loss on natural disaster (Note 7)
Effect of adoption of accounting standard for asset retirement
obligations (Note 3 (14))
Other, net

Income taxes:
Current
Deferred (Note 13)
Loss before minority interests
Minority interests in losses of consolidated subsidiaries¥ (14,497)

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

14¥

Mitsubishi Paper Mills Limited and Consolidated Subsidiaries

Consolidated Statements of Comprehensive income
For the years ended March 31, 2011 and 2010

Thousands of
U.S. dollars (Note 2)

Millions of yen

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

2011

2010

2011

¥ (14,320)¥ (1,314)$ (172,219)(1,533)
(525)

1,721
117

(18,442)(6,323)

(69)

0

(830)

(2,128)(16,448)

1,838
524

(25,597)(197,816)(16,213)¥    (235)(107)¥    632(194,987)$    (2,829)

Additional information
Accounting Standard for Presentation of Comprehensive Income
Effective the fiscal year ended March 31, 2011, the Company has applied the “Accounting Standard for Presentation ofComprehensive Income” (Accounting Standards Board of Japan (ASBJ) Statement No. 25 issued on June 30, 2010).

Yen

Amounts per share:
Net loss — basic (Note 3 (10))
Cash dividends applicable to the year

¥ (42.39)—

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

15

U.S. dollars (Note 2)¥ (4.67)—$ (0.51)—

Mitsubishi Paper Mills Limited and Consolidated Subsidiaries

Consolidated Statements of Changes in Net Assets
For the years ended March 31, 2011 and 2010

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 March 31, 2009
342,584,332 ¥ 32,756
Changes during the year:
Net loss
Cash dividends
Acquisition of treasury stock
Disposal of treasury stock
Decrease due to change in scope of
consolidation
Decrease due to change in equity
Changes in items other than shareholders’ equity
Total changes during the year——
Balance at March 31, 2010
342,584,332 ¥ 32,756
Changes during the year:
Net loss
Acquisition of treasury stock
Disposal of treasury stock
Changes in items other than shareholders’ equity
Total changes during the year——
Balance at March 31, 2011
342,584,332 ¥ 32,756¥ 19,717¥ 11,459¥ (129)¥ 63,803(4)0(1,597)
(855)
(4)
0

(1,597)
(855)
(4)
0

(15)
(71)
(673)
(673)
¥ 3,560

(15)
(71)
815
(1,727)¥ 68,709

(374)
(374)
¥ 3,185(14,497)(4)
0(2,090)(16,591)¥ 52,117

Number ofshares in
issue(1,597)
(855)
(0)
(15)
(71)
(0)
(2,539)¥ 19,717 ¥ 8,919(3)¥ (133)(2,543)¥ 61,259(4)
0(14,497)(4)
0(3)¥ (136)(14,501)¥ 46,758(14,497)(0)(0) (14,497)¥ 19,717 ¥ (5,577)¥ 1,578

1,373
1,373
¥ 2,951(1,157)(1,157)¥ 1,794

¥ 821

115
115
¥ 937

(558)
(558)
¥ 378

¥ 2,399

1,489
1,489
¥ 3,888(1,715)(1,715)¥ 2,173¥ 4,234¥ 70,436

Thousands of U.S. dollars
Shareholders’ equity

Commonstock

CapitalsurplusRetainedearnings

Net
Total
unrealized
accumulated Minority
interests ingains onother
TreasuryTotalstock, shareholders’ available-for-sale Translation comprehensive consolidated Total net
subsidiaries
assetssecurities
incomeat costequityadjustments

Balance at March 31, 2010
$ 393,942 $ 237,128 $ 107,272 $ (1,603)
Changes during the year:(174,350)
Net loss
Acquisition of treasury stock(49)
Disposal of treasury stock(2)
6
Changes in items other than shareholders’ equity
Total changes during the year—(2) (174,350)(43)
Balance at March 31, 2011
$ 393,942 $ 237,125 $ (67,078) $ (1,647)
The accompanying notes are an integral part of these financial statements.

