Annual Report2015Profile

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

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

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

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

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

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

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

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

Mitsubishi Paper Mills Limited and Consolidated Subsidiaries

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

2015

2014

2015

¥ 214,944
135(4,272)(12.50)−¥207,470
62
280
0.82
−

$1,788,668
1,127(35,551)
0.1−

As at March 31
Total assets
Total net assets
Common stock¥ 253,482
55,09432,756¥258,599
55,58632,756$2,109,369
458,470
272,583

17,063
3,622

17,987
3,982

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 ¥120.17 = U.S.$1, as of March 31, 2015.

Net Sales

11
12
13
14
15

Ordinary Income

11
12
13
14
15

(¥ Million)(¥ Million)

Net Income(Loss)

11
12
13
14
15

Total Net Assets

11
12
13
14
15

(¥ Million)(¥ Million)

Sales
Composition

210,846
194,856
200,850
207,470
214,944

888

2,116
2,663

62
135
(14,497)
565
1,710
280
(4,272)
52,117
52,10855,37055,58655,094

Others 3.0%
Speciality Materials
6.4%

Paper & Pulp 75.0%

Imaging Media
15.6%

1

Message from the President
Overview of the Reporting Term
In the term under review, the Japanese economy gently recovered,because corporate earnings increased mainly in the export industry
thanks to the yen depreciation and share prices got higher, but thebusiness environment of the paper and pulp industry was stringent,because personal consumption was sluggish due to the consumption tax hike, the domestic demand for paper declined structurally
due to the shift to electronic media, material costs augmented
steeply due to the weakened yen, and so on.
In this circumstance, our corporate group engages in someefforts for “strengthening the revenue base for growth” based on“the Phase 2 Rolling Plan for the First Medium-term Management
Plan” designed in November 2013. In that term, we actively
promoted structural reform, including the spin-off of Hachinohe Mill(April 2014), solicited voluntary retirement (August 2014), reduced
costs thoroughly, and so on in order to respond to the harshbusiness environment the paper and pulp industry had been facing.
For our core business of printing paper business, we continued the production-decreased system considering thedemand-supply balance, and adjusted prices as material costs
skyrocketed. For the imaging media business, we enhanced sales
outside Japan, and for the speciality materials business, weconcentrated on the overseas sales promotion mainly of water
processing ﬁlm supports and cabin ﬁlters for automobiles, etc.
As a result, consolidated net sales were ¥214,944
million(US$1,788 million), up 3.6% from the previous term. As for

Kunio Suzuki, President & C.E.O.

incomes, consolidated operating income was ¥1,038 million(US$8 million), up 119.2% from the previous term, and consolidated
ordinary income was ¥135 million(US$1 million), up 117.4% from theprevious term, as we reduced ﬁxed costs, including labor cost,through the structural reform of the above-mentioned HachinoheMill and the promotion of voluntary retirement, and made efforts toincrease proﬁts by enhancing the productivity of factories. However,consolidated current net loss was ¥4,272 million(US$35 million), as
the expenses for structural reform related to voluntary retirement
and the impairment loss due to the cessation of the operation ofsome production equipment in Takasago Mill were posted in theextraordinary loss section, and income taxes-deferred augmented
due to the use of deferred tax assets.
As for the nonconsolidated results of our company, net sales
were ¥113,965 million(US$948 million), ordinary loss was¥393 million(US$3 million), and current net loss was ¥5,504 million(US$45 million).
On August 25, 2014, our company and Hokuetsu Kishu Paper
Co., Ltd. announced that they would start having discussions for
integrating the businesses of their subsidiaries that distribute theirproducts, but we did not reach agreements on some conditions,and so we decided to stop discussing and consulting about the
integration of the businesses.

2Our Goals to Address
We engage in some measures centered on “strengthening theissues; “enhancement of activity on safety and health” andrevenue base for growth” in accordance with the Phase 2 Rolling“initiatives to ensure strict legal compliance.” Forming a foundation

Plan for the First Medium-term Management Plan. In order to copeto realize medium- to long-term growth, we promote activities

with the stringent business environment, we will enhance theleading to the improvement of our corporate value.

following activities for the 151st term.

Forecasts<Printing Paper Business>

In the next term, we will implement some measures for completing

We will take some measures for moving into the black, by

the Phase 2 Rolling Plan for the First Medium-term Management

continuing thoroughgoing cost reduction, in addition to adjustingPlan, and make efforts to improve proﬁtability further. As forprices in response to the skyrocketing of material costs, andconsolidated results, we estimate that net sales will be ¥223 billion

increasing the sales of communication paper, by exporting(US$1,858 million), operating income will be ¥3.5 billion

industrial inkjet printing paper, etc.

(US$29 million), ordinary income will be ¥1.5 billion (US$12 million),and current net proﬁt attributable to owners of parent will be<Imaging Media Business>¥0.5 billion (US$4 million).

We aim to further enrich existing products that are about to get

For the above earnings forecast, it is assumed that exchange

matured by actively conducting businesses in overseas markets

rate will be 120 yen/US dollar and 130 yen/euro.

while strengthening the business base utilizing the alliance, andThe earnings forecast is based on currently available informa-

expand our business scale by accelerating the advance to thetion, and includes risks and uncertainties. Accordingly, there is apromising ﬁelds including functional ﬁlms by utilizing the imaging

possibility that actual results will be different from forecasted values

technology.

due to various factors.

<Speciality Materials Business>

June 2015

We will expand our businesses by promoting the sales ofmainly ﬁlter products, water processing ﬁlm supports, andrewritable media in overseas markets, and releasing battery
separators inside and outside Japan, and proceed with theactivities for establishing new businesses.
In the shrinking paper and pulp market in Japan, it is anticipat-

Kunio Suzuki,
President & C.E.O.

ed that competitions will become ﬁercer, and so we will strive toimprove our ﬁnancial standing and earning base, by bettering ourbusiness portfolio and reducing costs further.
On the other hand, at the Mitsubishi Paper Mills Group, we
consider it necessary not only to secure proﬁt but also fulﬁll an
important social responsibility to various stakeholders in order tosurvive as a member of society.
We recognize that the fulﬁllment of our CSR activities is vital inenhancing the Group’s corporate value through winning your trust
and understanding. Accordingly, we promote distinctive CSR
activities while working to expand and enhance our initiatives in thisarea.
In this term, our priorities were “redoubling efforts to eradicate
unsafe practices,” and “initiatives to ensure strict legal compliance.”
With regard to products, we took steps to expand our lineup ofenvironment-conscious products such as FSC forest-certiﬁed paper
products and Thermal DigiPlate System.
In the 151st term, we will place our priority on the following two

3

Breakdown of Operations by Division

Paper and Pulp
Divisions

Net sales (¥ Million)
13

157,424

14

161,657

15

165,449

The sales volume of printing paper, which is our core product,less copy papers and thermal papers worsened.

decreased because of the consumption tax hike, the decline in

The sales volume and amount of commercial pulp declined.

demand, etc. The sales volume of communication paper

As a result, the total net sales of the Paper and Pulp

increased, because the sales of main brands, including PPC

Divisions were ¥165,449 million, up 2.3% from the previous term,

paper, steadily grew. The sales amount of printing and communi-

and operating loss was ¥1,326 million.

cation papers increased, thanks to the effect of price adjustment,etc.
As for the performance of European subsidiaries, sales
amount increased, because of the effect of exchange rates,
although the situations of the markets of our mainstay carbon-

Imaging MediaDivision

Net sales (¥ Million)
39,82513
14

41,61415

43,535In the domestic market, the demands for inkjet printing paper

were ¥43,535 million, up 4.6% from the previous term, andand platemaking materials were sluggish, but the sales ofoperating income was ¥1,481 million.

photographic sensitive materials were healthy. As a result, sales
amount was nearly equal to the value for the previous term.
In overseas markets, photographic sensitive materials wereaffected by the worsening of the market environment ascompetition became fierce, but the sales of inkjet printing paper
were healthy, and sales amount increased.
As a result, the total net sales of the Imaging Media Division4Speciality Materials
Division

Net sales (¥ Million)
14,223

13

16,034

14

16,84715

The sales amounts of non-woven fabric, filters and rewritable

Division were ¥16,847 million, up 5.1% from the previous term,

media increased because of the growth of sales of major

and operating income was ¥561 million.

products including water processing film supports, the increasein sales of cabin filters for automobiles and the sales promotionof home appliances, and sales growth outside Japan,
respectively.
The sales amount of chemical paper declined, because thesales of board paper for decorative sheets as building materials
decreased.
As a result, the total net sales of the Speciality Materials

Other
Divisions

Net sales (¥ Million)
13

16,49314

15,985
15,14015

Due to the decline in sales of subsidiaries in the fields ofengineering, warehousing and transportation, etc., total net sales
were ¥15,140 million, down 5.3% from the previous term, andoperating income was ¥395 million.

