Our company-owned forests at Nishigo-mura, Nishishirakawa-gun, Fukushima Pref.

Annual Report2017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 photographic 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 photographic
and inkjet paper. Furthermore, we are adding functional materials such as chemical paper, highly functional
filters to our operating business domains, and increasing emphasis on research and development
in new business areas.
With production facilities and R&D sites mainly located in Japan and Germany, and sales sites
located in Japan, Germany and the United States, we have positioned ourselves to serve global
markets.

Contents
FINANCIAL HIGHLIGHTS (CONSOLIDATED) ............. 1
MESSAGE FROM THE PRESIDENT ............................ 2
BREAKDOWN OF OPERATIONS BY DIVISION ........... 4
TOPICS: 50th anniversary of Hachinohe Mill ............... 6
OUR MILLS AND THEIR PRODUCT LINES ................. 8
SIX-YEAR SUMMARY (CONSOLIDATED) ................... 9

CONSOLIDATED STATEMENTS OF
CHANGES IN NET ASSETS ..................................... 14
CONSOLIDATED STATEMENTS OF CASH FLOWS.......... 15
NOTES TO CONSOLIDATEDFINANCIAL STATEMENTS....................................... 16
INDEPENDENT AUDITOR’S REPORT ....................... 33

CONSOLIDATED BALANCE SHEETS........................ 10

BOARD OF DIRECTORS, EXECUTIVE OFFICERS ANDCORPORATE AUDITORS......................................... 34

CONSOLIDATED STATEMENTS OF OPERATIONS .. 12

COMPANY DATA ....................................................... 35

CONSOLIDATED STATEMENTS OFCOMPREHENSIVE INCOME.................................... 13

Mitsubishi Paper Mills Limited and Consolidated Subsidiaries

Financial Highlights (Consolidated)
Millions of yen (1)Thousands of
U.S. dollars (1) and (2)For the years ended March 31
Net sales
Operating income
Net income attributable to owners of parent
Net income per share (in yen and dollars) (3)Cash dividends per share (in yen and dollars)

2017

2016

¥ 201,955
4,313
1,152
33.72
−

¥ 216,340
3,872
2,217
64.85
−

$1,800,120
38,448
10,2730.30−

As at March 31
Total assets
Total net assets
Common stock
Net assets per share (in yen and dollars) (3)¥ 235,869
56,63132,756
1,591.00¥ 241,155
51,49232,756
1,440.45$2,102,411
504,779
291,971
14.18

14,406
3,734

15,797
3,697

Number of shareholders
Number of employees

2017

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 ¥112.19 = U.S.$1, as of March 31, 2017.
(3) On October 1, 2016,the share consolidation was executed at a ratio of 1share per 10 shares.
Net income per share ,and net assets per share, are calculated based on the assumption that the share consolidation was executed at the beginning of the fiscal year
ended March 31,2016.

Net Sales

13
14
15
16
17

Operating Income

13
14
15
16
17

(¥ Million)(¥ Million)

Net Income(Loss)
Attributable to
Owners of Parent(¥ Million)

Total Net Assets(¥ Million)

Sales
Composition

200,850
207,470
214,944
216,340
201,955

473

3,332
1,038

3,872

13
14
15
16
17

280
(4,272)

1,710

1,152

2,217

55,37055,58655,09451,492
56,631

13
14
15
16
17
Others 3.5%
Speciality Materials
7.0%

Paper & Pulp 72.6%

Imaging Media
16.9%

1

4,313

Message from the President
The current term as the ﬁrst year of the Second Mid-termManagement Plan, we implemented the measures in accordancewith the 4 fundamental policies. However consolidated net sales
were ¥201,955 million (US$1,800 million) (down 6.6% from theprevious term) mainly due to a decrease in demand for existingproducts, the downturn of the printing paper market and theappreciation of the yen.
As for proﬁts and losses, proﬁt gain factors, including cheap
fuel costs in the ﬁrst half and improvement in proﬁts and losses of
our European subsidiary, exceeded loss factors from sales
including a decrease in sales ﬁgures and lower sales prices,leading to a consolidated operating income of ¥4,313 million(US$38 million; up 11.4% from the previous term), and a consolidated ordinary income of ¥2,703 million (US$24 million; up 22.0% fromthe previous term). Proﬁt attributable to owners of parent was¥1,152 million (US$10 million; down 48.0% from the previous term),
showing a decrease from the previous term, which saw high gains
on disposal of ﬁxed assets.
As for non-consolidated results, we had net sales of ¥119,972
million (US$1,069 million), an ordinary income of ¥3,410 million(US$30 million), and a proﬁt of ¥2,434 million (US$21 million).

Our Goals to Address[Second Mid-term Management Plan]
We have formulated the Second Mid-term Management Plan (from
April 2016 to March 2019) based on the key concept of “stabilizing
revenue through alliances” and are making efforts to establish andKunio Suzuki, President & C.E.O.

strengthen a revenue structure that will be unaffected by theexternal environment to deal with the business environment wherecompetitions are expected to be more and more ﬁerce.
<Structural reform of printing paper business>

Overview of the Reporting Term

We are taking efforts to stabilize our sales volume by expanding the

The outlook for the Japanese economy in the current term remains

sales of communication paper through strengthening our allianceunclear even though a mild recovery was seen amid a backdrop ofand by increasing the exports. We also are working to streamlining

improvements to the employment environment and strong corporate

the supply chain from production to sales (optimization of distribu-

proﬁts; there was also a slump in individual consumption and ation and circulation frameworks). Through those measures we try tosudden change in the exchange rate caused by economic andbuild a stable revenue structure that will not be affected by thepolitical shifts in the U.S. and Europe. The paper and pulp industry

external environment.
German business shows the positive effect of the proﬁt

continued to suffer disastrously as structural demand kept declining

focused sales and of cost down efforts, and from now on we study

due to the digitalization of various information media.

the possible alliances in the world market.

Under such conditions, in accordance with the Second

In addition, we are currently in negotiations to mark up the

Mid-term Management Plan (from April 2016 to March 2019), we
have been working on measures to establish and strengthen aprice of printing and communication paper as well as whiterevenue structure that will not be affected by the external environ-paperboards, since we had to revise our proﬁtability in response toment under the 4 fundamental polices (i.e. (1) structural reform of

the increase in fuel costs during the second half of the ﬁscal year.

printing paper business; (2) improving proﬁt base, (3) developing<Improving proﬁt base>new business; and(4) strengthening business foundation and

For the Imaging Division, we will strengthen its business base usingﬁnancial ground that will support the Group’s earning power) based

alliances, and through aggressive sales activity in overseas

on the key concept of “stabilizing revenue through alliances”.

markets, we will further enrich existing products, for which the2Structural Reform of Printing Paper Business・We will achieve stable earning structure not affected by the external
environment through structural reform and strengthening our alliance with Oji
Group.
・We will optimize our distribution and logistics systems.

2

Improving Proﬁt Base・We will strengthen our alliance with Fujiﬁlm Corporation to build an efﬁcient
production system.
・We will improve the proﬁt base business by effectively using the businesssuperiority and positioning of Mitsubishi Paper Mills.

3

Developing New Businesses

・We will launch a biomass power generation business in collaboration with Oji
Group.
・We will strategically develop new businesses.
・We will make careful strategic and selective investment in the focus ﬁelds.

4

Strengthening business foundation and ﬁnancial
ground that will support the Group’s earning power

environment, ﬁnancial and social perspectives through proactive

Stabilization of proﬁt through Alliances1

dialogues with stakeholders are critical to collaboratively build asustainable future and society.
We recognize that the purposes of the CSR activities are to enhance
the corporate value by obtaining trust and sympathy from thestakeholders. Base on this recognition, we will implement unique
CSR activities for sustainable development.
During this term, we carried out the activities in the following priority
areas: “Initiatives to ensure strict legal compliance” and “Enhancement of activity on safety and health.” With regard to products, we
also tries to expand environment-conscious product lines such as
FSC certiﬁed products which contribute to prevent forests andThermal DigiPlate System which will contribute to reduce environmental load.
In the 153rd term, we deemed “ensuring product quality” and“enhancement of activity on safety and health” as our top priority
tasks. “Ensuring product quality” promotes strengthening our

・We will work on the reconstruction of business process and IT infrastructure
to achieve the Group’s business structure reform.
・We will promote reduction of interest bearing debts, which we havemanaged to reduce to the pre-Great East Japan Earthquake level, andfurther strengthen the Group’s ﬁnancial ground.

alliances, which is one of the pillars of our Second Mid-termManagement Plan, while “enhancement of activity on safety andhealth” corresponds to “upgrading safety measures in the manufacturing business” which is progressing with assistance from thepublic and private sectors. We will endeavor to conduct CSR
activities that will lead to mid- to long-term development andmarket is maturing. For the Speciality Materials Division, we will

increasing our corporate value as well.

strive to expand sales in Asian countries, primarily China, the U.S.
and Europe, making steady growth of the non-woven fabrics andThermo Rewrite using our position in the market.