16

Total accumulated other comprehensive income$ 736,739$ 35,501(174,350)(49)
3(174,350)(49)
3(13,922)(6,713) (20,636)(4,507)(25,144)(13,922)(6,713) (20,636)(4,507) (199,541)$ 21,578 $ 4,555 $ 26,133 $ 38,309 $ 626,785(174,397)$ 562,342$ 11,269$ 46,770$ 42,816$ 826,327

Mitsubishi Paper Mills Limited and Consolidated Subsidiaries

Consolidated Statements of Cash Flows
For the years ended March 31, 2011 and 2010

Millions of yen

I

2011

2010

2011

¥ (12,601)
12,241¥    (191)
12,897
1,491—(1,344)
20
(641)
2,742
(865)
49
15
69

$ (151,547)
147,222

5,178
3,969
(1,541)(3,426)
18,536566(2,376)(683)
16,043

—
646
390
213
8,198
(5,524)540
18,708640(2,876)(1,459)15,0138,236—
336
62,28347,743(18,536)(41,212)
222,924
6,812(28,580)(8,214)
192,941(4,320)
3,110
(31)
3,474
(109)
(909)
692
(144)
1,763

(10,238)
330
(144)
2,530
(579)
(337)
29
115
(8,293)(51,959)
37,411(375)
41,788(1,310)(10,942)
8,329(1,738)21,203(2,809)(8,000)9,330(13,760)(9,883)7,000
18,207(6,834)(10,100)
(707)
(4)
(855)
(84)
0
(3,262)
63
3,521
3,464
¥ 6,985(33,785)(96,211)112,217(165,492)(1,202)(7,650)
(49)
—
(502)
3
(192,674)(2,118)19,35284,012$ 103,365

Cash flows from operating activities:
Loss before income taxes and minority interests
Depreciation and amortization
Impairment loss on fixed assets
Loss on natural disaster (Note 7)
Accrued post-employment benefit costs
Accrued retirement benefit costs for directors and statutory auditors
Interest and dividend income
Interest expense
Losses (Gains) on sales of investments in securities
Write-downs of investments in securities
Write-downs of other investments
Gains (Losses) on disposal of property, plant and equipment (Note 6)
Effect of adoption of accounting standard for asset
retirement obligations (Note 3 (14))
Losses on business restructuring
Loss from adjustment of a subsidiary
Decrease in trade accounts receivable
Decrease in inventories
Decrease in trade accounts payable
Other, net
Sub-totalInterest and dividends received
Interest paid
Income taxes paid
Net cash provided by operating activities

II

Thousands of
U.S. dollars (Note 2)—

13,314(1,492)
(1)
(561)
2,343
357

1,328

10
(1,298)
684

—
28

—

160,132(17,946)(14)(6,750)28,185
4,296

15,983

125(15,613)

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
Other, net
Net cash (used in) provided by investing activities

III Cash flows from financing activities:
Increase or decrease in short-term bank loans
Increase or decrease in issuance of commercial paper
Proceeds from long-term debt
Repayment of long-term debt
Redemption of bonds
Repayment of lease debt
Acquisition of treasury stock
Payment of cash dividends by the Company
Payments of cash dividends by subsidiaries to minority shareholders
Other, net
Net cash used in financing activities

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

17

(100)

(636)
(4)
—
(41)
0
(16,020)
(176)
1,609
6,985
¥ 8,594

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 ¥83.15 = U.S.$1, theexchange rate prevailing as of March 31, 2011. 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 33 subsidiaries as of March 31, 2011 (37 as of March 31, 2010). The accompanying consolidated financial
statements include the accounts of the Company and 24 (25 for 2010) of its subsidiaries for the year ended March 31, 2011
(together, hereinafter referred to as the “Companies”).
Mitsubishi HiTec Paper Bielefeld GmbH (Germany) absorbed Mitsubishi HiTec Paper Flensburg (Germany) on October 15,
2010. At the same time, Mitsubishi HiTec Paper Bielefeld changed its name to Mitsubishi HiTec Paper Europe GmbH.
The accounts of the remaining 9 (12 for 2010) unconsolidated subsidiaries for the year ended March 31, 2011 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 (5 for 2010) 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 an asset or a liability, as the case may be, and amortized over a period of five years on astraight-line basis.
Assets and liabilities of subsidiaries are remeasured based on the full fair value method, whereby the full portion of theassets and liabilities of the subsidiaries is marked to fair value as of the date of acquisition of control.