5Topics

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

Phase 2

RecoveryStrengthening the revenue base for growth【1.5 years】
Second half of the
Term ended March 2013
term ended March 2012

【3 years】
Term ended March 2014

Term ending March 2015

Changes in the external environment
Consumption tax hike

Coming of the digital printing age
in the U.S.

Acceleration of the shift from paper
media to electronic media

Enhance business operation in overseas markets
Increase of non-commodities
Injection of resources of promising products into niche markets
Decisive structural reform of Hachinohe Mill

Continued theme
Restoration of Hachinohe Mill
Completed

Procurement of Hachinohe restoration funds
Completed

Skyrocketing of material prices due to the yen depreciation
Increase in printing andcommunication paper prices

Increase in printing
paper prices

Theme of Phase 2

Changes in the external
environment

Downturn of the printing paper
market due to the steep increase ofimported paper, etc. from the fallof 2012

Term ending March 2016

[ Reinforcement of the fragile financial standing ]【Selection and concentration】 Improvement of imaging andspeciality materials businesses
To cement alliance, expand globally, and inject strategic products6(2) Strategies for Each Business — Printing Paper Business
Target value for the Printing Paper Division: Operating income for the term ending Mar. 2016: 0.0 billion yen☆ To secure profits by adjusting prices→

Full exertion and maintenance of the effect of price increase☆ To resume the operation of No.3 Paper Machine at Hachinohe
Promotion ofcommunication paper→

In July 2015 (5,000 tons/month)

Insufficiency of paper
machine performance

Expansion ofexportProgress of alliance

Variance in “Hachinohe communication paper (incl. alliance products) + export ” (monthly average)
When No.3 machine were halted (December 2012)

March 2015

Term ending March 2016 (estimate for the first half)

Domestic communication paper 10,500 tons

14,200 tons

15,000 tons

14,800 tons

16,000 tons

500 tons

ExportTotal

11,000 tons

600 tons

1,000 tons

Maintenance of the domestic base while monitoring
the market situation after price increase☆ Rationalization of distribution→

The integration of sales firms was abandoned. (April 2015)☆ Hachinohe FIT business (Power generation level: 88,300 kW)→

We aim to start operating in fiscal 2018.

(3) Strategies for Each Business — Imaging Business
Target value for the Imaging Media Division: Operating income for the term ending Mar. 2016: 2.5 billion yen☆ To enter the growing fields using the imaging technology

・To enter the growing fields including functional films (term ended March 2015: 700 million yen)
Screen film

Highly evaluated as digital signage

Promotion of application tovarious purposes of use in projection

For touch panel

Start of installation in several firms

Concentration on market expansion

Photo-sensitive resist

Expansion in application to electronic materials

Expansion in application to a broad range of fields☆ Enhancement of the alliance with Fuji Film

To surely increase the effects of the alliance・The effects of the alliance are steadily enhanced, through the increase of transactions about base paper and theimplementation of new measures☆ Further enrichment of existing products
・Horizontal expansion of IJ Mini Lab from the U.S. market to Asian and European markets
North American market grew
(year-on-year ratio: 160%)

Promotion in Asian and European markets(year-on-year ratio: 130%)

・Cultivation of new customers through the enrichment of printing and plate making materials
Injection of TDP platemaking equipment
compatible with large sizes

Entry to the screen printing market(year-on-year ratio: 120%)☆ New additional strategies・・・ Entry to the medical apparatus production and sales businesses
Injection of developed products one by one
Embryo freezing and storage devices
introduced at an academic conference

Release of the indwelling needle fixation tape
“DiaEkur”

7(4) Strategies for Each Business — Speciality Materials Business
Target value for the Speciality Materials Division: Consolidated operating income for the term ending Mar. 2016: 0.8 billion yen
The parenthesis indicates the ratio to the value for the previous term:

Results for
FY 3/15

Outlook for
FY 3/16☆ Non-woven fabric: Global promotion of water processing film supports (RO film), etc.
Expansion in application to other purposes of use,such as MBR films (116%)

Increase of users in China, the U.S., and Europe (276%)☆ BS: Sales promotion of lithium-ion batteries, separators, etc.
Upgrade of coating-type equipment and sales growth (227%)

Increase in sales of paper machine types (205%)☆ Rewritable media: Cultivation of new markets
Sales promotion in China (127%)

Cultivation of new markets in ASEAN (102%)☆ Filter: Global promotion of cabin filters for automobiles
Establishment of the tri-polar production and sales
system (Japan, China, and North America) (118%)

Worldwide manufacturing and sales (109%)☆ KJ specialty paper: Release of new products
Discussion on CNT (carbon nanotube)-related businesses

Mass production of CNT-related products8

Received “Nothing Ventured, Nothing Gained Award” at “FreewheelingAwards about Business and Biodiversity” of WWF Japan
Our corporate group received the special award titled “Nothing Ventured, Nothing Gained Award” at“Freewheeling Awards about Business and Biodiversity” organized by WWF Japan (the public interest
incorporated foundation World Wide Fund for Nature in Japan). This commending system is unique inthat WWF Japan selects the ﬁrms that have contributed to the conservation of biodiversity throughmaterial procurement and announces them based on its original evaluation system. This was the ﬁrst
event.
Our corporate group was highly evaluated, because we utilize the lumber with the FSC certiﬁcation,
intrepidly address the difﬁcult issues about the conservation of the earth environment, although it is noteasy to secure the traceability and sustainability of procurement resources, make efforts to diffuse the
FSC certiﬁcation system, and pursue social interests.
WWF Japan perused the CSR reports of 1,818 companies listed in the ﬁrst section of Tokyo Stock
Exchange, and selected 9 companies.

The screen film “SaiVis” adopted by Sumida Aquarium
The screen ﬁlm “SaiVis” of our company was adopted as a projection
mapping screen for effectively projecting an image onto the surface of a large
water tank at Sumida Aquarium. The right photo shows the rendering of a
humpback whale swimming in the sea around the Ogasawara Islands.
Through the practical activity (FSC supporting project) of the workshop
by Mitsubishi Paper Sales of our corporate group, the plan was realized, and
it is highly evaluated as exciting spatial rendering.

Start of the discussion on agricultural business
Hachinohe Mill is planning the agricultural business (strawberry cultivation) utilizing theenergy and materials of the mill, as one of new potential businesses, as our core businessof printing paper is at the ebb.
In April 2014, a greenhouse was built on the premises of the mill by utilizing theenergy and waste materials produced inside the mill, including the steam for temperature
control, the electricity for lighting and the materials for ﬂoors and planters, and then thedemonstrative experiment for cultivating “Natsu-Akari,” a strawberry for the summer andfall seasons, has begun.
We plan to carry out the demonstrative experiment repeatedly, while increasing its
scale at the subsidiary “MPM Operation Co., Ltd.” in order to evaluate the potential of the
agricultural business.

9

Corporate Social Responsibility (CSR)
Overview of Our CSR Activities
At the Mitsubishi Paper Mills Group, we consider it necessary not only to secure proﬁt but also fulﬁll an important social responsibility
to various stakeholders in order to survive as a member of society.
We recognize that the fulﬁllment of our CSR is vital in enhancing the Group’s corporate value through winning your trust andunderstanding. Accordingly, we promote distinctive CSR activities while working to expand and enhance our initiatives in this area.
In ﬁscal 2014, our top priorities were “redoubling efforts to eradicate unsafe practices at production sites,” and “initiatives toensure strict legal compliance.” With regard to products, we took steps to expand our lineup of FSC forest-certiﬁed products andother environment-conscious products such as Thermal DigiPlate System.
In ﬁscal 2015, we will place our priority on the following two issues; “enhancement of activity on safety and health” and “initiatives
to ensure strict legal compliance.” Forming a foundation to realize medium- to long-term growth, we promote activities leading to theimprovement of our corporate value.

Three-and-a-half-year strategic theme
SpecialFeatures

Create conditions for ensuring adequate revenues despite strong yen

Increasing Awareness of the FSC MarkWe attended the Eco Products 2014 held at Tokyo Big Sight in December 2014. Under the theme of “wisdom for ecology of
Mitsubishi Paper Mills Group,” we introduced initiatives on environmental conservation and environment-conscious products,
particularly FSC® forest-certiﬁed products.

