CONTENTS

2

Synopsis of Performance

6

To Our Shareholders

12

Special Feature:
DNP’s Growth Strategies

54

64“Today’s Innovation is Tomorrow’s Basic”

22

14

Four Growth Areas Where
DNP Will Concentrate on Creating Value

18

Major Initiatives Aimed at Global Expansion

20

Promoting Business Structure andCost Structure Reforms

DNP’s Businesses
24

DNP at a Glance

26

Our Products

28

Evolution of DNP’s Businesses

30

Major Events of this Fiscal Year

32

Information Communication

40

48

32

Business Strategies

34

Financial Results

36

Presentation of Growth Businesses
and Strategic Businesses

Lifestyle and Industrial Supplies

40

Business Strategies

42

Financial Results

44

Presentation of Growth Businesses
and Strategic Businesses

Electronics

48

Business Strategies

50

Financial Results

52

Presentation of Growth Businesses
and Strategic Businesses

102

Corporate Governance56

Corporate Governance

63

Board of Directors, Statutory
Auditors and Corporate Officers

Financial Section
66

Management’s Discussion and Analysis

76

Selected Financial Data

78

Consolidated Financial Statements

100

Independent Auditor’s Report

Appendix102

Investor Information

104

Major Subsidiaries and Affiliates

106

Glossary

111

Sources of Information about DNPThis annual report is aimed at providing information about
DNP’s businesses, management vision, and business results.
Opinions and forecasts contained in the report were based on
the best judgment of management at the time the report was
prepared, so we cannot guarantee that all information
contained in the report is completely infallible.
In this annual report, “DNP” refers to the entire DNP Group,and “we” refers to DNP or the DNP management team.
(In the section on Corporate Governance (pp 54-63), “DNP”
refers to Dai Nippon Printing Co., Ltd.)Synopsis of Performance

Grand Summary of Financial Results

Dai Nippon Printing Co., Ltd. and Consolidated Subsidiaries

Years ended March 31

Dollars in thousands
except per share amounts

2013

2012

2011

2013

Statements of Operations (¥ million)
Net saleschange2013/2012($ thousand)¥ 1,446,607¥ 1,507,228¥ 1,589,373$ 15,389,436-4.0%Operating income

35,78034,01567,819380,638

5.2%

Ordinary income

40,31836,84362,786428,915

9.4%

Income before income taxes

35,152

2,673

52,696373,957

1,215.1%

Net income (loss)

19,218(16,356)

25,033

204,447

Balance Sheets (¥ million)
Total net assets
Total assets

914,213¥

952,441$ 9,968,670

2.5%

227,211229,664

229,140

2,417,117-1.1%

1,578,976

1,608,806

1,649,784

16,797,617

-1.9%

¥

937,055

Interest-bearing debt¥

Cash Flow Statements (¥ million)
Cash flows from operating activities–($ thousand)($ thousand)¥

100,498¥

108,603¥

140,053$

1,069,128-7.5%

Cash flows from investing activities(72,588)(80,126)(82,562)(772,213)–

Cash flows from financing activities(36,236)(32,833)

15,186(385,489)–

Free cash flow*

27,91028,47757,491

296,904-2.0%

Per Share Data** (¥)
Net income (loss)

($)

¥

29.84

¥

(25.39)

¥

38.86

$

0.32

–

1,386.86

1,352.71

1,410.44

14.75

2.5%

32

32

32

0.34

–

Operating income margin

2.47

2.26

4.27

2.47

0.21

EBITDA margin

8.21

6.76

9.65

8.21

1.45

Net income (loss) to net sales

1.33

-1.09

1.57

1.33

2.42

ROE (%)

2.18

-1.84

2.74

2.18

4.02

ROA (%)

1.21

-1.00

1.53

1.21

2.21

Net assets
Cash dividend
Profit Margins (%)

Financial Ratios

D/E ratio (%)

25

26

25

25

–

11.27

10.95

25.65

11.27

–

PER (times)

29.70

–

26.07

29.70

–

PBR (times)

0.64

0.63

0.72

0.64

–

EV/EBITDA (times)

4.92

5.46

4.29

4.92

–

PCFR (times)

5.74

6.86

5.30

5.74

–

Dividend yield (%)

3.61

3.78

3.16

3.61

-0.17

Interest coverage ratio (times)
Valuations (against share price on March 31)

Return to Shareholders
Value of shares repurchased (¥ million)
Dividend payout ratio (%)

–

–

–

–

–

107.2

–

82.3

107.2

–

AA

AA

AA

AA

–

21.12

23.20

24.54

21.12

–

OthersLong-term credit rating (R&I)
Foreign ownership (%)

U.S. dollar amounts have been translated from yen, for convenience only, at the rate of ¥94=U.S.$1, the approximate Tokyo foreign exchange market rate as of March 31, 2013.
* Net cash from operating activities - net cash from investing activities

2** No diluting securities outstandingD N P A n n u a l R e p o r t 2 0 1 3 さ Synopsis of Performance

Synopsis of Performance■ Operating income rises on higher sales of high-value-added products,
lower depreciation, and other factors

To Our Shareholders■ Pursue cost structure reforms mainly in the Electronics segment■ Secure cash flows from operating activities of ¥100.5 billion and free
cash flow* of ¥ 27.9 billion* Free cash flow = net cash from operating activities – net cash from investing activities

Special Feature

Operating Income

Net Income (Loss)(¥ billion)(¥ billion)(¥ billion)

2,000

150

80

1,584.8

1,583.4

1,589.4

1,500

1,507.2

1,446.6

DNP’s Businesses

Net Sales

60

120

40
90

23.3

1,000

66.5
60

10

11

12

0

13

0

35.8

30

09

09

10

11

12

13

– 40

ROE

ROA

(¥)

(%)

(%)

7

09

10

11

1.5

1.5

12

13

Financial Section

4
3

5

60

4
36.13

40

38.86
29.84

20

2.6

3

2

2.7

1.2

2.2
1

2
1

−32.35−25.39

0

0
–1

–20

–1

–2

09

10

11

12

13

–3

– 1.8

– 2.2

09
08

10
09

11
10

12
11

13
12

–2

–1.0

–1.3

09
08

10
09

11
10

12
11

Appendix

–40

–16.4

6

80

0

–20.9

– 20

Net Income (Loss) per Share
100

19.2

Corporate Governance

0

46.2
34.0

500

25.0

20

67.8

13
12

3

Income (Loss) Before Income Taxes

EBITDA(¥ billion)(¥ billion)

120

250

100
200

80
60

49.5

52.7

40

153.4
118.8
101.9

100

20
0

143.6

150
35.2
80.7

2.7

– 27.8

50

– 20
– 40

0

09

10

11

12

09

13

10

11

Total Net Assets

Net Assets per Share(¥ billion)

(¥)

1,200

2,000

1,000

940.1

956.9

952.4

914.2

12

13

937.1
1,500

1,393.9

1,422.3

1,410.4

09

10

11

12

13

1,618.9

1,649.8

1,608.8

1,579.0

10

11

12

13

800
600

1,352.7 1,386.86

1,000

400
500
200
0

09

10

11

12

13

0

Interest-bearing Debt

Total Assets(¥ billion)(¥ billion)

250

229.1

229.7

227.2

1,536.6

200

1,500

166.8
150

2,000

124.3

1,000

100
500

50

0

09

10

11

12

13

0

09

PER (Price Earnings Ratio)*

PBR (Price Book-value Ratio)(times)(times)

1.5

40

30

34.97

29.70

1.0

0.89

26.07

0.72

20
0.5

0.63

0.64

12

13

0.64

10

0

4

09

10

11

12

13

* Figures for the fiscal years through March 2009
and March 2012 are not shown because there
were net losses in these years.

0

09

10

11

D N P A n n u a l R e p o r t 2 0 1 3 さ Synopsis of Performance

Capital Expenditures*

Research and Development Expenditures(¥ billion)(¥ billion)

120
100

34.1

119.1
102.2

96.2

33.8

33.1

31.7

30.8

12

13

28.5

27.9

12

13

Synopsis of Performance

40

140

30

98.2
88.3

80
20
60
40

10

0

09

10

11

12

0

13

09

10

11

To Our Shareholders

20*Figures include capital expenditures for intangible fixed assets.

Depreciation Expense

Free Cash Flow*(¥ billion)(¥ billion)

120

80
106.9
91.7

95.8
57.5

60

80.2

80
60

Special Feature

100

98.0

40
30.8

40

19.9

20
20
0

10

11

12

0

13

09

10

11

DNP’s Businesses

09* Free cash flow = net cash from operating activities –* net cash from investing activities

Net Sales by Segment (Year ended March 31, 2013)

Operating Income (Loss) by Segment (Year ended March 31, 2013)(¥ billion)(¥ billion)

Information
Communication

704.7

Lifestyle &Industrial Supplies

521.4

180.5

Electronics

0

28.0

– 0.3

Electronics

56.3

Beverages

15.9

0.5

Beverages

200

400

600

800

– 10

0

10

20

Employees by Segment (Year ended March 31, 2013)(¥ billion)(persons)
Beverages
1,004Electronics
3,897

27.3

Lifestyle &Industrial Supplies

30

Financial Section

Capital Expenditures by Segment (Year ended March 31, 2013)

Information
Communication

Corporate Governance

Lifestyle &Industrial Supplies

Information
Communication

Corporate
1,602

Information
Communication
19,633

32.6

Appendix

20.1

Electronics

Lifestyle &Industrial Supplies
13,309

8.3

Others

0

10

20

30

40

50

5

To Our Shareholders“Today’s Innovation is Tomorrow’s Basic”

Increasing Corporate Value by Contributing to Society’s Development

Today’s society is undergoing dramatic changes,
and we need to respond appropriately to themultitude of issues that people face in Japanand around the world. Some say that Japan, inparticular, has an increasing need to deal with“ultra-modern problems,” such as improving
quality of life in an “ultra-aging” society andfinding solutions to energy and environmental
preservation issues. Our situation presents anopportunity to be the first country in the world toaddress these problems and find solutions forthem. By being quick to recognize these types ofissues and to find effective solutions, DNP aims
to contribute to the sustainable development ofsociety and, by extension, to increase our own
corporate value.
Today, inspired by our awareness that “Today’s
Innovation is Tomorrow’s Basic,” DNP is working
on developing new products and services
that provide businesses and consumers withsolutions to their problems that will allow themto enjoy affluence, safety, and security.
Creating tomorrow’s “basic” means making
sure that the products and services that solve
people’s problems are always near at hand.
The things that we take for granted today are
the result of someone in the past having had
a vision and taking the steps required to makethat vision a reality. DNP is continuously looking

into the future and creating things that people
will later come to take for granted—things they
will depend on and benefit from even if they arenever aware of their existence.
This year we explored and analyzed a variety
of topics and defined four areas in which we
expect to see major growth and in which we
can best take advantage of DNP’s skills andexperience.
In the first area, “information distribution,” weaim to improve the convenience with which
information is safely and comfortably exchanged
with the rest of the world. Through “health andmedical care,” we want to improve safety inorder to support healthier, higher quality lives. In
the area of “environment and energy,” we wantto guard the Earth’s environment and sustain
our ability to enjoy its blessings, while in thearea of “comfortable living,” we will strive to help
people cooperate and live healthy, satisfying
lives with greater comfort.
We intend to respond appropriately tothe needs of domestic and global markets
pertaining to these four growth areas and by
doing so, to expand our worldwide business. In
this way, we will do our very best to contributeto the development of society and earn the trustof our shareholders and other stakeholders.

Yoshitoshi Kitajima
President

6

Interview with the President

Please start out by telling us about
DNP’s business performance.
Looking back at the fiscal year ended March
2013, we saw movement toward economic
recovery in Japan, partly due to demand related
to reconstruction in the aftermath of the Tohoku-Pacific
Ocean Earthquake. However, Japan was also affectedby fiscal crisis in Europe and economic slowdown indeveloping countries. In addition, although Internet
advertising increased, demand for printed materials was
sluggish, and policy changes by electronics manufacturers
also had a major impact. In sum, the business environment
remained harsh.
Given these conditions, I think we succeeded in
executing a major turn toward improving our bottom
line. In order to expand our business by combining thestrengths we have acquired to date, and in order toboost profitability and efficiency by eliminating waste, wemerged the two business units that previously made up
our Electronics segments into one, and we merged thethree divisions that previously made up our Information
Communication segment into one unit. In addition, we
worked to boost production efficiency by seeking themost suitable production sites nationwide through a
new integrated production control center that serves
the Information Communication segment, Packaging
Operations, and other manufacturing divisions. At thesame time, we worked on enhancing our domestic andoverseas production frameworks by selectively closing
and/or integrating production plants.
We have also been actively developing new products
and services. We launched a joint project with Nihon
Unisys, Ltd., with whom we formed a business alliancein August 2012, and as of this writing the project has
already made hundreds of joint proposals. In addition toaccelerating overseas development of businesses likepackaging and information media supplies, we are also
focusing on developing new products that take advantage
of our strength in EB coating technology and optical films.
And we are expanding our “honto” hybrid bookstore
network that links physical bookstores, online mail-ordersales, and e-book sales services.
In the fiscal term through March 2014, we will continue
to implement growth-oriented initiatives and contribute to
the development of society by generating new products
and services that solve problems faced by corporateclients, consumers, and society. At the same time, we will
increase DNP’s corporate value.

8

What are DNP’s growth strategies?

In order for the DNP Group to keep growing
into the future, we need to continually generate
fresh responses to each new era and we must
undergo “business structure reform” that will allow us totake the initiative to create new things that people will viewas “basic” in the future. And in order to realize that goal,
we must implement thorough “cost structure reform” sothat we can secure optimal management resources anduse them effectively.
Looking first at “business structure reform,” we plan toimplement the following three initiatives:(1) Be quick to discover issues by looking at things
through consumers’ and society’s point of view
Amidst all the big changes that are taking place in theworld these days, we feel it is difficult for companies andconsumers to foresee what issues they will face and how
to go about solving those problems. Since our corporate
vision is to be a provider of solutions, it is more important
than ever that we be quick to notice all types of changes,
propose hypotheses, and keep a step ahead of corporateclients and consumers in making suggestions.
It is also important that when we do this, we look atthings from both a “social point of view” that takes a broad
view of time and space and distinguishes overall social
problems, as well as a “consumer’s point of view” thattakes in the details of individual realities based on daily life
experiences. When every single DNP employee is actively
involved in society and in markets from both of theseperspectives, we will have more opportunities to discoverissues, and this in turn will help us to provide more
effective solutions.
(2) Generating new strengths through cooperation andcombination
When we work on developing solutions, we must aim for
maximum effect and find ways to satisfy our corporateclients and consumers. Toward that end, in addition tomobilizing all of the strengths that we already possess, wemust also generate new strengths.
DNP is known for its ability to sell. We also have so muchtechnological strength and production capacity that wewere able to develop and apply our printing technologies
broadly enough to become one of just a handful ofcomprehensive printing companies in the world. We have

Our corporate vision is to be a printing andinformation solutions provider. Based on that goal
and the growth strategies that I just described,
we use this catchphrase—“Today’s Innovation isTomorrow’s Basic”—to represent our efforts to increase
DNP’s corporate value.
We are surrounded by “basic” products and services
that solve a variety of problems for us in our daily lives. But
if we really think about it, these things are not at all basic—
in fact they are very valuable. First someone had to clearly
identify a problem and tease out the most appropriate way
to solve it. Then someone had to shape it into a product orservice, get a large number of people to adopt it, and keep
it going in a sustainable way that places minimal burden on
the environment. Only after investing effort in all of thesesteps do we create something “basic” that people will
eventually take for granted.
In the process of expanding our fields of business byapplying and developing printing technologies, DNP has
already created a number of products and services thatpeople now consider to be “basic.” Today there are a large
number of problems that await solutions both in Japanand elsewhere, in various fields of business, in people’s
personal lives, and in society in general, and we believe
we should set about solving those problems from a global
point of view.

Special Feature
DNP’s Businesses
Corporate GovernanceTo start with, we organized problems with greater social
significance into categories and established themes to help
us find solutions that make good use of DNP’s strengths.
These themes are “information distribution,” “health andmedical care,” “environment and energy,” and “comfortableliving.” We view these as areas with good growth potential,
and we have begun actively engaging in related businessactivities.

Financial Section

Meanwhile, regarding “cost structure reform,” we willcontinuously enlist the entire DNP Group in promoting theestablishment of production frameworks based on overall
optimization. We intend to thoroughly review our existing
business processes, construct more efficient production
systems, and work on boosting both quality and costcompetitiveness. These efforts will include the accelerationof measures like integrating business units and reviewing
production locations as we aim to maximize production
efficiency.

Please explain what you mean by“Today’s Innovation is Tomorrow’s
Basic.”To Our Shareholders(3) Promoting research and development aimed atbusiness creation
Today, as DNP works to develop products and services
that will be mainstays of our future business, we position
research and development aimed at business creation
as one of our major concerns. We will keep working to
generate new businesses by thinking outside the box
and promoting innovative ideas, and we will take care toproperly manage and make use of the intellectual property
that results from these efforts.
In October 2012 we established Business Development
Center dedicated to ideas that we expected to be able tocommercialize within a few years, with the aim of speeding
up our research and development. In order to actively
generate new businesses, we aim to link the R&D sectionsof business units that are working on relatively short-term
projects with our Research and Development Center, which
pursues longer-range projects.

Synopsis of Performance

been acquiring project planning skills for more than 40
years, since we established a division that specializes inproject planning in 1968. Now we intend to combine thesevarious strengths in order to generate new strengths. In
order to quickly and correctly develop new products andservices and establish new business models, we actively
incorporate independence and a spirit of innovation into our
corporate culture and blend these assets with our existing
strengths so that we can generate strengths that neverexisted before.

Appendix■ Information distribution: We aim to improve theconvenience of accessing information that safely andcomfortably connects us with the rest of the world. Amidst
the backdrop of increasingly complex information societies,
DNP creates “basic” products and services that allow
people to safely and reliably exchange the information thatthey want, when they want it, and in the format in which
they want it.

9■ Health and medical care: By pursuing safetythat underpins healthy, high-quality lifestyles, and by
maintaining healthy habits throughout our lives, more
people will be able to keep their good health and we canmake a vibrant aging society a “basic” reality.
■ Environment and energy: In order to protect the
Earth’s environment and make our enjoyment of its
blessings more sustainable, people are moving forwardwith the use of renewable sources of energy in placeof petroleum and other diminishing resources, thereby
creating a “basic” reality in which our planet’s environmentis properly protected.
■ Comfortable living: We aim to increase the level ofcomfort with which people work together and live healthy,
satisfying lives, i.e. to create a “basic” reality in whichpeople actively participate in their local communities andenjoy “smart” and pleasant lifestyles that are easy on theenvironment.
We intend to move forward with problem-solving and new
business creation related to these four growth areas that
we have targeted.

What specific initiatives will eachbusiness unit undertake in order toachieve growth?
Our printing business’s three business segments
grew out of the development and application of
printing technologies. Each segment has different
properties, and together they form a well-balanced
business portfolio. Together, they can even withstand theimpact of dramatic changes in the business environment
and allow us to maintain stable overall businessperformance.
In order to maintain this robust corporate structure, we
intend to implement the following measures with an eye
toward medium- and long-term growth.

■ Information Communication

This segment goes beyond printing on paper and, as its
name suggests, engages in businesses related to every
aspect of “information” exchanged between corporations
and consumers and every aspect of “communication.” By
addressing all types of information communication-related
businesses, we can greatly expand our growth potential.
For example, today’s consumer comes in contact witha variety of information media. Increased use of smart
phones and other mobile devices has led to more active
use of network-based information services and in-store
media such as digital signage. One-sided communication
has given way to interactive communication as thestandard, leading to increasing demand for data centersthat can make use of big data while providing complete
protection for personal information.
We will maintain an accurate grasp of this evolving
situation, and focus on expanding businesses that makeuse of our strength in providing “hybrid” solutions thatinvolve both paper and electronic media.

■ Lifestyle and Industrial Supplies

This segment is closely involved in corporate clients’manufacturing processes and provides products thatare vital to the daily life of consumers. We will focus ondeveloping new products that respond precisely to theneeds of corporate clients and consumers. In addition, we
will construct optimal production frameworks in Japan andoverseas and develop our businesses on a global scale.

10We view the return of profits to shareholders
as an important management policy. Our basic
approach is to distribute profits to shareholders
through stable dividend payments, with consideration
for business performance, dividend payout ratio, andother relevant factors. At the same time, we support
future business development by applying retained
earnings to enhancement of our financial constitution
and strengthening of our management base. We allocate
retained earnings primarily to fund investments in researchand development of new products and technologies,
capital investment in the development of new businesses,
and strategic alliances and M&As.
We believe that these types of investments help build
corporate value in the medium and long term, andultimately help us return profits to shareholders.
DNP values taiwa (dialogue) with all of our various
stakeholders. In order to stimulate livelier taiwa throughwhich we can discover and resolve new issues, we
disclose appropriate information in a timely fashion andwork hard to achieve accountability.
Furthermore, we view corporate governance as animportant management responsibility. We intend to build,
operate and maintain proper monitoring systems that
adequately support accurate, appropriate, and quick
decision-making and business execution.
In order to earn the trust of our shareholders and allother stakeholders, the management of DNP will continue
to increase DNP’s corporate value through our businessactivities. We look forward to your continued support andcooperation.

Special Feature
DNP’s Businesses
Corporate Governance
Financial Section
Appendix

This segment has continued to face a harsh businessenvironment due to stagnation in worldwide demand
for liquid crystal displays and electronic devices and theresulting major changes in manufacturers’ strategies. In
response to this situation, we have taken various steps toimprove profitability, including shifting our focus to smalland medium-sized color filters, expanding sales of touch
panel sensors and other new products, consolidating
manufacturing plants and optimizing production
equipment, and integrating business units. As a result, we
saw a sharp upturn in this segment’s performance in thesecond half of the fiscal term through March 2013, and weare expecting it to post 7.0 billion yen in operating incomein the term through March 2014.
We plan to hold off on major equipment investment for
the time being, but we will continue to make active use of
our existing facilities and the technologies and expertisethat we have accumulated to date in order to develop new
products aimed at expanding profits.

What is your approach toward returns
to shareholders and corporate
governance?

To Our Shareholders■ Electronics

Synopsis of Performance

In our packaging business, for example, in addition to
optimizing our domestic production framework, we are
expanding overseas production by building a new plant in
Vietnam and increasing capacity at our plant in Indonesia
in response to growth in packaging demand, which isoccurring primarily in Southeast Asia. We have already won
the top share of Indonesia’s packaging products market,
and by 2015, we aim to become Southeast Asia’s number
one packaging provider. One of the steps we are taking
toward this goal is to increase overseas sales of packaging
products by 50%. Regarding information media supplies,
we plan to build a new plant in Malaysia to manufacture
photo printing supplies, and to increase capacity at ourPittsburgh plant in the U.S., which makes barcode printing
supplies.
At the same time, we will accelerate development of
new products, such as optical films based on our original
optical design technologies and lifestyle materials thatmake use of DNP’s unique electron beam (EB) coating
technology. We will respond to demand for “smart cities”
and “smart houses,” etc. by increasing cooperation
between development teams in our various business
units. For example, we will combine our strength in opticalfilms with Energy Systems Operations’ strength in making
battery components and Lifestyle Materials’ strength ininterior materials.

11

DNP’s Growth
Strategies“Today’sInnovation isTomorrow’s
Basic”CONTENTS

12

14

Four Growth Areas Where
DNP Will Concentrate on Creating Value

18

Major Initiatives Aimed at Global Expansion

20

Promoting Business Structure andCost Structure Reforms

What do we mean by “basic?”

At DNP, we believe it would be wonderful if “basic” meant that everyone—all over theworld—can lead a healthy, rich life together with family and friends, safely protected andtruly at peace.

Amid the dramatic changes occurring in today’s society, we feel pressured to rethink what
we have considered “basic” until now. If it seems that placing heavy burdens on theenvironment, damaging our health, and taking the comfort out of communication havebecome “basic,” then we need to change.

Looking at the world from the viewpoint of consumers, society, and the entire planet,

DNP classifies and analyzes various problems and depicts “tomorrow’s basics” that would

be desirable for humankind. When we do so, we also give full consideration to how we canuse our own technologies and expertise to help solve problems, to how we can expect

significant growth in our business, and to how this will lead to improving DNP’s corporate
value.

At this juncture we have established four areas in which to cultivate “tomorrow’s basic”:

information distribution, health and medical care, environment and energy, and comfortableliving. DNP will set about creating value in these areas overseas as well as in Japan, i.e.
working to develop new products and services that solve problems for businesses,
consumers, and society.

In order to create “tomorrow’s basic,”
expand our business, and increase corporate value—

Business Structure Reform① Be quick to discover issues by looking at things throughconsumers’ and society’s point of view
② Generating new strengths through cooperation and combination③ Promoting research and development aimed at business creation

In order to strengthen our profit base by securing andmaking effective use of optimal management resources—

DNP
contributes tosociety andis trusted bysociety

Cost Structure Reform・ Promote Group-wide overall optimization
・ Thoroughly review business processes
・ Construct optimal frameworks forsales, planning, manufacturing, development, etc.