(3) Investments in unconsolidated subsidiaries and affiliates
The Company had 13 affiliates as of March 31, 2011 (13 for 2010). 2 affiliated companies were accounted for by the equity
method.
However, the remaining 9 (12 for 2010) subsidiaries and 11 (11 for 2010) 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.

18

(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-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 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). 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).

19(9) 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.

(10) 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.

(11) 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, 2011 and 2010 is shown below:
Millions of yen

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

2011

2010

¥ 8,878(283)¥ 8,594¥ 7,269(283)¥ 6,985

Thousands of
U.S. dollars
2011$ 106,779(3,413)$ 103,365(12) 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.

(13) Reserve for loss on natural disaster
The Company has provided a reserve for loss on natural disaster based on the estimated future costs of restoration of facilities anddisposal of equipment damaged by the Tohoku region Pacific Ocean earthquake that occurred in the fiscal year ended March 31,
2011.

(14) Accounting changes(i) Accounting Standard for Asset Retirement Obligations
Effective April 1, 2010, the Company has applied the “Accounting Standard for Asset Retirement Obligations” (ASBJ Statement
No. 18 issued on March 31, 2008) and the “Implementation Guidance on Accounting Standard for Asset Retirement Obligations”(ASBJ Guidance No. 21 issued on March 31, 2008). Due to the effect of adopting this new standard, both of operating income andordinary income decreased by ¥21 million ($255 thousand), while loss before income taxes and minority interests increased by¥706 million ($8,491 thousand).
(ii) Accounting Standard for Equity Method of Accounting for Investments
Effective April 1, 2010, the Company has applied the “Accounting Standard for Equity Method of Accounting for Investments”(ASBJ Statement No. 16 issued on March 10, 2008) and the “Practical Solution on Unification of Accounting Policies Applied to
Associates Accounted for Using the Equity Method” (ASBJ Practical Issues Task Force (PITF) No. 24 issued on March 10, 2008).
There was no effect on the financial statements for the year ended March 31, 2011.
(iii) Effective April 1, 2009, the “Partial Amendments to Accounting Standard for Retirement Benefits (Part 3)” (AccountingStandards Board of Japan (ASBJ) Statement No. 19 issued on July 31, 2008) has been applied. This change made no difference
on retirement benefit obligations. Therefore, there was no material effect on the financial statements for the year ended March 31,
2010.

20

4. Assets Pledged as Collateral
Assets pledged as collateral primarily for short-term loans, long-term debt and debentures at March 31, 2011 and 2010 were as
follows:
Millions of yen

Buildings and structures
Machinery and equipment
Land
Other
Investments in securities

Thousands of
U.S. dollars

2011

2010

2011

¥ 19,664
22,671
9,542
47
2,942
¥ 54,868¥ 20,888
26,993
9,542
55
3,526
¥ 61,006$ 236,489
272,663
114,759574
35,388$ 659,875

5. Contingent Liabilities

As at March 31, 2011 the Companies were contingently liable for guarantees of loans, primarily of their employees and unconsolidated subsidiaries and affiliates, in the aggregate amount of ¥3,109 million ($37,400 thousand), and also liable for a recourse
obligation of credit securitization in the aggregate amount of ¥2,886 million ($34,713 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

2011

2010

2011

¥ 1,673¥ 234$ 20,126(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

2011

2010

2011

¥ 118
181

¥ 230
614

$ 1,4222,185

7. 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

Restoration costs
Inventory valuation losses
Estimated costs of disposal of fixed assets
Fixed costs during the suspension of operations
OthersTotal

21

Thousands of
U.S. dollars

2011

2011

¥ 4,510
4,715
2,640
1,317
130
¥ 13,314$ 54,244
56,71331,75815,8451,570$ 160,132

8. 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
2011

Purchase price equivalent
Accumulated depreciation equivalent
Net book value equivalent