Forecast<Developing New businesses>

The consolidated ﬁnancial performance for the following term is

We are expanding the business in the new ﬁelds through launching

forecasted to have net sales of ¥205,000 million (US$1,782 million),new businesses in the expanding markets such as functional ﬁlms

an operating income of ¥4,000 million (US$34 million), an ordinaryand digital image transfer paper utilizing our imaging technology,

income of ¥2,500 million (US$21 million), and proﬁt attributable toand through the superior quality of our battery separators. For

owners of parent of ¥1,500 million (US$13 million).

functional ﬁlms, we decided an investment to build a new exclusive

The above forecast presumes 115 yen will equal 1 US dollar

facility in Kyoto Mill.

and 125 yen will be worth 1 euro. The business forecast is based on

Moreover, to improve the proﬁt base of Hachinohe Mill, we

our judgment and available information at the time of creation andwork with the Oji Group to build a biomass power plant, which willcontains risks and uncertain elements. It is possible that actual

start operation in July 2019. Furthermore, we have agreed to launch

results and ﬁgures may differ from the estimates according toa tissue paper business in collaboration with the Oji Group in

various factors.

Hachinohe Mill and strive to start operation in 2019.

June 2017<Strengthening business foundation and ﬁnancial ground that will
support the Group’s earning power>
We build a project framework to rebuild our business processes
and IT base. We achieved the goals set for interest-bearing
liabilities and D/E ratio in the Second Mid-term Management Plan
ahead of schedule in the current term. We continue to work towards

Kunio Suzuki,
President & C.E.O.

achieving our ﬁnal objectives of the Second Mid-term Management
Plan.
[CSR (corporate Social Responsibility)]
We believe that appropriate actions to address issues from3

Breakdown of Operations by Division

Paper and Pulp
Divisions

Net sales (¥ Million)
15

165,449

16

164,319
150,428

17

As for domestic sales, the performance of communication paper

Consequently, both quantity sold and sales dropped.

was healthy thanks to the alliance effects, the sales promotion of

As for commercial pulp, both quantity sold and sales

PPC paper, etc., while the sales of printing paper were sluggish,decreased.

and so quantity sold declined. As for export, production inkjet

Consequently, the total net sales of the Paper and Pulp

paper was promoted and the sold quantity of printing paper

Divisions were ¥150,428 million (US$1,340 million), down 8.5%

grew. As a result, quantity sold increased, but the domestic

from the previous term.

market was stagnant, and sales declined.
As for European subsidiaries, the revisions to the prices ofour mainstay carbonless copy paper and thermal paper turned
out to be effective, but orders were selectively received.

Imaging Division

Net sales (¥ Million)
43,53515
16

41,76517

38,908In the Japanese market, the performance of photosensitive
sensitive materials and platemaking materials was healthy, andsales were nearly equal to those in the previous term. In theoverseas market, the sales of photosensitive materials grew dueto the alliance effect, but total sales dropped, due to theweakening of demand for existing products, including inkjet
paper and platemaking materials, and the yen appreciation.
Consequently, the total net sales of the Imaging Division were¥38,908 million (US$346 million), down 6.8% from the previous
term.

4

Speciality Materials
Division

Net sales (¥ Million)
15

16,847

16

16,92817

16,958

As for speciality materials, the sales of water treatment

Division were ¥16,958 million (US$151 million), up 0.2% from themembrane supporting body and Thermo Rewrite targeted at

previous term.

overseas markets increased, but the number of orders for battery
separators and filters for overseas home electronics decreased,
and so the sales of speciality materials declined.
As for chemical paper, the performance of decorative
laminate base paper and lining paper for wallpaper was sluggish,
but the sales of tape base paper, etc. grew, and so the sales ofchemical paper increased.
Consequently, the total net sales of the Speciality Materials

Other
Divisions

Net sales (¥ Million)
15,14015
1615,81017

16,240As the sales at engineering-related subsidiaries increased, thetotal net sales of other divisions were ¥16,240 million (US$144
million), up 2.7% from the previous term.

5Topics

50th anniversary of Hachinohe Mill
Hachinohe Mill of Mitsubishi Paper Mills started operation in January 1967, and commemorated the 50th
anniversary in 2017. By taking advantage of the blessed coastal location of Hachinohe, it has grown to become oneof the largest paper pulp plants in Japan, as the ﬂagship factory of Mitsubishi Paper Mills.
It has undergone several earthquake disasters and economic turbulences, and suffered signiﬁcant damage
especially from the Great East Japan Earthquake, but was able to commemorate the 50th anniversary of start ofoperation, thanks to the strong support from stakeholders. We would like to express our gratitude to many people,
including shareholders, business partners, Aomori Prefecture, Hachinohe City, and employees, all of whom havesupported its operation for half a century.
As the demand for printing paper is weakening, Hachinohe Mill will work on shifting its portfolio tocommunication paper, biomass power generation, tissue paper business, and so on for the next stage, by utilizing
alliances.

6

Establishment of a photo gallery & shop
We opened a photo shop that includes a photo gallery in Omotesando (Jingumae, Shibuya-ku, Tokyo). In this shop,
Pictorico, which belongs to our corporate group, sells our photo-related products, offers consultation services about
printing, and receives orders for the printing service “Pictorico Atelier.” We entrust Pictorico with the operation ofthis gallery.

NanoBaseX “OZ-GX Series,” heat-resistant separators for lithium-ion batteries(produced at Takasago Mill)The heat resistance and liquid retention property of NanoBaseX, the separator for lithium-ion batteries, areenhanced by applying ceramics to non-woven polyester fabric. This separator contributes to the improvement ofsafety and life of lithium-ion batteries.
In November 2016, we developed NanoBaseX “OZ-GX Series” , which can tolerate as high as 470°C.
As the size of lithium-ion batteries has become larger for electric vehicles, we need to secure their safety. In thesecircumstances, we are actively promoting NanoBaseX “OZ-GX Series,” which would overcome the separators’ heat
resistance problem in lithium-ion batteries.

7

Our Mills and Their Product Lines

SHIRAKAWA SITEKITAKAMI HITEC PAPER CORP.

HACHINOHE MILL

Address:

Address:

Address:

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

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

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

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

TAKASAGO MILL
Address:

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

KYOTO MILL
Address:

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

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

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

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

MP Juarez LLC
Address: Ave. Valle del Cedro #1551 Paraq. Ind Intermex
C.P. 32690 Cd. Juarez. Chih., Mexico
Telephone: +1-915-534-8230 (U.S. Head Office)Products: Inkjet paper(Juarez, Mexico)Zhuhai MPM Filter, Ltd.
Address: #17 Yijing Lane, Pingsha Town, Jinwan District,Zhuhai, Guangdong, China
Telephone: +86-756-8895033
Products: Various filters(Zhuhai, China)8Six-Year Summary (Consolidated)Thousands of
U.S. dollars

Millions of yen
2017

For the years ended March 31¥ 201,955
Net sales
4,313
Operating income
1,152
Net income (loss) attributable to owners of parent
33.72
Net income (loss) per share (in yen and dollars)
As at March 31
Total assets
Total net assets¥ 235,869
56,631

2015

2014

2013

2012

2017

¥ 216,340 ¥ 214,944
3,872
1,038
2,217
(4,272)64.85(124.96)¥ 207,470
473
280
8.21

¥200,850
3,332
1,710
50.01

¥194,856
2,164
565
16.54

$1,800,120
38,448
10,2730.30¥ 241,155 ¥ 253,482
51,49255,094¥ 258,599
55,586¥265,234
55,370¥276,305
52,108$2,102,411
504,779

2016

Notes: On October 1, 2016,the share consolidation was executed at a ratio of 1share per 10 shares. Net income per share is calculated based on the assumption that the shareconsolidation was executed at the beginning of the fiscal year ended March 31, 2012.