13

Four Growth Areas Where
DNP Will Concentrate on Creating Value
In order to create “tomorrow’s basic,” we need to have aclear vision of what people want the future to look like.
There are many possible scenarios of what the future
might be like, but it’s impossible to accurately predict
what will actually happen.
At DNP, we believe we can participate in the creation ofa desirable future by clearly identifying the problems that
consumers, society, and the whole world want solved andby proposing optimal solutions for those problems.

Environment and energy
City planning
Advanced information society
Education
DNP is aware of social
issues in the above sevenareas and we recognize
the need for a “globalized”
approach to all of theseareas.
Globalization

Convenience with which information
is safely and comfortably exchanged
with the rest of the world

Health andmedical care
Safety that supports healthy,
high-quality lifestyles

Environment
and energy
Protecting the Earth’s environmentand sustaining the ability to enjoy its
blessings

Comfortableliving
The comfort of living healthy,
satisfying lives while cooperatingwith other people

14

Within increasingly complex
information societies, people cansafely and reliably exchange theinformation that they want, when
they want it, and in the format inwhich they want it.

As people maintain healthy
lifestyles throughout their lives,
more people preserve their healthand aging society becomes morevibrant.

People are using more renewablesources of energy andconserving in other ways in
response to the depletion of
petroleum and other fossil fuels,
and the Earth’s environment isbeing properly protected.

People actively participate intheir neighborhoods and local
communities and enjoy “smart,”
eco-friendly and comfortableliving.

The future, in which problems have been resolved

Key issues for global society

Food and agriculture

Information
distribution“Tomorrow’s basic” — The value that DNP provides

Medical care

Establishment of priority areas in which to make use of DNP’s strengths

Ultra-aging society

We began the process of creating new value that will be“tomorrow’s basic” by sorting and analyzing the problems weface. Next, we focused on fields in which DNP can help solve
problems by making use of the technologies and humanresources that are our strengths, and we established four
growth areas that we feel we should make our first priorities:
information distribution, health and medical care, environment
and energy, and comfortable living. As these areas influenceeach other, they will form an even bigger business field.

Synopsis of Performance

E-commerce andpayment settlement

Security solutions,etc.

eHybrid publishing

Cell engineering technologies

Information security

Microfabrication technologies

Content management

Surface processing technologies

Cross media

Diagnostic image analysis

Education and library operations

Information security

Pharmaceuticals andhealth food markets
Preventative medicine
Medical care support

Information
distribution

Health andmedical care

Nursing care market,
etc.

Representative strengths

Smart houses and offices
Electric vehicle market
Contribution to biodiversity,
etc

Comfortableliving

Eco-friendly product design

Consumer information collection and analysis

Energy-related product design

Local community development

Lens film

Dwelling space design technologies

Functional material coatings

Decorative materials design technologies

Safety and durability evaluation technologies

Electron beam application technologies

Elderly services market
Residential renovation market
Smart community market
Town management market,
etc.

Financial Section

Renewable energy sources

Environment
and energy

Corporate Governance

Development of media andapplication software

but

DNP’s Businesses

E-book publishing and sales

erFields and Markets
C a n M o st L i k e l y C o n tri
e WeSpecial FeatureWh

The company’s motto at the time of its founding, “Run a
civilized business,” expresses the strong desire of DNP’sfounders to contribute to the development of society. This
desire has been passed down to us as what we call the “DNP
spirit” that inspires us to continually take on challenges in ourdaily work.
The diagram below shows how DNP can use its strengths
to contribute to value creation in four areas that are expected
to grow. Overseas as well as in Japan, DNP intends tocontinue providing new value for corporate clients,
consumers, and society by solving the types of problems
mentioned below.

To Our Shareholders

DNP was established in 1876, based on the entrepreneurial
spirit of its founders and the most advanced technology of
the time — letterpress printing. Ever since, DNP has continued
to generate new products and services and innovative
systems. DNP’s technologies and expertise played importantroles in the creation of many products that are taken for
granted today, such as weekly magazines, electronic
dictionaries, smart cards, and holograms. DNP products andservices are also indispensable to a variety of other items that
we use in everyday life, including advanced packaging
products that protect foods and household items,
scratch-resistant wall and floor coverings, and components
for devices such as smart phones and tablet PCs.

Appendix15

Providing comprehensive energy solutions that support
the generation, storage, and conservation of energy
Environmental and energy-related problems are worldwide
social problems that need to be solved. DNP will continue torespond by providing comprehensive energy solutions.
We already mass-produce components that increase theconversion efficiency of photovoltaic cells in order togenerate energy, and we already mass-produce soft packs
for lithium-ion batteries to store energy. We addressconserving energy by offering products like decorative
materials with outstanding thermal insulation and light
blocking performance, which can be used to make efficientuse of light, heat, and other forms of energy.
These environment and energy-related solutions can bemade even more effective through optimal information
management. For example, our information distribution
technologies and expertise can be put to effective use inmonitoring the status of actual generation, storage, andconservation of energy relative to our goals in order tomaximize the effectiveness of our efforts. One example of
how we do that is through our “Making Energy Visible”
system.

Conserving energy bymaking consumption “visible”

16

Air

Amount ofenergy consumed

The system integrates“equipment operation
status” with “amount ofenergy consumed” anddisplays the results in aneasy-to-understand format.

Steam

Equipment
operation status

Energy Monitoring
SystemCoolingwater

Printing presses and other equipment

Graph ofoperation speed

Environment
and energy

In addition to developing diverse products and services
that make use of unique DNP abilities—including opticaldesign technologies, electron beam technology, andinformation processing technologies—we combine those
products and services to offer total systems that meet theneeds of corporate clients and consumers.

Generate(energy)

See

Store

(energy)

via network

Use(conserve
energy)Start of demonstration test of
power peak shift using O2O

DNP developed its own real-time energy consumption monitoring
system by linking production equipment operation data withenergy usage data. We introduced the system to the market in2009. After introducing the system at our domestic production
locations, we achieved reductions in CO2 emissions. In 2011, wedeveloped our Total Energy Conservation Management System
for managing every step of energy conservation at our businesslocations, from planning and implementation to verification, andwe reconfigured our operational frameworks to increase energy
conservation.
We also developed an energy conservation system for laser
lithography, one of the processes performed on our photomask
production lines, and achieved a major reduction in electric powerusage. In recognition of this achievement, the Energy
Conservation Center, Japan awarded DNP with a special prize for“Excellent Energy Conservation” as part of the Center’s Energy
Conservation Grand Prize program for the fiscal year ended
March 2012.
Electricity

Information
distribution

Graph ofelectricity consumed

DNP is collaborating with FAMILYNET・JAPAN CORPORATION to
conduct a demonstration test of a system for shifting powerusage to off-peak hours using O2O (Online to Offline) marketing.
The test began in July 2013 and is scheduled to run for
approximately one year.
For this test, the companies recruited 200 condominiumdwelling households and gave a free tablet PC to eachparticipating household. Participants are encouraged to leave
their homes during the hours of peak power consumption. In
addition to receiving a tablet PC application that enables them tocheck their daily power usage, participants receive discountcoupons and information about bargains that can be used atcommercial facilities during the hours when residential power
consumption is expected to peak. The goal is to use O2O
information services that draw customers to shops andrestaurants to get them out of their homes and shift power
consumption to off-peak times.
In the future, we intend to develop a new service that combines
O2O with Mansion Energy Management System (MEMS) in orderto satisfy both businesses that want to provide information andconsumers who want to use their information.

Screenshot of DNP’s peak
power shifting application
on a tablet PC

Health andmedical care

Appendix

High-reflective, Light-diffusing Ellio(right) compared with standard
room divider Ellio (left)
By scattering indirect light into every
corner of a space, a greater degreeof illumination can be achieved under
the same lighting conditions.

Financial Section

DNP’s unique electron beam (EB) technology enables the creationof exceptionally durable interior and exterior materials that arehighly resistant to scratching and soiling. This technology is
indispensable to the creation of comfortable living spaces. For
example, because our EB cloth is extremely low in volatile organic
compounds (VOCs) and lightweight (40% lighter than DNP’s vinyl
chloride wall covering), it is easier to work with and has received
high marks from the whole supply chain, including consumers,builders, and distributors.
Another example is DNP’s line of Ellio products, which are madeof directly painted or printed steel plate, stainless steel or aluminum.
These products, too, are increasingly popular because they
combine highly artistic designs with the fire resistance and otherbenefits of using metal. In 2012 we introduced a new product called“High-reflective, Light-diffusing Ellio.” The product is used on walls
and/or ceilings, where it effectively reflects and diffuses natural andartificial light, thereby reducing the amount of energy required tolight the room. Since its introduction on the ceilings of Tohoku
Shinkansen Hayabusa passenger rail cars, the new product isbroadening its market toinclude office buildings, public
facilities, and multi-family
housing.

Corporate Governance

Image processing technology makes it possible to confirm cultivation status bytracking the movements of individual cells
Left: cells are growing from the right and left sides toward the center
Right: the enlarged image makes it possible to distinguish individual cells

DNP products are indispensable tocomfortable living spaces

DNP’s Businesses

In order to enable widespread use of induced pluripotent stem
(iPS) cells in regenerative medicine, we must be able to cultivate
the cells safely and uniformly. In order to create tissues fortransplantation, in addition to properly preparing the cell
cultivation environment, we need new methods of determining
whether the cells are growing uniformly or not.
Cells form tissues by dividing repeatedly, and it is possible todetermine the status of tissue growth by tracking each cell’s
movements. DNP and Carnegie Mellon University jointly
developed a unique image processing technology that makes it
possible to precisely track individual cells’ movements and cell
division status by analyzing microscopic images. We are now
working on applying this technology to quality assessment
processes related to regenerative medicine. For example, we areengaged in joint research with Osaka University aimed at using
the technology in retinal regeneration.

In every era and every location, there will always be demand for
comfortable living, and this demand contains importantbusiness opportunities. Currently, for example, people wantparticipation in local communities, “smart,” eco-friendly dwellingspaces, products and services that meet the needs ofindividual consumers, and consideration for “universal design”
that makes products and services easy for anyone to use.
Within the growing “comfortable living” field, DNP aims to
expand business in such markets as services for the elderly,
residential renovation, “smart” communities, and town
management. In the process, we will make use of our various
special abilities, including expertise in consumer information
processing based on advanced security infrastructure,dwelling space and decorative material design, and electron
beam technologies, while also strengthening cooperation
between business fields.

Special Feature

Using image processing technologies toassess iPS cells

ComfortablelivingTo Our Shareholders

Now that the population’s average age is rising in Japan and inmany other countries, there is a greater need to resolve problems
related to medical care and pharmaceutical drugs as well as toimprove the quality of life of people in their later years. DNP
positions health and medical care as one of our priority growthareas, and we intend to concentrate on creating businesses thatmake use of our strengths in printing and information technologies.
For example, DNP is working on mass-producing cell culture
substrates as part of our active participation in a project aimed atcommercializing cell sheets developed by Tokyo Women’s
Medical University. There are increasing expectations that cellsheets will be useful in regenerative medicine. Additionally, incollaboration with Tokyo Medical and Dental University, we areapplying technologies that we acquired through printing, such ascolor management and 3D image processing, to the researchand development of technologies aimed at discovering thecauses of pathological myopia and developing early diagnosis
and treatment methods.
DNP is working to support the pharmaceutical and health foodmarkets, preventative medicine and other fields related to medicalcare, and to expand its business into areas like nursing care.

“Comfortable living” andbusiness opportunities

Synopsis of Performance

Improving quality of life17

Major Initiatives
Aimed at Global Expansion
DNP sees the entire world as its target market. We aim to makethe most of our strengths in order to provide products andservices that precisely meet the needs of people who face allkinds of problems in every part of the world.
In particular, we need to resolve social issues like reducing theburden that humans place on the environment, using energy
efficiently, and designing products according to universal designprinciples not just in Japan, but all over the world.
Ever since we opened a Hong Kong office in 1964, we haveactively developed our overseas business and expanded ouroperating locations in Europe, Asia, North America, Australia andelsewhere. In the regions where we operate, we manufactureand sell publications including pop-up and other books, catalogs
and other commercial printed matter, packaging and building
materials, color and monochrome ink ribbons, photomasks usedin semiconductor manufacturing, and other products.

Currently, one of our main policies is to further expand ourbusiness in the Asian region, where more marked economic
growth is expected. Especially in the ASEAN countries,
information media and lifestyles are rapidly changing, giving rise
to higher expectations for DNP products and services that boast
outstanding functionality and are needed for comfortable living.
In order to seize the business opportunities presented there, weestablished a regional control company in Singapore in June2012 and have been working to establish optimal business
management suited to the various situations found in each partof Asia.
In the fiscal term through March 2013, DNP’s overseas sales
amounted to 195.6 billion yen, representing 13.5% of theGroup’s consolidated net sales, up 0.7 point from a year earlier.
Of overseas net sales, the Asian region contributed about 70%,
or 137.5 billion yen.

Packaging Operations
Bolstering our overseas production bases, primarily in rapidly growing Southeast Asia

18

DNP founded PT DNP Indonesia in
1972 in order to spread “packaging
culture” in Indonesia. By performing avariety of manufacturing processes
in-house and supplying high-quality
products and services that respond todiverse needs, we have built a solid
relationship of trust with our corporateclients. Currently, we have captured
the top share in many packaging fields
including household items and foods,
and we serve as a strategic partner tocompanies that do business on a
global scale by providing them withhigh-quality packaging.

Today, PT DNP Indonesia aims to
expand its production capacity inresponse to Asia’s continuously
growing markets; in January 2013 itincreased its capacity for producing
soft packaging materials by about
20%. Looking ahead, we plan to build
a new factory in Indonesia withprojected start-up in 2015.
In May 2013, we commenced
operation of a new plant in Vietnam,
which has drawn attention as a
distribution base for all of Indochina
and a site of continuing rapid
economic growth. Previously wesupplied the nations of Indochina byexporting from Indonesia, but theestablishment of our new production
location will allow us to shortendelivery times and to spread
production capacity and risk as thenumber of our operating locations inSoutheast Asia increases.
As a result of these measures, we
aim to become Southeast Asia’s
leading packaging company and boost
our overseas net sales from packaging
by about 50%, from roughly 23.0
billion yen currently to around 35.0
billion yen in 2015.

DNP’s Vietnamese plant

Employees at our Vietnamese plant

Inside DNP’s Vietnamese plantPercentage of the Overseas Sales to Overall Sales(%)(¥ billion)

20

300
250
195.6

200

15

13.5

10

150

5
50

03

04

05

06

07

08

09

10

11

12

13

0

03

04

05

06

07

08

09

10

11

12

13

Global expansion of barcode ink ribbon and photo print businesses
one of the top shares of the world’s
market. Especially in Southeast Asia,
demand is growing not only for printing
regular digital photos but also for
printing ID photos and souvenir photos
taken at tourist destinations. In order to
respond to global photo printing
demand, including in Southeast Asianand other developing countries, DNP
will establish a new production base in
Malaysia in September 2013.
One of DNP’s advantages is that we
handle product development,
manufacturing and sales within a single
integrated framework. We intend to
expand our global business in response
to growing demand for barcode printing
in the Americas and for photo printing
all over the world, including indeveloping countries.

Corporate Governance

our Pittsburgh plant, we strengthened
our local production framework andachieved a big reduction in lead time.
Meanwhile, due to the spread of
digital cameras and smart phones inrecent years, there is increasing
worldwide demand for printing digital
photos using dry methods that do not
require developing solution. Photo
printing systems that use
dye-sublimation type thermal transfer
printing media (color ink ribbons andreceiver paper) provide much fasterprinting and much more durable prints,
and are acclaimed by the market
because the equipment costs less andis easier to maintain than equipmentused for silver halide-based printing.
DNP began manufacturing and sellingdye-sublimation thermal transfer printing
media in the 1980s and currently holds

DNP’s Businesses

DNP began manufacturing and selling
thermal resin-type transfer printing
media in the early 1980s. Today, theseproducts are the object of increasing
demand for printing barcodes at
distribution and manufacturing sites.
The Americas account for more than
40% of the world barcode market.
Since demand in North, Central, andSouth America is expected to continue
to grow, in May 2013 we expanded ourPittsburgh plant’s coating facilities formaking thermal resin-type transfer
printing media used for printing
barcodes.
Previously, in addition to
Americas-bound products that were
coated locally, we had been providing
products that were coated in Japan due
to production capacity limitations. By
roughly doubling the coating capacity atSpecial Feature

Information Media Supplies

To Our Shareholders

1000Synopsis of Performance

DNP’s Overseas Sales

Financial Section

Pittsburgh plant

Dye-sublimation typethermal transfer
printing media

Appendix

Barcode labels madeusing thermal resin-typetransfer printing media

Digital rendering of planned Malaysian plant

19

Promoting Business Structure andCost Structure Reforms
In order for DNP to create “tomorrow’s basic,” we need to pursue
both “business structure reform” that responds to major changes
and enables us to take on the challenge of expanding ourbusiness not only in existing fields but in completely new fields,
and “cost structure reform” that enables us to use management
resources effectively.
Business structure reform: we will focus on the following threepoints.
① Increasing corporate value by being quick to discoverand solve problems from the viewpoints of consumers
and society② Increasing collaboration within and outside our corporate group,and combining strengths in order to create new strengths③ Pursuing business creation-oriented research and development
and actively taking on the challenge of developing new businessfieldsCost structure reform: We will focus on getting the entire DNPGroup to work together to promote overall optimization. In thefiscal term through March 2013, we responded to drasticchanges in the business environment by merging business units,reviewing production bases, and taking other aggressive steps.
We also worked to establish optimal production frameworks,
improve quality, and boost cost competitiveness. Going forward,
we will conduct thorough reviews of business processes andbuild optimal frameworks for further increasing cooperation
between sales, project planning, manufacturing, productdevelopment and other functions.

Information Communication
Launch of “Information Solutions” division aimed at increasing cooperation through merger of business units
In October 2012, we merged three business units, whichmainly handle commercial printing, smart cards and security
solutions, in order to further boost the Information
Communication segment’s competitiveness and ability torespond to customers. The new Information Solutions
business unit will work at the global level in partnership withcorporate clients and consumers to develop optimal solutions
for all types of communication-related issues.
・ Creation of highly original information solutions: Make
use of each area’s specialties and the technologies andknow-how that they have cultivated, and combine
customer bases and other assets in order to develop highly

original, more effective solutions.
・ Strengthening of personalized marketing: Work throughvarious channels including websites and points of salecombined with paper and digital information media in orderto stimulate more personalized communication between
businesses and consumers.
・ Expanding our Business Process Outsourcing（BPO)
business: Focus on boosting corporate clients’ efficiency
by performing business processes on their behalf,
including operation of customer service centers, campaign
offices, and financial institutions’ back offices.

■ With resolution of customers’ and society’s problems as the starting point, develop business around the following three core areas.
Enable convenient and comfortable living.
Use information solutions to “intelligently” connect consumers and businesses

Smart communications

Use information solutions to “connect”

20

Use information solutions to “surely” connect consumers and businesses

Use information solutions to “efficiently” connect companies’ value chains

Information security

Business process outsourcing

Enable safe and reliable information transmission.

Enable optimization of business management resources.

■ The Strengths that Enable DNP to Create “Tomorrow’s Basic”

Viewpoints
Research anddevelopment

Human
人材
resources

Sales andproject
planning

Financialbase

DNP
Quality

Problem-solving

Printing andinformation
technologies
Patents andintellectual
property

Overall
optimization

Creating
new value forsociety

Cooperation andcombination

Manufacturing(domestic and overseas)

To Our Shareholders

Operation beyond
the confines ofbusiness areas andorganizations

Synopsis of Performance

Consumers’ viewpoint
Social viewpoint
Global viewpoint

Dialogue with consumers
and with communities

Special Feature

Lifestyle and Industrial Supplies
Reorganization of Packaging Operations’ domestic production framework and increasing competitivenessImproving profitability by integrating business units
and optimizing production frameworks

By applying the technologies and production equipment that
we have acquired through the manufacture of LCD color
filters and shadow masks for CRT televisions, we willcontinue to develop new products for which there is strong
market demand while restraining capital spending.
For example, we responded to growing demand for touch
panels by developing cover glass integrated sensors andfilm-type sensors, and we have already begun shipping thisproduct. Going forward, our main areas of focus will be
developing new products that help make information
terminals thinner and lighter in weight.

In June 2012, by merging two business units that primarily
handled display components and electronic devices, we
strengthened the Electronics segment’s technological capacityand overall product development capability, improved investment
efficiency and promoted market development. In order to
optimize our production framework, we transferred the color filter
operations at our Sakai plant in Osaka Prefecture to Sakai
Display Products Corp. in August 2012, and sold some of thecolor filter production equipment from our Mihara Plant inHiroshima Prefecture in February 2013. As a result of thesemeasures, we expect to reduce fixed costs and waste, andimprove the profitability of our operations.

Appendix

Promoting the development oftouch panel components and other new products

Financial Section

Electronics

Corporate Governance・ We reorganized the manufacturing, production control, andtechnical sections of the packaging divisions of our local
operating companies (DNP Hokkaido Co., Ltd., DNP Tohoku
Co., Ltd., DNP Chubu Co., Ltd. and DNP Nishi Nippon Co.,
Ltd.) and integrated those functions into DNP Technopack,resulting in a uniformly managed nationwide packaging
production framework.
In addition to continuing to press forward with “cost structurereform” aimed at improving profitability through measures like
reducing fixed costs and improving production efficiency, we
will continue to implement “business structure reform” with afocus on expanding overseas production bases anddeveloping eco-friendly products and functional packaging
products.

DNP’s Businesses

DNP has developed a comprehensive packaging businessthat operates in Japan and abroad, handling project planning,development and manufacturing of paper and plastic
containers, flexible packaging, etc. for a wide range of productfields including foods and household goods. In October 2012,
we reorganized our domestic production framework in order toincrease Packaging Operations’ competitive position andearning power while simultaneously constructing an optimalframework for business continuity.
・ Of Packaging Operations’ five group companies, DNP
Technopack Co., Ltd. was the surviving company thatabsorbed the other four―DNP Technopack Yokohama Co.,
Ltd., DNP Technopack Tokai Co., Ltd., DNP Technopack
Kansai Co., Ltd. and DNP Techno Polymer Co., Ltd.

21

32

DNP’s
Businesses

CONTENTS

22

40

48

Information Communication

32

Business Strategies

34

Financial Results

36

Presentation of
Growth Businesses andStrategic Businesses

Lifestyle and Industrial Supplies

40

Business Strategies

42

Financial Results

44

Presentation of
Growth Businesses andStrategic Businesses

Electronics

24

DNP at a Glance48

Our Products

Business Strategies

2650

Evolution of DNP’s Businesses

Financial Results

28

52

30

Major Events of this Fiscal Year

Presentation of
Growth Businesses andStrategic Businesses吾輩は猫である︒名前はまだ無い

どこで生れたかとんと 見当がつかぬ︒何でも薄暗いじめじめした所

いろはにほへと

吾輩は猫である︒名前はまだ無い

どこで生れたかとんと 見当がつかぬ︒何でも薄暗いじめじめした所

いろはにほへと

吾輩は猫である︒名前はまだ無い

DNP at a Glance

ProfileBusiness Portfolio

DNP is a comprehensive printing company; we
use our strong skills in printing and information
technologies to create things that people willview as “basic” in the future.

A well-balanced business portfolio from thestandpoints of stability, profitability, growthpotential and risk

DNP is one of the largest comprehensive printing companies
in the world. We provide a variety of products and services in awide range of business fields to consumers and some 30,000
corporate clients in Japan and around the globe. DNP’s mainstrengths are the printing and information technologies that it
has cultivated since its founding in 1876. The Company has
branched out from publishing and commercial printing into
diverse fields including packaging, decorative materials, display
components, and electronic devices. DNP has even grown tobe the world’s largest supplier of many products in these areas,
and we continue to take on the challenge of expanding into new
business fields, such as environment, energy, and life sciences.
From early in its development, DNP set about boosting theefficiency of the overall Group’s management through measures
including overall optimization, boosting profitability, and making
effective use of management resources. We work hard to
manage the company efficiently, for example by concentrating
functions such as planning, sales, and research anddevelopment in our head office while positioning manufacturing
divisions and specific technology development divisions withinGroup companies.
As of March 31, 2013, the DNP Group employed about 39,445
people. The Group has 48 sales bases and 59 production
plants in Japan, 24 sales offices in 15 countries and a region
and 12 overseas production plants in 10 countries and a region.
Overseas sales contributed 13.5% of the Group’s overall net
sales in the fiscal year ended March 2013.