Machineryandequipment

Other

¥ 146
104
¥ 41

¥ 184
138
¥ 45

Thousands of U.S. dollars
2011

2010

Total

Machineryandequipment

Other

¥ 331
243
¥ 87

¥ 215
144
¥ 70

¥ 318
231
¥ 87

Total

Machineryandequipment

Other

Total

¥ 534
376
¥ 157

$ 1,7621,261$   500$ 2,2211,670$   550$ 3,983
2,931$ 1,051(2) Lease commitments
Thousands of
U.S. dollars

Millions of yen

Due within one year
Due after one year
Total

2011

2010

2011

¥ 47
39
¥ 87

¥ 79
78
¥ 157

$   575476$ 1,052(3) Lease expenses and depreciation equivalents
Thousands of
U.S. dollars

Millions of yen

Lease expenses
Depreciation equivalents

2011

2010

2011

¥ 84
84

¥ 153
153

$ 1,013
1,013

Non-cancelable operating lease commitments were as follows:
Thousands of
U.S. dollars

Millions of yen

Due within one year
Due after one year
Total

2011

2010

2011

¥ 2
—
¥ 2

¥4
0
¥4

$ 26
—
$ 26

9. 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. These are managed at all times with the aim of maintaining them within the balance of accounts payable denominated in the same 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.

22

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 11. 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, 2011 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
2011

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¥ 42,168¥ 42,168¥ —19,396
61,56520,98075,596
63,984
160,560¥       —19,396
61,56520,98075,59664,236
160,813¥       —

—
—
—
—
252
252
¥ —

Thousands of U.S. dollars
2011

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

23

Book value

Fair value

Difference$   507,137$   507,137$     —

233,276
740,414
252,320909,156
769,501
1,930,979$         —233,276
740,414
252,320909,156
772,537
1,934,015$         —

—
—
—
—
3,035
3,035
$     —

Millions of yen
2010

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¥ 48,022¥ 48,022¥ —23,66571,68823,23979,902
68,742
171,885¥       —23,66571,68823,23979,902
69,446
172,589¥       —

—
—
—
—
704
704
¥ —

(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. Current portion of long-term debt (¥12,382 million ($148,917 thousand)) is included in long-term debt.
(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 estimated given equivalent new borrowings. The amount also includes the total current portion of long-term debt of ¥12,382 million($148,917 thousand).
(vi) Derivatives
Please see Note 11.
Unlisted equity securities (in the amount of ¥3,442 million ($41,404 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.
Planned repayment of debentures, long-term debt, lease obligations and other interest-bearing liabilities after the balance sheet
date (consolidated basis).
Millions of yen
2011

Debentures
Long-term debt
Lease obligations
Other interest-bearing liabilities
Total

Due within
1 year

1-2 years

2-3 years

3-4 years

4-5 years

Over 5 years¥    100
12,382294
1,000¥ 13,776¥    650
19,747269—¥ 20,667¥      —15,607246—¥ 15,854¥     —
8,807
208—
¥ 9,015¥     —
7,340
192—
¥ 7,532¥     —
98951—
¥ 1,050

24

Thousands of U.S. dollars
2011

Debentures
Long-term debt
Lease obligations
Other interest-bearing liabilities
Total

Due within
1 year

1-2 years

2-3 years

3-4 years

4-5 years

Over 5 years$    1,202
148,917
3,537
12,026$ 165,684$    7,817
237,494
3,239—$ 248,551$       —187,705
2,966—$ 190,672$       —105,9202,509—$ 108,429$      —88,277
2,311—$ 90,588$      —1,18711,446—$ 12,633

Millions of yen
2010

Debentures
Long-term debt
Lease obligations
Other interest-bearing liabilities
Total

Due within
1 year

1-2 years

2-3 years

3-4 years

4-5 years

Over 5 years¥    100
13,813570
9,000¥ 23,483¥    100
12,444557—¥ 13,101¥    650
19,565538—¥ 20,754¥      —14,230520—¥ 14,751¥     —
8,440
489—
¥ 8,929

¥ —
248
467
—
¥ 716

Additional information

Effective the year ended March 31, 2010, “Accounting Standard for Financial Instruments” (ASBJ, Statement No. 10 issued on
March 10, 2008) and “Guidance on Disclosures about Fair Value of Financial Instruments” (ASBJ, Guidance No. 19 issued on
March 10, 2008) have been applied.
10. 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, 2011 and 2010 are summarized as follows:
Available-for-sale securities:
Millions of yen
2011