9Mitsubishi Paper Mills Limited and Consolidated Subsidiaries

Consolidated Balance Sheets
As at March 31, 2017 and 2016
Thousands of
U.S. dollars (Note 2)

Millions of yen
2017

2016

2017

¥ 10,840¥11,381$96,629

46,291
2,100

48,3381,950

412,613
18,72548,391(216)

50,288(188)

431,339(1,926)Inventories
Deferred tax assets (Note 14)
Other48,17541,406
1,027
2,346

50,10045,505
945
1,975

429,412369,074
9,160
20,918

Total current assets

103,797

109,907925,196Land
Buildings and structures
Machinery, equipment and vehicles
Construction in progress
Leased assets
Other

22,06896,648360,409
676
2,643
9,583

22,51896,990361,447
535
2,867
9,814

196,708
861,471
3,212,494
6,028
23,56385,417

Less: Accumulated depreciation
Accumulated impairment losses

492,029(387,374)(590)

494,174(383,735)(563)

4,385,684(3,452,845)(5,267)104,064

109,875

927,571

21,673
1,328
599
2,005
(99)
184
2,315

17,568
985
82
8
(338)
198
2,868

193,183
11,843
5,339
17,875(886)
1,645
20,64228,007

21,372

249,643¥ 235,869¥241,155$2,102,411

ASSETS

Current assets:

Cash and deposits (Note 3 (12))
Receivables:
Trade notes and accounts (Note 10)
Other
Less: Allowance for doubtful accounts

Non-current assets:
Property, plant and equipment (Note 4):

Net property, plant and equipment

Investments and other assets:
Investment securities (Notes 4, 10 and 11)
Investments in unconsolidated subsidiaries and affiliated companies
Long-term loans receivable
Net defined benefit asset
Less: Allowance for doubtful accounts
Deferred tax assets (Note 14)
Other
Total investments and other assets
Total assets
The accompanying notes are an integral part of these ﬁnancial statements.

10Thousands of
U.S. dollars (Note 2)

Millions of yen
2017

2016

2017

¥ 50,828
17,435346¥53,32127,854363$453,061
155,413
3,087

24,573
2,648
7,135
399
4,007

23,302
2,744
7,081
345
3,665

219,037
23,60963,6053,560
35,718107,376

118,677

957,093

57,570
907
66
143
8,949
2,442
888
893

57,443
1,240
48
121
9,165
1,213
884
866

513,150
8,092
591
1,283
79,766
21,774
7,918
7,962

71,862

70,985640,539¥ 179,238¥189,663$1,597,632¥ 32,756
7,438
8,599
(147)

¥32,756
7,456
7,447
(145)

$291,971
66,301
76,654(1,314)

48,64747,514

433,613

5,506
1,245
(1,015)

3,014
1,577
(2,864)49,084
11,101(9,052)

5,736

1,727

51,133

2,247

2,250

20,032

Total net assets¥ 56,631¥51,492$504,779

Total liabilities and net assets¥ 235,869¥241,155$2,102,411

LIABILITIES AND NET ASSETS
Current liabilities:

Short-term loans payable (Note 10)
Current portion of long-term debt (Note 10)
Lease obligations
Payables:Trade notes and accounts (Note 10)
Other
Accrued expenses
Income taxes payable
Other
Total current liabilities

Non-current liabilities:
Long-term debt (Note 10)
Lease obligations
Provision for directors' retirement benefits
Reserve for loss on dissolution of employee's fundNet defined benefit liability
Deferred tax liabilities (Note 14)
Asset retirement obligations
Other
Total non-current liabilities
Total liabilities
Contingent liabilities (Note 5)
NET ASSETS
Shareholders’ equity:
Capital stock
Authorized: 90,000,000 shares at March 31, 2017
Issued: 34,258,433 shares at March 31, 2017
Capital surplus
Retained earnings
Treasury shares
Total shareholders’ equity
Accumulated other comprehensive income:
Valuation difference on available-for-sale securities
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Non-controlling interests

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

11Mitsubishi Paper Mills Limited and Consolidated Subsidiaries

Consolidated Statements of Operations
For the years ended March 31, 2017 and 2016
Thousands of
U.S. dollars (Note 2)

Millions of yen
2017

2016

2017

¥ 201,955
166,817¥216,340
181,117$1,800,120
1,486,920

35,13735,223

313,200

30,82431,350274,752

4,313

3,872

38,448485(2,075)
149
(287)
255
228
207
(513)
－
(348)
(276)
(287)
(265)

473
(2,320)
188
(242)
365
37
38
1,017
277
(302)
(227)
(18)
(140)

4,327
(18,502)
1,335(2,559)
2,274
2,036
1,852
(4,574)－(3,107)(2,465)(2,561)(2,370)Total(2,727)(853)(24,314)

Income before income taxes and non-controlling interests

1,585

3,018

14,133

341
(85)

914
81

3,044
(758)

1,329

2,023

11,848176¥ 1,152(193)¥2,217

1,575$10,273

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income
Other income (expenses):
Interest and dividend income
Interest expenses
Royalty income
Foreign exchange gains(losses)
Insurance income
Compensation income
Gain on sales of investment securities
Gain(loss) on disposal of non-current assets (Note 6)
Reversal of allowance for doubtful accounts for subsidiaries and affiliates
Special retirement expenses
Business restructuring cost (Note 7)
Impairment loss (Note 8)
Other, net

Income taxes:
Current
Deferred (Note 14)
Net income
Net income(loss) attributable to non-controlling interests
Net income attributable to owners of parent
The accompanying notes are an integral part of these ﬁnancial statements.

12Mitsubishi Paper Mills Limited and Consolidated Subsidiaries

Consolidated Statements of Comprehensive Income
For the years ended March 31, 2017 and 2016
Thousands of
U.S. dollars (Note 2)

Millions of yen

Net income
Other comprehensive income:
Valuation difference on available-for-sale securities
Foreign currency translation adjustments
Remeasurements of defined benefit plans,net of tax
Share of other comprehensive income of entities
accounted for using equity method
Total other comprehensive income
Comprehensive income
Comprehensive income attributable toComprehensive income attributable to owners of parent
Comprehensive income attributable to non-controlling interests

2017

2016

2017

¥ 1,329¥2,023$11,848

2,813
(313)
1,821

(1,918)(438)(2,979)25,078(2,798)16,238

(53)

3

(472)

4,268
5,597

(5,333)(3,310)38,04649,894

5,161
¥ 435

(2,946)¥(364)

46,009$3,884

Yen

Amounts per share:
Net income(loss) — basic (Note 3 (11))
Cash dividends applicable to the year

U.S. dollars (Note 2)

2017

2016

2017

¥ 33.72−¥64.85−$0.30−

The accompanying notes are an integral part of these ﬁnancial statements.
On October 1, 2016,the share consolidation was executed at a ratio of 1share per 10 shares. Net income per share is calculated based on the assumption that the share consolidation was
executed at the beginning of the ﬁscal year ended March 31, 2016.

13

Mitsubishi Paper Mills Limited and Consolidated Subsidiaries

Consolidated Statements of Changes in Net Assets
For the years ended March 31, 2017 and 2016

Millions of yen

Shareholders’ equity

Capitalstock

CapitalsurplusRetainedearnings

Total
Treasury shareholders’equityshares342,584,332 ¥32,756¥7,523¥5,147¥(143) ¥45,284¥4,663

Number ofshares in
issue

Balance at April 1, 2015
Changes during the year:
Net income attributable to owners of parent
Acquisition of treasury stock
Disposal of treasury stock
Change of scope of consolidation

2,217

Change in treasury shares of parent arisingfrom transactions with non-controlling shareholders(67)

Changes in items other than shareholders’ equity
Total changes during the year
Balance at March 31, 2016

(1)

82

−

(67)

2,299

342,584,332 ¥32,756¥7,456¥7,447

Changes during the year:
Net income attributable to owners of parent
Acquisition of treasury stock
Disposal of treasury stock
Change of scope of consolidation

(17)

1,152

34,258,433 ¥ 32,756¥ 7,438¥ 8,599¥254¥6,733¥3,076 ¥55,094

2,217
(1)
−
82

2,217
(1)
−
82
(67)

(5,832)(3,602)(1,648)(1,648)

(237)
(237)

(3,119)(3,119)(5,006)(5,006)

(826)
(826)

¥(145) ¥47,514¥3,014¥1,577¥(2,864)¥1,727¥2,250 ¥51,492

(2)
0

(17)
−

¥1,815

Total
accumulated
otherRemeasurements
comprehensive Non-controlling Total netof definedincomeassetsinterests
benefit plans

2,230

(1)

(0)

Changes in items other than shareholders’ equity
Total changes during the year

Foreigncurrencytranslation
adjustment

(67)

1,152

Change in treasury shares of parent arisingfrom transactions with non-controlling shareholders

Balance at March 31, 2017

Total accumulated other comprehensive income

Valuationdifference
on availablefor-salesecurities

1,152
(2)
0
−

1,152
(2)
0
−

(17)

(17)

1,132

2,492
2,492

¥ (147) ¥ 48,647¥ 5,506

(1)

1,849
1,849

(332)
(332)

4,009
4,009

¥ 1,245 ¥ (1,015) ¥ 5,736

(3)
(3)