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

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

10

The Forest Neighborhood Association “Paper that contributes to tree thinning”
In collaboration with Ofﬁce-Chonai-kai, we have supported the tree

間伐に寄与する紙

thinning activities conducted by the Forest Neighborhood Association andutilized thinnings since 2006. With shortfalls of expenses for tree thinning

森の町内会の仕組み：1kgあたり12円が間伐促進に使われます

born by the users of “paper that contributes to tree thinning” as “cost to
promote tree thinning,” we promote tree thinning activities which are at astandstill for economic reasons.
As this year marks ten-year anniversary, we continue to disseminate

森の町内会用紙

従来からの用紙代

間伐促進費12円/kg

the information together with Ofﬁce-Chonai-kai.

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

TopicsMitsubishi Paper Mills Receives DBJ’s Highest Environmental Responsibility Rating for Three Years in a Row
Our company received the highest environmental responsibility rating from the Development Bank of Japan (DBJ) for three years ina row for the following measures:(1) Responsibly procuring materials at all stages from the collection of raw materials, process to distribution in consideration ofsocial, environmental and economic aspects such as participating in JBIB(*) working group, and making efforts to disseminate andpromote FSC® forest-certiﬁed paper.
(2) Through the environmental education program “Ecosystem Academy” which utilizes company-owned forests and other activities, continually and actively promoting conservation initiatives on biodiversity.
(3) By utilizing biomass and refuse derived fuel, etc., reducing the ﬁnal disposal amount of wastes and usage amount of fossil fuel,thus promoting conversion to energy with less environmental burden.
(*) JBIB：Abbreviation of Japan Business Initiative for Biodiversity

11

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)

12

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

Millions of yen

For the years ended March 31

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

2015

2014

2013

2012

¥ 214,944
1,038
135(4,272)(12.50)¥ 207,470
473
62
280
0.82

¥200,850
3,332
2,663
1,710
5.00

¥194,856
2,164
888
565
1.65

¥210,846 ¥219,728
4,253
3,477
2,658
2,116
(1,597)(14,497)(4.67)(42.39)$1,788,668
8,643
1,127
(35,551)
0.00¥ 253,482
55,094¥ 258,599
55,586¥265,234
55,370¥276,305
52,108¥248,506
52,117¥282,131
68,709$2,109,369
458,470

13

2011

2010

2015

Mitsubishi Paper Mills Limited and Consolidated Subsidiaries

Consolidated Balance Sheets
As at March 31, 2015 and 2014
Thousands of
U.S. dollars (Note 2)

Millions of yen
2015

2014

2015

¥ 6,505¥ 8,382$54,134

47,0452,588

42,424
3,271

391,492
21,544

49,634(149)

45,696(264)

413,037(1,241)Inventories
Deferred income taxes (Note 17)
Other49,48549,537892
2,796

45,431
51,8791,261
2,372

411,795
412,231
7,423
23,269Total current assets

109,217

109,328

908,854

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

22,95098,238365,033516
3,115
10,03723,19898,410362,157
1,107
3,086
10,170190,984
817,496
3,037,644
4,301
25,92383,529Less: Accumulated depreciation
Accumulated impairment losses

499,892(382,428)(807)

498,130(373,785)(540)

4,159,879(3,182,397)(6,719)116,656

123,805

970,761

20,491
977
772
2,638
(1,027)247
3,508

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

170,524
8,130
6,429
21,957(8,550)2,063
29,19827,60925,465

229,752¥ 253,482¥258,599$2,109,369

ASSETS

Current assets:

Cash and bank deposits (Note 3 (12))
Receivables:
Trade notes and accounts (Note 13)
Other
Less: Allowance for doubtful accounts

Property, plant and equipment (Note 4):

Net property, plant and equipment

Investments and other assets:
Investments in securities (Notes 4, 13 and 14)
Investments in unconsolidated subsidiaries and affiliated companies
Long-term loans
Net defined benefit asset
Less: Allowance for doubtful accounts
Deferred income taxes (Note 17)
Other
Total investments and other assets
Total assets
The accompanying notes are an integral part of these ﬁnancial statements.

14

Thousands of
U.S. dollars (Note 2)

Millions of yen
2015

2014

2015

¥ 56,306
20,780394¥ 53,227
20,675378$468,556
172,923
3,285

24,062
2,861
7,270
356
3,774

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

200,240
23,81360,502
2,965
31,413

115,807

115,194

963,699

67,234
1,617
34
115
9,682
2,069
880
945

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

559,498
13,455288
961
80,57017,225
7,329
7,869

82,58087,818687,198

32,756
7,523
5,147
(143)

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

272,583
62,60842,838(1,196)45,28449,302376,833

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

4,663
1,815
254

2,804
1,576
(924)

38,804
15,107
2,121

Total accumulated other comprehensive income

6,733

3,456

56,033

3,076

2,827

25,60355,09455,586458,470¥ 253,482¥ 258,599$2,109,369

LIABILITIES AND NET ASSETS
Current liabilities:

Short-term bank loans (Note 13)
Current portion of long-term debt (Note 13)
Lease obligations
Payables:Trade notes and accounts (Note 13)
Other
Accrued expenses
Income taxes payable
Other
Total current liabilities

Long-term liabilities:
Long-term debt (Note 13)
Lease obligations
Accrued retirement benefits for directors and statutory auditors
Reserve for loss on dissolution of employee pension fundNet defined benefit liability
Deferred income taxes (Note 17)
Asset retirement obligations
Other
Total long-term liabilities
Contingent liabilities (Note 5)
NET ASSETS
Shareholders’ equity:
Common stock:
Authorized: 900,000,000 shares at March 31, 2015 and 2014
Issued: 342,584,332 shares at March 31, 2015 and 2014
Capital surplus
Retained earnings
Less: Treasury stock, at cost
Total shareholders’ equity

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

15

Mitsubishi Paper Mills Limited and Consolidated Subsidiaries

Consolidated Statements of Operations
For the years ended March 31, 2015 and 2014
Thousands of
U.S. dollars (Note 2)

Millions of yen
2015

2014

2015

¥ 214,944
184,907¥ 207,470
178,273$1,788,668
1,538,718

30,03629,197

249,949

28,99728,723

241,306

1,038

473

8,643

670
(2,519)
(319)
783
405
(163)
−
5
(386)
(1,665)−903

614(2,440)
(241)
3,099
−
(36)
199
889
−
(464)
(2,027)
1,238

5,576
(20,964)(2,656)
6,521
3,373(1,359)−48(3,218)(13,858)
−
7,518

Total

(2,285)829(19,019)

Income before income taxes and minority interests(1,246)

1,303(10,375)

Income taxes:
Current
Deferred (Note 17)

545
2,478

484
341

4,541
20,625

Income before minority interests
Minority interests in income of consolidated subsidiaries

3,024(4,271)
1

825
477
197

25,167(35,542)8¥ (4,272)¥ 280$(35,551)

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income
Other income (expenses):
Interest and dividend income
Interest expense
Losses on disposal of property, plant and equipment (Note 6)
Gains on sales of investments in securities
Compensation for damage income
Special severance payments
Gain on negative goodwill (Note 18 (5))
Subsidy income (Note 7)
Impairment loss on fixed assets (Note 8)
Cost for business structure reform (Note 9)
Legal settlement (Note 10)
Other, net

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

16Mitsubishi Paper Mills Limited and Consolidated Subsidiaries

Consolidated Statements of Comprehensive Income
For the years ended March 31, 2015 and 2014
Thousands of
U.S. dollars (Note 2)

Millions of yen

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

2015

2014

2015

¥ (4,271)¥ 477$(35,542)

2,217
151
1,013

(972)
861
(209)

18,454
1,259
8,429

154

169

1,288

3,536
(734)

(150)
326

29,431(6,110)

(995)
¥ 260

88
¥ 238

(8,282)$2,171

Yen

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

17

U.S. dollars (Note 2)

2015

2014

¥ (12.50)−¥ 0.82
−

2015

$0.1
−

Mitsubishi Paper Mills Limited and Consolidated Subsidiaries

Consolidated Statements of Changes in Net Assets
For the years ended March 31, 2015 and 2014