Three Well-Balanced
Strategic Segments

DNP has two main businesses: Printing, which contributes about
96% of consolidated net sales, and Beverages, which generates
about 4% of the Group’s sales through Hokkaido Coca-Cola
Bottling Co., Ltd. Armed with this business portfolio, DNP aims
to expand its overall business and increase its corporate value by
striving to solve problems for corporate clients and consumers.
Printing consists of an assortment of businesses throughwhich DNP applies and develops printing and information
technologies in order to solve problems for consumers, and forclient companies who operate in all types of business fields andin diverse formats. We divide our Printing business into threesegments: (1) Information Communication, which includes theBooks and Magazines and Commercial Printing businesses
where DNP got its start, (2) Lifestyle and Industrial Supplies,
which supplies a wide range of products including packaging
products, decorative materials, optical films and ink ribbons, andenergy-related components, and (3) Electronics, which supplies
display components and electronic devices, among otherproducts. These three segments cooperate with each otherand form a business portfolio that is well-balanced from thestandpoints of stability, profitability, growth potential, and risk.
Our Beverages business takes advantage of the Coca-Colabrand strength while also developing original DNP products.
We are working on bolstering our beverages business base, forexample by promoting production and procurement in liaison
with bottlers in other parts of Japan.

Information Communication
Books and Magazines

Commercial Printing

Business Forms

Education and Publications Distribution

The Three
Segments of
DNP’s Printing
Business

Lifestyle and Industrial Supplies
Packaging

24

Lifestyle Materials

Industrial Supplies

Electronics
Display Components

Electronic Devices

D N P A n n u a l R e p o r t 2 0 1 3 さ D N P ’ s B us i ne sses さ DNP at a Glance

Net Salesby Segment (Year ended March 31, 2013)
Net Salesby Segment (Year ended March 31, 2013)

Information Communication

Beverages
3.9%Electronics
12.3%

Information
Communication
48.2%
Information
Communication
48.2%

Beverages
3.9%Electronics
12.3%

Net
Net Sales
Sales

Operating Income
Income (¥(¥ billion)
Operatingbillion)(Net sales)(Net sales)

800
800

(Operating income)(Operating income)

722.0
722.0

714.6
714.6

120
120

704.7
704.7

100
100

600
600

Lifestyle andIndustrial Supplies
35.6%
Lifestyle andIndustrial Supplies
35.6%

80
80
60
60

400
400

40
40

200
200

18.1
18.1

0
0

Operating Income
by Segment* (Year ended March 31, 2013)
Operating Income
March 31, 2013)by Segment* (Year ended
Beverages
1.0%

12
12

11
11

Net
Net Sales
Sales

0
0

(Depreciation)(Depreciation)

800
800

600
600

120
120

620.6
620.6

610.5
610.5

100
100

606.6
606.6

80
80
60
60

400
400

200
200

0
0

OperatingOperating Income
Income (¥(¥ billion)
billion)(Net sales)(Net sales)(Operating income)(Operating income)

800
800

600
600

120
120

100
100

531.7
531.7

400
400

522.8
522.8

521.4
521.4

80
80
60
60

46.8
46.8
31.8
31.8

200
200

Lifestyle andIndustrial Supplies
63.1%
Lifestyle andIndustrial Supplies
63.1%

13
13

20
20

Depreciation
Depreciation (¥(¥ billion)
billion)

24.0
24.0

11
11

40
40

24.0
24.0

12
12

22.3
22.3

13
13

20
20
0
0

Lifestyle and Industrial Supplies
Information
Communication
35.9%
Information
Communication
35.9%

Beverages
1.0%

15.9
15.9

15.5
15.5

AssetsAssets(Assets)(Assets)

28.0
28.0

40
40
20
20

0
0

11
11

* Electronics segment recorded
operating loss of 0.3 billion yen.

12
12

13
13

0
0

AssetsAssetsDepreciation (¥(¥ billion)
Depreciation
billion)(Assets)(Assets)(Depreciation)(Depreciation)

800
800

600
600

120
120

518.3
518.3

100
100

583.1
583.1

565.4
565.4

80
80
60
60

400
400

26.1
26.1

200
200

0
0

26.5
26.5

25.5
25.5

40
40
20
20

11
11

12
12

13
13

0
0

* Electronics segment recorded
operating loss of 0.3 billion yen.

Beverages
Net Sales

Electronics
Operating Income (¥ billion)(Net sales)(Operating income)

80

2

63.0
57.1

60

1.3

1.2

Net
Net Sales
Sales
800
800

400
400

1

40

200
200

0.5

11

12

13

120
120

AssetsAssetsDepreciation
Depreciation (¥(¥ billion)
billion)(Assets)(Assets)(Depreciation)(Depreciation)

800
800

120
120

100
100
80
80
60
60

286.3
286.3

224.8
224.8

40
40

180.5
180.5

20
20

12.2
12.2

0
0

0

0

(¥ billion)(¥ billion)(Operating income)(Operating income)

600
600

56.3

20

Operating(Loss)
Income (Loss)
Operating Income(Net sales)(Net sales)

– 4.6
– 4.6

11
11

12
12

– 0.3
– 0.3

13
13

100
100

600
600

400
400

80
80

387.9
387.9
41.9
41.9

288.0 40.4
288.0 40.4

200
200

60
60

238.8
238.8

26.0
26.0

20
20

0
0
– 20
– 20

0
0

40
40

11
11

12
12

13
13

0
0

25

Our Products

Information Communication
●

［1］

［2］

［3］

［8］

［9］

［ 10 ］［ 15 ］［ 16 ］［ 17 ］［ 23 ］［ 24 ］［ 25 ］［ 31 ］［ 32 ］［ 38 ］［ 39 ］

Books and Magazines[1] Magazines [2] Books [3] Dictionaries[4] Hybrid bookstore network “honto” membership card (left);“My Bookshelf” display (right)●

Commercial Printing[5] Catalogs, posters [6] Augmented reality (AR)[7] Orikomio! e-flyer service[8] Digital signage (integrated into furniture) “Monitana”[9] Personalized mail●Business Forms[10] Smart cards [11] SIM cards[12] Lippmann hologram[13] OpenSTAGETM digital pen-based presentation system
Education and Publications Distribution[14] Maruzen’s main bookstore in Tokyo’s Marunouchi district●

Lifestyle and Industrial Supplies●

Packaging[15] Packaging for foods [16] Packaging for toiletries andpharmaceutical products [17] Universal design products[18] Packages made of IB film [19] PET plastic bottles andpreform [20] Aseptic filling systems for PET plastic bottle●

Lifestyle Materials[21] Residential interior materials [22] Automotive interiormaterials [23] Interior coverings for railway cars (Tohoku
Shinkansen Hayabusa Reserved “Green” Car)●

Industrial Supplies[24] Optical film for displays [25] Projection screen[26] Soft pack for lithium-ion battery[27] Dye-sublimation thermal transfer printing media[28] Digital photo printer [29] Barcode labels made using
thermal resin-type transfer printing media[30] Self print terminal “PrintRush”

Electronics●

Display Components[31, 32] LCD color filters[33] Large-scale photomasks[34] Touch panel sensors●

Electronic Devices[35] Semiconductor photomasks[36] Template for nanoimprinting[37] Hard disk drive suspension[38] Lead frames for semiconductor packages[39] Metal substrate for LED light[40] Camera modules[41] Reader/writer modules [42] IC tags[43] Ultracompact IC tags[44] MEMS (micro electro mechanical systems) products

Note: Numbers in square brackets correspond to photographs on p.26-27.

26

D N P A n n u a l R e p o r t 2 0 1 3 さ D N P ’ s B us inesses さ Our Products

［5］

［7］

［ 13 ］［ 14 ］［ 22 ］［ 12 ］［ 18 ］［ 19 ］［ 20 ］［ 21 ］［ 26 ］［ 27 ］［ 28 ］［ 29 ］

Special Feature［ 11 ］To Our Shareholders［6］

Synopsis of Performance［4］

DNP’s Businesses［ 34 ］［ 35 ］［ 36 ］［ 37 ］［ 40 ］［ 41 ］［ 42 ］［ 43 ］［ 44 ］

Financial Section［ 33 ］

Corporate Governance［ 30 ］

Appendix27

Evolution of DNP’s Businesses
1876 <Founding>

1950

1960

Printing▶1876 Founding of Shueisha, DNP’spredecessor; start of letterpress printing

Information Communication

1970

1980
Information
Processing

Comprehensive Printing▶1935 Merger of Shueisha and Nisshin Printing to form Dai Nippon Printing▶1949 Listed shares on Tokyo Stock Exchange▶1963 Establishment of Hokkaido Coca-Cola Bottling Co., Ltd.
▶1951 Began promoting “expansion printing”▶1944 Launch of DNP’s Technical Research Laboratory (now called the Research and Development Center)

Books and Magazines▶1972 Began development of Computer Typesetting System (CTS)▶1877 Produced first Western-style book in Japan, revised edition of “Self-Help” by Samuel Smiles▶1975 Began digital processing of image data
▶1912 Completion of DNP’s original Shueitai font
▶1925 Received order to print 740,000 copies of the inaugural edition of “King” magazine▶1956 Printed the inaugural edition of “Shukan Shincho,” the first weekly magazine issued by a publishing company▶1882 Began sales of printing types

Commercial Printing▶1885 Start of lithographic printing▶1971 Developmentof scented printing▶1981 Establishment of new video printing
system technology

Business Forms▶1898 Began printing of securities▶1954 Start of carbon-backed ledger printing▶1973-74 Full-scale production of magnetic plastic cards▶1945 Began printing new Bank of Japan notes▶1965 Began mass production of OCR ledgers▶1983 Development of smart cards
after being designated to do so by Japanese Ministry of Finance

Lifestyle and Industrial Supplies
Packaging▶1951 Full-scale entry into
paper container business▶1951 Began printing on vinyl andother non-paper materials▶1961 Started production of
blow-molded bottles▶1962 Began producing paper cups

▶1975 Began producing retort pouches▶1976 Development of▶1983 Development of
aseptic filling systemtechnology for drawing
on molded plastic goods▶1969 Began producing laminated tubes▶1984 Began producing
PET plastic bottles

Lifestyle Materials▶1951 Began developing decorative paper for melamine resin plate▶1974 Introduction of Curlfit technology for printing on curved surfaces▶1961 Began printing directly onto steel plates▶1977 Development of stainless decorative sheet

Industrial Supplies▶1983 Started producing
projection screens▶1984-85
Development of thermal resin-typeand dye-sublimation thermaltransfer printing media

Electronics
Display Components▶1958 Successful prototyping of shadowmasks▶1973 Development of color filters▶1978 Development of new type of
shadowmasks (flat masks)

Electronic Devices▶1959 Successful prototyping of photomasks▶1964 Began lead frame production

28

D N P A n n u a l R e p o r t 2 0 1 3 さ D N P ’ s B us i ne s s e s さ E v o l u tion of DNP’s Businesses

1990

2000

2010

▶1987 Began shifting focus from “expansion printing” to“comprehensive information processing”

P&I Solutions▶2001 Announcement of DNP Group Vision for the 21st Century(125th anniversary of DNP’s founding)“Today’s Innovation isTomorrow’s Basic”— a philosophy that will lead us
to even greater growth —▶2008-10 Alliances with Maruzen Co., Ltd.
Junkudo Co., Ltd. andBunkyodo Group Holdings Co., Ltd., etc.
▶2010
Startup of “honto” e-book sales service▶1989 Construction of global network system▶2001 Began Orikomio! e-flyer service▶1995 Began Internet service “Media Galaxy”▶2008 Launch of digital signage project▶1997 Began e-commerce service

Hybrid production solutions
Hybrid bookstore network “honto”
DNP-brand B to C business
Cross media communications
business

To Our Shareholders▶1985 Development of world’s first electronic dictionary on CD-ROM▶1992 Development of Shueitai True Type font
▶1997 Start of online publishing business

Synopsis of Performance

Information Communication

2013

Promotion of BPO business▶2007 Development of packaging forJapanese-style space food▶1998 Development of transparent barrier film (IB Film)

Expansion of security solutions

Special Feature▶1993 Production of contactless smart cards▶2004 Began Card Data Management Service (CDMS)▶1999 Launch of IC tag project▶2005 Establishment of “SSFC” office security consortium▶1992 Development of preform method for PET plastic bottles

Expand eco-friendly products▶1996 Began producing sheet with EB coating▶1996 Establishment of anti-glare film technology for LCDs
▶2004 Development of “JETBLACK” front projection screens▶2005 Began development of “PrintRush” self-service printing system▶2001 Development of flexible organic EL displays▶2003 Development of full-color organic EL panels▶2006 Mass production of color filters
using inkjet method▶2002 Completed production line for “B 2 it” high-density
build-up boards

Electronic devices:develop cutting-edge technologies
and expand overseas business

New Businesses

Financial Section▶1995 Launched multilayer wiring formation technology▶1999 Entered semiconductor package substrate field▶2001 Began MEMS (micro electro mechanical systems)
processing under contract

Display products:
shift emphasis to growth areas
and expand new product lineup

Corporate Governance▶1985 Development of LCD color filter production technology

Expand safe, reliable packaging,a variety of living spacesolutions, and industrial materials
businesses worldwide

DNP’s Businesses

Develop new products usingmaterials with more advanced
functionality

Energy Systems

photovoltaic cells

Life Science (Regenerative Medicine, etc.)▶2004 Successful formation of capillary patterns▶2008 Development of cell patternculture substrates▶2008 Development of cell sheet culture film

Promote research and development
aimed at business creation
Create value by forming businesses
related to four growth areas:
information distribution;
health and medical care;environment and energy;
and comfortable living.

Appendix▶1999 Commercialization of “soft packs” for lithium-ion batteries▶2003 Development of photovoltaic module components▶2005 Development of fuel cell components▶2007 Development of printed organic29

Major Events of this Fiscal Year

2012

Jun.

■ Creation of Fine Electronics Business Operations business unit ( さ details on P21)
■ Startup of “honto” hybrid bookstore network service
In cooperation with Maruzen Co., Ltd., Junkudo Co., Ltd., Bunkyodo
Group Holdings Co., Ltd. and other partners, DNP began operating a joint
loyalty point system to serve customers of physical bookstores, e-booksales services, and online mail-order services. Once customers register
using a “honto card” issued by a bricks-and-mortar bookstore, they canreceive points for purchases whether they buy online or at a physicalbookstore. We intend to continue to stimulate both the e-book and paper
book markets by developing a variety of additional “hybrid” services.

Jul.

■ DNP ties up with C-SAM, Inc. of the U.S.
to provide mobile wallet service
DNP concluded a licensing agreement that authorizes it to sell C-SAM’s
Mobile Transaction Platform (mobile wallet) in Japan. The mobile wallet
imitates the functions of a physical wallet in that it allows smart phoneusers to make electronic payments and enjoy services such as uniform
management of coupons and loyalty points. The mobile wallet enables
consumers to process payments and coupons simultaneously, and can belinked to other services including banking transactions and loyalty point
accumulation. It can also help business operators expand sales by
allowing them to distribute coupons and information based on eachcustomer’s purchasing history.

Aug.

“honto” hybrid bookstore network display

Mobile wallet software■ Transfer of our Sakai Plant’s LCD color filter operations ( さ details on P21)
■ Formation of strategic partnership with Nihon Unisys, Ltd.
In addition to concluding a business alliance agreement with Nihon Unisys,Ltd., one of Japan’s leading computer system vendors, DNP acquired
common shares in Nihon Unisys (amounting to about 18.90% of shares
outstanding or about 22.09% of voting rights) from Mitsui & Co., Ltd.
By increasing cooperation in cloud-based business, new platform
services, marketing and sales, DNP and Nihon Unisys, Ltd. plan to actively
develop new businesses through their strategic partnership.
DNP Executive Vice President Koichi Takanami and
Nihon Unisys President Shigeru Kurokawa shake hands
at the press conference announcing their partnership

Sept.

30

■ Business tie-up with Transaction Media Networks Inc. (TMN)
By combining the mobile wallet and other services related to near ﬁeld
communication (NFC) with TMN’s thin-client electronic account settlement
system, the two companies will be able to offer batch processing on asingle terminal that supports multiple services including electronic accountsettlement and management of coupons, loyalty points, and prepaid
services. We plan to market the system primarily to distributors, retailers,and ﬁnancial institutions.

D N P A n n u a l R e p o r t 2 0 1 3 さ D N P ’ s B us i ne s s e s さ M a jo r Events of this Fiscal Year

■ Establishment of new hologram factory in the Kansai region
DNP inaugurated a new plant in the Kansai region to manufacture
holograms, which are used in a wide variety of applications such as
preventing forgery of passports, corporate and other ID cards, and credit
cards. The new plant produces two types of holograms: “embossed
holograms” that are both artistic and counterfeit-resistant, and “Lippmann
holograms,” which are so difﬁcult to copy that they can only be fabricatedby a few companies in the world. We will work on getting holograms to be
adopted more widely in products that support social infrastructure, such as
paper money, passports, driver licenses, and social insurance cards.

A Lippmann hologram■ Opening of Communication Plaza dot DNP in Tokyo

Communication Plaza dot DNP

DNP’s Businesses

We opened “Communication Plaza dot DNP,” a hands-on showroom inTokyo’s Shinjuku Ward, where we introduce consumers to a wide variety of
DNP products and services. The facility includes the “honto Cafe,” wherevisitors can feel free to try reading e-books on tablet PCs made available
throughout the shop, a “Digital Picture Book Museum” where parents andchildren can encounter futuristic picture books, and “Enjoy! Photo Park,”
where visitors can create personalized photo books and take pictures in a
specially designed studio. In addition to introducing DNP products andservices to the wider public, Communication Plaza dot DNP allows DNP to
directly sense consumers’ awareness and values, which we will reﬂect infuture business development.

Special Feature

2013

Jan.

■ Launch of Information Solutions Operations business unit ( さ details on P20)

To Our Shareholders

Dec.

■ Reorganization of domestic Packaging Operations’ production framework ( さ details on P21)

Synopsis of Performance

Oct.

■ Expansion of Packaging Operations plant in Indonesia ( さ details on P18)
■ Establishment of chemical plant in Utsunomiya,Tochigi Prefecture to make functional materials

Utsunomiya plant■ Startup of Packaging Operations plant in Vietnam( さ details on P 18)

Appendix■ Expansion of Information Media Supplies plantin Pittsburgh ( さ details on P19)

Sept.

Financial Section

DNP Fine Chemicals Fukushima Co., Ltd., a producer of functional materials
and active pharmaceutical ingredients based in Minamisouma-shi, Fukushima
Prefecture, relocated its business base to Tochigi City, Tochigi Prefecture.
In February 2013, the company changed its name to DNP Fine Chemicals
Utsunomiya Co., Ltd. and in March of the same year began operating a newfactory. Making the most of its organic synthesis technologies, DNP aims to
expand production of functional materials that are used as electronic materials
in ﬁelds like display components and environment and energy,
in addition to producing the active pharmaceutical ingredients and intermediatebodies that have been the company’s mainstays to date.

May

Corporate GovernanceMar.

■ Completion of Information Media Supplies plantin Malaysia ( さ details on P19)

Vietnamese plant31

Business Strategies

Information
Communication

Our Information Communication segment is composed mainly ofBooks and Magazines, Commercial Printing, Business Forms, and
Education and Publications Distribution operations. The segment
is working hard to develop new services and new businesses that
address current trends such as the diversification of consumers’
value systems, progress in information technologies, andglobalization. In order to increase the segment’s competitiveness,in October 2012 we merged three business units that mainly
handled commercial printing, smart cards, and security solutions
and formed a single business unit called Information Solutions. By
combining the specialized strengths that these three business units
have cultivated, we intend to increase our ability to solve issues
related to the following themes on behalf of corporate clients andconsumers:● Creation of highly original solutions
We will provide highly original, effective solutions by combining
the solid customer base that we have cultivated with forwardlooking products and services.

● Strengthening of personalized marketing
We will enliven communication between corporations andconsumers by offering more personalized information services
through the use of diverse information media, including websitebased and in-store media.

● Expanding our Business Process Outsourcing(BPO) businessWe will focus on BPO-related operations that we can perform onbehalf of client companies in order to boost their efficiency;
these include operation of customer service centers and sales
campaign management offices, and performance of back office
functions for financial institutions.

● Boosting cooperation within
the DNP Group and between affiliates
By increasing collaboration between highly specializedcompanies like Maruzen CHI Holdings Co., Ltd. and Nihon
Unisys, Ltd., we will strengthen our “honto” hybrid bookstore
network and other operations, including data centers andinformation security.

32

D N P A n n u a l R e p o r t 2 0 1 3 さ D N P ’ s B us i ne s s e s さ I n f ormation Communication

In order to stimulate the publications market, DNP focuses not
only on our position as a printing company, i.e. a manufacturer,
but also on boosting the efficiency of our marketing, sales, anddistribution functions and on improving customer service. We aredeveloping a “hybrid bookstore network” that links bricks-andmortar bookstores with online mail-order bookstores and e-booksales services at the same time that we enhance our frameworkfor providing “hybrid production solutions” that offer one-stop
support for the publishing of paper books, electronic content,
and on-demand printing.

DNP is focusing on expanding comprehensive Business Process
Outsourcing (BPO) services that address corporate clients’
overall business processes. Our BPO services go beyond
contracting to print direct mail and notifications, etc. to lighten
our customers’ workload in such areas as on-demand printing
and all types of back-office operations including market research,planning and development, content production, operation of data
centers and customer service centers, and promotional material
envelope-stuffing and mailing.

Page 36■

Cross Media Communications         Page 37

DNP has accumulated a great deal of expertise throughperforming front office operations that deal directlywith consumers and corporate clients. Nihon Unisys,Ltd. is one of Japan’s top IT system vendors. By
linking these two companies across industry lines, we
intend to generate new businesses and new services.
Specifically, we will work on collaborating in four areas:“marketing and sales cooperation” aimed at boosting
both companies’ capacity for proposing solutions
for customers; “strengthening the service business
infrastructure” that is the foundation of both companies’
businesses; “joint development of marketing platforms” tohelp corporate clients meet their customers’ needs more
quickly and more effectively; and “global development,”
which is an important issue for both partners. Throughthese efforts, we aim to achieve 50.0 billion yen in joint
sales in the fiscal year through March 2017.

Appendix* O2O (Online to Offline): online marketing ―through mobile phone applicationsor the Internet― that draws customers to make purchases
at offline (physical) businesses■ Expanding DNP’s Business through■ Cooperation with Nihon Unisys, Ltd.

Financial Section

DNP engages in a wide variety of online business enterprises.
For example, we operate the “Elne” loyalty point service and“Orikomio!” e-flyer service, and participate in a capital andbusiness alliance with All About, Inc. Going forward, we will
focus particularly on the O2O* services that are attracting
attention amid increasingly widespread use of smart phones.
DNP provides business models for drawing customers to bricksand-mortar stores by providing consumers with optimized online
information at the times they want it, for example through smart
phone applications that handle membership authentication,
payment, and coupon distribution. By collecting and analyzing
consumer information and providing feedback to companies
that offer products and services, DNP will continue to provide
solutions that benefit both information senders and receivers.

Corporate Governance■ Development and Expansion of  
■ Channels for Communication with Consumers

DNP leads the Japanese markets for smart card production andissuance and for development of smart card operating systems
and applications. We also provide unique security solutions thatmake use of our smart card-related strengths. We are preparing
to meet the international standards for Near Field Communication(NFC) that are likely to be used increasingly widely in smart
phones. DNP is developing a variety of services to support safe
and secure lifestyles.

DNP’s Businesses

DNP is reinforcing its cross media business in response toincreasing diversification of information media formats, including
social media and digital signage, with a focus on content
management systems (CMS). For example, we can use ourelectronic catalog production and distribution system to automate
production processes in the construction of optimized databases.
In this way, we can reduce production lead time and cut costs
while maximizing the synergistic benefits of using both paperand electronic media; in short, we help stimulate communication
between companies and consumers.

■ Security Solutions and NFC            Page 39

Special Feature■ Expanding Business Process Outsourcing■ (BPO) Based on Corporate■ Clients’ Trust in DNP                     Page 38

To Our Shareholders■ Expanding Hybrid Production Solutions and■ DNP’s “Hybrid Bookstore Network”

Synopsis of Performance

Main Policies

33

Financial Results

Financial Highlights(¥ billion, %)2011.32012.32013.3¥ 722.0¥ 714.6¥ 704.7

Operating income

18.1

15.5

15.9

Operating income margin

2.5%

2.2%

2.3%

Net sales

Net Sales

Operating Income (¥ billion)(Net sales)
800(Operating income)
120

722.0

714.6

704.7
100

600
80
60

400

40
200

18.1

15.5

15.9

20
0

0

11

12

13

Net sales
The environment
the segment
as (¥a billion)
whole remained
Netsurrounding
Sales
Operating
Incomeharsh due to(Neta lackluster
publications
market,lackof growth insales)(Operating income)800
120
outlays for non-Internet
advertising, and reductions
in corporate
expense budgets, among other factors. Net sales
declinedby100
600
1.4%, or 9.9 billion
yen, from522.8
the previous
fiscal term.
531.7
521.4
80

Operating income 46.8

60

400

31.8

40

200
Operating income
increased by 2.9%, or28.0
456 million yen, from20
the previous term, thanks largely to improved productivity
0 reductions instemming from 0the integration of business units,11
12
13
indirect costs, and expansion of strategic products and services
including smart cards and Business Process Outsourcing (BPO).
The segment’s operating income margin increased by 0.1 point,
from 2.2% a year earlier to 2.3%.