4,006
5,138

¥ 2,247 ¥ 56,631

Thousands of U.S. dollars
Shareholders’ equity

Capitalstock

CapitalsurplusRetainedearnings

TreasurysharesTotalshareholders’equity342,584,332 $291,971$66,461$66,382$(1,297) $423,518$26,869

Number ofshares in
issue

Balance at April 1, 2016
Changes during the year:
Net income attributable to owners of parent
Acquisition of treasury stock
Disposal of treasury stock
Change of scope of consolidation
Change in treasury shares of parent arisingfrom transactions with non-controlling shareholders
Changes in items other than shareholders’ equity
Total changes during the year
Balance at March 31, 2017

Total accumulated other comprehensive income

Valuationdifference
on available-for-salesecurities

10,273
(0)

(19)
1

(159)
−

(159)

10,272

34,258,433 $291,971$66,301$76,654

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

14

Total
Foreignaccumulated
currency Remeasurements
otherof defined comprehensive Non-controlling Total net
translation
adjustment benefit plansinterests
assetsincome$14,061$(25,534) $15,396 $20,059 $458,974

10,273(19)
0−

10,273
(19)
0
−

(159)

(159)
35,73635,736

10,094

22,21522,215(2,960)(2,960)

16,481
16,481$(1,314) $433,613$49,084$11,101$(9,052) $51,133

(17)

(27)
(27)

35,70945,804$20,032 $504,779

Mitsubishi Paper Mills Limited and Consolidated Subsidiaries

Consolidated Statements of Cash Flows
For the years ended March 31, 2017 and 2016

Thousands of
U.S. dollars (Note 2)

Millions of yen

I Cash flows from operating activities:
Income before income taxes and non-controlling interests
Depreciation
Impairment loss (Note 8)
Increase (decrease) in net defined benefit liability (Note 13)
Decrease (increase) in net defined benefit asset (Note 13)
Increase (decrease) in provision for directors' retirement benefits
Interest and dividend income
Interest expense
Loss (gain) on sales of short-term and long-term investment securities
Loss (gain) on disposal of non-current assets (Note 6)
Business restructuring cost (Note 7)
Decrease (increase) in trade notes and accounts receivable
Decrease (increase) in inventories
Increase (decrease) in trade notes and accounts payable
Other, net
Sub-total
Payments for business restructuring cost (Note 7)
Interest and dividend income received
Interest expenses paid
Income taxes paid

Net cash provided by (used in) operating activities
II Cash flows from investing activities:
Purchase of property, plant and equipment and intangible assets
Proceeds from sales of property, plant and equipment and intangible assets
Purchase of investment securities
Proceeds from sales of investment securities
Purchase of shares of subsidiaries and associates
Proceeds from sales of shares of subsidiaries and associates
Payments of loans receivableCollection of loans receivable
Other, net
Net cash provided by (used in) investing activities
III Cash flows from financing activities:
Net increase (decrease) in short-term loans payable
Proceeds from long-term debt
Repayments of long-term debt
Repayments of lease obligations
Purchase of treasury shares
Proceeds from sales of treasury shares
Dividends paid to non-controlling interests
Payments from changes in ownership interests in subsidiaries
that do not result in change in scope of consolidation
Net cash provided by (used in) financing activities
IV Effect of exchange rate change on cash and cash equivalents
V Net increase (decrease) in cash and cash equivalents
VI Increase in cash and cash equivalents from newly consolidated subsidiaries
VII Cash and cash equivalents at beginning of period
VIII Cash and cash equivalents at end of period (Note 3 (12))
The accompanying notes are an integral part of these ﬁnancial statements.

15

2017

2016

2017

¥ 1,585
10,454
287
(120)
2
17
(485)
2,075
(207)
513
276
2,182
3,432
1,547
592

¥3,018
10,662
18
291
(669)
14
(473)
2,320
(38)
(1,017)227(1,530)
3,210
(384)
(117)

$14,133
93,1882,561(1,070)24
155(4,327)18,502(1,852)4,574
2,465
19,45630,593
13,793
5,283

(227)
470
(2,387)(761)(1,285)
4,366(19,210)(4,513)22,155

15,532

197,480

19,83912,626

176,837(6,120)
50
(142)
269
(355)
−
(570)
53
(256)

(4,196)
1,682
(28)
40
(4)
4
(2)
325
34

(54,557)453(1,266)
2,404(3,168)−(5,085)479(2,284)(144)
489(2,155)(506)(7,070)(2,145)(63,025)(2,112)
17,899(28,090)
(348)
(2)
0
(188)

(2,343)
18,175(20,653)
(383)
(1)
−
(240)

(18,833)
159,541(250,382)(3,108)(19)
0(1,680)

(269)

(290)

(2,401)(13,112)(5,737)(116,881)

(196)
(540)
−
11,381

(109)
4,633
242
6,505

(1,748)(4,818)−
101,447¥ 10,840¥11,381$96,629

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 ¥112.19 = U.S.$1, theexchange rate prevailing as of March 31, 2017. 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 34 subsidiaries as of March 31, 2017 (34 as of March 31, 2016). The accompanying consolidated ﬁnancial
statements include the accounts of the Company and 26 (26 for 2016) of its subsidiaries for the year ended March 31, 2017
(together, hereinafter referred to as the “Companies”).
The accounts of the remaining 8 (8 for 2016) unconsolidated subsidiaries for the year ended March 31, 2017 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.
The ﬁscal year end of Mitsubishi Paper Holding (Europe) GmbH and other 6(6 for 2016) consolidated subsidiaries is December 31. For the purpose of preparing the consolidated ﬁnancial statements, we used their ﬁnancial statements as of their respectiveﬁscal year end. We made adjustments for the purpose of consolidation as necessary for the material transactions that occurred
between such ﬁscal year-end dates and the consolidated account closing date.

(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 10 afﬁliates as of March 31, 2017 (11 for 2016). 3 afﬁliated companies were accounted for by the equity
method.
However, the remaining 8 (8 for 2016) subsidiaries and 7 (8 for 2016) afﬁliates did not have a material effect on net
income and retained earnings in the accompanying consolidated ﬁnancial statements and, therefore, these investments have been
carried at cost.

(4) Financial instruments(i) Derivatives

All derivatives are stated at fair value, with changes in fair value included in net income or loss for the year in which they arise,
except for those that are designated as “hedging instruments.”(ii) Securities
Securities other than equity securities issued by subsidiaries and afﬁliates are classiﬁed into three categories: trading, held-to-matu-

16

rity or other securities. Marketable securities classiﬁed as other securities are carried at fair value with changes in unrealized
holding gain or loss, net of the applicable income taxes, included directly in net assets. Non-marketable securities classiﬁed asother securities are carried at cost. Cost of securities sold is determined by the moving average method.
(iii) Hedge Accounting
Unrealized gains or losses arising from changes in fair value of derivative ﬁnancial instruments designated as “hedging
instruments”are carried as an asset or a liability until the losses or gains on the hedged items or transactions are recognized.
In accordance with the exceptional measure under the Japanese Accounting Standard for Foreign Currency Translations,theCompanies 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, the Companies do not record certain interest rate swap arrangements at market value but charge or credit net cash ﬂows arising from theswap 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 theaverage method and other inventories are stated at lower of cost or market, cost being determined by the moving average method.

(6) Property, plant and equipment

Depreciation of buildings (excluding for leased assets) is computed by the straight-line method.Depreciation of other property,
plant and equipment (excluding for leased assets) is mainly computed by the straight-line method,but in part, the declining-balance method is used at the head ofﬁce of the Company and certain consolidated subsidiaries.However,depreciation of structuresacquired after April 1,2016 is computed by the straight-line method.
Estimated useful lives of assets used in computing depreciation are as follows:
Buildings and structures...................... 31 to 47 years
Machinery and equipment............................ 12 years
Leased assets under ﬁnance lease agreements of the Company and its domestic consolidated subsidiaries, which do not
stipulate the transfer ownership of the leased assets to the lessee, are depreciated principally over the lease term by thestraight-line method with no residual value except for the following transactions.

(7) Allowance for doubtful accounts

The Company and the domestic consolidated subsidiaries provide the allowance for doubtful accounts based on the bad debt loss
ratio derived from their own loss history plus the amount of uncollectible receivables estimated on an individual basis.
Overseas consolidated subsidiaries provide the allowance for doubtful accounts based on methods prescribed by theirrespective countries’ regulations.