Millions of yen
Shareholders’ equity

Commonstock

CapitalsurplusRetainedearnings

Net
Total
Minority
unrealized
accumulated
Accumulated
interests ingains onother
TreasuryTotalstock, shareholders’ available-for-sale Translation remeasurements of comprehensive consolidated Total net
adjustments defined benefit plans income
subsidiaries assets
securities
at costequity342,584,332 ¥32,756¥7,523¥8,883¥(138) ¥49,024

Number ofshares in
issue

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

−

−

−

280

342,584,332 ¥ 32,756¥ 7,523¥ 9,164

32,756

7,523

9,420

Balance at the beginning of the term reflecting the change of accounting policies

Balance at March 31, 2015

256

¥626

950
950

¥ (141) ¥ 49,302¥ 2,804¥ 1,576¥ (924) ¥ 3,456¥ 2,827 ¥ 55,586

2,804

1,576

(924)

2,883

55,898193
193(4,272)
(2)
0
3,470
(804)

256

(0)

(4,272)(2)
0(2)(4,274)

1,858
1,858

238
238

¥ (143) ¥ 45,284¥ 4,663¥ 1,815

342,584,332 ¥ 32,756¥ 7,523¥ 5,147

(48)
(48)

280
(2)
(61)
216

(971)
(971)

(2)
0

(4,272)¥2,841 ¥55,370

277

49,558−¥3,504

(2)

(141)

−

¥(897)

280(2)(4,272)−¥3,775(2)

280

Cumulative effect of changes in accounting policies
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

Total accumulated other comprehensive income

(26)
(26)

1,179
1,179

3,456

3,276
3,276

¥ 254 ¥ 6,733

(13)
(13)
56

312

¥ 3,076 ¥ 55,094

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

Shareholders’ equity

Commonstock

CapitalsurplusRetainedearnings

Net
Total
Minority
unrealized
accumulated
Accumulated
interests ingains onother
TreasuryTotalstock, shareholders’ available-for-sale Translation remeasurements of comprehensive consolidated Total net
adjustments defined benefit plans income
subsidiaries assets
securities
at costequity342,584,332 $272,583$62,608$76,260$(1,177) $410,274$272,583$62,608$78,390

Number ofshares in
issue

Balance at April 1, 2014
Cumulative effect of changes in accounting policies
Balance at the beginning of the term reflecting the change of accounting policies

Changes during the year:
Net income
Acquisition of treasury stock
Disposal of treasury stock
Changes in items other than shareholders’ equity
Total changes during the year
Balance at March 31, 2015

$2,130$2,130$(1,177) $412,404(35,551)(20)
0$23,336$13,119$(7,692) $28,764 $23,528 $462,567$23,336$13,119$(7,692) $28,764$466$2,597$23,994 $465,164−−(35,552)(18) (35,571)

15,46815,468

1,987
1,987

9,813
9,813

27,26927,269(35,551)(20)
01,608 28,877
1,608 (6,694)

342,584,332 $272,583$62,608$42,838$(1,196) $376,833$38,804$15,107$2,121$56,033$25,603 $458,470(35,551)(1)−

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

18

(20)
2

Mitsubishi Paper Mills Limited and Consolidated Subsidiaries

Consolidated Statements of Cash Flows
For the years ended March 31, 2015 and 2014

Thousands of
U.S. dollars (Note 2)

Millions of yen
2015

2014

2015

I Cash flows from operating activities:
Income before income taxes and minority interests
Depreciation and amortization
Impairment loss on fixed assets (Note 8)
Accrued retirement benefits for employees
Increase in liabilities for net defined benefit liability (Note 16)
Decrease in assets for net defined benefit asset (Note 16)
Accrued retirement benefits for directors and statutory auditors
Interest and dividend income
Interest expense
Subsidy income (Note 7)
Gain on negative goodwill (Note 18 (5))
Gains on sales of investments in securities
Losses on disposal of property, plant and equipment (Note 6)
Cost for business structure reform (Note 9)
Legal settlement (Note 10)
Increase (decrease) in trade accounts receivable
Decrease in inventories
Decrease in trade accounts payable
Other, net¥ (1,246)
10,955
386
−
289
(272)
3
(670)
2,519
−
−
(830)
319
1,665
−
(5,165)
2,638(1,567)(547)¥ 1,303
11,214−(7,697)
6,858
65
(1)
(614)
2,440
(889)
(199)
(3,099)
241
464
2,027
4,901
3,208
(2,095)(2,585)$(10,375)
91,163
3,218
−
2,407
(2,269)32(5,576)
20,964−−(6,914)
2,656
13,858−(42,984)
21,959(13,043)(4,556)

8,476
670
−
(2,557)(522)(2,159)−15,543645
889(2,499)(328)−(2,027)70,5395,581−(21,282)(4,351)(17,969)−

Net cash provided by (used in) operating activities

3,907

12,22232,516(4,735)
140
(29)
2,936
−
20
(9)
354
153

(6,525)
72
(40)
5,976
(78)
−
(365)
355
171

(39,406)
1,170
(247)
24,436
−
174
(75)
2,953
1,273

(1,168)(433)(9,721)

2,910
14,000(21,074)
(379)
(2)
0
(30)

(6,081)
14,361(16,747)
(367)
(30)
−
(24)

24,219116,501(175,374)(3,155)
(20)
1
(250)

(4,576)(8,888)(38,079)(40)(1,877)
8,382

244
3,144
5,237

(338)
(15,622)69,756Sub-totalInterest and dividends received
Proceeds from subsidy (Note 7)
Interest paid
Income taxes paid
Payments for business restructuring costs (Note 9)
Pay of legal settlement (Note 10)

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

19¥ 6,505¥8,382$54,134

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 ¥120.17 = U.S.$1, theexchange rate prevailing as of March 31, 2015. The inclusion of such U.S. dollar amounts is solely for convenience and is notintended to imply that yen amounts have been or could be readily converted, realized or settled in U.S. dollars at that rate or any
other rate.

3. Summary of Significant Accounting Policies(1) Scope of consolidation
The Company had 35 subsidiaries as of March 31, 2015 (35 as of March 31, 2014). The accompanying consolidated ﬁnancial
statements include the accounts of the Company and 25 (25 for 2014) of its subsidiaries for the year ended March 31, 2015
(together, hereinafter referred to as the “Companies”). Furthermore, MPM Operation Co., Ltd. newly established in this consolidated
ﬁscal year is included within the scope of the consolidation. In addition, Ostrichdia Co., Ltd., which was a consolidated subsidiary,
has been excluded from the scope the consolidation from this consolidated ﬁscal year due to the selling of their stocks.
The accounts of the remaining 10 (10 for 2014) unconsolidated subsidiaries for the year ended March 31, 2015 have been
excluded from consolidation since the aggregate amounts of these subsidiaries in terms of combined assets, net sales, retained
earnings and net income were immaterial in relation to those of the consolidated ﬁnancial statements of the Companies.
Mitsubishi Paper Holding (Europe) GmbH and other four (4 for 2014) subsidiaries are consolidated using the ﬁnancial
statements as of the respective ﬁscal year end which falls on December 31 and necessary adjustments are made to their adjustments are made to their ﬁnancial statements to reﬂect any signiﬁcant transactions from January 1 to March 31.
(2) Consolidation and elimination
For the purposes of preparing the accompanying consolidated ﬁnancial statements, all signiﬁcant intercompany transactions,account balances and unrealized proﬁts among the Companies have been eliminated.
Elimination of investments in shares of consolidated subsidiaries, together with the underlying equity in net assets of such
subsidiaries, has been made to include equity in net income of subsidiaries subsequent to the respective dates of acquisitionin the consolidated statements of income. Any difference between the cost of an investment in a subsidiary and the amount ofunderlying equity in net assets of the subsidiary, unless speciﬁcally identiﬁed and reclassiﬁed to the applicable accounts fromwhich the value originates, is treated as goodwill or negative goodwill. Goodwill and negative goodwill (only incurred before
March 31, 2010) are amortized over ﬁve years on a straight line basis.
Assets and liabilities of subsidiaries are remeasured based on their fair value at the date of acquisition of control of thesubsidiaries.
(3) Investments in unconsolidated subsidiaries and affiliates
The Company had 11 afﬁliates as of March 31, 2015 (12 for 2014). 2 afﬁliated companies were accounted for by the equity
method.
However, the remaining 10 (10 for 2014) subsidiaries and 9 (10 for 2014) afﬁliates did not have a material effect on net
income and retained earnings in the accompanying consolidated ﬁnancial statements and, therefore, these investments have been
carried at cost.
(4) Financial instruments(i) Derivatives
All derivatives are stated at fair value, with changes in fair value included in net income or loss for the year in which they arise,
except for those that are designated as “hedging instruments.”20