Net Sales

Operating Income (Loss) (¥ billion)(Net sales)
800(Operating income)
120
100

600
80

34

60

400

286.3
224.8

40

Fiscal Term through March 2013:
Business Environment andSummary of Financial Results■ Books and Magazines
The Japanese publications market remained sluggish in theyear through March 2013, with publishing industry sales
down 4.4% from a year earlier to 1,718.2 billion yen according
to Japan’s Research Institute for Publications. Big hits were
scarce in the book market, where sales declined by 2.9% to796.9 billion yen. Magazine sales continued their downward
trend, falling 5.6% to 921.3 billion yen. In addition to a drop in
the number of magazines sold, the number of magazines thatceased publication was greater than the number of new titles.
Despite this environment, DNP took advantage of its integrated
manufacturing line—which handles everything from printing tobinding—to increase sales from book publishing for the third
consecutive year. However, magazine sales declined and sales
by DNP’s overall Books and Magazines business ended slightly
below the previous-year level.
Meanwhile, Japan’s market for electronic publications in thefiscal term through March 2013 grew by 16% from the previous
term’s roughly 63.0 billion yen to about 73.0 billion yen. DNP
focused on providing services that make consumers “certain
to find a book they want to read” and “able to read the bookthey want in the format they want,” primarily through the “honto”
hybrid bookstore network that combines electronic booksales, Internet-based mail-order sales, and bricks-and-mortar
bookstores. In the fiscal year ended March 2013, we provided
readers with greater value, for example by enabling them to use
hybrid loyalty points throughout the honto network and to use ahybrid “My Bookshelf” program to manage both electronic andpaper book purchases, and by distributing publication rankings
and information about bookstore events.
We are also working to improve the functionality of our “Hybrid
Production Solutions,” which address both paper and electronic
media formats. In addition to producing electronic bookcontent, we aim to expand our electronic magazine business by
producing content with added video and audio components, bydeveloping search functions and website-linking functions, andby developing overseas businesses that capitalize on magazine
brands.

D N P A n n u a l R e p o r t 2 0 1 3 さ D N P ’ s B us i ne s s e s さ I n f ormation Communication

DNP’s Businesses
Corporate Governance
Financial Section
Appendix

As corporations streamline their organizations and trim expenses,
they are ordering fewer types and fewer copies of printed matter.
The business environment for this sector remains harsh as all
types of notifications that used to be printed on paper and mailed
to consumers are increasingly being made available through theInternet instead. On the other hand, there is increasing worldwide
demand for information security systems that enable safe andreliable storage and use of sensitive corporate information andconsumers’ personal information.
By taking advantage of our Business Forms unit’s high capacity
for developing software and processing information under theprotection of DNP’s strong security infrastructure, we expanded
sales of products like smart cards used for telecommunications,transportation, and electronic money applications. On the other
hand, as businesses shift more notifications to the Internet andcut overall costs, we have seen less demand for information
processing services (IPS) that handle every step in the productionof personal mail and other customer communication, from data

Although our Education and Publications Distribution businessfocused on sales of electronic books, book sales to libraries andeducation-related businesses were sluggish, and sales declined
somewhat compared to a year earlier.
Maruzen CHI Holdings Co., Ltd. performed more contracted
services on behalf of libraries and worked on boosting profitability
through such steps as closing inefficient stores and trimming
its workforce. We tried to boost the sales of Bunkyodo Group
Holdings Co., Ltd. by opening new stores and renovating existing
stores, but sales still fell below the previous-year level.
The publications distribution market is expected to remaindifficult, but we aim to expand profits through such initiatives
as rebuilding or remodeling bookstores in line with consumer
demands and market realities, expanding our hybrid bookstore
network that combines electronic and paper books, andimproving our distribution services and product lineups.

Special Feature■ Business Forms■ Education and Publications■ Distribution Business

To Our Shareholders

Overall, Japanese corporate advertising expenses in the fiscal
year ended March 2013 were little changed from the previous
year, according to the Ministry of Economy, Trade and Industry.
Sales of Internet-based advertising continued to grow while themarket for magazine advertising and publication of flyers, etc.,
was sluggish. Due to the increasing trend toward distributing
product catalogs and user manuals via the Internet rather than inpaper formats, demand for printed matter continued to decline.
Given this situation, although DNP’s Commercial Printing
business boosted sales from such services as sales campaign
office management and customer service center operation,and from point-of-purchase advertisements, etc., overall sales
declined relative to the previous year due to the decrease inprinting of pamphlets, flyers, and catalogs.
Based on consumers’ point of view, DNP is promoting “crossmedia communication” business that provides consumers with
the information they want at the times when they want it,
by means of the most appropriate information media. In addition,
we have been integrating business units in order to strengthen
cooperation between segments, and are making use of oursolid information security infrastructure and diverse information
media, including websites and in-store promotional materials,
as we focus on personalized marketing based on consumer
information. Furthermore, we are expanding our Business
Process Outsourcing (BPO) business, whereby we increase theefficiency of clients’ businesses by handling various processes on
their behalf, including operation of customer service centers andcampaign event management offices.

input to printing and mailing. As a result, overall Business Forms
sales declined relative to a year earlier.
DNP has always led Japan’s market for smart cards andauthentication technologies. We combine this advantage with ourstrength as a manufacturer of products like holograms in order todevelop safe, reliable and convenient security solutions. We also
intend to develop global services for a wide variety of industries
including finance, logistics and manufacturing, using the near fieldcommunications (NFC) international standard that is expected to
be increasingly widely used in smart phones and other devices.

Synopsis of Performance■ Commercial Printing

35

Expanding Hybrid Production Solutions and
DNP’s “Hybrid Bookstore Network”

Rather than approaching the market solely from the standpoint ofa manufacturer, we offer total support as the Japanese publishingindustry’s “No. 1 partner.” This includes helping with the planningof marketing and sales promotion projects, sales and distributionof both electronic and paper books, and providing customer
service. DNP began digitizing printing processes in the early
1970s. Today, we are making the most of the experience that wehave accumulated in this field as we focus on “hybrid production
solutions” that meet all of our publishing customers’ needs,
including content production for paper and electronic books, andon-demand printing of small-lot publications.

DNP aims to create a service that makes consumers “sureto find a book they want to read” and “able to read the bookthey want in the format they want,” primarily by developing our“honto” hybrid bookstore network that combines three sales
formats: physical bookstores, online mail-order sales, and e-booksales. “honto” sales data is highly reliable marketing information.
By providing it to publishers and other companies, we aim tostimulate the publishing market and corporate clients’ productdevelopment and sales promotions.
・ product developement
・ events
・ promotions, etc.

Corporateclients

・ Editing・ Brands
・ Contents

Consumers
Marketing Information

DNP

Readers

Hybrid production solutions

Authors

Publishers

Printing and binding

Editing and data
production
for printing

Printing on demand

Digital data
production
Data production
for electronic
publishing

Electronically published content(shared bases for distribution and sales)

Hybrid bookstore
network・ Books
・ Magazines
Readers

Physicalbookstores
Onlinebookstores
E-booksales services

Marketing Information

・ Mobile phones
・ Smart phones
・ PCs
・ E-book readers・ Multifunctional
information
terminals

さ Hybrid promotion linked with physical bookstores, online mail-order sales, ande-book sales service
The strength of DNP’s “honto” hybrid bookstore network lies in its
linkage of physical bookstores, online mail-order sales, and an e-booksales service. One example of how “honto” actively works to promotesales of both paper and electronic books is a loyalty point service
that we launched in June 2012, allowing customers to accumulate“honto” points regardless of what sales format they used for theirpurchase. Purchasing records and other customer information areused as a basis for distributing targeted information including book
recommendations. We also provide a “My Bookshelf” program andsmart phone application that allow consumers to keep track of theirelectronic and paper book purchases in one place.
Our hybrid network takes a variety of initiatives aimed at promoting
sales. For example, we advertise bookstore events through the “honto”
website and distribute detailed information and videos related tobooks through “hontovision” digital signage installed at bookstores.
We also operate the “honto Cafe,” where customers are free toexperience reading e-books on tablet PCs made available throughout
the shop. The cafe is located inside Communication Plaza dot DNP, a
showroom that we opened in January 2013 in Tokyo’s Shinjuku Ward.
The showroom also serves as a venue for events to introduce books
and magazines, which we organize in cooperation with publishingcompanies.

36

hontovision: a type of digital signage
installed in the main bookstores of DNPGroup subsidiaries Maruzen Co., Ltd. andJunkudo Co., Ltd. Each unit is built intoa merchandise display shelf, and can beused for various types of promotions.

Communication Plaza dot
DNP: a showroom where
consumers can experience awide range of products andservices offered by the DNPGroup. The photo at rightshows the “honto Cafe” on
the first floor.

D N P A n n u a l R e p o r t 2 0 1 3 さ D N P ’ s B us i ne s s e s さ I n f ormation Communication

Developing and Expanding Channels forCommunication with Consumers“Orikomio!” e-flyer service

Special Feature
DNP’s Businesses

Launched in 2001, DNP’s “Orikomio!” e-flyer service enables users to accessdaily information about special offers, either by taking a leisurely look on theirhome computer, or by checking a smart phone or tablet PC while on the go.
In addition to this basic function, we have been developing one function after
another that expands opportunities for communication between consumers
and businesses, resulting in both more convenience for customers and more
opportunities for businesses.
In order to provide greater benefits for consumers, we added a function thatallows consumers to create shopping lists of items advertised in the e-flyersthat appear on their smart phone. In November 2012, we launched a smart
phone service that proposes an ideal menu based on combining foods thatthe user already has at home with sale items advertised on an e-flyer.
Other services that we initiated in order to lighten the load on businesses
while simultaneously helping them expand sales include a service thatquickly and cheaply produces and distributes e-flyer smart-phone applications
for distribution and retail businesses, and a service that uniformly manages
production of e-flyers and paper-based sales promotion tools.

To Our Shareholders

さ Providing a variety of services that help consumers shop

Synopsis of Performance

DNP provides solutions that support consumers’ various purchasing activities. By making use of our best technologies to provide avariety of services that consumers can easily appreciate, we continue to create communication services that are beneficial to bothconsumers and businesses.

さ Developing new B to C communication channels

Financial Section
Appendix

A growing number of “O2O” (Online to Offline) services are inducing “online” consumers,
i.e. users of the Internet and/or smart phone applications, to go to bricks-and-mortar
stores and buy “off-line” merchandise. DNP is making use of its accumulated expertisein marketing to provide services that increase the timeliness and utility of information
distributed by businesses and get consumers to visit stores, make purchases, and passon the information that they receive.
In June 2013, DNP introduced “Receipi!,” a home budget application that allows users
to track daily expenses simply by photographing receipts with their smart phone andeven suggests the best recipes based on food items listed on receipts.
The application is also useful for food and beverage manufacturers, distributors andretail stores as it enables them to attract customers and promote sales by distributing
promotional information and coupons based on purchasing patterns revealed by reading
the receipts. We are developing a menu of solutions that will allow corporate customers
to make use of purchasing information stored in our “Receipi!” databases for planningtheir marketing strategies.

Corporate Governance“Receipi!” expense log reads cash register receipts

37

Promoting DNP’s Business Process Outsourcing (BPO) BusinessOutsourcing of business processing is gradually becoming morecommonplace, but most BPO services focus only on increasing
efficiency and cutting costs. There are still few examples of BPO
being used to improve customer service, increase sales, or expand
a company’s overall business.
DNP offers comprehensive BPO services that start withanalyzing a client company’s business challenges and continue
with the construction of necessary frameworks or systems andthe planning, design and execution of business processes. In thisway, we help strengthen each company’s corporate structure inline with its particular management strategies, and we support
effective, strategic business reform that leads to businessexpansion. The main features of DNP’s BPO business are:① We provide optimal communication between corporations
and consumers by using all kinds of information media, fromprinted matter to networked media.
② Because we have built advanced security infrastructure, we
can provide safe and reliable information services that meetthe rigorous quality standards of all kinds of corporations,
including financial institutions.

③ Because we have accumulated know-how and constructed
frameworks for properly handling large amounts of diverse
personal information, we are able to reliably perform the levelof mass processing required for large-scale projects suchas responding to legal revisions, implementing corporate
mergers, or changing organizational formats.
④ We solve corporate clients’ management issues by reforming
their business processes, which we accomplish by taking on
the performance of functions like marketing, project planning,
IT, and/or office work.
DNP offers two types of BPO services: BPO in the narrow
sense of handling sensitive business information, including
personal information, while carefully managing information
security, and Commerce Process Outsourcing (CPO), which
entails handling information related to the trade of goods orservices. By addressing both of these areas with meticulous care,
we intend to solve the problems of client companies in a wide
variety of industries.

さ Examples of BPO service

さ Examples of CPO service  

BPO may entail full outsourcing by a wide variety of industry
types. Examples include handling of all processes related to
new account set-up on behalf of banks, printing of notifications
to policyholders on behalf of insurance companies, andprocessing of applications for credit card issuers and operatorsof certification examinations or school entrance examinations.
DNP has won high marks for accurate and dependable
execution of business processes involving the handling ofimportant information that requires the combination of printing,supply services, documentation, card services, networking andother services.

We support corporate clients’ e-commerce through theconstruction of product or service information databases,
integrated management of sales promotion tools, andconstruction of e-commerce websites. In addition to producing
all types of sales tools, our comprehensive service includes pointof-purchase installation and data collection.
We combine marketing services, planning and production ofsales promotion tools, customer management, sales operations,distribution and other services in order to accomplish whatevercommerce-related tasks our corporate clients need us to do on
their behalf.

DNP’s Business Process Outsourcing (BPO)
Marketing
services

Card services

Advertise

Information flow

Corporate clients

Promotional
services

NotifyMail
Networking

Issue

Supplyservices

Printing
Supply services
Documentation
Card services
Networking
Marketing services
Promotional services

Collect
DecideStore●Efficient processing●Reliable operation●High degree of security●High performance

Record

:
:
:
:
:
:
:

Printing

Consumers
Information flow

Documentation●Easy-to-understand information●Very convenient●Safe and reliable usage●Greater customer loyalty

provision of reliably processed personal information in printed form
storage of printed matter; selection and mailing in response to individual requests
compilation of information from applications or other forms; provision to client in electronic form
production and issuance of smart cards, etc. under high-security conditions
distribution of information through networking between clients and consumers
provision of research and other marketing services
provision of services related to sales promotions and sales operation support

38
DNPのBPOD N P A n n u a l R e p o r t 2 0 1 3 さ D N P ’ s B us i ne s s e s さ I n f ormation Communication

Security Solutions for Safe and Reliable Communication

services as distribution of software applications and managementof authentication, universal updating of personal information,
invoice production, coupon distribution, customer loyalty point
management, and even healthcare and entertainment-related
services.

DNP’s Businesses

さ Expanding security solutions through M2M technology
be built into electronic devices and cloud-based services thatcan perform functions like data analysis. By combining theseelements with data obtained via M2M technology, we intend
to build safe and reliable interactive networks of devices thathave been verified as legitimate network members in order tomonitor each device’s status and usage and manage logistics
and inventories. We will also link M2M with solutions in areas
like payments and marketing, in order to develop even moreconvenient security solutions.

Financial Section

Machine to machine (M2M) technology allows devices connectedby a computer network to exchange measurements and otherdata and to execute control functions with no need for the
involvement of a human being. Recent developments in sensors
and networking technologies have made it possible to obtain
massive amounts of data in real time from a variety of devices.
Based on authentication and other security technologies that
we acquired through the development and manufacture of smart
cards, DNP has been developing authentication modules to

Corporate Governance

Near field communication (NFC) is a set of international standards
that is starting to be used in a wide variety of devices including
exercise machines and home appliances in addition to credit card
terminals at retail outlets, electronic money terminals, and loyalty
point service terminals. The technology is increasingly viewed
as likely to enable basic infrastructure to be shared around theworld. Consumers can obtain a wide variety of information simply
by holding up an NFC-enabled smart phone near one of various
types of NFC-enabled devices.
DNP became Japan’s first provider of a mobile wallet platform
offering safe, reliable and convenient uniform management of
payment processing and other smart phone-based services
that have been proliferating as use of NFC has become morewidespread. The platform supports “wallet-like” software thatmanages multiple applications, offering service providers suchSpecial Feature

さ DNP’s “Mobile Wallet,” Japan’s first platform for uniform management of
NFC-compatible applications

To Our Shareholders

field communication (NFC) and machine to machine (M2M)
technologies, as well as other forms of telecommunications andequipment management. We are also focusing on developing
broader solutions that employ these technologies.
DNP intends to deliver a variety of security solutions worldwide,using both our skills as a manufacturer—for example bydeveloping holograms, printing minute characters, or using inkthat changes color—and our skills in information processing,including processing involving smart cards and data centers.

Synopsis of Performance

In recent years there has been strong demand for safer, more
appropriate handling of information, including sensitive corporate
information and consumers’ personal information. In the morethan 30 years since DNP began to develop smart cards in
1981, we have always been the leader in the Japanese smart
card market. We have actively promoted the development anduse of information network-related systems and of operating
systems and application software for smart cards. Recently wehave been providing advanced information security using near

Serviceproviders●Cloud●BPO

M2M
platform

Various goods
and services

Products andservices

Appendix●Modules●Data analysis

39

Business Strategies

Lifestyle andIndustrial Supplies

40

The Lifestyle and Industrial Supplies segment is composedof three business divisions: Packaging, Lifestyle Materials,
and Industrial Supplies. The segment plays a vital part in our
corporate clients’ manufacturing processes and provides many
products that are important in the daily life of consumers.
The Industrial Supplies division in particular provides many
products for which demand is expected to grow, including
various types of optical films that prevent glare on the surfaceof display components, components for photovoltaic cells, andlithium-ion batteries.
In recent years, consumers have become concerned that theirlifestyles be environmentally friendly at the same time that they
insist on safety and peace of mind regarding their food, clothing,and housing. Conservation of energy and resources, supporting
clean energy, and applying universal design principles to makeproducts and services easy to use for the maximum numberof people are all important considerations. The Lifestyle andIndustrial Supplies segment will continue to respond precisely
to the diverse needs of DNP’s corporate clients and consumers
as we continue developing a multitude of eco-friendly products
endowed with optimal functions for enriching people’s lives.
DNP takes a very broad view of the business fields in which
printing technologies can be applied. We include areas ofsocial concern, such as environmental preservation, energy
and life sciences, as areas in which we endeavor to create new
businesses by providing cutting-edge, original products.
We will speed up the development of these new businesses
by making use of DNP’s original technologies and by actively
forming alliances with companies and research institutes thathave particular capabilities.

D N P A n n u a l R e p o r t 2 0 1 3 さ D N P ’ s B us i ne s s e s さ L i f e s t y l e and Industrial Supplies

Synopsis of Performance

Main Policies■ Packaging :■ Expand Global Business with Focus on■ Advanced, Eco-friendly Products

Page 18,21

We aim to enhance our global manufacturing and sales framework
in order to increase the market share of DNP brand products
worldwide.
In September 2013, we plan to start up a plant in Malaysia tostrengthen our framework for producing dye-sublimation thermaltransfer printing media (color ink ribbons and receiver paper) in order
to meet rapidly growing demand for photo printing in Southeast
Asian markets. By enhancing the framework for producing thermal
resin-type transfer printing media used for printing barcodesat our Pittsburgh plant in the U.S., we intend to boost DNP’scompetitiveness throughout the Americas. Furthermore, we will
expand our field of business by developing new print media andsystems that meet the needs of each country’s consumers.

Advanced Optics (Optical Films):              Page 46

Page 47

Appendix

Due to increased demand for clean sources of energy, there
is a growing market for products like lithium-ion batteries andphotovoltaic cells. DNP uses its original technologies to offer avariety of products that meet this demand.
We are focusing on improving the functionality and lowering thecost of back sheets and encapsulants used in photovoltaic cells
while also pursuing the development of new products that will help
improve the cells’ reliability and conversion efficiency. While DNP
is already the world’s largest provider of soft packs for lithium-ion
batteries used in mobile phones and similar devices, we intend towork harder than ever to expand applications for these types of
products to batteries used in larger devices like electric cars andhome-use storage batteries.

Financial Section

Energy Systems:                                     Corporate Governance

DNP is particularly skilled at applying “clean converting”
technologies—combinations of DNP’s original optical technologies
with techniques such as high-precision thin film coating and highprecision molding—which we use to develop a wide variety of
optical films. In addition to anti-reflection films for liquid crystal
displays, we are developing many new products including films for3D displays and “Moth Eye®” films that are extremely effective at
minimizing the reflection of light.
In the future, we intend to actively respond to trends in display
markets, including higher definition, increasing multi-functionality
and greater energy efficiency, and to make the most of our solid
grasp of the properties of light in order to provide a wide variety of
products that only DNP can provide. In addition, we will work moreclosely with Lifestyle Materials and other business units to focus ondeveloping “smart houses,” “smart cities,” and other products andservices that address environmental and energy-related problems.

DNP’s Businesses

Page 44

The Lifestyle Materials division offers comprehensive solutions
for every type of “living space” where people conduct their lives,
including homes, offices, medical and nursing care facilities,
commercial facilities, hotels, automobiles, and trains, etc. We makeuse of DNP’s original EB (electron beam) coating technology tosupply abrasion and soil-resistant wall and floor coverings and otherproducts that deliver the durability that is a basic requirement of
products used in living spaces.
Lifestyle Materials engages in a wide range of businesses that
address the entire living space supply chain. These include designof living spaces, measuring and assessing living environment
quality, proposing space designs based on considerations like
Kansei (emotional) engineering, and developing easy-to-implement
construction techniques. In addition to developing new products likemetal paneling that reduces electricity usage by effectively reflecting
and diffusing light, we will make use of our global sales network to
expand our market share in Europe and developing countries.

Page 19,45

Special Feature■ Lifestyle Materials :■ Realize Solutions for All Types of■ “Living Spaces”

Information Media Supplies:                  To Our Shareholders

We intend to enhance our lineup of eco-friendly and highly
functional products in order to realize both a sustainable society
and an abundant consumer lifestyle. Also, we aim to develop ourbusinesses not only in Japan, but around the world. We will also
concentrate on analyzing consumers’ awareness and usage of
packaging products in order to continue creating the value that
consumers demand.
We consider our Innovative Barrier (IB) film, a transparent filmwith excellent barrier properties, to be a strategic product that wewill develop not only for packaging of foods and household items,
but also for medical and pharmaceutical products and for industrial
materials. In addition, we will concentrate on developing packaging
products based on universal design and more eco-friendly products
like our polyethylene terephthalate (PET) film made from sugar canederived material.
Moreover, we will push forward with the development of
packaging technologies that enable a high level of safety while
placing minimal burden on the environment, with the best example
being aseptic filling systems for PET plastic beverage bottles,
a market in which DNP is one of the top suppliers.

■ Industrial Supplies :■ Realize Sustainable Growth by  
■ Providing a Wide Range of Products

41

Financial Results
Net Sales

Operating Income (¥ billion)(Net sales)
800(Operating income)
120

722.0

714.6

704.7
100

600
80

Financial 400Highlights

60
40

200

18.1

15.9

15.5

2011.302012.302013.312531.7¥13 522.8¥ 521.4

Operating income

46.8

31.8

28.0

Operating income margin

8.8%

6.1%

5.4%

11

Net sales¥(¥ billion, %)20

Net Sales

Operating Income (¥ billion)(Net sales)
800(Operating income)
120
100

600

531.7

400

522.8

521.4

80
60

46.8
31.8

28.0

200

40
20
0

0

11

12

13

Net sales
Industrial Supplies
below Income
the previous-yearlevel,Net sales
Sales dipped
Operating(Loss) (¥ billion)
largely due to(Neta sales)decline in sales of anti-reflection
films
resulting(Operating income)
800 and heavier competition in the
120LCD televisionfrom lower prices
market. At the same time, sales of aseptic PET100
plastic bottle filling600
systems and Lifestyle
Materials products increased. As a result,80
sales by the segment as a whole declined by 0.3%, or 1.4 billion
60
400 earlier.
yen, from a year
286.3
200
Operating income

224.8
12.2

180.5

40
20

Affected by factors
like lower market prices for 0photovoltaic cells0– 0.3– 4.6 operating income fell by
and decreased sales of optical films,– 20
12.0%, or 3.8 billion yen,
11 from the
12 previous
13 year. The operating
income margin declined 0.7 point from the previous year’s 6.1%,
to 5.4%.