(8) Accounting method for retirement benefits(i) Method of attributing the projected beneﬁts to periods of service
As for the calculation of retirement beneﬁt obligation, the beneﬁt formula basis is used for including estimated retirement beneﬁts ina period till the end of this consolidated ﬁscal year. Some consolidated subsidiaries adopt the simpliﬁed method for calculating theliabilities and costs for retirement beneﬁts, while deﬁning the term-end privately necessary payment for retirement beneﬁts asretirement beneﬁt obligation for the lump-sum severance pay plan, and deﬁning the actuarial obligation in the latest pension ﬁnancecalculation as retirement beneﬁt obligation for the corporate pension plan.
(ii) Amortization of unrecognized prior service cost
Unrecognized prior service cost is amortized on a straight-line basis over a term that does not exceed the average remaining
service period of the employees who are expected to receive beneﬁts under the plans (10 to 14 years).
(iii) Amortization of unrecognized net actuarial gain or loss
Unrecognized net actuarial gains or losses are amortized from the year following the year in which such gains or losses arerecognized on a straight-line basis over a term that does not exceed the average remaining service period of the employees whoare expected to receive beneﬁts under the plans (10 to 14 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.

17

(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 prevailing at
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 of treasury
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 are able
to be withdrawn on demand and short-term investments with original maturities of three months or less that are exposed to a 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, 2017 and 2016 is shown below:
Thousands of
U.S. dollars

Millions of yen

Cash and bank deposits
Cash and cash equivalents

2017

2016

2017

¥ 10,840¥ 10,840¥11,381¥11,381$96,629$96,629(13) Dividends
The Companies Act of Japan (the “Law”) provides that an amount equal to 10% of the amount to be distributed as distributions ofcapital 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
In accordance with the amendment of the Corporate tax laws,the Company adopted the "Practical solution on change indepreciation method due to 2016 Tax Reform"(Practical Issues Task Force No. 32, June 17, 2016) from the ﬁscal year of 2016.
Therefore, the Company has changed the depreciation method of structures acquired after April 1,2016 from thedeclining-balance method to the straight-line method. The impact of the change on consolidated ﬁnancial statements in thisconsolidated ﬁscal year is insigniﬁcant.
(15) Changes in presentation
Previously, the Group presented part of the transportation expenses, etc. in our Paper and Pulp Division as “Cost of sales.”However, we switched to a method that presents this as “Selling, general and administrative expenses” from this consolidated
ﬁscal year.
We made this change to more appropriately present these expenses in comparison with the content of our business activities after
re-considering the conditions in which they occur while we are proceeding with efforts to optimize our distribution and logistics
structures given in our “Second Mid-term Management Plan” that we started from this consolidated ﬁscal year. We havereclassiﬁed our consolidated ﬁnancial statements for the previous consolidated ﬁscal year to reﬂect this change in thepresentation method.
As a result, ¥3,640 million presented as “Cost of sales” in our consolidated statements of operations for the previous consolidated
ﬁscal year has been reclassiﬁed as “Selling, general and administrative expenses.”(16) Changes in Accounting estimates
With regard to the number of years for posting actuarial difference and past service costs, the average remaining years of serviceof an employee has shortened, therefore from this consolidated ﬁscal year, the number of years for the Company is changed from13 to 12. Certain overseas consolidated subsidiaries have changed from 11 to 10. This change resulted in ¥182 million ($1,622
thousand) increase in operating income and income before income taxes and non-controlling interests for this consolidated ﬁscal
year.
(17) Reclassification
Certain reclassiﬁcation have been made to the prior years’ consolidated ﬁnancial statements to conform to the presentation for theyear ended March 31, 2017.

18

4. Assets Pledged as Collateral
Assets pledged as collateral primarily for short-term loans, long-term debt and debentures at March 31, 2017 and 2016 were as
follows:

Thousands of
U.S. dollars

Millions of yen

Buildings and structures
Machinery and equipment
Land
Investment securities
Other

2017

2016

2017

¥ 16,061
27,784
10,4974,820
74¥17,181
32,564
10,4973,583
104$143,159
247,656
93,56542,966659¥ 59,237$528,008¥63,930

5. Contingent Liabilities
As at March 31, 2017 the Companies were contingently liable for guarantees of loans, primarily of their employees and unconsolidated subsidiaries and afﬁliates, in the aggregate amount of ¥1,829 million ($16,303 thousand), and also liable for a recourse
obligation of credit securitization in the aggregate amount of ¥546 million ($4,875 thousand).

6. Disposal of Property, Plant and Equipment(1) Gains on disposal of property, plant and equipment

Main items under gains on disposal of property, plant and equipment were as follows:

Thousands of
U.S. dollars

Millions of yen
2017

¥ 13
4

Machinery and equipment
Land

2016

2017

¥4
1,455

$121
35

(2) Losses on disposal of property, plant and equipment

Main items under gains on disposal of property, plant and equipment were as follows:

Thousands of
U.S. dollars

Millions of yen

Scrapping and removal expenses
Machinery and equipment
Buildings and structures

2017

2016

2017

¥ 342
105
55

¥296
137
9

$3,051938
492

7. Business Restructuring Cost
Consolidated ﬁscal year under review (April 1,2016 – March 31,2017)
Survey and examination cost, and restructuring cost of a consolidated subsidiary
Previous consolidated ﬁscal year(April 1,2015 – March 31,2016)
Cost for dissolution of a consolidated subsidiary, etc.

8. Impairment Loss
Consolidated ﬁscal year under review (April 1,2016 – March 31,2017)

Application
Idle assets
Idle assets
Idle assets

Location
Aomori
Fukushima
Fukushima

Millions of yen

Category
Land
Land, etc.
Machinery and equipment

Thousands of
U.S. dollars

Impairment loss
¥ 212
52
21

$1,897469
193

Our group’s main business assets are the factories that are used as production bases. Idle assets are grouped per individual unit.
The book values of assets to be disposed of and idle assets are reduced to recoverable values. Such loss is reported as an
impairment loss under extraordinary losses. Furthermore, the recoverable value is measured with the net sale value. Land isevaluated based on the values by real estate appraisers, and other assets are reduced their book value to the residual value.

19

Previous consolidated ﬁscal year (April 1,2015 – March 31,2016)
Millions of yen

Application
Business assets

Location
Hyogo

Category

Impairment loss

Machinery and equipment, etc.

¥ 18

Our group’s main business assets are the factories that are used as production bases. Idle assets are grouped per individual unit.
Based on the decision to discontinue the use of manufacturing equipment and the scheduled disposal of assets, their book values
are reduced to recoverable values. Such loss is reported as an impairment loss under extraordinary losses. Furthermore, therecoverable value is measured with the net sale value. Land and buildings are evaluated based on the values by real estateappraisers, and other assets are reduced their book value to the residual value.

9. Other Comprehensive Income
The following table shows reclassiﬁcation adjustment for each component of other comprehensive income for the year ended
March 31, 2017:

Thousands of
U.S. dollars

Millions of yen
2017

2016

2017

¥ 4,279(233)¥(2,946)(0)$38,142(2,078)4,045(1,232)¥ 2,813(2,946)
1,028¥(1,918)

36,063(10,985)$25,078

Foreign currency translation adjustment
Amount arising during the year

¥ (313)¥ (438)$(2,798)

Remeasurements of defined benefit plans
Amount arising during the year
Reclassification adjustments for gains and losses included in net income¥ 2,634(812)¥(2,343)(573)$23,482(7,243)

1,821¥ 1,821(2,917)(62)¥(2,979)

16,238$16,238

(53)

3

(472)

¥ 4,268¥(5,333)$38,046

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 effect
Total

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
Total other comprehensive income

2010. 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.
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 withﬂoating interest rates exposed to interest-rate ﬂuctuation risk, the Company uses derivative transactions (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 derivativetransactions meet the conditions for special accounting treatment for interest rate swaps. For carrying out and managing derivativetransactions, the Company adheres closely to internal policies delimiting the authority 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 compilation ofa 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 estimatedfair value when the quoted market prices are not available. Since various assumptions and factors are reﬂected in estimating thefair value, different assumptions and factors could result in different fair value. In addition, the contract values of derivatives in Note
12. 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, 2017 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).

21

Millions of yen
2017

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

Trade notes and accounts payable
Short-term loans payable (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¥ 46,291¥ 46,291¥−

21,002
67,29321,002
67,293−−24,55650,82875,006150,391¥−

24,55650,82875,375
150,760

¥−

−
−
369
369

¥−

Thousands of U.S. dollars
2017

Trade notes and accounts receivable
Investment securities
Available-for-sale securities
Total of assets
Trade notes and accounts payable
Short-term loans payable (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$412,613$412,613$−

187,207599,821
218,879
453,061
668,563
1,340,504

187,207599,821
218,879
453,061
671,853
1,343,794

−
−
−
−
3,290
3,290

$−

$−

Difference$−

Millions of yen
2016

Trade notes and accounts receivable
Investment securities
Available-for-sale securities
Total of assets
Trade notes and accounts payable
Short-term loans payable (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¥48,338¥48,338¥−

16,96265,30023,24553,321
85,297
161,865¥−

16,96265,30023,24553,32185,430161,997
¥−

−
−
−
−
132
132
¥−

(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 securities
Fair value of investment 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 loans payable
Because these are settled in a short period of time, fair value approximates book value. Accordingly, fair value is recognized asbook value.