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

21

(10) Translation of foreign currency financial statements (accounts of overseas subsidiaries and affiliates)
The ﬁnancial statements of overseas consolidated subsidiaries are translated into Japanese yen at the exchange rates prevailingat the respective balance sheet dates of those subsidiaries for assets and liabilities, and at the historical exchange rate for capital
accounts and retained earnings. All income and expense accounts are translated at the average rates of exchange during the ﬁscal
year of those subsidiaries. The resulting translation adjustments are included in net assets.
(11) Net income or loss per share
Net income or loss per share is based on the weighted average-number of common shares outstanding less the number oftreasury stock during each year, appropriately adjusted for subsequent free distributions of common shares.
(12) Cash and cash equivalents
Cash and cash equivalents in the consolidated statements of cash ﬂows are composed of cash on hand, bank deposits that areable to be withdrawn on demand and short-term investments with original maturities of three months or less that are exposed toa minor risk of ﬂuctuation in value.
A reconciliation of cash and cash equivalents in the accompanying consolidated statements of cash ﬂows and cash and bankdeposits in the accompanying consolidated balance sheets at March 31, 2015 and 2014 is shown below:
Thousands of
U.S. dollars

Millions of yen

Cash and bank deposits
Cash and cash equivalents

2015

2014

2015

¥ 6,505¥ 6,505¥8,382¥8,382$54,134$54.134(13) Dividends
The Corporation Law of Japan (the “Law”) provides that an amount equal to 10% of the amount to be distributed as distributionsof capital surplus (other than the capital reserve) and retained earnings (other than the legal reserve) be transferred to the capitalreserve and the legal reserve, respectively, until the sum of the capital reserve and the legal reserve equals 25% of the common
stock amount. Such distributions can be made at any time by resolution of the shareholders, or by the Board of Directors if
certain conditions are met, however neither the capital reserve nor the legal reserve is available for distributions.
(14) Accounting changes
Accounting Standard for Retirement Beneﬁts
Effective from the ﬁscal year of 2014, the Company adopted the “Accounting Standard for Retirement Beneﬁts” (ASBJ Statement
No. 26, May 17, 2012), and its accompanying implementation guidance,“Guidance on Accounting Standard for Retirement
Beneﬁts” (ASBJ Guidance No. 25, March 26, 2015) with respect to certain provisions described in Section 35 of the standard andin Section 67 of the guidance.
By adhering to these accounting standards, the Company has revised the method for calculating retirement beneﬁt obligations and service costs. The Company has changed the method for attributing projected beneﬁts to periods from the point
standard used by the Company and a part of consolidated subsidiaries to a beneﬁt formula. The same is applied to thestraight-line basis some of the other consolidated subsidiaries used. In addition, the method to determine the discount rate haschanged to use a single weighted-average discount rate that reﬂects the periods until the expected payment of retirement beneﬁts
and the amount of projected beneﬁts every such period.
In accordance with transitional treatment determined by article 37 of the Retirement Beneﬁts Accounting Standards, theamount of ﬁnancial impact associated with changing calculation method for retirement beneﬁt obligations and service costs wasadded to removed from the beginning balance of retained earnings.
As a result of this, our liabilities related to retirement beneﬁts at the beginning of this consolidated ﬁscal year decreased by
487 million yen, and retained earnings and minority interest increased by 256 million and 56 million yen, respectively. Furthermore,
the effect on our proﬁt and loss for this consolidated ﬁscal year is immaterial.
(15) Changes in Accounting Estimates
With regards 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 altered from15 to 13. Certain domestic consolidated subsidiaries have adjusted from 15 to 14, while certain overseas consolidated subsidiar-22

ies have altered from 12 to 11. This change resulted in a 102 million yen decrease in operating income and ordinary income for thisconsolidated ﬁscal year, respectively, including an increase of 102 million yen in net loss before income taxes and minority
interests.
(16) Reclassification
Certain reclassiﬁcation have been made to the prior years’ consolidated ﬁnancial statements to conform to the presentation for theyear ended March 31, 2015.

4. Assets Pledged as Collateral
Assets pledged as collateral primarily for short-term loans, long-term debt and debentures at March 31, 2015 and 2014 were as
follows:
Thousands of
U.S. dollars

Millions of yen

Buildings and structures
Machinery and equipment
Land
Other
Investments in securities

2015

2014

2015

¥ 18,281
37,604
10,497138
4,444¥ 19,458
43,086
10,514178
3,532$152,133
312,929
87,352
1,155
36,989¥ 70,967¥76,769$590,561

5. Contingent Liabilities
As at March 31, 2015 the Companies were contingently liable for guarantees of loans, primarily of their employees and unconsolidated subsidiaries and afﬁliates, in the aggregate amount of ¥2,216 million ($18,442 thousand), and also liable for a recourse
obligation of credit securitization in the aggregate amount of ¥1,396 million ($11,618 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
2015

¥7
0

Machinery and equipment
Land

2014

2015

¥20
25

$60
2

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

Thousands of
U.S. dollars

Millions of yen

Machinery and equipment
Scrapping and removal expenses

23

2015

2014

2015

¥ 122
185

¥109
146

$1,0171,542

7. Subsidy Income
Previous consolidated ﬁscal year (April 1, 2013 – March 31, 2014)
The subsidy income includes the subsidy for projects promoting domestic location given to the Company’s Hachinohe Mill andconsolidated subsidiaries.

8. Impairment Loss on Fixed Assets
Consolidated ﬁscal year under review (April 1, 2014 – March 31, 2015)
Our group’s main business assets are the factories that are used as production bases. Idle assets are grouped per individual unit.

Millions of yen

Application
Business assets
Idle assets

Location
Hyogo
Tokyo

Category
Machinery and equipment, etc.
Land, etc.

Thousands of
U.S. dollars

Inpairment loss
¥ 247
139

$2,061
1,157

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. Cost for Business Structure Reform
Previous consolidated ﬁscal year (April 1, 2013 – March 31, 2014)
The cost for business structure reform includes the special retirement beneﬁt for the transfer of employees to the new subsidiary
MPM Operation Co., Ltd. Through the restructuring of the Hachinohe Mill.
Consolidated ﬁscal year under review (April 1, 2014 – March 31, 2015)
There are additional charges etc. due to voluntary retirement.

10. Legal Settlement
Previous consolidated ﬁscal year (April 1, 2013 – March 31, 2014)
The legal settlement are the settlement money for the damage suit that had been ﬁled by the Urban Renaissance Agency and wasunder dispute.

2411. Other Comprehensive Income
The following table shows reclassiﬁcation adjustment for each component of other comprehensive income for the year ended
March 31, 2015:

Thousands of
U.S. dollars

Millions of yen

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

25

2015

2014

2015

¥ 3,873(808)¥ 1,533(3,043)$32,235(6,727)

3,065
(847)
¥ 2,217(1,510)537¥ (972)25,507(7,053)$18,454

¥ 151
−

¥ 861
−

$1,259
−

151
−
¥ 151

861
−
¥ 861

1,259
−
$1,259¥ 831
68¥ (316)106$6,922570

900
112¥ 1,013(209)−¥ (209)7,493
936$8,429

¥ 154
−

¥ 169
−

$1,288
−

154

169

1,288

¥ 3,536¥ (150)$29,43112. 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

2015
Machineryandequipment

Purchase price equivalent
Accumulated depreciation equivalent
Net book value equivalent