Equity securities
Government bonds and local government bonds
Other

Acquisition

Carrying amountGross unrealized
holding gains

Gross unrealized
holding losses¥ 16,5509—¥ 16,560¥ 19,3879—¥ 19,396¥ 4,4190—¥ 4,419¥ 1,582——¥ 1,582

Thousands of U.S. dollars
2011

Equity securities
Government bonds and local government bonds
Other

Acquisition

Carrying amountGross unrealized
holding gains

Gross unrealized
holding losses$ 199,047
115—$ 199,163$ 233,157
119—$ 233,276$ 53,146
3—$ 53,150$ 19,037——$ 19,037

Millions of yen
2010

Equity securities
Government bonds and local government bonds
Other

25

Acquisition

Carrying amountGross unrealized
holding gains

Gross unrealized
holding losses¥ 18,2419—¥ 18,251¥ 23,655
9—¥ 23,665¥ 7,0660—¥ 7,066¥ 1,652——¥ 1,652

11. 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

¥24,414 million¥16,416 million$293,619 thousand$197,426 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.
12. 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.
The following table sets forth a reconciliation of the projected benefit obligation, plan assets, funded status of the retirement benefit
plans and net liability recognized in the accompanying consolidated balance sheets at March 31, 2011 and 2010.
In addition, in October 2006, the Company transferred a portion of its defined benefit pension plans to a defined contribution
pension plan.
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)
Net retirement benefits
Prepaid pension costAccrued retirement benefits

Thousands of
U.S. dollars

2011

2010

2011

¥ (26,399)
27,387988(1,357)(1,119)(1,487)3,885¥ (5,373)¥ (27,600)
29,3491,749(2,990)(1,269)(2,510)4,016¥ (6,526)$ (317,490)
329,380
11,890(16,324)(13,458)(17,892)
46,728$ (64,621)

The net periodic retirement benefit cost for the years ended March 31, 2011 and 2010 included the following components:
Millions of yen

Service cost
Interest cost
Expected return on plan assets
Amortization of net actuarial loss (gain)
Amortization of prior service cost (reduction of the obligation)

26

2011

2010

¥ 1,687
427
(171)
(253)
(104)
¥ 1,586¥ 1,610
543
(315)
283
(169)
¥ 1,952

Thousands of
U.S. dollars
2011$ 20,299
5,138(2,057)(3,048)(1,255)$ 19,077

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

2011

2010

1.5~1.9%
2.0%
mainly on a points basis
10~15 years
10~15 years

1.5~1.9%
4.0%
mainly on a points basis
10~15 years
10~15 years

13. Deferred Income Taxes

At March 31, 2011 and 2010, significant components of deferred tax assets and liabilities were as follows:
Millions of yen

Thousands of
U.S. dollars

2011

2010

2011

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
Loss on natural disasterTax loss carryforwards
Other
Gross deferred tax assets
Valuation allowance
Total deferred tax assets¥      48
1,042
3,305
157
613
171
4,527
9,903
9,484
29,255(24,780)4,474¥      99
1,304
3,690
233
1,036
199
—
8,125
8,696
23,386(17,456)5,929$     587
12,54339,753
1,892
7,379
2,065
54,451
119,099
114,063
351,835(298,019)
53,815

Deferred tax liabilities:
Reserve based on Special Taxation Measures Law
Consolidation adjustment to book value of subsidiaries’ assets
Unrealized gains on available-for-sale securities
Other
Total deferred tax liabilities
Net deferred tax assets(32)—(1,155)(268)(1,456)¥ 3,018(34)(239)(2,200)(163)(2,637)¥ 3,292(391)—(13,900)(3,225)(17,517)$ 36,298

Due to the posting of a loss before income taxes and minority interests for the years ended March 31, 2011 and 2010, description
regarding reconciliation of the statutory tax rate to the effective income tax rate was omitted.