22

(v) Long-term debt
The fair value of long-term debt is calculated by discounting the total principal and interest using the assumed interest rate given
equivalent new borrowings.
For long-term debt with ﬂoating interest rates, loans are subject to special settlement for interest swaps. The fair value iscalculated by discounting the total principal and interest (including interest-rate swap) using the interest rate reasonably estimatedgiven equivalent new borrowings. The amount also includes the total current portion of long-term debt of ¥17,435 million ($155,413
thousand).
(vi) Derivatives
Please see Note 12.
Unlisted equity securities (in the amount of ¥1,999 million ($17,819 thousand) on the consolidated balance sheet) are not included
in available-for-sale securities, due to the difﬁculty of measuring their fair value as the stock has no quoted share price and future
cash ﬂow cannot be predicted.

Thousands of
U.S. dollars

Millions of yen

Unlisted equity securities

2017

2016

2017

¥ 1,999¥1,591$17,819

Planned repayment of debentures, long-term debt, lease obligations and other interest-bearing liabilities after the balance sheet
date (consolidated basis)
Millions of yen
2017

Short-term loans payable
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¥ 50,828
17,435346¥−
19,654332¥−
15,145309¥−
12,700
68

¥−
9,255
49

¥−
815
147

¥ 68,611¥ 19,986¥ 15,455¥ 12,768¥ 9,304¥ 963

Thousands of U.S. dollars
2017

Short-term loans payable
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$453,061
155,413
3,087$−
175,1862,960$−
134,998
2,761$−
113,201
610$−
82,495
441

$−
7,267
1,317

$611,561$178,146$137,759$113,812$82,937$8,585

Millions of yen
2016

Short-term loans payable
Long-term debt
Lease obligations

Total

Due within
1 year

1-2 years

2-3 years

3-4 years

4-5 years

Over 5 years¥53,32127,854363¥−
16,870347¥−
17,162
331¥−
11,418
309

¥−
9,633
52

¥−
2,357
199

¥81,53923¥17,217¥17,493¥11,728¥9,686¥2,557

11. Investment 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, 2017 and 2016 are summarized as follows:
Available-for-sale securities:
Millions of yen
2017

Acquisition

Carrying amountGross unrealized
holding gains

Gross unrealized
holding losses¥ 12,354¥ 21,002¥ 8,866¥ 218¥ 12,354

Equity securities¥ 21,002¥ 8,866¥ 218

Thousands of U.S. dollars
2017

Acquisition

Carrying amountGross unrealized
holding gains

Gross unrealized
holding losses$110,119$187,207$79,033$1,945$110,119

Equity securities$187,207$79,033$1,945

Millions of yen
2016

Equity securities

Acquisition

Carrying amountGross unrealized
holding gains¥12,359¥16,962¥5,371¥12,359¥16,962¥5,371Gross unrealized
holding losses

¥769

¥769

12. Derivatives(1) Transactions not subject to hedge accounting
No applicable transactions(2) Transactions subject to hedge accounting(i) Currency-related

No applicable transactions(ii) Interest-rate related
Hedge accounting

Type of derivative

methodtransaction, etc.

Main targets of hedging

Contract value

Contract value of instruments due within morethan a year

Special settlement ofInterest rate swap trans-interest rate swap

actions,ﬁxed payments,

Long-term debt

variable receivables¥31,210 million¥21,410 million$278,188 thousand$190,836 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.

24

13. Retirement and Pension Plans(1) Outline of retirement beneﬁt plan
The Company and consolidated subsidiaries adopt reserve-type and non-reserve-type deﬁned beneﬁt and deﬁned contributionplans for the retirement beneﬁts of our employees.
In the deﬁned beneﬁt pension plan(reserve-type), employees will receive lump-sum payments or pensions, which arecalculated based on their salaries and employment periods.
In the lump-sum retirement beneﬁt plan(non-reserve-type), employees will receive lump-sum retirement beneﬁts, which arecalculated based on their salaries and employment periods. The Company and some consolidated subsidiaries establish
retirement beneﬁt trusts for the lump-sum retirement beneﬁt plan to make it reserve-type.
In addition, additional retirement beneﬁts may be paid, at the time of the retirement, etc. of our employees.
In the deﬁned beneﬁt pension and lump-sum retirement beneﬁt plans adopted by some consolidated companies, thesimpliﬁed method is used for calculating the liabilities and costs for retirement beneﬁts.
As for deﬁned contribution plans, the Company and some consolidated subsidiaries establish the deﬁned contribution
pension plan, while the other consolidated subsidiaries subscribe to Smaller Enterprise Retirement Allowance Mutual Aid System.
(2) Deﬁned beneﬁt plans(i) The schedule of the deﬁned beneﬁt obligation at 2017 and 2016, were as follows:

Thousands of
U.S. dollars

Millions of yen

Balance at beginning of year (period)
Current service cost
Interest cost
Actuarial losses
Benefit paid
Other
Balance at end of year (period)

2017

2016

2017

¥ 22,164
1,101
131
595
(1,163)(362)¥21,858
1,078
262
687
(1,071)(650)¥ 22,467$197,562
9,820
1,174
5,311
(10,368)(3,233)¥22,164(ii) The schedule of the pension assets at 2017 and 2016 were as follows:

Thousands of
U.S. dollars

Millions of yen

Balance at beginning of year (period)
Expected return on pension assets
Actuarial losses
Contributions by the employer
Benefit paid
Balance at end of year (period)

2017

2016

2017

¥ 13,586
13
3,142
56
(623)

¥15,45013(1,882)56(51)$121,102
118
28,006500(5,561)¥ 16,174¥13,586(iii) The schedule of the net deﬁned beneﬁt liability for simpliﬁed method at 2017 and 2016 were as follows:
Millions of yen

Balance at beginning of year (period)
Periodic benefit cost
Benefit paid
Contribution to systems
Balance at end of year (period)$144,166

Thousands of
U.S. dollars

2017

2016

2017

¥ 579
122
(34)
(17)

¥635
58
(98)
(17)

$5,162
1,090
(308)
(153)

¥ 649

25

$200,266¥579$5,790(iv) The reconciliation of the deﬁned beneﬁt obligations and pension assets to the liabilities and assets on retirement beneﬁts
recognized in the consolidated balance sheet as of 2017 and 2016 were as follows:

Thousands of
U.S. dollars

Millions of yen

Funded defined benefit obligations
Pension assets

2017

2016

2017

¥ 15,123(16,520)¥15,065(13,931)$134,799(147,253)

6,943

9,157

61,891(1,397)
8,340

Unfunded defined benefit obligations

Net amount of liabilities and assets recognizedin consolidated balance sheet
Retirement benefit liabilities
Retirement benefit asset

Net amount of liabilities and assets recognizedin consolidated balance sheet

1,134
8,023

(12,454)
74,3458,949(2,005)9,165(8)79,766(17,875)¥ 6,943¥9,157$61,891(v) The proﬁts and losses related to retirement beneﬁts for ﬁscal period ended March 31, 2017 and 2016 were as follows:
Thousands of
U.S. dollars

Millions of yen

Current service cost
Interest cost
Expected return on pension assets
Actuarial loss recognized in the year
Prior service cost recognized in the year
Periodic benefit cost in simplified method
Periodic benefit costs of retirement benefit plan

2017

2016

2017

¥ 1,101
131
(13)
(716)
(95)
122

¥1,078
262
(13)
(477)
(95)
58

$9,8201,174(118)(6,390)
(852)
1,090

¥ 529

¥812

$4,723

In addition to the above, the premium severance payment has been reported as extraordinary losses of ¥348 million ($3,107 thousand), and ¥365 million
for the consolidated ﬁscal year ended March 31,2017 and 2016, respectively. In addition,in preperation for the loss of the planned dissolution of theemployees’ pension fund that some of our consolidated subsidiaries are members of, the Company has recorded extraordinary losses of ¥22 million($197 thousand),and ¥6 million for the consolidated ﬁscal year ended March 31,2017 and 2016, respectively.