¥−
−

¥−

Millions of yen

Other

Total

¥−
−

¥−
−

¥−

¥−

Thousands of U.S. dollars
2015

2014

Machineryandequipment

Other

Total

¥38
34

¥24
24

¥62
59

¥3

¥0

¥3

2014

¥−
−

¥3
−

¥−

Total

¥3

(3) Lease expenses and depreciation equivalents

Lease expenses
Depreciation equivalents

¥3
3

26

$−

$−
−
$−

$−
−
$−

2015

$−
−
$−

Thousands of
U.S. dollars

Millions of yen
2015

Total

Thousands of
U.S. dollars

Millions of yen

Due within one year
Due after one year

Other

$−
−

(2) Lease commitments

2015

Machineryandequipment

2014

¥10
10

2015

$32
32

13. Financial Instruments(1) Summary of financial instruments(i) Policy regarding ﬁnancial instruments
To carry out its capital expenditure plans to develop its paper, pulp, photosensitive material products and other manufacturing
activities, the Group raises the funds it needs principally through bank loans and issuance of corporate bonds. Temporary
surpluses are managed as short-term deposits, and temporary working capital is procured through bank loans and issuance ofcommercial paper. The Company has a policy of not entering into any speculative derivative transactions and only enters into
derivative transactions to avoid exposure to interest-rate risk on loans.
(ii) Details of ﬁnancial instruments and related risk and management of risk
Trade notes and accounts receivable are exposed to the credit risk of customers. In accordance with the internal policy for credit
risk management regulations, the Group manages both the due dates and balance of such transactions by customer, and has
systems to accurately assess the credit status of its major customers at any time.
Receivables in foreign currencies originating overseas businesses are exposed to foreign exchange-rate risk. The majority ofthese risks are diminished through the use of a balance of accounts payable denominated in foreign currencies.
Investment securities are exposed to risks of changes in market prices. However, market prices of the shares held for
operational purposes are periodically reviewed.
Trade notes and accounts payable are obligations due within one year. Some of these obligations are denominated in foreign
currencies in connection with imports of raw materials, and are exposed to exchange-rate ﬂuctuation risk. The Company hedges
against risk regarding net receivables and payables denominated in foreign currencies using forward exchange contracts.
Short-term borrowings are raised mainly in connection with business activities, while long-term debt, corporate bonds andlease obligations related to ﬁnance lease transactions are the main means for procurement of funds needed for capital expenditures.
In most cases, the repayment date is within ﬁve years from the balance sheet date.
For some long-term debt with ﬂoating interest rates exposed to interest-rate ﬂuctuation risk, the Company uses derivativetransactions (interest-rate swaps) for hedging purposes.
For derivative transactions, the Company uses forward exchange contracts to hedge against exchange-rate risk affecting
trade notes and accounts receivable and payable denominated in foreign currencies, and interest rate swap transactions to hedge
interest rate ﬂuctuation risks on loans. We do not assess the effectiveness of our hedging strategies, since all derivative transactions
meet the conditions for special accounting treatment for interest rate swaps.
For carrying out and managing derivative transactions, the Company adheres closely to internal policies delimiting theauthority for engaging in such transactions. To reduce credit risk in using derivatives, the Company works only with the ﬁnancial
institutions with good credit-ratings.
The Company is exposed to liquidity risk in its payables and borrowings. Risk-management methods including compilationof a monthly cash ﬂow plan are used to mitigate the risks by each Group company.
(iii) Additional notes on the fair value of ﬁnancial instruments, etc.
Calculations of the fair value of ﬁnancial instruments are based on their quoted market prices, as well as their reasonably
estimated fair value when the quoted market prices are not available. Since various assumptions and factors are reﬂected inestimating the fair value, different assumptions and factors could result in different fair value. In addition, the contract values ofderivatives in Note 15. 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, 2015 are as follows. The following table does not include
ﬁnancial instruments for which the fair value is extremely difﬁcult to determine (please refer to note below).

27

Millions of yen
2015Book value

Fair value

Difference

Trade notes and accounts receivable
Investments in securities
Available-for-sale securities
Total of assets¥ 47,045¥ 47,045¥−

19,881
66,927

19,881
66,927−−

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

24,01556,30688,015
168,337

24,01556,30688,155
168,477

−
−
140
140

¥−

¥−

¥−

Derivative transactions

Thousands of U.S. dollars
2015

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$391,492$391,492$−

165,448556,941

165,448556,941−−

199,849
468,556
732,4221,400,827

199,849
468,556
733,589
1,401,994

−
−
1,167
1,167

$−

$−

$−

Millions of yen
2014Book value

Fair value

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

18,60661,031

18,60661,031−−

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

26,01453,227
95,093
174,335

26,01453,22795,021
174,262

−
−
(72)
(72)

¥−

¥−

¥−

Derivative transactions

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

28

(v) Long-term debt
The fair value of long-term debt is calculated by discounting the total principal and interest using the assumed interest rate given
equivalent new borrowings.
For long-term debt with ﬂoating interest rates, loans are subject to special settlement for interest swaps. The fair value iscalculated by discounting the total principal and interest (including interest-rate swap) using the interest rate reasonably estimatedgiven equivalent new borrowings. The amount also includes the total current portion of long-term debt of ¥20,780 million($172,923 thousand).
(vi) Derivatives
Please see Note 15.
Unlisted equity securities (in the amount of ¥1,586 million ($13,205 thousand) on the consolidated balance sheet) are notincluded in available-for-sale securities, due to the difﬁculty of measuring their fair value as the stock has no quoted share priceand future cash ﬂow cannot be predicted.

Thousands of
U.S. dollars

Millions of yen

Unlisted equity securities

2015

2014

2015

¥ 1,586¥1,622$13,205

Planned repayment of debentures, long-term debt, lease obligations and other interest-bearing liabilities after the balance sheet
date (consolidated basis).
Millions of yen
2015

Short-term bank loans
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¥ 56,306
20,780394¥−
27,847364¥−
15,779346¥−
15,790
331

¥−
3,180
314

¥−
4,638
259

¥ 77,481¥ 28,211¥ 16,126¥ 16,122¥ 3,494¥ 4,897

Thousands of U.S. dollars
2015

Short-term bank loans
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$468,556
172,923
3,285$−
231,730
3,031$−
131,3102,884$−
131,398
2,761$−
26,463
2,617$−
38,5952,160$644,764$234,761$134,195$134,160$29,081$40,756

Millions of yen
2014

Short-term bank loans
Long-term debt
Lease obligations

Total

Due within
1 year

1-2 years

2-3 years

3-4 years

4-5 years

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

¥−
9,458
316

¥−
10,462
302

¥−
6,918
551

¥ 74,281

29¥ 20,861¥ 27,409¥ 9,775¥ 10,765¥ 7,470

14. 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, 2015 and 2014 are summarized as follows:
Available-for-sale securities:
Millions of yen
2015

Acquisition

Carrying amountGross unrealized
holding gains

Gross unrealized
holding losses¥ 12,332¥ 19,881¥ 7,669¥ 119¥ 12,332

Equity securities¥ 19,881¥ 7,669¥ 119

Thousands of U.S. dollars
2015

Acquisition

Carrying amountGross unrealized
holding gains$102,625$165,448$63,820$102,625

Equity securities$165,448$63,820Gross unrealized
holding losses

$996

$996

Millions of yen
2014

Equity securities

Acquisition

Carrying amountGross unrealized
holding gains¥14,086¥18,606¥4,960¥14,086¥18,606¥4,960Gross unrealized
holding losses

¥439

¥439

15. 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¥47,957 million¥39,446 million$399,082 thousand$328,255 thousand

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

30

16. Retirement and Pension Plans(1) Outline of retirement beneﬁt plan
Our company and consolidated subsidiaries adopt reserve-type and non-reserve-type deﬁned beneﬁt and deﬁned contributionplans for the retirement beneﬁts of our employees.
In the deﬁned beneﬁt pension plan (reserve-type), employees will receive lump-sum payments or pensions, which arecalculated based on their salaries and employment periods.
In the lump-sum retirement beneﬁt plan (non-reserve-type), employees will receive lump-sum retirement beneﬁts, which arecalculated based on their salaries and employment periods. Our company and some consolidated subsidiaries establish retirement
beneﬁt trusts for the lump-sum retirement beneﬁt plan to make it reserve-type.
In addition, additional retirement beneﬁts may be paid, at the time of the retirement, etc. of our employees.
In the deﬁned beneﬁt pension and lump-sum retirement beneﬁt plans adopted by some consolidated companies, thesimpliﬁed method is used for calculating the liabilities and costs for retirement beneﬁts.
As for deﬁned contribution plans, our company and some consolidated subsidiaries establish the deﬁned contribution pension
plan, while the other consolidated subsidiaries subscribe to Smaller Enterprise Retirement Allowance Mutual Aid System.
(2) Deﬁned beneﬁt plans(i) The schedule of the deﬁned beneﬁt obligation at 2015 and 2014, were as follows:
Millions of yen

Thousands of
U.S. dollars

2015

2014

2015

Balance at beginning of year (period)
Cumulative effect of changes in accounting policies
Balance at the beginning of the term reflecting the change of accounting policies
Current service cost
Interest cost
Actuarial losses
Benefit paid
Other

¥ 21,539(487)
21,052
1,144
317
1,729
(2,443)57¥ 21,329−
21,329
1,144
309
407
(2,427)
777$179,242(4,055)
175,187
9,527
2,646
14,392(20,336)476