2714. 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 two reportable segments, identified by product portfolio, which are classified as the “Paper andPulp Segment” and the “Imaging and Development (I&D) Segment.”
The “Paper and Pulp Segment” develops writing and printing paper, premium-quality paper and pulp. The “I&D Segment”
develops photo-sensitive printing plates, inkjet paper, photographic materials and other items.
Millions of yen
Reportable segments
Year ended March 31, 2011

Sales
Sales to unaffiliated customers
Intersegment sales and transfers
Total sales
Segment income (loss)
Segment assets
Amortization
Investment in equity-method affiliates
Increase in tangible and intangible fixed assets

Paper
and Pulp

Imaging andDevelopment¥ 172,129
3,584
175,713¥    3,180¥ 187,821
9,453
488
2,828

Total

¥ 31,825 ¥ 203,954
16,54820,133
48,374224,088¥     (37) ¥    3,142¥ 51,566 ¥ 239,387
2,528
11,981
—
488
1,331
4,160

Other

Total

¥ 6,891
10,88817,780¥    375¥ 12,102305—
229¥ 210,846
31,021
241,868¥    3,518¥ 251,490
12,286
488
4,389

Adjustments

Consolidated¥      — ¥ 210,846(31,021)—(31,021) 210,846¥     (40) ¥    3,477¥ (2,983) ¥ 248,506(44)
12,241
—
488
(62)
4,326

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

Paper
and Pulp

Imaging andDevelopment

Total

Other

Total

Adjustments

Consolidated

Sales
Sales to unaffiliated customers$ 2,070,104 $ 382,749 $ 2,452,854 $ 82,884 $ 2,535,739 $      — $ 2,535,739
Intersegment sales and transfers
43,107 199,024
242,131 130,946
373,077 (373,077)—
Total sales
2,113,212 581,774 2,694,986 213,831 2,908,817 (373,077) 2,535,739
Segment income (loss)$     38,245 $     (446) $     37,798 $    4,551 $     42,309 $    (487) $     41,822
Segment assets$ 2,258,826 $ 620,158 $ 2,878,984 $ 145,550 $ 3,024,535 $ (35,882) $ 2,988,652
Amortization
113,689
30,405144,095
3,668
147,763(540)
147,222
Investment in equity-method affiliates
5,876
—
5,876
—
5,876
—
5,876
Increase in tangible and intangible fixed assets
34,012
16,01850,0302,762
52,793(757)
52,035(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 ¥(5) million ($(68) thousand) of elimination of inter-segment
income and loss and ¥(34) million ($(418) thousand) of corporate expenses, which are general and administrative expenses and are
not allocable to the reportable segments.
• Adjustments and eliminations for segment assets include ¥17,585 million ($211,495 thousand) of corporate assets and ¥(20,569)
million ($(247,377) thousand) of elimination of inter-segment assets.
• Adjustments and eliminations for increase in tangible and intangible fixed assets include ¥(62) million ($(757) thousand) of elimination of inter-segment increase in tangible and intangible fixed assets.
(iii) Segment income (loss) is adjusted with consolidated operating income (loss).

28

Millions of yen
Reportable segments
Year ended March 31, 2010

Sales
Sales to unaffiliated customers
Intersegment sales and transfers
Total sales
Segment income (loss)
Segment assets
Amortization
Investment in equity-method affiliates
Increase in tangible and intangible fixed assets

Paper
and Pulp

Imaging andDevelopment¥ 177,980
3,529
181,509¥    4,392¥ 217,468
10,262
488
4,657

Total

¥ 34,906 ¥ 212,886
14,855
18,38449,761
231,271¥    (640) ¥    3,751¥ 54,976 ¥ 272,445
2,457
12,720
—
488
2,819
7,476

Other

Total

Adjustments¥ 6,841
12,268
19,110¥    505¥ 12,898
218—
267¥ 219,728
30,653250,382¥    4,257¥ 285,343
12,938488
7,743

Consolidated¥      — ¥ 219,728(30,653)—(30,653) 219,728¥      (3) ¥    4,253¥ (3,212) ¥ 282,131(41)
12,897
—
488
(55)
7,687