42

Fiscal Term through March 2013:
Business Environment andSummary of Financial Results■ Packaging
Because personal consumption was sluggish in the fiscal year
ended March 2013, sales of foods and household items werelackluster. Although sales of paper yogurt containers increased,sales of other paper containers and flexible packaging were littlechanged from the previous year. On the other hand, sales oflarge-scale aseptic filling systems increased greatly relative to ayear earlier, as did packaging sales in Indonesia.
Following the startup of a new plant in Vietnam in May 2013,
we also plan to expand our Indonesian plant as we reinforce ouroverseas manufacturing bases with a focus on Southeast Asia,
where demand is robust. Throughout Japan, we reorganized
our packaging manufacturing units in order to improve
competitiveness by building an optimal production framework
and reforming our cost structure.

■ Lifestyle Materials
Japanese housing starts rose by 6.2% year on year to around
890,000 units, marking a third consecutive year of increase.
Reasons for this growth included reconstruction following the
Tohoku-Pacific Ocean Earthquake and a rush to complete
projects before an expected sales tax increase. Increased
demand for eco-friendly products made with DNP’s unique EB
coating technology as well as solid sales of high-added value
products that excel in terms of both aesthetics and functionality
also helped this sector exceed the previous year’s sales.
We intend to further expand our Lifestyle Materials business invarious directions: for example by actively entering the markets
for home renovation and elderly housing, by increasing our lineup
of external products, by developing our automotive electron beam(EB) coating products on the global market, and by reinforcing
sales of Ellio steel plate in response to increasing worldwide
demand for railway cars.

D N P A n n u a l R e p o r t 2 0 1 3 さ D N P ’ s B us i ne s s e s さ L i f e s t y l e and Industrial Supplies

Information Media Supplies①

Aseptic filling systems: a field with growing potential
DNP’s comprehensive framework handles every aspect from technological development
to equipment manufacture and installation②③

Appendix

One of the important roles of packaging is to enable the safe and reliable delivery of foods
and beverages to consumers. “Aseptic packaging” entails filling sterilized containers or
packaging material with sterilized contents and sealing them shut within a bacteria-freeenvironment. In addition to being safe and reliable, this type of system preserves nutrients,
flavors, textures, colors and aromas by eliminating the need to sterilize contents at hightemperatures for a long period of time.
In 1978, DNP became the first Japanese company to develop aseptic packaging when
we began working on single-portion containers for coffee whitener. Since then, we havecontinued to innovate new technologies as packages have become more complex.
In 1994, DNP was the first Japanese company to develop a system for aseptically filling
PET plastic beverage bottles with milk-based beverages. In 1997, we started operatinga system that aseptically filled small, test tube-like bottle preforms while simultaneously
blowing them up into full-size bottles. We expanded this business and today hold one of thelargest shares of the Japanese market for aseptic bottle preform-filling systems.
By refining our converting technologies (technologies that change a material’s form) andthe sterilization techniques that we have been working on for some 40 years, we have built
a comprehensive framework for handling every step from technological development toequipment manufacture and installation, and we are now working on market development.

Financial Section① Bottle preforms② Aseptic filling system③ Polyethylene
terephthalate (PET)
plastic bottle

Corporate Governance

TOPICS

Here too, the business environment was severe. In the fiscal
term ended March 2013, in addition to a sharp drop in worldwide
demand for photovoltaic cells due to the European fiscal crisisand other factors, order prices also plunged, largely due toincreased competition. DNP’s Energy Systems business soldmore soft packs for lithium-ion batteries and encapsulants forphotovoltaic cells, but sales of back sheets for photovoltaic
modules were weak.
In the future, we will develop and market components with
better functionality and greater durability, for which demand is
expected to increase. Currently there is growing demand forsoft packs for lithium-ion batteries used in smart phones andother mobile devices, but in the long term we aim to respond to
growing demand for electric car batteries and home-use storage
batteries.

DNP’s Businesses

The environment surrounding this market was very difficult, due
to factors like growth in tablet PCs putting pressure on demand
for laptop computers and monitors in addition to the worldwide
slump in demand for flat-panel displays, including LCD and PDP(plasma display panel) televisions.
In the year ended March 2013, DNP sold more new products,
including films for 3D displays and ultra-low reflection films.
However, sales of anti-reflection films used in liquid crystal

Energy Systems
Special Feature

Advanced Optics (Optical Films)

To Our Shareholders

In the fiscal term ended March 2013, we maintained sales of dyesublimation thermal transfer printing media (color ink ribbons andreceiver paper) at roughly previous-year levels despite sluggish
domestic demand for photo prints and the effects of a strong yen
during the first half of the term. In the market for thermal resintype transfer printing media for printing barcodes, there waslackluster demand for Europe-bound products, but U.S. sales
were strong.
Looking ahead, we expect to complete construction of our
Malaysian factory in September 2013, which will help us respondto robust demand for dye-sublimation thermal transfer printing
media in Southeast Asian markets. In addition, we will boost ourcompetitiveness in the market for thermal resin-type transfer
printing media for printing barcodes throughout the Americas byadding production equipment at our Pittsburgh plant in the U.S.

displays dropped due to the double impact of sluggish demandand lower unit prices resulting from increased competition.
In addition, sales of existing products such as projection screen
components and contrast improvement film and other PDP
components were generally sluggish and declined relative to theyear before.
In the future, in addition to maintaining our large market shareon the strength of outstanding technology, we will focus ondeveloping new products that make use of clean converting
techniques based on DNP’s original optical technologies.

Synopsis of Performance■ Industrial Supplies

43Lifestyle Materials:

Developing Solutions for All Types of Living Spaces

DNP’s Lifestyle Materials Operations develops and supplies awide range of products and services for any company, whether
in Japan or abroad, that deals in “dwelling spaces,” including
homes, offices, medical or nursing care facilities, automobiles
and railroad cars. As we develop this business, we keep inmind a number of concepts that are indispensable to thedevelopment of living styles and living spaces for the future.
These include environmental and energy conservation, safety
and security, health and comfort, aging, smart housing andsmart cities.

Model room showing residential interior using DNP products

DNP has filed more than 1,000 patent applications related
to our proprietary electron beam (EB) coating technology.
The advanced, eco-friendly products that we make with thistechnology have won high praise from corporate clients andconsumers and are capturing a growing share of the domestic
market for interior and exterior products. One after another,
we are creating products like “EB Floor” and “EB Cloth” thatgenerate new value for “dwelling spaces.”

Electron Beam (EB) coating

A model lobby with
DNP wall and floor coverings

さ Providing solutions that cover every part of every dwelling space
DNP defines “dwelling space” as any location where people
conduct their lives, and we consider all dwelling spaces to bewithin our field of business. We have continually advanced“dwelling spaces” by increasing “functional value”—primarily
through EB technology—and “kansei (emotional) value”—
primarily through design. We are actively engaged in new
product development aimed at creating dwelling spaces forthe future, which will not only meet the expectations of ourcorporate clients but also enable consumers to enjoy full andcomfortable lives.
Our VOX-ART (Beaux-Art) and WORKSHOP lifestyle materials
showrooms (in Gotanda, Tokyo; Nanba, Osaka; and Tenjin,
Fukuoka) display models of residential living spaces thathighlight DNP’s unique design ideas. The comprehensive
showrooms display DNP interior products covering ceilings,
floors, walls, doors, windows and sliding partitions, and Ellio
steel plate and other DNP exterior products in front doors andelevators, etc.
The showrooms serve as a meeting place for condominium
developers, residential contractors, interior coordinators, anddesign firms. In addition to introducing each of our decorative

44

materials, we integrate into our business the viewpoints that wehear in these showrooms from the many stakeholders involvedin creating and using residential living spaces.
Based on this information, we envision lifestyle scenarios andpropose comprehensive solutions encompassing every stepfrom materials development and living space design to interior
coordination, even including construction methods.

DNP’s VOX-ART (Beaux-Art) lifestyle materials showroom
in the DNP Gotanda BuildingD N P A n n u a l R e p o r t 2 0 1 3 さ D N P ’ s B us i ne s s e s さ L i f e s t y l e and Industrial Supplies

Information Media Supplies:

Business Expansion Centered on Photo Printing

To Our Shareholders

One way in which we expand our worldwide business is byactively pursuing M&As that provide synergistic benefits throughthe combination of our strengths with those of other companies.
In 2006, for example, we acquired the Konica Minolta Group’s ID
photo business and photography-related product manufacturing
and sales businesses. In 2008, we acquired Sony Chemical &Information Device Corp.’s barcode printing business, and in 2011
we acquired Sony Corp.’s commercial-use digital photo printerbusiness.

Synopsis of Performance

DNP began manufacturing and selling information media supplies
in the 1980s after applying coating technologies that we cultivatedthrough our printing business to the successful development of
two types of thermal transfer printing media—dye-sublimationand thermal resin. DNP is among the world’s largest providers ofboth dye-sublimation media (used primarily in photo printers andcard printers for printing high-definition, full-color images) andof thermal resin-type media (used mainly in ink ribbons for highspeed barcode printers).

Special Feature
DNP’s Businesses

Dye-sublimation thermal transfer printing media and a digital photo printer (right)

Thermal resin-type transfer printing media

さ Expanding our business by developing products that meetcustomers’ photo printing needs

thermal head
How dye-sublimation type thermal transfer printing works

heatdye-based
ink layertransfer
film

receiving layer

receiverpaperrollerdye

substrate

Appendix

Heat from the printer’s thermal head sublimates (vaporizes andhardens) yellow, magenta and cyan dye-based inks that have been
thinly coated onto a base film, and transfers each color in turn onto
receiver paper, thereby printing a color image. Because the amountof ink transferred is proportional to the amount of heat in the thermal
head, the printer can express smooth gradations in color tones andproduce finely detailed, beautiful photographs.

base
film

Financial Section

because they deliver the same smooth color tunes and highquality images as silver halide printing, but the prints come out
instantly and are exceptionally durable. In addition to offering
printing services at retail outlets, we take advantage of DNP’sinstant printing system to offer printing services at more and more
locations, including event venues and tourist destinations.
In the future, in addition to ongoing development andproduction of print media, we intend to use our capacity todevelop printing systems and software in order to provide
convenient products and services for consumers’ enjoyment.

Corporate GovernanceDue to the increasing popularity of smart phones and digital
cameras, there has been a dramatic increase in the number ofphotos taken by consumers. In tandem with this trend, more
people are printing photos using dry methods such as dyesublimation or inkjet rather than conventional silver halide
methods using a developing solution.
Dye-sublimation printers are gaining popularity in the market
as they take up less space, are more affordable to buy, andare easier to maintain than other types of dry printers or photo
printers that use silver halides. DNP’s dye-sublimation thermaltransfer printing media are increasingly appreciated in the market

45

Advanced Optics (Optical Films):

Using “Clean Converting Technologies” to Provide Products andSolutions that Only DNP Can Provide, Based on Our ThoroughKnowledge of Optical Properties
By making use of the “clean converting technologies” that we
acquired through the design and development of a variety ofmaterials and manufacturing processes based on original opticaldesign technologies, DNP provides optical film products that
perform a variety of functions, primarily for flat-panel displays
used in devices like televisions, personal computers, and mobile
devices.
DNP has won the top share of the world market for antireflection films, which are used on a display’s outermost surface

in order to make the display easier to see by preventing glarefrom both indoor and outdoor light. We have developed one
new product after another, including films for 3D displays, “MothEye®” ultra-low reflection films, and optical films for touch panel
displays.
In the future, we will make use of our proprietary basic
technologies to advance product development from new pointsof view and to expand our business into a broader market that
includes fields like energy and environmental preservation.

Backlight films

Anti-reflection film

DNP optical films used in a liquid crystal display

Anti-reflection film

さ “Moth Eye®” anti-reflection film reduces light reflection more than ever before

Photograph of enlarged
cross-section of “Moth Eye ®” film

With film

Without film

The compound eyes of moths have microscopic conical protrusions thatmeasure a few hundred nanometers in height and form a concavo-convex
surface structure called a “moth-eye” structure. Because the protrusions
on the surface of a moth’s eye are smaller than the wavelength of light, they
block reflection of outside light. This allows the moth to make efficient use ofwhat little light there is at night without exposing its position to an enemy byreflecting light from its eyes.
DNP produces films that imitate the microscopic concavo-convex surface
of a moth’s eye using continuous, roll to roll processing that allows us tocover even large surfaces.
By using this ultra-low reflective film on a flat-panel display, glare issignificantly reduced compared to existing products on the market, enabling
the display of a clearer picture. Going forward, we aim to expand salesof related products beyond the flat-panel display market by developing
applications such as display cases used in art galleries and museums andshow windows used in commercial facilities.

Display case using “Moth Eye ®” anti-reflection film:on the left side, where “Moth Eye ®” film is used,a minimal amount of light is reflected.

46

D N P A n n u a l R e p o r t 2 0 1 3 さ D N P ’ s B us i ne s s e s さ L i f e s t y l e and Industrial Supplies

Energy Systems:

Providing Diverse Products and Services in Response to the Growing
Market for Clean Energy

To Our Shareholders
Special Feature

We also offer lightweight, exceptionally durable “soft pack"external coverings for lithium-ion batteries made with flexible,easy-to-process multiplex film. Our soft packs have alreadycaptured the top share of world markets. In addition to the current
primary applications—smart phones, tablet PCs, and othermobile devices—we intend to expand this business through otherapplications including battery-assisted bicycles, electric cars, andhome-use storage batteries.
In addition to creating very clean environments in our
manufacturing plants, we designed our Tobata Plant in
Kitakyushu, Fukuoka Prefecture so that we can produce
components for both photovoltaic cells and lithium-ion batteries
at a single facility, which will allow us to respond flexibly to suddenchanges in market trends.

Synopsis of Performance

DNP positions environment and energy as one of our strategic
businesses as we respond to growing demand for clean sourcesof energy that can replace fossil fuels, and to growth in related
markets.
DNP’s main photovoltaic cell-related products are back sheets,
which adhere to the back side of photovoltaic panels and keepout wind and rain; encapsulants, which hold photovoltaic cells(power generation elements) and power collection wiring inplace and protect them from the outside environment; and busline sheet used in rear-contact photovoltaic modules, made byforming electrode circuits on film. We began mass producing
in bus-line sheet in 2012. We intend to continue meeting ourcorporate clients’ needs by increasing the functionality of our
products and reducing costs.

DNP’s Businesses“Soft pack” covering for a lithium-ion battery

Photovoltaic cell

Going forward, we will work actively to improve power
generation efficiency by developing new products that meet ourcustomers’ demands, including an all-in-one bus-line sheet-backsheet combination.

Financial Section
Appendix

The photovoltaic cell market seeks high-performancecomponents amid increasing demand for greater durability andpower generation efficiency. DNP is meeting these needs bydeveloping high-quality photovoltaic module components thatbring together DNP’s unique clean converting technologies.
DNP’s encapsulants shut out water vapor ten times more
effectively than competing products in common use. In addition,
because DNP’s encapsulants do not generate acidic gas that
corrodes wiring or other components, they have attracted
attention as outstanding encapsulants that prevent potential
induced degradation (PID) in photovoltaic cells subject to highvoltage, high temperature and high humidity.
Bus-line sheets reduce shadow loss in photovoltaic cells andcontribute to the commercialization of rear-contact photovoltaic
modules, which are more efficient power generators thanconventional photovoltaic cells. Our corporate clients have givenhigh marks to DNP’s bus-line sheets.

Corporate Governance

さ Development of products that improve the power generation efficiency ofphotovoltaic cells

Bus-line sheet used on photovoltaic modules

47

Business Strategies

Electronics

48

Usage of a wide variety of electronic devices—including
household appliances and information devices like smart phones
and tablet PCs­—is rapidly spreading. When selecting thesetypes of electronic devices, consumers seek convenience andnew features based on cutting-edge technologies. At the sametime, the needs of corporations and consumers are becoming
increasingly diverse and manufacturers must take appropriate
action to quickly address these changing needs while also
responding to demands for lower costs.
DNP’s Electronics segment considers these various market
demands as we work hard to develop the newest technologies
that respond to the market’s diverse needs and to establish
optimal supply frameworks. It is against this backdropthat we apply world-class printing technologies, including
microfabrication and patterning technologies, in order to provide
a wide range of display components and electronic devices suchas color filters for liquid crystal displays, photomasks (originalplates for making LSI circuits), and touch panel components.
The Electronics segment’s basic strategy regarding productdevelopment is to keep our eyes on the next generation ofelectronic products as we work at developing cutting-edge,
industry-leading technologies, and to supply high-added value
products with superior functionality in line with the market’s
demands. These cutting-edge products are primarily developed
and manufactured at our mother plant in Japan, but we intend to
take a global point of view regarding other products as we flexibly
consider the best locations for production, including overseas
locations. We also intend to actively engage in collaboration withcompanies that have important strengths in order to speed up
our business development.

D N P A n n u a l R e p o r t 2 0 1 3 さ D N P ’ s B usinesses さ Electronics

Expand Overseas Semiconductor Photomask
Business and Develop Cutting-edge Technologies

Now that LCD televisions have transitioned from the growthphase to a mature phase of their product lifecycle, growth indemand for LCD TV-related products has begun to slow on
the global market for displays. Worldwide, panel manufacturers
have excessive production capacity for panels used in largescreen televisions. Panel prices are falling, and it is becoming
increasingly difficult for manufacturers to turn a profit.
Given these circumstances, we are working to stabilize
production, largely by shifting our focus from color filters forlarge-screen televisions that were our previous mainstay to thesmall- and medium-sized color filters that are expected to be
increasingly in demand for use in products like smart phones andtablet PCs. At the same time, we are reforming our business andcost structures. This includes revising our production frameworkby selling or consolidating equipment. We will make the mostof the technical strengths and customer trust that we havecultivated over the years as we work to stabilize our business byfocusing on providing the high-resolution, high-quality productsthat are particularly in demand for use in small- and mediumsized devices.

DNP’s semiconductor photomasks have established a solid
reputation for outstanding quality and have maintained control ofa large share of the global photomask market (excluding in-houseproduction by semiconductor manufacturers). In particular, wehave captured one of the top shares of the worldwide market for
cutting-edge products with line widths of 45nm*1 or less, which
require particularly advanced technology for their production.
With demand for miniaturizing semiconductor products only
expected to increase in the future, DNP aims to use the resultsof development conducted jointly with corporate clients in orderto prepare a framework for developing and supplying cuttingedge photomasks with line widths of 22nm or less. At the sametime, we will keep working on commercializing next-generation
semiconductor lithography technologies such as extreme
ultraviolet (EUV) exposure*2 and nanoimprinting.*3
Given the harsh business environment surrounding electronic
devices, we will adjust our production framework so that we canactively address demand overseas as well as in Japan. We will
make use of overseas photomask production bases that we haveestablished in partnership with major corporate clients in order tosupply cutting-edge photomasks to Europe and the Asian region.

Make Use of Existing Technologies and Equipment
to Enhance Product Lineup with New Products like
Touch Panel Components

Boost Earning Power by Developing New Products*1 nm (nanometer): one billionth of a meter*2 Extreme ultraviolet (EUV) exposure: a technique for using ultraviolet rays withextremely short wavelengths to burn minute circuit patterns onto a wafer*3 Nanoimprinting: a semiconductor manufacturing technique that entails
physically transferring a minute pattern to a resin-coated silicon wafer bypressing a template bearing the pattern against the resin on the wafer*4 MEMS (micro electro mechanical system): a group of minute components
made with semiconductor microfabrication technologies

Financial Section

We intend to apply microfabrication, patterning, etching, andother technologies to the active development of a wide range of
products including hard disk drive components, metal bases forLEDs, printed wiring boards with embedded components, andMEMS*4 products.
By concentrating management resources on areas thatpromise future growth, such as various types of electronic
modules used in image processing, we intend to construct abusiness framework that will allow us to secure profits despite
fluctuations in the semiconductor market.

Corporate Governance

We will work to develop our lineup of new products by making
the most of existing technologies and production equipment.
Touch panel components in particular are expected to bea growing market, and we intend to expand our share ofthat market based on the appeal of our advanced technicalcapabilities. We already supply touch panel sensors and othernew products that contribute to the production of thinner,
lighter smart phones and tablet PCs, and we intend to continue
to focus on product development that meets the needs ofmanufacturers in Japan and around the world.

DNP’s Businesses

Shift Focus to Small- and Medium-sized Products
and to Increasing Resolution

Special Feature■ Electronic Devices:

To Our Shareholders■ Display Components:

Synopsis of Performance

Main Policies

Appendix

49

200

18.1

15.9

15.5

20
0

0

11

12

13

Financial Results
Net Sales

Operating Income (¥ billion)(Net sales)
800(Operating income)
120
100

600

531.7

522.8

521.4

80

Financial 400Highlights

60

46.8

31.8

28.0

200

0

11

Net sales¥

Operating income(¥ billion, %)20

2011.32012.3

12286.3¥13 224.8¥ 180.5

12.2

(4.6)

(0.3)

–

–

0

4.3%

Operating income margin

Net Sales40

2013.3Operating Income (Loss) (¥ billion)(Net sales)
800(Operating income)
120
100

600
80
60

400

286.3
224.8

40

180.5

200

20

12.2
0

– 4.6

– 0.3

0
– 20

11

12

13

Net sales
Sales of color filters declined relative to the previous fiscal year,
mainly because of decreased demand for LCD televisions andthe August 2012 transfer of our Sakai plant’s color filter businessto Sakai Display Products Corp. Sales of electronic devices,
including photomasks, were generally slow due to weak demandfor personal computers. As a result, sales by the segment as awhole declined by 19.7%, or 44.3 billion yen, from a year earlier.

Operating income
In addition to benefits from reforming the Electronics segment’s
cost structure, for example by reorganizing production bases
and merging the two business units that formerly handled display
components and electronic devices separately, operating income
was also boosted by revenues from new products like touch
panel sensors, which we began mass producing. Compared tothe operating loss of 4.6 billion yen posted in the previous fiscal
term, we achieved a big improvement in the fiscal year ended
March 2013, resulting in the segment’s operating loss shrinking
by some 4.3 billion yen to 0.3 billion yen.

50

Fiscal Term through March 2013:
Business Environment andSummary of Financial Results■ Structural Reform of■ the Entire Electronics Segment
In June 2012, we merged the two business units that formerly
handled display products and electronic devices to form a
new Fine Electronics unit. In addition to reducing indirect
operations, we set about boosting the Electronics segment’s
technological and development capabilities by combining thetwo units’ strengths in order to improve investment efficiency andprofitability.

■ Display Components
According to one research company’s figures, worldwide
shipments of LCD televisions in calendar 2012 declined by 1%
year on year to 203 million units. There was continued growth inshipments to emerging countries, including China and Central
and South American nations, but the number of units shipped todeveloped countries decreased. There was an especially sharp
year-on-year drop in television shipments in Japan because of theprevious year’s spike in replacement buying due to broadcasters’
shift to digital terrestrial broadcasting in 2011. Shipments ofpersonal computers also declined worldwide, by 3.5% year on
year to about 350 million units. Growth in both LCD televisions
and personal computers was slowed partly because of the
spread of smart phones and tablet PCs. These market trends
gave rise to major changes in manufacturers’ courses of action,with panel makers implementing production cutbacks and shifting
their emphasis from large-size products used in televisions tosmall- and medium-sized products for smart phones and othermobile devices.
Given this environment, DNP did a brisk business in smalland medium-sized color filters, but larger filters for large-screen
televisions were affected by falling LCD television prices andoverall Display Components operations posted smaller sales
than in the previous year. In response, we downsized by sellingsome of the color filter manufacturing equipment from our plantin Mihara, Hiroshima Prefecture in February 2013, and by selling
our Sakai plant’s 10th-generation color filter operations to Sakai
Display Products Corporation.
In the future, demand for LCD televisions is expected to growprimarily in newly industrializing countries like India, while indeveloped countries higher-added value products such as 4K
and 3D televisions are expected to grow in popularity. Meanwhile,D N P A n n u a l R e p o r t 2 0 1 3 さ D N P ’ s B usinesses さ Electronics

DNP’s Businesses
Corporate Governance
Financial Section
Appendix

We are starting to see signs of a future recovery in thesemiconductor market, such as more active investment in thefurther miniaturizing of semiconductor products used in smart
phones, tablet PCs, and other mobile terminals that are
the objects of growing demand. As semiconductor products
become thinner and higher in density than ever before,
increasingly advanced technologies are required to create
the ultra-fine circuit lines used in their manufacture.
As miniaturization progresses, we aim to increase DNP’s shareof the market for products at the cutting edge. At production
bases both in Japan and abroad, DNP is moving ahead withmass production of products made with under-32nm line widths.
At the same time, we are preparing to support photolithography
techniques for making ultra-advanced under-30nm products bycombining ArF immersion and double exposure manufacturingmethods. In addition, we are working with semiconductor
manufacturers to speed up research and development of nextgeneration semiconductor lithography technologies like extreme
ultraviolet (EUV) exposure and nanoimprinting.
Amid growing demand for thin, compact semiconductor
packages that can accommodate high-density mounting ofSpecial Feature

In the fiscal term through March 2013, the global semiconductor
market shrank by 2.2% from the previous year, mainly becauseof stagnation in demand for personal computers, the European
fiscal crisis, and a dampening of demand from China. The
market slowed in Japan too, and the fiscal performance ofmajor domestic semiconductor manufacturers declined due toincreased international competition.
DNP’s Electronic Devices business worked hard to increase its
share of the domestic market and to take advantage of overseas
demand, but net sales of photomasks declined compared to theprevious year. In other areas, DNP enjoyed increased sales ofelectronic modules used in commercial amusement machines,
but sales of suspensions and other components for hard disk
drives declined, as did sales of lead frames.