Balance at end of year (period)¥ 21,858¥ 21,539$181,893(ii) The schedule of the pension assets at 2015 and 2014 were as follows:
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)

Thousands of
U.S. dollars

2015

2014

2015

¥ 13,834
14
2,545
98
(1,041)¥ 13,327
12
596
108
(211)

$115,123
117
21,178818(8,665)¥ 15,450¥ 13,834(iii) The schedule of the net deﬁned beneﬁt liability for simpliﬁed method at 2015 and 2014 were as follows:
Millions of yen$128,572

Thousands of
U.S. dollars

2015

2014

2015

Balance at beginning of year (period)
Periodic benefit cost
Benefit paid
Contribution to systems
Increase（Decrease）of business combination

¥ 695
104
(86)
(18)
(59)

¥ 738
90
(110)
(22)
−

$5,789
869
(716)
(152)
(498)

Balance at end of year (period)

¥ 635

¥ 695

$5,29231

(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 2015 and 2014 were as follows:

Thousands of
U.S. dollars

Millions of yen

Funded defined benefit obligations
Pension assets

2015

2014

2015

¥ 13,755(15,771)¥ 14,683(14,144)$114,469(131,245)

7,043

8,400

58,613(2,015)
9,059

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

539
7,861

(16,776)
75,3899,682(2,638)

8,872
(471)

80,570(21,957)¥ 7,043¥ 8,400$58,613(v) The proﬁts and losses related to retirement beneﬁts for ﬁscal period ended March 31, 2015 and 2014 were as follows:
Thousands of
U.S. dollars

Millions of yen
2015

2014

2015

Current service cost
Interest cost
Expected return on pension assets
Actuarial loss recognized in the year
Prior service cost recognized in the year
Periodic benefit cost in simplified method¥ 1,144
317
(14)
207
(138)
104

Periodic benefit costs of retirement benefit plan

¥ 1,144
309
(12)
100
(93)
90

$9,527
2,646
(117)
1,724
(1,154)869¥ 1,621¥ 1,537$13,495

In addition to the above, the premium severance payment has been reported as extraordinary losses of 484 million yen($4,031 thousand) in the previous consolidated ﬁscal year and 1,611 million yen ($13,407 thousand) for this consolidated ﬁscal year.

(vi) The breakdown of items in other comprehensive income for ﬁscal period ended March 31, 2015 and 2014 were as follows:
Thousands of
U.S. dollars

Millions of yen

Actuarial loss
Prior service cost
Total

2015

2014

2015

¥ 1,039(138)¥(209)−$8,647(1,154)¥ 900¥(209)$7,493(vii) The breakdown of items in accumulated other comprehensive income for ﬁscal period ended March 31, 2015 and 2014 were as
follows:

Thousands of
U.S. dollars

Millions of yen
2015

2014

2014

Unrecognized actuarial loss
Unrecognized prior service cost

¥ (559)289¥(1,598)427$(4,654)
2,407

Total

¥ (270)¥(1,170)$(2,247)

32

(viii) The breakdown of pension assets by major category as of March 31, 2015 and 2014 were as follows:
2015

Equities
Bonds
General account of life insurance
Other

33%
33%
32%
2%

2014

24%
29%
45%
2%

100%

100%

2015

2014

0.6~2.0%
0.0~2.0%

0.6~3.4%
0.0~2.0%(ix) The items of actuarial assumptions as of ﬁscal period ended March 31, 2015 and 2014 were as follows:

Discount rate
Expected long-term return on plan assets(3) Deﬁned contribution plan

The necessary contribution to the deﬁned contribution plan of our company and consolidated subsidiaries is ¥388 million($3,230
thousand) and ¥321 million($3,128 thousand) for the ﬁscal year ended March 31,2015 and 2014, 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.

17. Deferred Income Taxes
At March 31, 2015 and 2014, 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
Liability adjustment account
Other

Total deferred tax liabilities

Net deferred tax assets (liabilities)

2015

2014

2015

¥ 75
690
1,752
470
610
186
6,963
8,785

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

$625
5,746
14,582
3,911
5,080
1,551
57,946
73,112

19,534(17,351)

21,913(16,810)

162,557(144,393)

2,182

5,103

18,163(22)(2,435)
(313)
(341)

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

(185)
(20,265)(2,612)(2,838)(3,112)(2,672)(25,901)¥ ( 929)

33

Thousands of
U.S. dollars¥ 2,431$(7,738)

For the year ended March 31, 2015 and 2014, a reconciliation of the statutory tax rate to the effective tax rates was as follows:
2015

2014

−%
−
−
−
−
−
−
−

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

Effective tax rates

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

−%

63.4%

Notes were omitted in the year ended March 31, 2015, due to the posting of loss before income taxes and minority interests.
(Amendments to amounts of deferred tax assets and liabilities as a result of change in normal effective statutory tax rate)
On March 31, 2015 saw the promulgation of the "Partial Revision of Income Tax Act" (Act No.9 of 2015). Accordingly, the effective
legal tax rate, used to calculate deferred tax assets and deferred tax liabilities, will decline from 35.6%(in the previous ﬁscal year)
to 33.1% between April 1, 2015 and March 31, 2016(the period in which the temporary difference and other items are expected to
be abolished). As of April 1, 2016, it will be changed to 32.3%.
As a result of this, deferred tax assets, deferred tax liabilities and the adjusted total sum for retirement beneﬁts reported inthis consolidated ﬁscal year have decreased by 114 million, 290 million and 6 million yen, respectively. The marketable securities
valuation difference and the income taxes - deferred have increased by 242 million and 59 million yen, respectively.

18. 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.
Millions of yen
Reportable segments
Year ended March 31, 2015

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¥ 161,300¥ 33,496¥ 13,829 ¥ 208,626

4,149

10,039¥ (1,326)¥ 1,481

165,449

3,017

43,535

16,847

¥ 561

Total

17,205

225,832¥ 715¥ 15,976 ¥ 257,031
529
10,797

Other

Total

¥ 6,317 ¥ 214,944
8,823

15,140¥ 395

Adjustments¥ − ¥ 214,944

26,029(26,029)¥ 1,110¥ (71)

240,973

Consolidated(26,029)−

214,944¥ 1,038¥ 196,861
8,107¥ 44,192
2,160

1,902

−

−

1,902

−

1,902

−

1,902

3,407

739

427

4,575

61

4,637

(70)

4,566

34

¥ 10,466 ¥ 267,497 ¥ (14,014) ¥ 253,482
245
11,043(88)
10,955

Thousands of U.S. dollars
Reportable segments
Year ended March 31, 2015

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$1,342,270$278,741

34,52683,542

Total

Other

Total

Adjustments$115,085 $1,736,097 $52,570 $1,788,668
25,110143,179

73,423$5,954$3,288(216,603)−$(599)$8,643362,283

140,195$1,638,195
67,468$367,752
17,974$132,947 $2,138,895 $87,100 $2,225,995 $(116,625) $2,109,369
4,409
89,852
2,044
91,896(732)
91,163

15,833−−

15,833−

15,833−

15,83328,358

6,154

3,560

38,074513

38,587(583)

38,004$12,326$4,6692,005,271$1,788,668

1,376,796$(11,041)

1,879,276 125,993

216,603$−

Consolidated$9,242(216,603) 1,788,668(i) The storage and transport business as well as the engineering business are included in “Other.” They are not included in thereportable segments.
(ii) Adjustments are:• Adjustments and eliminations for segment income(loss) include ¥(42) million ($(351) thousand) of elimination of inter-segment
income and loss and ¥(29) million ($(247) thousand) of corporate expenses, which are general and administrative expenses andare not allocable to the reportable segments.
• Adjustments and eliminations for segment assets include ¥12,823 million ($106,715 thousand) of corporate assets and ¥(26,838)
million ($(223,341) thousand) of elimination of inter-segment assets.
• Adjustments and eliminations for amortization of ¥(88) million ($(732) thousand) is elimination of inter-segment.
• Adjustments and eliminations for increase in tangible and intangible ﬁxed assets include ¥(70) million ($(583) thousand) ofelimination of inter-segment increase in tangible and intangible ﬁxed assets.
(iii) Segment income(loss) is adjusted with consolidated operating income.