(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 ¥31 million of elimination of inter-segment income and lossand ¥(34) million of corporate expenses, which are general and administrative expenses and are not allocable to the reportablesegments.
• Adjustments and eliminations for segment assets include ¥17,842 million of corporate assets and ¥(21,054) million of eliminationof inter-segment assets.
• Adjustments and eliminations for increase in tangible and intangible fixed assets include ¥(55) million of elimination of intersegment increase in tangible and intangible fixed assets.
(iii) Segment income (loss) is adjusted with consolidated operating income (loss).
Additional information
Effective the fiscal year ended March 31, 2011, the Company has applied the “Accounting Standard for Disclosures about Segments ofan Enterprise and Related Information” (ASBJ Statement No. 17, March 27, 2009) and the “Implementation Guidance on AccountingStandard for Disclosures about Segments of an Enterprise and Related Information” (ASBJ Guidance No. 20, March 21, 2008).

(2) Geographical information(i) Net sales to third parties by countries or areas grouped according to geographical classification for the years ended March 31,
2011 and 2010 are as follows:
Millions of yen

Japan
EuropeAsia
North America
Other
Consolidated

Thousands of
U.S. dollars

2011

2010

2011

¥ 157,463
27,691
9,431
9,759
6,500
¥ 210,846¥ 166,765
28,636
7,785
10,2346,305¥ 219,728$ 1,893,726
333,036
113,429
117,366
78,180$ 2,535,739

Net sales information above are based on customer location.
(ii) Property, plant and equipment by countries or geographical areas at March 31, 2011 and 2010 are as follows:
Millions of yen

Japan
EuropeNorth America
Consolidated

29

Thousands of
U.S. dollars

2011

2010

2011

¥ 107,182
10,52287¥ 117,792¥ 115,560
13,721150¥ 129,433$ 1,289,023
126,553
1,052$ 1,416,630

(3) Impairment loss on fixed assets by reportable segments
Thousands of
U.S. dollars

Millions of yen

Paper and Pulp segment
Imaging and Development segment
Other
Consolidated

2011

2010

2011

¥—
—
—
¥—

¥ 1,002275
213¥ 1,491$———$—

Other is impairment loss on fixed assets relating to management of sports facilities.

(4) Amortization and balance of goodwill
Millions of yen
Reportable segments
Year ended March 31, 2011

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

Paper
and Pulp

Imaging andDevelopment

Total

Other

Total

Adjustments

Consolidated

¥ —
—

¥ 42
22

¥ 42
22

¥ —
—

¥ 42
22

¥—
—

¥ 42
22

108
¥ 353

—
¥—

108
¥ 353

94
¥ 196

202
¥ 550

—
¥—

202
¥ 550

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

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

Paper
and Pulp

Imaging andDevelopment

Total

Other

Total

Adjustments

Consolidated$     —
—

$ 515
272

$   515272$     ——

$   515272$——$   515272

1,303$ 4,247

—
$ —

1,303
$ 4,247

1,136$ 2,369

2,439$ 6,616

—
$—

2,439
$ 6,616

Millions of yen
Reportable segments
Year ended March 31, 2010

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

Paper
and Pulp

Imaging andDevelopment

Total

Other

Total

Adjustments

Consolidated

¥ —
—

¥ 42
65

¥ 42
65

¥ —
—

¥ 42
65

¥—
—

¥ 42
65

79
¥ 461

—
¥—

79
¥ 461

97
¥ 297

177
¥ 759

—
¥—

177
¥ 759

30

Mitsubishi Paper Mills Limited and Consolidated Subsidiaries

Report of Independent Auditors on Consolidated Financial Statements

31

Mitsubishi Paper Mills Limited

Board of Directors, Executive Officers and Corporate Auditors

Managing Executive Officers

Masami Mizuno

Kunio Suzuki

Director and Senior
Managing Executive Officer

President and Chief Executive
Officer

Takao Senga

Kanji Itakura

Mitsuo Ushijima

Hiroshi Nozawa

Fukumi Kanehama

Director and Managing
Executive Officer

Director and Managing
Executive Officer

Director and Managing
Executive Officer

Director and Managing
Executive Officer

Managing Executive
OfficerPresident and Chief Executive
Officer

Kunio Suzuki
President

Director and Senior Managing
Executive Officer

Masami Mizuno

Supervisor, Purchasing Dept. & Forestry
Dept.; General Manager, President’s
Office; In Charge of President’s Office(Corporate Planning Dept. and Affiliates
Managing Dept.), Internal Audit Dept.;
Director Responsible for Corporate Social
Responsibility