To Our Shareholders■ Electronic Devices

internal components, we aim to expand DNP’s share of themarket for etched electronic components, backed by suchstrengths as our unique B2it (pronounced “bee-square-it”) buildup
board technology. We will also actively pursue development of
new products including metal LED substrates, hard disk drive
components, electronic modules for image processing and otherapplications, and MEMS products.

Synopsis of Performancethe market for small- and medium-sized panels is expected tocontinue to enjoy solid growth as more people use smart phones
and tablet PCs.
DNP will continue to expand production of the small- andmedium-sized products that are meeting growing demand. In
addition, we will continue to respond to demand for thinner,
lighter products and to develop products for flexible displays.
We will also accelerate development of new products thatcan be made with color filter production equipment, such as
capacitive sensors for touch panels and surface covers that
protect touch panels from scratching.

51

DNP Electronics Products in Everyday LifeDNP Products and Technologies Used in Smart Phones and Tablet PCs

For more than half a century, DNP has been supplying
a wide variety of electronic products by applying
the photographic plate-making skills that we gained
through our printing business, and by refining thephotolithography and etching technologies that enable
us to make extremely fine patterns.
DNP’s various products and systems contributeto improving the operation and functionality of smart
phones, tablet PCs and other information terminals.
Examples of the products we supply include highdefinition color filters for liquid crystal displays, touch
panel components, photomasks and lead frames usedin cutting-edge semiconductor products, digital camera
modules and autofocus springs.

Camera module

Li-i
on
BAT
V2
000
TER
mA
h
Y

3.7

■ “Soft pack” for lithium-ion battery
Soft packs are outer coverings made of film-type material; they seal
in electrolytes, separators and other battery components.
Compared to conventional metal packaging, a soft pack allows
greater freedom in designing a battery’s shape and dimensions andcan help reduce its weight and cost.
(Lifestyle and Industrial Supplies)■ SIM (Subscriber Identity Module) card
A type of smart card issued by a telecommunications carrier, theSIM card contains information needed for authenticating user
identification, as well as telephone numbers and other information.
(Information Communication)

52

D N P A n n u a l R e p o r t 2 0 1 3 さ D N P ’ s B usinesses さ Electronics

Synopsis of Performance

Touch panel components

To Our Shareholders

Amid widening use of smart phones, tablet PCs and other mobile
terminals, there is increasing demand for touch panel sensors that
detect fingertip movement on a display. When building a touch panel
function into a display, it is important to avoid increasing the device’s
thickness or weight. In response to this consideration, DNP has
begun mass producing cover glass integrated sensors using
tempered glass, and film-type sensors that are processed on bothsides of the film. Both of these products enable the production ofthinner, lighter mobile terminals.

Special Feature

Touch panel sensor

High-definition color filters for LCDs

Lead frame

Printed wiring board withembedded components(for camera module, etc.)

Motherboard for a smart phone

Appendix

Photomask used formaking semiconductors

Financial Section

DNP makes use of printing technologies like patterning and etching toprovide a large number of products that are essential to the operationof all kinds of electronic devices.
We mass-produce cutting-edge photomasks—masters for making
large-scale integrated circuits (LSIs), DRAM semiconductor
memories, and other semiconductor products—with line widths ofless than 30nm. We also meet our corporate clients’ miniaturizationneeds by working to develop practical applications fornext-generation semiconductor lithography technologies likenanoimprinting and extreme ultraviolet (EUV) exposure.
In addition, we supply lead frames (components that hold IC chips
onto printed wiring boards and transmit electric signals) for use inultra-thin semiconductor packages that are only 0.4mm thick, or one
eighth the thickness of conventional products.
DNP’s unique B2 it (pronounced “bee-square-it” ) embeddedcomponent wiring board technology answers demand for morecompact, higher-density motherboards. And we use our advanced
etching technologies to manufacture autofocus springs that
instantaneously adjust the focus of the lens inside a camera module.

Color filter, with enlarged view at lower right

Corporate GovernanceElectronic devices

DNP’s Businesses

In order to display more beautiful images on the small screens ofsmart phones and tablet PCs, the displays need to have better
resolution and brightness. In our color filter production, we havedeveloped some of DNP’s existing proprietary technologies to meetthe market’s demands for higher-definition, brighter, thinner, lighter
displays for smart phones and other mobile terminals, and these
efforts have won high praise.

53

Corporate
Governance
CONTENTS

54

56

Corporate Governance

63

Board of Directors,
Statutory Auditors andCorporate Officers

55

Corporate Governance“DNP” refers to Dai Nippon Printing Co., Ltd. in this section.

1 Corporate Governance■ Fundamental Philosophy
DNP has established a management concept of contributing
to the emergently evolving society of the 21st century, andrecognizes that fulfilling its corporate responsibilities tosociety as a Group and being trusted by its shareholders,customers, consumers, employees and other stakeholders
is critical to improving the competitiveness of the Group.
Toward this end, we regard corporate governance as a top
management priority. We have strived to establish andmanage an organizational structure that allows for precise
managerial decision-making, prompt and appropriate
execution based on the decisions made, and proper
supervision and surveillance; strengthen education andtraining to improve each employee’s awareness ofcompliance issues; and enhance our overall corporate
governance.

■ Progress on Corporate Governance Measures(1) Corporate governance structure
DNP’s organization is designed to allow the directors withspecialized expertise and experience in a wide range ofbusiness fields to participate in management decisions, totake responsibility and authority as they execute their work,and to supervise the work of other directors. Also, so as topromptly make precise management decisions, smoothly
act based on the decisions, and further strengthen proper
supervisory functions, independent directors participate indecision making, and corporate officers named by the Boardof Directors execute the decisions made by the Board of
Directors, and have the responsibility and authority to decideupon and carry out those matters delegated by the Board.
Working in close communication with the directors and inclose proximity to the workplace, their function is to ensurethat the views of those on the front lines are reflected inmanagement.
The term of office for the directors is one year, in order tohave more flexibility to construct a management system best
suited to responding to the business environment; and tofurther clarify management responsibility for each fiscal year.
The Board of Directors consists of 20 directors including
one independent outside director. In principle, the Board
meets once a month. Based on the Company’s Board of
Directors Regulations, the directors ensure that operations
are appropriately run and mutually supervise day-to-day
operations. The directors and corporate officers holdexecutive committee meetings twice a month toexchange information that is helpful for efficient decision

56

making. To speed up the Company’s activities and makethem more efficient, DNP has also established aManagement Committee consisting of directors at the senior
managing director level and above. The committee meetsonce a month, in principle, to review and discuss
management policies, strategies, and important businessmatters.
DNP has in place a Board of Statutory Auditors thatconsists of five auditors, including one auditor withconsiderable knowledge of finance and accounting andthree outside auditors. In accordance with auditors’prescribed audit criteria and responsibilities, the statutory
auditors conduct audits of the directors’ management of
day-to-day operations and, as necessary, seek informationfrom the directors and employees regarding business
operations.
With such a corporate governance structure, the Board of
Directors can make appropriate decisions efficiently.

(2) Internal controls and auditor’s auditing
In order to maintain a structure that allows for precise
management decision-making, appropriate and prompt
execution of business, and inspection and monitoring ofthese functions, the Corporate Ethics Committee, as the
body in charge of internal control, inspects and guides
DNP’s operating units according to the DNP Group’s Basic
Compliance Management Regulations, and regularly reports
to auditors on management conditions.
In addition, the Auditing Department (consisting of 16
employees) ensures the propriety of operations byconducting accounting and operational audits based oninternal audit regulations and by providing progress reports
to the statutory auditors and the accounting auditor.
The statutory auditors hold regular meetings of the Boardof Statutory Auditors, work with other statutory auditors to
perform their audit duties, and closely cooperate with theaccounting auditors by receiving from them an explanationof the audit plan at the start of the fiscal year, assessing
audit operations during the fiscal year as appropriate, andreceiving a report of audit results at the end of the fiscal year.
The names of the certified public accountants who
performed the accounting audits, the audit firms they are
employed by, and their assistants in the audit work are as
follows:

D N P A n n u a l R e p o r t 2 0 1 3 さ Corporate Governance

Synopsis of Performance● Certified public accountants who performed theminimize losses to the DNP Group. Certain divisions anddirectors are promptly established and appointed for
responding to risks that have newly developed.

(3) Development of a risk management structure
To manage risks related to compliance, information security,
the environment, disasters, product safety, insider tradingand export management, the Corporate Ethics Committee,
other special committees, and other head office divisions
develop rules and conduct training as part of risk-related
preemptive efforts, and respond promptly to avert orSpecial Feature(4) Progress on other corporate governance measures
DNP set down the DNP Group Code of Conduct for
employees to follow, so as to contribute to the prosperity
and solid development of society, promote fair andappropriate corporate activity, protect the environment,
contribute to society, and establish a free and lively
corporate culture. Among the stipulations is that DNP, as an
emergently evolving company that does not do businesswith antisocial elements, fulfill its corporate responsibilities tosociety, respect its shareholders, customers, consumers,
employees and other stakeholders, and act in a way thatearns trust.

To Our Shareholders

accounting audits
Senior partners and managing partners
Jun Sasayama, Tsuguhiro Tsukakoshi,
Junko Shima, Yurika Akimoto● Audit firm
Meiji Audit Corporation● Number of accounting audit assistants
9 certified public accountants, 10 others(5) A diagram of the corporate governance structure is shown below.
General Meeting of Shareholders
Audit

Board of Directors

DNP’s Businesses

Audit

Management Committee
Representative Directors

Corporate Ethics Committee

ReportingOpen Door Room
ReportingInformation Disclosure Committee

Product Safety Committee
Environmental Committee
Complaint Handling Committee

Audit

Audit
Guidance

ReportingAssistance

Legal and other main divisions

Guidance
Training

Audit unit

(Environmental Safety Division, Labor Division,
Technology Division, Accounting Division, Management
Division, IP Division, Legal Affairs Division, etc.)

Corporate Social Responsibility Committee(Autonomous implementation, inspection,
review, improvement)

Financial Section

Central Disaster Prevention Council

Auditing Department

Group companies

Oversight of internal controls

Head office

Operating units

Accounting Auditors

Divisions

Audit

Information Security Committee

Board of Statutory Auditors

Insider Trading Prevention Committee
Corporate officers

Audit

Corporate GovernanceDirectors in charge

Audit
Guidance
ReportingAppendix

Coordination

57

(6) Interests between DNP and its outside directors andoutside statutory auditors
DNP has one outside director and three outside statutory
auditors. Outside directors and statutory auditors do nothave any particular personal relationships, capital
relationships, transactional relationships, or other interests
with DNP. The role of outside directors is to supervise insidedirectors and contribute to improving the transparency andaccountability of the Board of Directors by providing
management advice based on their judgment. The role ofoutside statutory auditors is to enhance the propriety ofaccounting and operational audits and to supervise
management.
DNP does not have any standards of independence forappointing outside directors and outside statutory auditors,
but to avoid conflicts of interest with general shareholders, it
references the standards of independence for independent
officers as stipulated by financial instruments exchanges.
DNP has also established the following insignificance criteria
related to the attributes of independent officers determined
to pose no risk of influencing the voting decisions ofshareholders.
・Transactions less than 2% of DNP’s annual sales

during the most recent fiscal year.

・Donations less than the greater of either an annual

average during the previous three years of ¥10 million
or 2% of the total annual revenues of the donation
recipient.
Outside director Tadao Tsukada is designated as anindependent officer and can apply his expertise as an
academic to the business activities of DNP and participate inmanagement decision making from an objective standpoint
as an outside director. Mr. Tsukada owns 2,000 shares of
DNP stock.
Outside statutory auditor Shin-ichi Ikeda is designated as
an independent officer and can help bolster auditing basedon a broad knowledge gained from business experience atother companies. Mr. Ikeda owns 2,000 shares of DNP
stock. Mr. Ikeda was previously employed at The Dai-ichi Life
Insurance Co., Ltd., and although DNP had a relationshipwith Dai-ichi Life Insurance in the form of mutual
appointments of outside directors or auditors, it does nothave such a relationship at the present time.
Outside statutory auditor Makoto Matsuura is designatedas an independent officer and can help bolster auditing
based on legal expertise as an attorney.
Outside statutory auditor Kuniaki Nomura can help bolster
auditing based on legal expertise as an attorney.
DNP and its outside director and outside statutory
auditors have concluded agreements that limit the director
and auditors’ liability for damages within the parameters set

58

forth in Article 423, Paragraph 1 of Japan’s Companies Act,so long as they execute their duties in good faith and without
serious negligence.

(7) Number of directors
DNP’s Articles of Incorporation specify that the number ofregular members on the Board of Directors shall be no morethan 20.
(8) Requirements for shareholder approval of director
nominees
DNP’s Articles of Incorporation specify that the approval of
director nominees requires the attendance of at least one
third of shareholders with voting rights and a majority of thevotes of these shareholders, and does not depend on
cumulative votes.
(9) Matters to be resolved at the meeting of shareholders
that can be resolved by the Board of Directors
1) Share buybacks
DNP’s Articles of Incorporation specify that the Company
may buy back its shares in the open market, in accordancewith Article 165, Paragraph 1 of Japan’s Companies Act,
upon approval by the Board of Directors, in accordance with
Article 165, Paragraph 2 of Japan’s Companies Act, to allow
the Company to use capital more efficiently and implement a
flexible capital structure policy in response to changes inbusiness conditions.
2) Exemption of directors from liability
DNP’s Articles of Incorporation specify that directors(including former directors) may, by a resolution of the Boardof Directors, in accordance with Article 426, Paragraph 1 ofJapan’s Companies Act, be exempted from liabilities in
Article 423, Paragraph 1 of Japan’s Companies Act so thatthe directors can sufficiently carry out their expected
responsibilities.
3) Exemption of auditors from liability
DNP’s Articles of Incorporation specify that statutory
auditors (including former statutory auditors) may, by aresolution of the Board of Directors, in accordance with
Article 426, Paragraph 1 of Japan’s Companies Act, be
exempted from liabilities in Article 423, Paragraph 1 ofJapan’s Companies Act so that the statutory auditors cansufficiently carry out their expected responsibilities.
4) Interim dividend
DNP’s Articles of Incorporation specify that the Company
may, by a resolution of the Board of Directors, pay amonetary dividend stipulated in Article 454, Paragraph 5 ofJapan’s Companies Act to shareholders of record as ofD N P A n n u a l R e p o r t 2 0 1 3 さ Corporate Governance

To Our Shareholders(10) Requirements for shareholder approval of special
		resolutions
DNP’s Articles of Incorporation specify that the approval of
special resolutions stipulated in Article 309, Paragraph 2 ofJapan’s Companies Act requires the attendance of at least
one third of shareholders with voting rights and at least two
thirds of the votes of these shareholders, so that theshareholders’ meetings can run smoothly.

Synopsis of Performance

September 30 of each year and shareholders with actual
stock certificates, so that profits can be flexibly passed on toshareholders.

■ Compensation Paid to Directors and Statutory Auditors(1) Total compensation paid by DNP, by category of director/statutory auditor, total compensation
by type, and the number of directors and statutory auditors covered

Directors(excluding outside directors)

Total compensation by type (¥ million)(¥ million)

Base compensation

Bonus

Number of directors
and statutory
auditors covered

1,322

1,167

155

21

75

75

–

2

87

87

–

4

Total compensation

Statutory auditors(excluding outside auditors)

Outside directors
and auditors(2) Company directors and total compensation
Name(director type)

Total
compensation

Company(¥ million)

Total compensation by type (¥ million)
Base compensation

Bonus

288

Dai Nippon Printing Co., Ltd.

265

23

Koichi Takanami

122

Dai Nippon Printing Co., Ltd.

110

12

Masayoshi Yamada

122

Dai Nippon Printing Co., Ltd.

110

12

(Director)(Director)

Appendix(3) Policies regarding the determination of compensation for directors and statutory auditors
Compensation for directors is calculated within the limits on directors’ compensation approved byshareholders at a general meeting, reviewed and discussed by the Management Committee, anddeliberated and decided on by the Board of Directors.
Compensation for each director is determined based on a broad range of factors, including theoperations they are in charge of, their responsibilities, achievements, and contributions.
Compensation for statutory auditors is calculated within the limits on statutory auditors’compensation, and the compensation of each statutory auditor is determined based on discussions withthe statutory auditor.

Financial Section

Notes: 1. Total compensation is shown only for those with compensation of at least 100 million yen.
2. Bonuses of Dai Nippon Printing Co., Ltd. are the amounts expected to be paid as bonuses for the current fiscal year.

Corporate GovernanceYoshitoshi Kitajima(Director)

DNP’s Businesses

Notes: 1. Bonuses are provisions for bonuses for directors and statutory auditors for the fiscal year.
2. There were 19 internal directors, two internal statutory auditors, one outside director and three outside auditors as of theend of the fiscal year.

Special Feature

Category of director/
statutory auditor

59

■ Stockholdings(1) Stocks held for reasons other than for pure investment purposes
No. of stocks: 416
Total on the balance sheet: 153,469 million yen(2) Holding category, company name, number of shares, amount recorded on the balance sheet,and holding purpose of stocks held for reasons other than for pure investment purposes(Previous fiscal year)
Stocks held for reasons other than pure investment purposes

66,066

Amount recordedon balance sheet(¥ million)
7,551

Enhance business relationship10,0004,870

Strengthen business alliance

Taisho Pharmaceutical Co., Ltd.

692,700

4,648

Enhance business relationship

Terumo Corporation

1,101,000

4,354

Enhance business relationshipMizuho Financial Group, Inc.

27,134,319

3,663

Enhance business relationshipAsahi Breweries, Ltd.

1,860,029

3,409

Enhance business relationship

Ezaki Glico Co., Ltd.

3,221,314

3,198

Enhance business relationshipNissin Foods Holdings Co., Ltd.

898,711

2,781

Enhance business relationship

Yamato Holdings Co., Ltd.

1,660,600

2,123

Enhance business relationshipToyo Suisan Kaisha, Ltd.

794,980

1,708

Enhance business relationshipToshiba Corporation

4,547,000

1,655Strengthen business alliance

Mitsubishi Chemical Holdings Corporation

3,598,790

1,590

Strengthen business alliance

Aica Kogyo Co., Ltd.

1,293,743

1,536

Enhance business relationshipLion Corporation

3,140,665

1,488

Enhance business relationshipFujifilm Holdings Corporation

685,965

1,331

Enhance business relationship

Sapporo Holdings Limited

3,796,388

1,161

Enhance business relationship

NSK Ltd.

1,814,000

1,155

Strengthen business alliance

Yakult Honsha Co., Ltd.

393,000

1,118

Enhance business relationship

ROHM Co., Ltd.

266,501

1,088

Enhance business relationship

CALBEE, Inc.

258,200

1,088

Enhance business relationship

Nippon Steel Corporation

4,594,768

1,043

Strengthen business alliance

Meiji Holdings Co., Ltd.

282,200

1,020

Enhance business relationship

Mitsubishi UFJ Financial Group, Inc.

2,399,760

988

Enhance business relationshipShiseido Co., Ltd.

677,619

967

Enhance business relationship

Mitsubishi Electric Corporation

1,300,000

951

Enhance business relationship

SMK Corporation

3,200,000

918

Enhance business relationship

Company name

Number ofsharesThe Dai-ichi Life Insurance Co., Ltd.
NuFlare Technology, Inc.

Holding purpose

Stocks held in trust or other legal entity while retaining voting rights or voting instruction rights

Note:

60

Company name

Number ofsharesAmount recordedon balance sheet(¥ million)

Terumo Corporation

1,930,500

7,635

TV Asahi Corporation

40,3005,436

Astellas Pharma Inc.

913,770

3,106Japan Tobacco Inc.

5,000

2,330

Holding purpose
Hold voting instruction rights forshares in retirement benefit trust
Hold voting instruction rights forshares in retirement benefit trust
Hold voting instruction rights forshares in retirement benefit trust
Hold voting instruction rights forshares in retirement benefit trust

Specified stocks and stocks held in trust with voting rights are not added together when selecting stocks with the largest
amounts as recorded in the balance sheet.

D N P A n n u a l R e p o r t 2 0 1 3 さ Corporate Governance

Synopsis of Performance(Current fiscal year)
Stocks held for reasons other than pure investment purposes
Number ofsharesAmount recordedon balance sheet(¥ million)

Holding purpose

The Dai-ichi Life Insurance Co., Ltd.

66,066

8,357

Enhance business relationship

NuFlare Technology, Inc.

10,0005,830Strengthen business alliance

27,134,319

5,399

Enhance business relationship

Taisho Pharmaceutical Co., Ltd.

692,700

4,724

Enhance business relationship

Terumo Corporation

1,101,000

4,459

Enhance business relationshipMizuho Financial Group, Inc.

Enhance business relationship

3,940

Enhance business relationship

Ezaki Glico Co., Ltd.

3,224,268

3,140

Enhance business relationship

YAMATO HOLDINGS CO., LTD.

1,660,600

2,889

Enhance business relationship

YAKULT HONSHA CO., LTD.

701,000

2,667

Enhance business relationshipToyo Suisan Kaisha, Ltd.

794,980

2,289

Enhance business relationship

Aica Kogyo Co., Ltd.

1,293,743

2,248

Enhance business relationship

TOSHIBA CORPORATION

4,547,000

2,146

Strengthen business alliance

CALBEE, Inc.

258,200

1,970

Enhance business relationshipLion Corporation

3,140,665

1,626

Enhance business relationship

Hulic Co., Ltd.

2,040,000

1,576

Enhance business relationship

Mitsubishi Chemical Holdings Corporation

3,598,790

1,565

Strengthen business alliance

Sapporo Holdings Limited

3,796,388

1,499

Enhance business relationship

Mitsubishi UFJ Financial Group, Inc

2,399,760

1,339

Enhance business relationship

NSK Ltd.

1,814,000

1,297

Strengthen business alliance

FUJIFILM Holdings Corporation

685,965

1,259

Enhance business relationship

Hakuhodo DY Holdings Inc.

172,000

1,233

Enhance business relationship

Meiji Holdings Co., Ltd.

282,200

1,231

Enhance business relationship

Senshukai Co., Ltd.

1,509,663

1,160

Enhance business relationship

Daikin Industries, Ltd.

300,000

1,107

Enhance business relationship

NIPPON STEEL & SUMITOMO METAL CORPORATION

4,594,768

1,079

Strengthen business allianceCorporate Governance

4,183

898,711

DNP’s Businesses

1,860,029

Special Feature

Asahi Group Holdings, Ltd.
NISSIN FOODS HOLDINGS CO., LTD.

To Our Shareholders

Company name

Stocks held in trust or other legal entity while retaining voting rights or voting instruction rights
Amount recordedon balance sheet(¥ million)

Holding purpose

Terumo Corporation

1,930,500

7,818

Hold voting instruction rights forshares in retirement benefit trust

TV Asahi Corporation

4,030,000

7,338

Hold voting instruction rights forshares in retirement benefit trust

Astellas Pharma Inc.

913,770

4,623

Hold voting instruction rights forshares in retirement benefit trust

Japan Tobacco Inc.

1,000,000

3,000

Hold voting instruction rights forshares in retirement benefit trust

Specified stocks and stocks held in trust with voting rights are not added together when selecting stocks with the largest
amounts as recorded in the balance sheet.

Appendix

Number ofsharesFinancial Section

Note:

Company name(3) Stocks held for pure investment purposes
None

61

2 Compensation Paid to Accounting Auditors(1) Compensation paid to accounting auditors
Previous fiscal year
Compensation foraudit certification(¥ million)

Current fiscal year

Compensation forother services(¥ million)

Compensation foraudit certification(¥ million)

Compensation forother services(¥ million)

Dai Nippon Printing Co., Ltd.

83

–

83

–

Consolidated subsidiaries

126

–

128

–

Total

209

–

211

–

(2) Other material compensation details
None(3) Compensation paid to accounting auditors for services other than audit work provided to DNP
None(4) Determination of compensation for audit services
The Company’s compensation for audit services is determined based on a variety of factors, including
the number of expected days for the audit and the size of the Company.