Millions of yen
Reportable segments
Year ended March 31, 2014

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¥ 157,974¥ 29,886¥ 13,019 ¥ 200,880

3,683

11,727¥ (1,806)¥ 1,526

161,657

41,614

3,015

16,034
¥ 294

Total

18,426219,307
¥ 13

Total

¥ 6,589 ¥ 207,470
9,395

15,985¥ 463

Adjustments¥ − ¥ 207,470

27,821(27,821)

¥ 477

¥ (3)

235,292

Consolidated(27,821)−

207,470¥ 473¥ 201,995
8,443¥ 41,668
2,094

488

−

−

488

−

488

−

488

4,348

1,659

483

6,491

105

6,596

(101)

6,494

35

¥ 15,380 ¥ 259,044
506
11,044Other¥ 10,866 ¥ 269,910 ¥ (11,311) ¥ 258,599
254
11,298(84)
11,214

(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 ¥21 million of elimination of inter-segment income and loss and¥(24) million of corporate expenses, which are general and administrative expenses and are not allocable to the reportablesegments.
• Adjustments and eliminations for segment assets include ¥19,751 million of corporate assets and ¥(31,062) million of eliminationof inter-segment assets.
• Adjustments and eliminations for amortization of ¥(84) million is elimination of inter-segment.
• Adjustments and eliminations for increase in tangible and intangible ﬁxed assets include ¥(101) million of elimination of intersegment increase in tangible and intangible ﬁxed assets.
(iii) Segment income(loss) is adjusted with consolidated operating income.
(2) Geographical information(i) Net sales to third parties by countries or areas grouped according to geographical classiﬁcation for the years ended March 31,
2015 and 2014 are as follows:

Thousands of
U.S. dollars

Millions of yen
2015

Japan
EuropeAsia
North America
Other

Consolidated

2015

2014

¥ 148,059
36,66813,031
10,467
6,716¥ 146,547
30,21812,08010,708
7,915$1,232,086
305,142
108,443
87,10255,892¥ 214,944¥ 207,470$1,788,668

Net sales information above are based on customer location.
(ii) Property, plant and equipment by countries or geographical areas at March 31, 2015 and 2014 are as follows:
Thousands of
U.S. dollars

Millions of yen
2015¥ 104,534
11,973147

Japan
EuropeNorth America

Consolidated¥ 116,656

2014¥ 111,779
11,900125¥ 123,805

2015$869,891
99,6401,229$970,761(3) Impairment loss on fixed assets by reportable segments
Consolidated ﬁscal year under review (April 1, 2014 – March 31, 2015)
Millions of yen

Reportable segments

Year ended March 31, 2015

Impairment losses

Paper
and Pulp

Imaging
Media

Speciality
Materials

Total

Other

Total

Adjustments

Consolidated

¥ 373

¥ 13

¥−

¥ 386

¥−

¥ 386

¥−

¥ 386

Thousands of U.S. dollars

Reportable segments

Year ended March 31, 2015

Impairment losses

Paper
and Pulp

Imaging
Media

Speciality
Materials

Total

Other

Total

Adjustments

Consolidated$3,104$113$−$3,218$−$3,218$−$3,21836

(4) Amortization and balance of goodwill
Millions of yen

Reportable segments

Paper
and Pulp

Speciality
Materials

Total

Other

Total

Adjustments

Consolidated

Amortization
Balance as of March 31¥−−

ImagingMedia(Negative goodwill)
Amortization
Balance as of March 31

30
¥−

−
¥−

−
¥−

30
¥−

−
¥−

30
¥−

−
¥−

30
¥−

Year ended March 31, 2015

¥−
−

¥−
−

¥−
−

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

Paper
and Pulp

$−
−
−
255
$−

¥−
−

¥−
−

¥−
−

Thousands of U.S. dollars

Reportable segments

Year ended March 31, 2015¥−−

Imaging
Media

Speciality
Materials

Total

Other

Total

Adjustments

Consolidated

−
$−

−
$−

255
$−

−
$−

255
$−

−
$−

255
$−

$−
−

$−
−

$−
−

$−
−

$−
−

$−
−

$−
−

Millions of yen

Reportable segments

Paper
and Pulp

Imaging
Media

Speciality
Materials

Total

Other

Total

Adjustments

Consolidated

Amortization
Balance as of March 31

¥−
−

¥−
−

¥−
−

¥−
−

¥−
−

¥−
−

¥−
−

¥−
−

(Negative goodwill)
Amortization
Balance as of March 31

105
¥30

−
¥−

−
¥−

105
¥30

3
¥−

109
¥30

−
¥−

109
¥30

Total

Adjustments

Consolidated

Total

Adjustments

Consolidated

Year ended March 31, 2014(5) Information relating to gain on negative goodwill by reporting segment

Millions of yen

Reportable segments

Year ended March 31, 2015

Gain on negative goodwill

Paper
and Pulp¥−

Imaging
Media

Speciality
Materials¥−¥−

Year ended March 31, 2015

Gain on negative goodwill$−

Imaging
Media

Speciality
Materials

$−

¥−

$−

Total

$−

Gain on negative goodwill

¥−

¥−

¥−

¥−

Other

$−

$−

$−

$−

Millions of yen

Reportable segments

Year ended March 31, 2014

Other

Thousands of U.S. dollars

Reportable segments

Paper
and Pulp

Total

Paper
and Pulp

Imaging
Media

Speciality
Materials

Total

Other

Total

Adjustments

Consolidated

¥198

¥0

¥−

¥199

¥−

¥199

¥−

¥199

37

Mitsubishi Paper Mills Limited and Consolidated Subsidiaries

Independent Auditor’s Report38Mitsubishi Paper Mills Limited

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

Kunio Suzuki

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

Naoya Tashiro

Kiyoshi Maeda

Director andManaging Executive Officer

Director andManaging Executive Officer

Director andManaging Executive Officer

Managing Executive Officer

Managing Executive Officer

President and Chief Executive
Officer

Director and Managing Executive
Officers

President

In charge of Speciality Materials Div. Senior Executive Officers
and Intellectual Property Dept.;
Kiyoharu Yamada
General Manager, Speciality
General Manager, Raw Materials &Materials Div.
Purchasing Dept.

Kunio Suzuki

Director and Senior Executive Vice
President

Kazuhisa Taguchi

Outside Director

Tomohisa Shinagawa

Junji Harada

Masaki Shuto

Yutaka Oka

Supervisor, President’s Office and Imaging
In charge of Finance & Accounting
Media Div.; In charge of Kitakami Div.
Dept.
Internal Audit Dept. Energy Business Dept.
and Technology & Environmental Dept.
Tsuneaki Handa
General Manager, Kitakami Div., Director
Supervisor, German Operations; In
responsible for Corporate Social Responsibility Charge of Paper Div.; General
Manager, Paper Div.
Director and Senior Managing
Executive Officer
Managing Executive Officers

Kanji Morioka

Supervisor, Raw Materials &Purchasing Dept.

President & CEO, Diamic Co., Ltd.

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

Director and Executive Officer

Naoki Okawa

Naoya Tashiro

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

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

Kiyoshi Maeda

In charge of President’s Office
General Manager, President’s Office

Executive Officers

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

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

Shimpei Yamada

General Manager, Imaging Media Div. andGeneral Manager, Ink Jet & Photo Sales
Dept.

Akira Inoue

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

Kenji Manabe

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

Corporate Auditor

Kenji Oka

Outside Corporate Auditors

Yasuharu Takamatsu
Koji Kaihotsu
Tsuyoshi Inoue(as of June 26, 2015)39

Mitsubishi Paper Mills Limited

Company Data

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

Disclaimer Regarding Forward-Looking Statements
This material contains forward-looking statements relating to thebusinesses and prospects of the Company. These statements are basedon our expectations at MAY 2015. and are subject to the risks anduncertainties that may affect our businesses, which could cause actual
results to differ materially from those anticipated.
We will not be liable for any damage or loss incurred by you arisingout of or in connection with this material.

40

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

Mitsubishi Paper Sales Co., Ltd.
Toho Tokushu Pulp Co., Ltd.
Hachinohe Paper Processing Co., Ltd.
Shin-Hokuryo Forest Products Co., Ltd.
Hachiryo Co., Ltd.
Hokuryo Co., Ltd.
Hakuryo Co., Ltd.
Takasago Paper Processing Co., Ltd.
Kitakami HiTec Paper Corp.
Diamic Co., Ltd.
Pictorico Co., Ltd.
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 Paper GmbH (Germany)
Mitsubishi HiTec Paper Europe GmbH (Germany)
Mitsubishi Imaging (MPM), Inc. (U.S.A.)
MP Juarez LLC (Mexico)
Zuhai MPM Filter, Ltd. (China)

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