(vi) The breakdown of items in other comprehensive income for ﬁscal period ended March 31, 2017 and 2016 were as follows:
Thousands of
U.S. dollars

Millions of yen
2017

2016

2017

Actuarial loss
Prior service cost

¥ 1,917(95)¥(2,821)(95)$17,091
(852)

Total

¥ 1,821¥(2,917)$16,238(vii) The breakdown of items in accumulated other comprehensive income for ﬁscal period ended March 31, 2017 and 2016 were as
follows:

Thousands of
U.S. dollars

Millions of yen
2017

2016

2017

Unrecognized actuarial loss
Unrecognized prior service cost

¥ (1,459)
97¥(3,376)
193$(13,009)
873

Total

¥ (1,361)¥(3,183)$(12,136)26

(viii) The breakdown of pension assets by major category as of March 31, 2017 and 2016 were as follows:2017

Equities
Bonds
General account of life insurance
Other

38%
37%
22%
3%

100%

2016

38%
36%
22%
4%

100%

(ix) The items of actuarial assumptions as of ﬁscal period ended March 31, 2017 and 2016 were as follows:

Discount rate
Expected long-term return on plan assets

2017

2016

0.0~1.8%
0.0~2.0%

0.0~2.5%
0.0~2.0%(3) Deﬁned contribution plan
The necessary contribution to the deﬁned contribution plan of our company and consolidated subsidiaries is ¥360 million($3,215
thousand) and ¥371 million for the consolidated ﬁscal year ended March 31,2017 and 2016, respectively.
(4) Multi-employer pension plan
As for the multi-employer pension plan(comprehensive employees' pension system) used by some consolidated subsidiaries,
its importance is not signiﬁcant, and so its notes are omitted.

14. Deferred Income Taxes(1) At March 31, 2017 and 2016, signiﬁcant components of deferred tax assets and liabilities were as follows:
Millions of yen

Deferred tax assets:
Accrued enterprise taxes
Accrued expenses
Net defined benefit liability
Allowance for doubtful accounts
Loss on revaluation of fixed assets
Unrealized gains on property, plant and equipment
Tax loss carryforwards
Other
Gross deferred tax assets
Valuation allowance
Total deferred tax assets
Deferred tax liabilities:
Reserve based on Special Taxation Measures Law
Unrealized gains on available-for-sale securities
Other

Total deferred tax liabilities

2017

2016

2017

¥ 95
595
1,909
83
338
170
6,386
8,106

¥73
554
2,750
175
314
221
6,344
8,248

$846
5,306
17,020
743
3,017
1,522
56,922
72,254

17,685(15,969)

18,682(16,989)

157,634(142,341)

1,715

1,693

15,293(18)(2,639)(288)(20)(1,407)
(335)

(161)
(23,528)(2,571)(2,946)

Net deferred tax assets (liabilities)¥ (1,230)

27

Thousands of
U.S. dollars(1,763)¥(70)(26,261)$(10,967)

(2) For the year ended March 31, 2017 and 2016, a reconciliation of the statutory tax rate to the effective tax rates was as follows:2017

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

30.9%
3.9
(2.8)
3.4
(22.2)(1.5)
4.5

Effective tax rates

16.2%

2016

−%
−
−
−
−
−
−

−%

For the year ended March 31, 2016, the difference between the effective statutory tax rate and the rate of burden of income taxes
after tax effect accounting has been applied is less than 5/100 of the statutory effective tax rate, so this note has been omitted.

(3) Amendments to amounts of deferred tax assets and liabilities as a result of change in normal effective statutory tax rate
“Act for Partial Amendment of Act for Partial Amendment of the Consumption Tax Act and others for the drastic reform of thetaxation system for ensuring stable ﬁnancial resources for social security” and “Act for Partial Amendment of Act for Partial
Amendment of the Local Tax Act and the Local Allocation Tax Act and others for the drastic reform of the taxation system forensuring stable ﬁnancial resources for social security” were enacted on November 18, 2016. As a result, the effective statutory
tax rate, used to calculate deferred tax assets and deferred tax liabilities, have been changed from that of the previous
consolidated ﬁscal year.
The impact on the consolidated ﬁnancial statements in this consolidated ﬁscal year is insigniﬁcant.

28

15. 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.
Consolidated ﬁscal year under review (April 1, 2016–March 31, 2017)
Millions of yen
Reportable segments

Year ended March 31, 2017

Sales
Sales to unaffiliatedcustomers
Intersegment sales andtransfers
Total sales

Segment income (loss)

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

Paper
and Pulp

Imaging
Media

Speciality
Materials¥ 146,649¥ 34,222¥ 14,092 ¥ 194,965

3,779

4,685

2,866

11,330Total¥ 6,990 ¥ 201,955
9,249¥ − ¥ 201,955(20,580)

1,523

−

−

1,523

351

1,874

−

1,874

3,678

1,820

470

5,970

123

6,094

(98)

5,995

¥ 3,941¥ 352¥ 4,294¥ 11,251 ¥ 238,953
241
10,550(20,580)−¥ 37,947
2,151

¥ 970

222,535

Consolidated¥ 174,267
7,548¥ 15,487 ¥ 227,702
608
10,30816,24020,580Adjustments

38,908¥ 948

206,295

Other

150,428¥ 2,022

16,958

Total

¥ 19

201,955¥ 4,313¥ (3,084) ¥ 235,869(95)
10,454

Thousands of U.S. dollars
Reportable segments
Year ended March 31, 2017

Sales
Sales to unaffiliatedcustomers
Intersegment sales andtransfers
Total sales

Segment income (loss)

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

Paper
and Pulp

Imaging
Media

Speciality
Materials$1,307,153$305,042

33,687

41,762

Total

Other

Total

$125,614 $1,737,810 $62,309 $1,800,120
25,546

100,995

82,447$35,135$3,139$−Consolidated$1,800,120(183,443)−$172$38,448

1,340,841

346,805

151,160

1,983,563(183,443) 1,800,120$1,553,322
67,286$338,244
19,174$138,049 $2,029,616 $100,287 $2,129,903
5,424
91,8842,155
94,040$(27,491) $2,102,411(852)
93,18813,580−−13,5803,130

16,711−

16,71132,791

16,227

4,194

53,214

1,105

54,319(876)

53,442$18,029$8,452

29$8,653

1,838,806 144,756

183,443

Adjustments$38,275

(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 ¥47 million ($427 thousand) of elimination of inter-segment
income and loss and ¥(28) million ($(254) thousand) of corporate expenses, which are general and administrative expenses andare not allocable to the reportable segments.
• Adjustments and eliminations for segment assets include ¥14,952 million ($133,276 thousand) of corporate assets and ¥(18,036)
million ($(160,767) thousand) of elimination of inter-segment assets.
• Adjustments and eliminations for amortization of ¥(95) million ($(852) thousand) is elimination of inter-segment.
• Adjustments and eliminations for increase in tangible and intangible ﬁxed assets include ¥(98) million ($(876) thousand) ofelimination of inter-segment increase in tangible and intangible ﬁxed assets.
(iii) Segment income(loss) is adjusted with consolidated operating income.
Previous consolidated ﬁscal year (April 1, 2015 – March 31, 2016)
Millions of yen
Reportable segments
Year ended March 31, 2016

Sales
Sales to unaffiliatedcustomers
Intersegment sales andtransfers
Total sales

Segment income (loss)

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

Paper
and Pulp

Imaging
Media

Speciality
Materials¥ 160,013¥ 35,673¥ 13,859 ¥ 209,546

4,306

164,319
¥ 226

6,092

41,765¥ 2,400

3,068

16,928
¥ 902

Total

13,466

223,013¥ 3,529¥ 15,585 ¥ 241,041
579
10,523

Other

Total

¥ 6,793 ¥ 216,340
9,017

15,810¥ 371

Adjustments¥ − ¥ 216,340

22,483(22,483)¥ 3,901¥ (28)

238,824¥ 9,998 ¥ 251,040
233
10,757

Consolidated(22,483)−

216,340¥ 3,872¥ 185,155
7,817¥ 40,300
2,126¥ (9,884) ¥ 241,155(94)
10,662

1,810

−

−

1,810

4

1,815

−

1,815

3,497

941

489

4,927

87

5,015

(75)

4,939

(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 ¥(0) million of elimination of inter-segment income and loss and¥(28) million of corporate expenses, which are general and administrative expenses and are not allocable to the reportablesegments.
• Adjustments and eliminations for segment assets include ¥14,448 million of corporate assets and ¥(24,333) million of eliminationof inter-segment assets.
• Adjustments and eliminations for amortization of ¥(94) million is elimination of inter-segment.
• Adjustments and eliminations for increase in tangible and intangible ﬁxed assets include ¥(75) million of elimination of inter-segment increase in tangible and intangible ﬁxed assets.
(iii) Segment income(loss) is adjusted with consolidated operating income.