62

D N P A n n u a l R e p o r t 2 0 1 3 さ Co r p o r a t e G o v e r n a n c e さ B o a r d o f D i r e c t o r s , S t a t u t o r y A u d i t o r s and Corporate Officers

Board of Directors, Statutory Auditors and Corporate Officers(As of June 27, 2013)

Standing Statutory Auditors

Senior Corporate Officers

Tetsuji Morino

Kenji Noguchi

Tatsuya Nishimura

Kunikazu Akishige

Minoru Yoneda

Tatsuo Komaki

Executive Vice Presidents

Motoharu Kitajima

Shin-ichi Ikeda*

Shigemi Furuya

Koichi Takanami

Takao Shimizu

Masayoshi Yamada

Masaki Tsukada

Statutory Auditors

Masato Koike

Yoshinari Kitajima

Sakae Hikita

Makoto Matsuura*

Masato Yamaguchi

Fujio Yamazaki

Kuniaki Nomura*

Morihiro Muramoto

Senior Managing Directors

Tokuji Kanda

Mitsuhiko Hakii

Takashi Saito

Ryuji Minemura

To Our Shareholders

Managing Directors

Yoshitoshi Kitajima

Synopsis of Performance

President

Corporate Officers

Kenji Miya

Teruomi Yoshino

Directors

Toshiki Sugimoto

Yujiro Kuroda

Satoru Inoue

Kiyotaka Nakagawa

Masahiko Wada

Tadao Tsukada*

Naohiko Sugimoto

Special Feature

Osamu Tsuchida

Shuichi Kobayashi

DNP’s Businesses*Outside director or auditors

Corporate Governance
Financial Section
Appendix

Yoshinari Kitajima

Koichi Takanami

Yoshitoshi Kitajima

Masayoshi Yamada

63

Financial
Section
CONTENTS

64

66

Management’s Discussion
and Analysis

76

Selected Financial Data

78

Consolidated Financial
Statements

100

Independent Auditor’s Report

65

Management’s Discussion and Analysis

Operating Results
Business Environment
Japan’s economy showed signs of recovery during the current fiscal year,
aided by restoration demand following the Tohoku-Pacific Ocean
Earthquake, but was also affected by the European financial crisis andeconomic slowdowns in emerging countries. In the printing industry, despitechanges in the business environment for media, including growth in Internet
advertising, overall demand was sluggish and the business environment for
printing remained challenging.
A discussion of the business environment affecting each of DNP’sbusiness segments during the current fiscal year is provided below.
In the Information Communication segment, the books and magazines
market has continued to contract that has persisted since 1997, andestimated sales of publications in Japan fell 4.4% year on year during theyear ended March 2013. Book sales declined 2.9% year on year to ¥796.9
billion as a result of fewer major hit titles than last year. Magazine sales also
fell 5.6% to ¥921.3 billion, reflecting not only a decline in sales volume, butalso a far greater number of discontinued publications than new
publications. However, the e-book market grew 16% year on year and sales
value rose to about ¥73.0 billion.
In the Commercial Printing business, domestic advertising expenditures
increased on growth in Internet advertising in January–March 2013, but held
flat for the full year. Demand for printed material was weak as companies
accelerated their shift from paper catalogs and instruction manuals to online
distribution. Conditions in the Business Forms business remained difficult,affected by the production of fewer forms and decrease in circulation due tocutbacks in corporate expenditures, progress in efforts to simplify andenable online viewing of invoices, notifications, and other items, and a
decline in order prices from stiffer competition.
In the Lifestyle and Industrial Supplies segment, consumer spending on
jewelry and other luxury goods was strong in January–March 2013, anddepartment store sales showed signs of recovery by rising above year-ago
levels for three consecutive months. However, supermarket sales were lower
than the previous year on declines for both foods and daily goods.
Convenience store same-store sales have also decreased year on year for
10 consecutive months, since June 2012. Accordingly, consumer spending
on foods and other daily goods has continued to stagnate. In the Lifestyle
Materials business (includes decorative materials), domestic housing starts
grew 6.2% year on year to around 890,000 units during the fiscal year
ended March 2013, and have risen above year-ago levels for sevenconsecutive months, since September 2012.
In the Industrial Supplies business, anti-reflection films faced a difficult
business environment. Global LCD TV shipment volume fell 1% to 203.2
million units in January–December 2012, the first year on year decline since
the start of data disclosure. Chinese market demand rose from summer2012 through the end of the year, due partly to public demand stimulus
measures, but slowed from February 2013 as a result of slower economic

66

D N P A n n u a l R e p o r t 2 0 1 3 さ F i n a n c i a l S e c t i o n さ M a na g e m e n t ’ s Discussion and Analysis

Synopsis of Performance
To Our Shareholders

growth and other factors. The photovoltaic cell market faced increasingly
harsh conditions. Despite the launch of a feed-in tariff system for renewableenergy in Japan, global demand continued to decline and the world’s
biggest photovoltaic panel maker in China went bankrupt in March 2013.
In the Electronics segment, in addition to lower shipments of LCD TVs,
global PC shipment volume decreased by 3.5% to 352.7 million units inJanuary–December 2012. Mobile phone shipments grew 1.2% to 1.7359
billion units, but expanding demand for smart phones and tablet PCs
resulted in lower shipment volume for PCs, and conditions remained quite
severe overall.

Overview
Special Feature
DNP’s Businesses
Corporate Governance
Financial Section
Appendix

DNP sought to aggressively develop its business and deliver products andservices tailored to the needs of its customers, based on its P&I Solutions
business vision. It also pursued Production 21 Activities to establish arobust production structure in all facets of production, including quality,
cost, and delivery time. Additionally, DNP worked to secure earnings
through the rebuilding of domestic and overseas business structures fromthe standpoint of overall optimization and actively pursued businessexpansion from global and social perspectives. Despite these efforts,
DNP’s consolidated net sales fell 4.0% year on year to ¥1,446,607 million in
the year ended March 2013.
In the Information Communication segment, DNP integrated the threebusiness divisions responsible for commercial printing, smart cards, andsecurity solutions into the Information Solutions Operations business unit in
October 2012 in an effort to bolster mutual cooperation and establish a
structure for developing comprehensive solutions. DNP is also pursuing abusiness partnership with Nihon Unisys, Ltd. and launched specificinitiatives to expand cloud computing and platform service businesses.
Sales in this segment decreased as a result of weakness for products otherthan strong-performing smart cards.
The Lifestyle and Industrial Supplies segment maintained sales on parwith the previous year. Sales of anti-reflection films decreased, due partly toa decline in unit prices from a shift toward lower priced LCD TVs and stiffer
competition. However, the Packaging business had higher sales of aseptic
PET plastic bottle filling systems, and decorative materials were also firm.
In the Electronics segment, to respond to rapid changes in the businessenvironment, DNP sought to improve profitability by integrating the twobusiness divisions responsible for display components and electronic
devices in June 2012, and also focused on the development of new
products, including touch panel components. Segment sales fell sharply asa result of lower global demand for LCD panels, a decline for LCD color
filters on account of transferring operations at the Sakai Plant to Sakai
Display Products Corporation in August 2012, and the impact of toughsemiconductor market conditions in the Electronic Devices business.
The Beverages segment posted lower sales overall. Mineral waters andtea beverages achieved growth, but carbonated beverages declined.
Consolidated operating income grew 5.2% year on year. Despite the large
impact of a slump for anti-reflection films, the company benefited fromstrong performances for smart cards and decorative materials, the67integration of business divisions, and cost structure reforms in the Electronics
segment. The consolidated operating income margin was 2.5%, up 0.2
percentage points from the previous year.
Looking at the operating income margins in each business segment, theInformation Communication segment rose 0.1 percentage points to 2.3%,
whereas the Lifestyle and Industrial Supplies segment declined 0.7
percentage points to 5.4%. The Electronics segment posted an operating
loss for a second consecutive year, but the operating loss margin improved
1.9 percentage points to 0.2%. The Beverages segment declined 1.5
percentage points to 0.8%.

Net sales (¥ million)

Net Sales by Segment(year ended March 2013)

Beverages
Electronics
12.3%

3.9%

48.2%

2012.3¥ 1,446,607¥ 1,507,228

2011.3¥

1,589,373

Gross margin (%) 		

18.0% 		17.3%		

19.0%Operating income margin (%) 		

2.5% 		

2.3%		

4.3%

Ordinary income margin (%)		

2.8% 		

2.4%		

4.0%

Net income margin (%)		

1.3% 		

–		

1.6%Net income (loss) per share (¥)
Information
Communication2013.3

¥

29.84

¥

(25.39)¥38.86

Net sales

Net sales totaled ¥1,446,607 million in the current fiscal year, down 4.0%, or¥60,621 million, from the previous year.
Lifestyle andIndustrial Supplies
35.6%

Information Communication

In the Books and Magazines business, magazine sales decreased amid acontinued slump in the publications market, but book sales increased thanks
to aggressive sales activities and benefits from integrated production lines.
In the Commercial Printing business, sales of flyers, catalogs, and other printed
materials decreased, but sales increased for mail-order shipping agency
services and point-of-purchase (POP) materials. In the Business Forms
business, smart card sales increased, but overall sales decreased year on year
on a decline for information processing services (ranging from data entry toprinting and shipment of personal mail and other items). In the Education andPublications Distribution business, despite focusing on sales of e-books, sales
decreased on a decline for education business, including book sales tolibraries. As a result, overall segment sales declined 1.4%.

Lifestyle and Industrial Supplies

Packaging business sales increased on growth for paper cups, aseptic PET
plastic bottle filling systems, and other products. Lifestyle Materials businesssales also increased on growing demand for products that use DNP’sproprietary Electron Beam coating technology. In the Industrial Supplies
business, energy-related products (including soft packs for lithium-ion batteries)
recorded higher sales, but anti-reflection films declined. As a result, overall
segment sales declined 0.3%.

68

D N P A n n u a l R e p o r t 2 0 1 3 さ F i n a n c i a l S e c t i o n さ M a na g e m e n t ’ s Discussion and Analysis

Synopsis of PerformanceElectronics

To Our Shareholders

In the LCD Color Filter business, sales of small- and medium-sized filters
were firm throughout the year, but overall sales were down sharply as aresult of large TV panel production adjustments at domestic customers,
lower capacity utilization from converting to small- and medium-sized
products, and lower sales from the transfer of 10th-generation color filter
operations at the Sakai Plant in August 2012. Semiconductor photomasks
achieved growth overseas, but sales fell below prior-year levels on a
downturn in the domestic semiconductor market. Lead frames and otherproducts decreased as a result of weak demand for hard disk products
amid weak PC sales. As a result, overall segment sales declined 19.7%.

Amid tough market conditions characterized by weak consumer spending
and stiffer sales competition, DNP worked to expand sales of Coca-Colaand Georgia, both core products, and I LOHAS, a brand of mineral waterthat uses “ecoru Bottle Shiboru,” a lightweight PET plastic bottle. As aresult, although mineral waters and tea beverages increased, carbonatedbeverages declined, and overall segment sales fell 1.4%.

Gross Proﬁt Margin

(%)

25
20

10

11

17.3

18.0

15
10
5
0

09

12

13

Corporate Governance

SGA Expenses to Net Sales
(%)

20

16
13.5

14.5

14.7

15.0

15.5

10

11

12

13

Financial Section

Selling, general and administrative expenses totaled ¥224,269 million, down
0.9%, or ¥2,066 million, from the previous year. However, selling, generaland administrative expenses equated to 15.5% of net sales, up 0.5
percentage points from the previous year.

19.0

DNP’s Businesses

Selling, General and Administrative Expenses

18.7
16.4

Cost of Sales

The cost of sales totaled ¥1,186,558 million, down 4.8%, or ¥60,320 million,
from the previous year. The gross margin was 18.0%, up 0.7 percentage
points from 17.3%.
Naphtha prices trended upward at the start of the fiscal year, held steadyas crude oil prices fell sharply in summer 2012, and then rose gradually on a
yen converted basis due to the weaker yen from the end of 2012. However,
the year on year impact was minor. As a result, although higher raw material
prices had a ¥1.5 billion impact during the current fiscal year, nearly all of
this was passed through to product prices based on negotiations withcustomers.
The entire DNP Group has also been pursuing Production 21 Activities
since April 2002. During the current fiscal year, DNP consolidated
manufacturing facilities for Packaging Operations and sought to optimize
nationwide production based on integrated production control centers for
the Information Communication segment and packaging production control
centers for Packaging Operations. DNP also worked to enhance production
efficiency, improved yields, and reduce material losses. As a result, DNP cut
costs by ¥27.3 billion during the year.

Special Feature

Beverages

12

8

0

09

Appendix469

Operating Income

Operating Income Margin
(%)

10

8

6
4.2

4.3

4

2

0

2.9

09

10

11

2.3

2.5

12

13

Nonoperating Income (Expenses) and Extraordinary Income(Losses)

ROE
(%)

7
6
5
4
2.6

3

2.7

2.2

2
1
0
–1
–2
–3

Operating income totaled ¥35,780 million, up 5.2%, or ¥1,765 million, fromthe previous year. The operating income margin was 2.5%, up 0.2 percentage
points from 2.3% in the previous year.
In the Information Communication segment, in addition to increasing highly
profitable business, notably smart cards, DNP worked to reduce overall
segment costs through well-located production and other actions led by the
production control center. Segment operating income totaled ¥15,944 million,
up 2.9%, or ¥456 million, from the previous year.
The Lifestyle and Industrial Supplies segment had operating income of¥28,029 million, down 12.0%, or ¥3,810 million, from the previous year,
due to lower sales of anti-reflection films and deterioration in the profitability ofphotovoltaic module components on a decline in demand.
The Electronics segment had an operating loss of ¥304 million as a resultof weak capacity utilization for large color filter lines during the first half of the
fiscal year and a slump for semiconductor photomasks. However, operating
losses improved by ¥4,343 million from ¥4,647 million in the previous year
thanks to rigorous cost cutting, including production line reforms.

– 1.8

– 2.2

09

10

11

12

13

Nonoperating income totaled ¥14,833 million, up 34.6%, or ¥3,809 million,
from the previous year; and nonoperating expenses totaled ¥10,295 million,
up 25.6%, or ¥2,100 million. As a result, net nonoperating income was ¥4,538
million.
Ordinary income totaled ¥40,318 million, up 9.4%, or ¥3,475 million, fromthe previous year.
For extraordinary items, due to the sale or disposal of property, plant andequipment, losses on sale or disposal of property, plant and equipment
increased, but sale gains also rose sharply. As a result, extraordinary income
totaled ¥10,187 million, up 4.28 times, or ¥7,808 million, from the previous
year. Extraordinary losses totaled ¥15,353 million, down nearly 50%, or¥21,197 million, from the previous year, due to a sharp decrease in impairment
losses, which totaled ¥25,013 million in the previous year. As a result, net
extraordinary losses totaled ¥5,166 million, down from ¥34,171 million in theprevious year.
As a result of the above, income before income taxes and minority interests
totaled ¥35,152 million, up 13.16 times, or ¥32,479 million, from the previous
year.

Net Income (Losses)

Net income totaled ¥19,218 million, improving sharply from a loss of ¥16,356
million in the previous year.
Additionally, net income per share was ¥29.84, improving sharply from aloss of ¥25.39 in the previous year.

70

D N P A n n u a l R e p o r t 2 0 1 3 さ F i n a n c i a l S e c t i o n さ M a na g e m e n t ’ s Discussion and Analysis

Synopsis of Performance

Liquidity and Capital Resources

To Our Shareholders

DNP seeks to expand its business by increasing cash flow through aggressive
operating activities and prioritizing investment in strategic areas. It is also
working to bolster its financial position to achieve stable growth over the
medium to long term.

Cash Flow
2013.32012.32011.3

Cash flow from operating activities ¥100,498

Cash flow from investing activities		（ 72,588 ）		

（80,126）		

（82,562）

Free cash flow 		

27,910 		

28,477		

57,491¥

108,603¥

140,053
Special Feature(¥ million)

Interest-bearing Debt to Cash Flow Ratio(times)

2.5
2.1

2.3

2.0
1.6
1.5
1.0

1.2

DNP’s Businesses

0.9

0.5
0

09

10

11

12

13

Corporate GovernanceNet cash provided by operating activities totaled ¥100,498 million, down 7.5%
from the previous year.
Net cash used in investing activities totaled ¥72,588 million, down 9.4%, or¥7,538 million, from ¥80,126 million in the previous year.
Net cash used in financing activities totaled ¥36,236 million, up ¥3,403
million, from ¥32,833 million in the previous year.
As a result of these activities, cash and cash equivalents at the end of the
fiscal year totaled ¥212,062 million, down 1.9%, or ¥4,218 million, from theprevious year.
Free cash flow—i.e., net cash provided by operating activities minus net
cash used in investing activities—was ¥27,910 million, down ¥567 million from
¥28,477 million in the previous year.

Financial Section
Appendix71Capital Expenditures; Depreciation; Research andDevelopment Expenditures, etc.
Capital Expenditures and Free Cash Flow(¥ billion)

200

150
119.1
100

102.2

96.2

98.2

88.3

57.5
50

0

30.8

28.5

19.9

09

10

Capital expenditures

11

12

27.9

13

Free cash ﬂow

DNP focuses capital expenditures on strategic areas and upgrading existing
facilities to enhance its competitive advantages. Capital expenditures thisfiscal year totaled ¥88.3 billion, down 10.1%, or ¥9.8 billion, from the previous
year. Key capital expenditures included: the opening of the DNP Ichigaya
Tamachi Building, expansion of the Sapporo Plant of Hokkaido Coca-Cola
Bottling Co., Ltd., development of systems for the hybrid bookstore network,
expansion of flexible packaging production lines at the Tanabe Plant in Kyoto
Prefecture, and construction of a new building at the Utsunomiya Plant of
DNP Fine Chemicals Utsunomiya Co., Ltd. (name changed from DNP Fine
Chemicals Fukushima Co., Ltd. on February 1, 2013). By segment, capital
expenditures in the Information Communication segment were ¥27.2 billion,
down ¥2.6 billion from the previous year and accounting for 31% of total
capital expenditures. The Lifestyle and Industrial Supplies segment was ¥32.5
billion, down ¥6.9 billion and accounting for 37%. The Electronics segment
was ¥20.1 billion, down ¥3.3 billion and accounting for 23%. Other
businesses were ¥8.3 billion, up ¥3.0 billion and accounting for 9%.
Depreciation totaled ¥80.2 billion, down 16.3%, or ¥15.6 billion, from theprevious year. By segment, depreciation in the Information Communication
segment was ¥22.2 billion, down ¥1.7 billion from the previous year andaccounting for 28% of total depreciation. The Lifestyle and Industrial Supplies
segment was ¥26.4 billion, up ¥0.9 billion and accounting for 33%.
The Electronics segment was ¥25.9 billion, down ¥14.4 billion and accounting
for 32%. Other businesses were ¥5.5 billion, down ¥0.2 billion andaccounting for 7%.
Research and development expenditures totaled ¥30.8 billion, down 2.8%,
or ¥0.8 billion, from the previous year. DNP focuses on “business creation”
research and development to find proper solutions to problems from thestandpoint of consumers.

The Balance Sheet

DNP is working to enhance capital efficiency, raise enterprise value, andmaintain the liquidity required to quickly respond to changes in the businessenvironment.

Current Ratio

Total assets (¥ million)

(%)

200
177
150

157
144

157
144

177

157

177
164

2013.32012.32011.3¥ 1,578,976¥ 1,608,806¥ 1,649,784

Current ratio (%) 		

164% 		

177%		

177%

Working capital/net sales (%)		

20% 		

23%		22%

Debt-to-equity ratio (%) 		

25% 		

26%		25%

Net assets per share (¥)¥ 1,386.86¥

1,352.71¥

1,410.44

100

50

0

72

09
08

10
09

11
10

12
11

13
12

DNP’s total assets at the end of this fiscal year amounted to ¥1,578,976
million, down 1.9%, or ¥29,830 million, from the previous year.
Among current assets, cash and cash equivalents, and time deposits
totaled ¥213,630 million, down 1.8%, or ¥3,889 million, from the previous
year. Trade receivables totaled ¥367,765 million, down 4.5%, or ¥17,337
million. Inventories of merchandise and finished products, work in process,D N P A n n u a l R e p o r t 2 0 1 3 さ F i n a n c i a l S e c t i o n さ M a na g e m e n t ’ s Discussion and Analysis

Synopsis of Performance
To Our Shareholders

Equity Ratio
(%)

80

60

58.5

56.6

55.1

54.2

56.6

09

10

11

12

13

40

Special Feature

raw materials and supplies totaled ¥139,055 million, down 8.0%, or ¥12,064
million. As a result, current assets totaled ¥751,151 million, down 4.1%, or¥31,806 million.
Among long-term assets, property, plant and equipment totaled ¥538,455
million, down 7.1%, or ¥41,112 million, from the previous year. Intangible
assets totaled ¥35,480 million, down 6.6%, or ¥2,525 million. Investments
and other assets totaled ¥253,890 million, up 22.4%, or ¥46,503 million.
As a result, long-term assets totaled ¥827,825 million, up 0.3%, or ¥2,866
million.
Current liabilities totaled ¥457,785 million, up 3.3%, or ¥14,606 million,
from the previous year. Long-term liabilities totaled ¥184,136 million, down
26.8%, or ¥67,278 million. As a result, total liabilities amounted to ¥641,921
million, down 7.6%, or ¥52,672 million.
Additionally, net assets totaled ¥937,055 million, up 2.5%, or ¥22,842
million.
DNP repurchased a total of about 112.86 million of its shares through2008 and retired 59 million treasury shares during this time. As of March 31,
2013, the number of treasury shares totaled 55.94 million shares, or 7.99%
of total shares outstanding of 700,480,693 shares.

20

0

DNP’s Businesses
Corporate Governance
Financial Section
Appendix73

Business Risks
The performance and the results of DNP could be significantly affected by a variety offactors and circumstances that might arise in the future. Because the Company is aware ofthese risk factors, its policy is to strive to minimize their potential effects.
The Company considers the following factors to be key risks, as of the publication date ofthis annual report.

The Japanese economy and consumption trends
DNP engages in a wide range of businesses with an extremely large number of customers.
It conducts business so as not to be overly dependent on specific customers. The Company
does most of its business in the Japanese market and overseas sales account for about
14% of net sales. Nevertheless, if the domestic economy weakens in sympathy with global
economic trends and consumer spending and other components of domestic demand
slump, then declines in order volume and unit prices may affect its performance.

Changes in the electronics market
The Electronics segment is a strategic segment and the Company aims to secure stableprofits by focusing on creating business strategies based on rigorous data collection,
establishing a highly profitable production structure, and developing high-value-added
products that are competitive in the market. However, it is possible that earnings in thissegment could be affected by changes in the global markets for display and semiconductor
products, including sharp fluctuations in demand and declines in unit prices.

Fluctuations in raw material procurement
The Company procures raw materials such as printing paper and film from multiple
suppliers in Japan and overseas. The Company works hard to secure stable supplies andmaintain optimal prices. However, there is some potential for imbalances between supply
and demand due to factors like sharp volatility in petroleum prices, sudden surges indemand from emerging markets, and major disasters. The Company intends to cope withsuch instances by negotiating with customers and business partners. However, if it should
become extremely difficult to secure supplies, or if prices rise markedly, DNP’sperformance could be affected.

Development of new products and technologies and services
DNP uses its printing and information technologies to develop and provide to a broad
range of industries products, technologies, and services that meet the needs of corporateclients and consumers. In recent years, the pace of technological innovation in theseareas has become faster than ever, and customers’ needs have been rapidly diversifying.
The Company believes that in the future, competition in the area of product development
will become more intense than ever before, and it is possible that DNP’s performance
could fluctuate significantly due to unforeseeable changes in market trends or ashortening of product life cycles.

74

D N P A n n u a l R e p o r t 2 0 1 3 さ F i n a n c i a l S e c t i o n さ M a na g e m e n t ’ s Discussion and Analysis

Legal compliance

Special Feature

The Company’s business conduct is based on strict compliance with the law and social
ethics. Both in Japan and overseas, our business is subject to a wide variety of laws andrestrictions, including regulations related to product liability, monopolies, protection of
personal information, patents, taxes, and international trade. It is possible that in the future,these regulations may become even more restrictive than they are now. At the same time,
we expect that in some areas deregulation will lead to dramatic changes in markets andindustry trends. Whether regulations are tightened or loosened, DNP’s business activities
may be affected by direct and/or indirect costs resulting from the need to adapt to suchchanges.

To Our Shareholders

Particularly in fields such as Electronics, and Lifestyle and Industrial Supplies, the Company
is expanding its business with customers overseas. Because the Company expects theeffects of currency rates to gradually become more important, it uses such means asforeign exchange forward contracts to hedge the risks of currency fluctuations.
Nevertheless, it is possible that radical swings in currency values could have a more serious
effect on the Company’s performance.

Synopsis of Performance

Currency ﬂuctuations

Environmental protection and stricter regulations
DNP’s Businesses

The Company is affected by laws and regulations in Japan and other countries regarding
energy conservation, the use of harmful substances, the prevention of air pollution, water
quality protection and waste treatment, and product recycling. Such regulations may bestrengthened because of the impact of global climate trends. In addition, for example, if soil
is contaminated by harmful substances and the Company is faced with the situation of
being responsible for assessing and cleaning up the environmental pollution, then the
Company’s business could be substantially affected.