Director and Managing
Executive Officers

Director and Senior Executive
Officer

Takao Senga

Kazuhisa Taguchi

Supervisor, Technology & Environmental
Dept.; In Charge of Intellectual
Property Dept.; President, Imaging &Development Company

Unit Manager, Digital Imaging Unit,
Imaging & Development Company

Executive Officers

Motoshige YamadaHead, Kyoto Mill, Imaging andDevelopment Company

Shinichi Suzuki

Head, Takasago Mill

Director

Tomohisa Shinagawa

Kanji Itakura

Supervisor, Finance & Accounting Dept.

Yoshihiko Hibino

Deputy Head, Hachinohe Mill

Senior Executive Officers

Kiyoshi Maeda

Mitsuo Ushijima

General Manager, Purchasing Dept. andForestry Dept.

In Charge of Paper Div., German
Operations and President’s Office;Information Sharing Office; General
Manager, Paper Div.

Junji Harada

Unit Manager, New Business
Development Unit, Imaging andDevelopment Company; Head, Tsukuba
R&D Center

Naoya Tashiro

General Manager, Kitakami Div.,
Imaging and Development Company;
President & CEO, Kitakami Hitec Paper
Corp.

Hiroshi Nozawa

In Charge of General Affairs & Personnel
Dept. and Information Systems Dept.;
General Manager, Information Systems
Dept.

Kiyoharu Yamada

General Manager, Commercial Printing
Paper Sales Dept., Paper Div.

Managing Executive Officer

Fukumi Kanehama

Yutaka Oka

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

Masaki Shuto

General Manager, Finance & Accounting
Dept.

Corporate Auditors

In Charge of Technology &Environmental Dept.; Head, HachinoheMill and General Manager, Equipment
Planning OfficeKenji Oka
Shigeru Uemura
Yasuharu Takamatsu
Koji Kaihotsu32(as of June 29, 2011)

Mitsubishi Paper Mills Limited

Company Data

Established:
April 1, 1898
Head Office:4-2, Marunouchi 3-chome, Chiyoda-ku, Tokyo 100-0005, Japan
Telephone:+81-3-3213-3751 (Information)+81-3-3213-3641 (President’s Office)+81-3-3213-3729 (Commercial Printing Paper Sales Dept.
Paper Division)+81-3-3213-3733 (Business Communication & Specialty Paper
Sales Dept. Paper Division)+81-3-3213-3728 (Sales Administration Dept. Paper Division)+81-3-3213-3734 (Ink Jet & Photo Sales Dept. & Marketing &Planning Dept. Imaging & Development
Company)+81-3-3213-3743 (Graphic Systems Sales Dept. Imaging
Development Company)+81-3-3213-3731 (Sales Development Dept. New Business
Development Unit Imaging &Development Company)+81-3-3213-3745 (Purchasing Dept.)+81-3-3213-3646 (Forestry Dept.)

Facsimile:+81-3-3214-2338 (Information)+81-3-3213-3818 (President’s Office)+81-3-3213-2339 (Commercial Printing Paper Sales Dept.
Paper Division)+81-3-3215-8157 (Business Communication & Specialty Paper
Sales Dept. Paper Division)+81-3-3215-2339 (Sales Administration Dept. Paper Division)+81-3-3213-6715 (Ink Jet & Photo Sales Dept. & Marketing &Planning Dept. Imaging & Development
Company)+81-3-3214-5936 (Graphic Systems Sales Dept. Imaging
Development Company)+81-3-3214-5506 (Sales Development Dept. New Business
Development Unit Imaging &Development Company)+81-3-3213-3804 (Purchasing Dept.)+81-3-3213-3804 (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 2011. 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.

33

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.
Hachinohe Forest Products Co., Ltd.
Hachiryo Co., Ltd.
Hokuryo Forest Products 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.
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)

SHIN NISSEKI BLDG.
4-2, MARUNOUCHI 3-CHOMECHIYODA-KU, TOKYO 100-0005, JAPANURL http://www.mpm.co.jp/