30

(2) Geographical information(i) Net sales to third parties by countries or areas grouped according to geographical classiﬁcation for the years ended March 31,2017 and 2016 are as follows:

Thousands of
U.S. dollars

Millions of yen
2017

Japan
EuropeAsia
North America
Other

Consolidated

2017

2016

¥ 141,513
30,63013,35011,663
4,797¥149,130
35,36814,43911,2486,154$1,261,373
273,021118,998
103,966
42,761¥ 201,955¥216,340$1,800,120

Net sales information above are based on customer location.
(ii) Property, plant and equipment by countries or geographical areas at March 31, 2017 and 2016 are as follows:
Thousands of
U.S. dollars

Millions of yen
2017

2016

¥ 94,329
9,235
369
130

Japan
EuropeAsia
North America

Consolidated¥98,852
10,433439
150¥ 104,064¥109,875

2017$840,799
82,3173,295
1,159$927,571(3) Impairment loss on fixed assets by reportable segments

Consolidated ﬁscal year under review (April 1, 2016–March 31, 2017)
Millions of yen

Reportable segments

Year ended March 31, 2017

Impairment losses

Paper
and Pulp

Imaging
Media

Speciality
Materials

Total

Other

Total

Adjustments

Consolidated

¥ 287

¥−

¥−

¥ 287

¥−

¥ 287

¥−

¥ 287

Thousands of U.S. dollars

Reportable segments

Year ended March 31, 2017

Impairment losses

Paper
and Pulp$2,561

Consolidated

Imaging
Media

Speciality
Materials

Total

Other

Total

Adjustments$−$−$2,561$−$2,561$−$2,561

Previous consolidated ﬁscal year (April 1, 2015 – March 31, 2016)
Millions of yen

Reportable segments

Year ended March 31, 2016

Impairment losses

Paper
and Pulp

Imaging
Media

Speciality
Materials

Total

Other

Total

Adjustments

Consolidated

¥ 18

¥−

¥−

¥ 18

¥−

¥ 18

¥−

¥ 18

31

16. Important Subsequent Events
A reduction in the amount of capital reserve and an appropriation of surplus

At a meeting of the Board of Directors on May 25, 2017, the Company resolved a reduction in the amount of capital reserve and an
appropriation of surplus according to the Company’s Articles of Incorporation pursuant to the provisions of Paragraph 1 of Article
459 of the Companies Act.The details of this are as follows.

(1) Purpose

The purpose of a reduction in the amount of capital reserve and an appropriation of surplus is to dispose of deﬁcits of retained
earnings for resumption of dividend,and to secure ﬂexibility and mobility of the future capital policy.

(2) Procedure of a reduction in the amount of capital reserve
Based on the provisions of Paragraph 1 of Article 448 of the Companies Act, the Company reduced the amount of capital reserveand transferred the same amount to other capital surplus.
(i) Items and amount by which the reserves are reduced
Capital reserve: 1,167,302,386 yen of 7,523,692,165 yen(ii) Items and amount by which the reserves are increased
Other capital surplus: 1,167,302,386 yen(3) Procedure of an appropriation of surplus
Based on the provisions of Article 452 of the Companies Act, by transferring other capital surplus after transfer of the capitalreserves described above (2) to retained earnings, the Company disposed of all deﬁcits of retained earnings.
(i) Items and amount by which the reserves are reduced
Other capital surplus: 1,167,302,386 yen(ii) Items and amount by which the reserves are increased
Retained earnings:

1,167,302,386 yen(4) Effective date
May 25, 201732

Mitsubishi Paper Mills Limited and Consolidated Subsidiaries

Independent Auditor’s Report33Mitsubishi Paper Mills Limited

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

Kunio Suzuki

Kazuhisa Taguchi

President and Chief Executive
Officer

Director andSenior Executive Vice President

Kanji Morioka
Director andSenior Managing Executive Officer

Junji Harada

Masaki Shuto

Tsuneaki Handa

Kiyoharu Yamada

Makoto Fujita

Director andManaging Executive Officer

Director andManaging Executive Officer

Director andManaging Executive Officer

Managing Executive Officer

Managing Executive Officer

President and Chief Executive
Officer

Kunio Suzuki
President

Director and Senior Executive Vice
President

Kazuhisa Taguchi

Outside Directors

Masaki Shuto

Tomohisa Shinagawa

In charge of Finance & Accounting
Dept.

Tsuneaki Handa

Supervisor, German Operations ; In
Charge of Paper Div.; General
Manager, Paper Div.

Kanji Morioka

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

Director and Managing Executive
Officers

Junji HaradaSupervisor, Speciality Materials R&D
Laboratory, Product Development
Dept. and Intellectual Property Dept. ;In chargeof Speciality Materials Div. ; General
Manager, Speciality Materials Div.

Soumitsu Takehara

In charge of President’s Office
General Manager, President’s OfficeSenior Executive Officers

Keiichi Sato

Yutaka Oka

In charge of Imaging Media Div. ;General Manager, Imaging MediaDiv. and General Manager, DI &Photo Sales Dept.

Supervisor, Imaging Media Div., Energy
Business Dept. and Technology &Managing Executive Officers
Environmental Dept.
Kiyoharu Yamada; In charge of Kitakami Div.; General
President & CEO, MPM Operation
Manager, Kitakami Div.
Co., Ltd.
Head, Hachinohe Mill; Deputy
General Manager, Paper Div.
Director and Senior Managing
Executive Officer

Nobuhiro SatoIn charge of German Operations ; Deputy
General Manager, Paper Div.

Makoto Fujita

Executive Officers

Shimpei Yamada

Yukihiro Tachifuji

In charge of Energy Business Dept.,
Head, Takasago Mill ; Deputy GeneralSpeciality Materials R&D Laboratory, Manager, Paper Div., Imaging Media Div. and
Product Development Dept.,
Speciality Materials Div.
Intellectual Property Dept. andTechnology & Environmental Dept. ;General Manager, Product Develop- Akira Inoue
Director and Managing Executive Officer,
ment Dept.
Mitsubishi Paper Sales Co., Ltd.

Director and Senior Executive Officer

Director and Managing Executive Officer,
MPM Operation Co., Ltd.
Deputy Head, Hachinohe Mill

Koji Hayashi

President, Mitsubishi Paper Holding(Europe) GmbH

Takeshi Sunakawa

President & CEO, KJ SPECIALTY
PAPER Co., Ltd.

Corporate Auditor

Kenji Oka

Outside Corporate Auditors

Tsuyoshi Inoue
Hiroaki Tonooka
Takayuki Nakazato(as of June 27, 2017)

Naoki Okawa

In charge of General Affairs & Personnel
Dept. ,Legal Dept. and Shirakawa Office
General Manager, General Affairs &Personnel Dept.

34

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 & Business Communication
Paper Sales Dept. Paper Division)+81-3-5600-1464 (Sales Administration Dept. Paper Division)+81-3-5600-1536 (International Sales Dept. Paper Division)+81-3-5600-1479 (DI & Photo Sales Dept. Imaging Media Division)+81-3-5600-1475 (Graphic Systems Dept. Imaging Media Division)+81-3-5600-1471 (Speciality Materials Division)+81-3-5600-1453 (Raw Materials & Purchasing Dept.)
Facsimile:+81-3-5600-1489 (Information)+81-3-5600-1489 (President’s Office)+81-3-5600-1467 (Commercial Printing & Business Communication
Paper Sales Dept. Paper Division)+81-3-5600-1469 (Sales Administration Dept. Paper Division)+81-3-5600-1539 (International Sales Dept. Paper Division)+81-3-5600-1418 (DI & Photo Sales Dept. Imaging Media Division)+81-3-5600-1413 (Graphic Systems Dept. Imaging Media Division)+81-3-5600-1419 (Speciality Materials Division)+81-3-5600-1451 (Raw Materials & Purchasing Dept.)
Sales Branch:
Osaka

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

Mitsubishi Paper Sales 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 Paper Technology Co., Ltd.
Takasago Paper Processing Co., Ltd.
Kitakami HiTec Paper Corp.
Diamic Co., Ltd.
Pictorico Co., Ltd.
Kyoryo Chemical Co., Ltd.
NAMITSU Co., Ltd.
Mitsubishi Paper Engineering Co., Ltd.
Ryoshi Co., Ltd.
MPM Shared-service Co., Ltd.
MPM CAE Center Co., Ltd.
KJ Specialty Paper Co., Ltd.
Ryoko Co., Ltd.
MPM Operation Co., Ltd.
Overseas

Mitsubishi Paper Holding (Europe) GmbH (Germany)
Mitsubishi HiTec Paper Europe GmbH (Germany)
Mitsubishi Imaging (MPM), Inc. (U.S.A.)
MP Juarez LLC (Mexico)
Zuhai MPM Filter, Ltd. (China)
MPM Hong Kong Limited
Forestal Tierra Chilena Ltda. (Chile)

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 2017. 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.

352-10-4 Ryogoku, Sumida-ku,
Tokyo 130-0026, JAPANURL http://www.mpm.co.jp/