Information security and protection of personal information

Appendix

The Company takes steps to protect its production equipment and other major facilities
from being damaged by disasters such as fires or earthquakes. In addition, the Company
divides its work among multiple production bases and makes every effort to prevent
disasters from causing production stoppages or disturbances in its ability to supply
products. The Company also uses various types of insurance to transfer risk. Nevertheless,its performance could be substantially affected in the event of major earthquakes or othernatural disasters, terrorist attacks, infectious disease outbreaks, or other unexpected
events that cause production stoppages or major damage or interference with social
infrastructure.

Financial Section

Disasters

Corporate GovernanceWith computer networks and information systems playing an ever-greater role in keeping
business activity going, the risks of information system malfunctions, breaches of personal
information, and other events, owing to software and hardware problems and viruses, haverisen. The Company regards the protection of data and personal information as a toppriority. It is doing all it can to protect and maintain systems and data by strengthening its
organization and training employees, but if problems arise in these areas, then its businessactivity could be affected.

75

Selected Financial Data (unaudited)
Dai Nippon Printing Co., Ltd. and Consolidated Subsidiaries
Years ended March 31

2013

2012

2011

¥ 1,446,607¥ 1,507,228

2010

Statements of Operations Data (¥ million)
Net sales¥

1,589,373¥

1,583,383

Cost of sales

1,186,558

		

1,246,878

		

1,287,581

		

1,286,682

Gross profit

260,049		

260,350

		

301,792		

296,701

Selling, general and administrative expenses

224,269		

226,335

		

233,973		

230,187

Operating income

35,780		

34,015

		

67,819		

66,514

Ordinary income

40,318

		

36,843

		62,786

		68,841

Income (loss) before income taxes and minority interests

35,152

		

2,673

		

52,696

		

49,496

Net income (loss)

19,218		(16,356)

		

25,033

		23,278¥ 1,608,806¥

1,649,784¥

1,618,854

Balance Sheet Data (¥ million)
Total assets¥ 1,578,976

Property, plant and equipment—net

538,455		

579,567		

614,827

		

616,848

Long-term liabilities

184,136		

251,414		

249,575		

190,045

Total liabilities

641,921

		

694,593		

697,343		

661,990

–

		

–

		

–

		

–

Stockholders’ equity

887,194		

888,650

		

925,702		

921,775

Total net assets

937,055		

914,213

		

952,441		

956,864

88,315¥98,189¥102,173¥

119,063

Depreciation expenses

80,200		

95,829		

97,977

		

91,695R&D expenditures

30,820		

31,690		

33,147

		

33,85029.84¥(25.39)

¥

38.86

¥

36.13

Earnings (loss) per share—fully diluted

29.79

		

–

		

–

		

–

Dividends paid per share

32.00

		

32.00

		

32.00

		

32.00

1,386.86

		

1,352.71

		

1,410.44

		

1,422.34

Total stockholders’ equity

Other Selected Data (¥ million)
Capital expenditures¥

Common Share Data (¥, shares)
Earnings (loss) per share—primaryBook value per share
No. of common shares outstanding (exc. treasury shares)¥

643,990,364

		644,062,928

644,142,530

		 644,238,930

Financial Ratios (%, times)
As a percent of net sales:
		 Gross profit

17.98%

		17.27%

18.99%

		18.74%

		 Selling, general and administrative expenses

15.50

		

15.02

14.72

		

14.54

		 Operating income

2.47

		

2.26

4.27

		

4.20

		 Income (loss) before income taxes and minority interests

2.43

		

0.18

3.32

		

3.13

		 Net income (loss)

1.33

		

-1.09

1.57

		

1.47

Return on equity

2.18

		

-1.84

2.74

		

2.57

Current ratio

164

		

177

177

		

157

D/E ratio

25

		

26

25

		

18

		

76

D N P A n n u a l R e p o r t 2 0 1 3 さ F i n a n c i a l S e c t i o n さ Selected Financial Data

2008

2007

2006

2005

2004

¥ 1,584,844¥ 1,616,053¥ 1,557,802¥ 1,507,506¥ 1,424,943¥ 1,354,101

1,324,522

		

1,327,872

		

1,268,072

		

1,202,160

		

1,121,374

		

1,073,118

		

260,322		

288,181		

289,730		

305,346		

303,569

		

280,983		

214,145		

201,077		

193,585

		

184,676

		

183,041

		

178,545

		

46,177

		87,104

		

96,145

		120,670		

120,528		

102,438

		

47,390		

86,502

		

101,348

		

124,715

		

120,485		

97,276

		(27,842)

		

88,469		

98,950		

114,640

		

107,686

		

93,137

		

(20,933)

		

45,172

		

54,842

		

65,188

		

59,937

		

52,971¥ 1,601,193¥ 1,700,250¥ 1,662,377¥ 1,600,129¥ 1,513,734

		639,343		

635,784		

568,966		

528,009		

513,175

		

126,671		

106,691		

118,437

		

118,287

		

115,801		

119,277		

596,471		

561,058		

600,811

		

571,170		

566,796		

510,970

		

–

		

–

		

–

		

1,063,309

		

1,007,944

		

978,736		

917,348		

990,122		

1,027,475

		

–

		

–

		

–

		

940,086		

1,040,135

		

1,099,439

		

–

		

–

		

–

¥

96,156¥116,139¥

162,886¥

136,059¥

86,057¥

69,834

		

106,883		

109,902		

100,161		87,264

		

80,440		

85,182

		

34,112

		

35,556

		30,113

		28,692

		

26,386

		

26,050¥(32.35)

¥

67.08

¥

78.10

¥

91.23

¥

82.56

¥

71.49

		

–

		

–

		

–

		

–

		

–

		

–

		

32.00

		

36.00

		

32.00

		

26.00

		

24.00

		

21.00

		

1,393.91

		

1,516.35

		

1,544.02

		

1,507.90

		

1,409.18

		

1,348.40

		644,357,076

		661,366,377

		694,226,171

		704,972,101

		715,076,830

Corporate Governance604,904

DNP’s Businesses		Special Feature¥ 1,536,557

To Our Shareholders

		

Synopsis of Performance2009		725,677,422

		17.83%

		18.60%

		

20.26%

		21.30%

		20.75%

		

13.51

		

12.44

		

12.43

		

12.25

		

12.85

		

13.19

		

2.91

		

5.39

		

6.17

		

8.00

		

8.46

		

7.57

		

-1.76

		

5.47

		

6.35

		

7.60

		

7.56

		

6.88

		

-1.32

		

2.80

		

3.52

		

4.32

		

4.21

		

3.91

		

-2.20

		

4.35

		

5.14

		

6.29

		

6.03

		

5.52

		

144

		

157

		

166

		

178

		

186

		

197

		

14

		

8

		

6

		

6

		

7

		

7

Appendix

16.43%

Financial Section

		77Consolidated Financial Statements

Consolidated Balance Sheets
Thousands of
U.S. dollars (Note 3)

Millions of yen

Dai Nippon Printing Co., Ltd. and Consolidated Subsidiaries
March 31, 2013 and 2012

2012

2013

2013

AssetsCurrent assets:
Cash and cash equivalents (Notes 4 and 16)
Time deposits (Note 16)
Trade receivables (Notes 10 and 16)
Allowance for doubtful receivables
Inventories (Note 6)
Prepaid expenses and other current assets (Notes 10 and 13)
Total current assets¥

212,062
1,568
367,765(2,883)139,055
33,584751,151

216,280
1,239
385,102(3,704)
151,119
32,921
782,957$

2,255,979
16,681
3,912,394(30,670)
1,479,309
357,275
7,990,968

Investments and advances:Non-consolidated subsidiaries and associated companies(Notes 10 and 16)
Investment securities (Notes 5 and 16)
Other (Note 16)
Total investments and advances

33,716
157,088
8,992
199,796

21,186
118,992
2,191
142,369

358,681
1,671,149
95,6592,125,489

Property, plant and equipment, at cost (Notes 7 and 14):Land
Buildings and structures
Machinery and equipment
Leased assets
Construction in progress
Total
Accumulated depreciation
Net property, plant and equipment

154,005
529,760
925,341
32,17022,922
1,664,198(1,125,743)
538,455

142,150542,222975,517
39,10735,411
1,734,407(1,154,840)
579,567

1,638,351
5,635,745
9,844,053
342,234
243,851
17,704,234(11,975,989)
5,728,245

89,574

103,913952,915

Other assets (Notes 7, 13 and 14)

Total assets¥

1,578,976

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

78

¥

¥

1,608,806$

16,797,617

D NP A n n ua l Re p or t 2 0 1 3 さ F in a n c ia l Se c tion さ Con solid a t ed Financ ial S tatements

Dai Nippon Printing Co., Ltd. and Consolidated Subsidiaries
March 31, 2013 and 2012

2012

2013

2013

Synopsis of Performance

Thousands of
U.S. dollars (Note 3)

Millions of yen

Liabilities and Net Assets¥¥

51,8096,308
276,354
35,5608,598
64,550443,179$

503,160
612,394
2,654,979
388,596
95,904
615,020
4,870,053

122,349
26,44235,345
184,136

172,208
33,23045,976
251,4141,301,585
281,298
376,011
1,958,894

114,464
144,898
722,058

114,464
144,898
723,460

1,217,702
1,541,468
7,681,468(94,226)
887,194(94,172)888,650(1,002,404)
9,438,234

18,9089(12,987)
5,930
16
43,915937,055

4,370(15)(21,776)(17,421)16
42,968914,213201,149
96(138,160)
63,085170
467,1819,968,670

Special Feature

Long-term liabilities:
Long-term debt (Notes 7 and 16)
Liability for retirement benefits (Note 8)
Other long-term liabilities (Notes 7 and 13)
Total long-term liabilities

47,29757,565249,568
36,528
9,015
57,812457,785

To Our Shareholders

Current liabilities:
Short-term bank loans (Notes 7 and 16)
Current portion of long-term debt (Notes 7 and 16)
Trade payables (Notes 10 and 16)
Accrued expenses (Note 10)
Income taxes payable (Note 13)
Other current liabilities (Notes 7, 10 and 13)
Total current liabilities

Contingent liabilities (Note 18)
DNP’s Businesses¥

1,578,976¥

1,608,806$

16,797,617

Financial Section

Total liabilities and net assets

Corporate GovernanceNet assets
Stockholders’ equity
Common stock Authorized: 1,490,000,000 shares;
Issued: 700,480,693 shares;
Capital surplus (Note 9)
Retained earnings (Note 9)
Treasury stock, at cost
56,490,329 shares in 2013 and 56,417,765 shares in 2012 (Note 9)
Total stockholders’ equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Net deferred gains (losses) on hedges
Foreign currency translation adjustments
Total accumulated other comprehensive income
Stock acquisition rights
Minority interests
Total net assets

Appendix79

Consolidated Statements of Operations
Thousands of
U.S. dollars (Note 3)

Millions of yen

Dai Nippon Printing Co., Ltd. and Consolidated Subsidiaries
Years ended March 31, 2013 and 2012

Net sales (Note 19)
Cost of sales (Notes 11, 15 and 19)
Gross profit
Selling, general and administrative expenses (Notes 11, 15 and 19)
Operating income¥

1,446,607
1,186,558
260,049
224,269
35,780

Other income (expenses) (Note 12):Interest and dividends income
Interest expenses
Equity in earnings of affiliates
Foreign exchange transaction gain (loss)
Net gain (loss) on sale or disposal of property, plant and equipment
Net gain on sales of investment securities
Loss on devaluation of investment securities
Impairment loss on fixed assets (Note 14)
Other

Income before income taxes and minority interests
Income taxes (Note 13):
Current
Deferred
Net income (loss) before minority interests
Minority interests
Net income (loss)¥

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

80

2012

2013
¥

1,507,228
1,246,878
260,350
226,335
34,0152013$

15,389,436
12,622,957
2,766,479
2,385,841
380,638

3,465(3,483)
3,013
1,411
2,844
140
(2,692)(3,564)(1,762)
(628)

3,469
(3,424)345(16)(2,854)37(1,150)(25,013)(2,736)(31,342)

36,862(37,053)
32,05315,011
30,255
1,489(28,638)(37,915)(18,745)(6,681)35,152

2,673

373,957

17,079(314)
16,765
18,387

17,2102,301
19,511(16,838)

181,691(3,340)178,351
195,606831
19,218¥482(16,356)$

8,841
204,447

D NP A n n ua l Re p or t 2 0 1 3 さ F in a n c ia l Se c tion さ Con solid a t ed Financ ial S tatements

Thousands of
U.S. dollars (Note 3)

Millions of yen

Dai Nippon Printing Co., Ltd. and Consolidated Subsidiaries
Years ended March 31, 2013 and 2012¥

18,387¥(16,838)$

195,606

14,290
7
9,276

3,697
(2)
(4,196)

152,02174
98,681

162
23,73542,122(1)(502)(17,340)

1,723
252,499
448,105¥(16,596)(744)$

452,850(4,745)Special Feature

42,568
(446)

¥

2013

To Our Shareholders

Net income (loss) before minority interests
Other comprehensive income
Valuation difference on available-for-sale securities
Net deferred gains (losses) on hedges
Foreign currency translation adjustments
Share of other comprehensive income in associates
accounted for using the equity method
Total other comprehensive income
Comprehensive income (loss)
Attributable to:Shareholders of parent company
Minority interests

2012

2013

Synopsis of Performance

Consolidated Statements of Comprehensive Income (Loss)

U.S. dollars (Note 3)

Yen

2012

2013

2013

¥

1,386.86¥

1,352.71$

14.75

Net income (loss) per common shareprimary

¥

29.84

¥

(25.39)$0.32

Net income per common share
fully diluted

¥

29.79

¥

–

$

0.32

DNP’s Businesses

Net assets per common share

The accompanying notes are an integral part of these consolidated financial statements.
Corporate Governance
Financial Section
Appendix81

Consolidated Statements of Changes in Net Assets
Millions of yen

Dai Nippon Printing Co., Ltd. andConsolidated Subsidiaries
Years ended March 31, 2013 and 2012

Balance at April 1, 2011
Changes of items during the period
Net loss
Cash dividends paid
Purchases of treasury stock
Disposal of treasury stock
Changes in valuation difference
on available-for-sale securities
Changes in deferred gains (losses)on hedges
Changes in foreign currencytranslation adjustments
Changes in minority interests
Total changes of items during the period
Balance at March 31, 2012
Changes of items during the period
Net income
Cash dividends paid
Changes resulting from changeof scope of consolidation
Purchases of treasury stock
Disposal of treasury stock
Changes in valuation difference
on available-for-sale securities
Changes in deferred gains (losses)on hedges
Changes in foreign currencytranslation adjustments
Changes in minority interests
Total changes of items during the period
Balance at March 31, 2013

Stockholders’ equity

Accumulated other comprehensive income
Valuation
Foreign
Net deferreddifference on
currency
available-for-sale gains (losses) translation
on hedges
securities
adjustments

Number ofsharesissued(in thousands)

Commonstock

CapitalsurplusRetainedearnings

700,480

114,464

144,898

760,453(94,113)

833

(12)

–
–
–
–

–
–
–
–

–
–
–
–

(16,356)(20,629)
–
(8)

–
–
(76)
17

–
–
–
–

–

–

–

–

–

–

–

–

–

–
–
–
700,480–––
114,464–––
144,898

–
–

–
–

–
–
–

Stock
acquisitionrightsMinority
interests(18,000)

16

43,902

–
–
–
–

–
–
–
–

–
–
–
–

–
–
–
–

3,537

–

–

–

–

–

–

(3)

–

–

–

–
–
(36,993)
723,460––(59)(94,172)

–
–
3,537
4,370

–
–
(3)
(15)

(3,776)–(3,776)(21,776)

–
–
–
16

–
(934)
(934)
42,968––19,218(20,626)

–
–

–
–

–
–

–
–

–
–

–
–

–
–
–

–
–
–

17
–
(11)

(33)
(38)
17

–
–
–

–
–
–

–
–
–

–
–
–

–
–
–

–

–

–

–

–

14,538

–

–

–

–

–

–

–

–

–

–

24

–

–

–

–
–
–
700,480–––
114,464–––
144,898––(1,402)722,058––(54)(94,226)––
14,53818,908

–
–
24
9

8,789
–
8,789
(12,987)

–
–
–
16

–
947
947
43,915StockacquisitionrightsMinority
interests

Treasurystock,
at costThousands of U.S. dollars (Note 3)
Number ofsharesissued(in thousands)

Balance at April 1, 2012
Changes of items during the period
Net income
Cash dividends paid
Changes resulting from changeof scope of consolidation
Purchases of treasury stock
Disposal of treasury stock
Changes in valuation difference
on available-for-sale securities
Changes in deferred gains (losses)on hedges
Changes in foreign currencytranslation adjustments
Changes in minority interests
Total changes of items during the period
Balance at March 31, 2013

Stockholders’ equity
Commonstock

Capitalsurplus700,480 1,217,702 1,541,468

Retainedearnings

7,696,383 (1,001,830)

46,489(160)(231,660)

170

457,106

–
–

–
–

–
–

204,447(219,426)

–
–

–
–

–
–

–
–

–
–

–
–

–
–
–

–
–
–

–
–
–

181
–
(117)

(351)
(404)
181

–
–
–

–
–
–

–
–
–

–
–
–

–
–
–

–

–

–

–

–

154,660

–

–

–

–

–

–

–

–

–

–

256

–

–

–

–
–
–
–
(574)
(14,915)
7,681,468 (1,002,404)––
154,660
201,149

–
–
256
96

93,500–93,500(138,160)

–
–
–
170

–
10,075
10,075467,181

–
–
–
–
–
–
–
–
–
700,480 1,217,702 1,541,468

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

82

Accumulated other comprehensive income
Valuation
Foreign
Net deferreddifference on
currency
available-for-sale gains (losses) translation
on hedges
securities
adjustments

Treasurystock,
at costD NP A n n ua l Re p or t 2 0 1 3 さ F in a n c ia l Se c tion さ Con solid a t ed Financ ial S tatements

Thousands of
U.S. dollars (Note 3)

Millions of yen

Dai Nippon Printing Co., Ltd. and Consolidated Subsidiaries
Years ended March 31, 2013 and 201235,152

¥

2,673

$

373,957

18,727(11,758)
2,828
2,752
129,131(943)(19,585)
108,603207,255
130,798(336,862)
91,894
1,273,287(18,128)(186,031)
1,069,128(276)(66,217)
14,719(14,138)
489
8,091
3,971
(19,227)(72,588)539(74,673)
5,999(2,468)277–
4,003(13,803)(80,126)(2,936)(704,436)
156,585(150,404)
5,202
86,07442,245(204,543)(772,213)(5,490)7,450(6,438)
1,882
500
(660)
(3,494)(20,626)(406)(39)(8,915)(36,236)
4,134(4,192)
216,280

678
7,025(6,260)–1,189(2,603)(3,270)(21,062)–(77)(8,453)(32,833)(1,717)(6,073)222,057(58,404)
79,255(68,489)
20,021
5,319(7,021)(37,170)(219,426)(4,319)(415)(94,840)(385,489)
43,979(44,595)
2,300,851(26)
212,062¥296
216,280$(277)
2,255,979

Appendix

19,482
12,295(31,665)
8,638
119,689(1,704)(17,487)
100,498

Financial Section

853,191
37,915(11,096)(71,223)(32,053)
32,128(36,862)
37,053(1,489)28,638(29,957)

Corporate Governance

95,82925,013(8,428)(5,449)(345)
3,335(3,469)
3,424
(40)
1,150
2,889

DNP’s Businesses

80,2003,564(1,043)(6,695)(3,013)3,020(3,465)
3,483
(140)
2,692
(2,816)

Special Feature

¥

¥

2013

To Our Shareholders

Cash flows from operating activities:
Income before income taxes and minority interests
Adjustments to reconcile income before income taxes
and minority interests to net cash provided by operating activities:
Depreciation
Impairment loss on fixed assets
Provision for doubtful receivables (net)Provision for retirement benefits (net)
Equity in earnings of affiliates
Amortization of consolidation goodwill (net)
Interest and dividends income
Interest expenses
Net gain on sales of investment securities
Loss on devaluation of investment securities
Net loss (gain) on sale or disposal of property, plant and equipment
Changes in assets and liabilities
Trade receivables
Inventories
Trade payables
Other assets and liabilities
Sub-total
Extra retirement payments
Payments of income taxes
Net cash provided by operating activities
Cash flows from investing activities:
Net (increase) decrease in time deposits
Payments for purchases of property, plant and equipment
Proceeds from sales of property, plant and equipment
Payments for purchases of investment securities
Proceeds from sales of investment securities
Proceeds from transfer of business
Interest and dividends received
Other investing
Net cash used in investing activities
Cash flows from financing activities:
Net increase (decrease) in short-term bank loans
Proceeds from long-term debt
Repayments of long-term debt
Proceeds from stock issuance to minority shareholders
Proceeds from issuance of debentures
Payments for redemption of debentures
Interest paid
Dividends paid
Dividends paid to minority shareholders
Payments for purchases of treasury stocks
Other financing
Net cash used in financing activities
Effect of exchange rate changes on cash and cash equivalents
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of year
Increase (Decrease) in cash and cash equivalents
resulting from change of scope of consolidation
Cash and cash equivalents at end of year

2012

2013

Synopsis of Performance

Consolidated Statements of Cash FlowsThe accompanying notes are an integral part of these consolidated financial statements.

83

Notes to Consolidated Financial Statements

Dai Nippon Printing Co., Ltd. and Consolidated Subsidiaries March 31, 2013 and 2012
1. Basis of Presenting the Consolidated Financial Statements
Dai Nippon Printing Co., Ltd. (hereinafter referred to as the “Company”) and its domestic subsidiaries maintain their books of accountand prepare their financial statements in conformity with accounting principles and practices generally accepted in Japan (“Japanese
GAAP”), and its foreign subsidiaries in conformity with the Company’s group accounting policies based on International Financial
Reporting Standards (“IFRS”) or accounting principles generally accepted in the United States of America (“US GAAP”).
The accompanying consolidated financial statements have been compiled from the consolidated financial statements filed with the
Financial Services Agency of Japan as required by the Financial Instruments and Exchange Act of Japan. Certain reclassifications ofaccounts and modifications have been made in the accompanying consolidated financial statements to facilitate understanding byreaders outside Japan. Certain reclassifications have also been made in the 2012 financial statements to conform with current
classifications. In addition, the notes to the consolidated financial statements include additional information which is also not requiredfor disclosure under accounting principles and practices generally accepted in Japan.
2. Significant Accounting Policies
Consolidation
The accompanying consolidated financial statements include the accounts of the Company and its significant majority-owned
subsidiaries. All significant intercompany accounts and intercompany transactions have been eliminated in consolidation.
The fiscal year-end of the consolidated subsidiaries is mostly the same as that of the Company. There are twenty-eight subsidiaries
whose fiscal years end December 31 and twenty-four subsidiaries whose fiscal years end January 31. Significant transactions thattook place between their fiscal year ends and the Company’s fiscal year end are reflected in the consolidated financial statements.
Eight subsidiaries whose fiscal years end August 31, one subsidiary whose fiscal year ends June 30 and one subsidiary whose fiscal
year ends September 30 are consolidated based on their additionally prepared financial statements as of and for the period ended
March 31.
Investments in non-consolidated subsidiaries are stated at cost and, for valuation of such investments, the equity method has notbeen applied since these investments are considered immaterial in the aggregate. However, investments are devalued if the decline invalue is judged to be other than temporary.
Investments in 20% to 50% associated companies are principally accounted for by the equity method.
The differences between costs and underlying net assets at the date of investment in consolidated subsidiaries are included in otherassets or other long-term liabilities and are amortized over a period mainly for five years.
Translation of foreign currency accounts
Monetary assets and liabilities denominated in foreign currencies of the Company and its domestic subsidiaries are translated into
Japanese yen at the exchange rates at the balance sheet date. Revenues and expenses denominated in foreign currencies aretranslated at the exchange rates prevailing during the year. The resulting translation gains (or losses) are included in other income (orexpenses).
The translation of foreign currency financial statements of foreign consolidated subsidiaries into Japanese yen has been made forconsolidation purposes in accordance with the translation method prescribed in the accounting standard for foreign currencytransactions. The balance sheet accounts of the foreign consolidated subsidiaries are translated at the exchange rates in effect at thebalance sheet date, except for common stock and capital surplus, which are translated at historical rates. Revenue and expense
accounts are translated at the average exchange rates during the year. The resulting translation adjustments are presented as “foreign
currency translation adjustments” which is shown as a separate component of accumulated other comprehensive income in the
consolidated balance sheets.
Cash and cash equivalents
Cash and cash equivalents include all highly liquid investments, generally with original maturities of three months or less, that arereadily convertible to known amounts of cash and are so near maturities that they present insignificant risk of changes in value
because of changes in interest rates.
Inventories
Inventories are stated at cost which is determined substantially by the average method being written-down to reflect the decline ofprofitability.
Marketable securities and investment securities
Marketable and investment securities are classified and accounted for, depending on management’s intent, as follows: i) held-tomaturity debt securities, which are expected to be held to maturity with the positive intent and ability to hold to maturity, are reported
at amortized cost and ii) available-for-sale securities are reported at fair value, with unrealized gains and losses, net of applicabletaxes, reported in a separate component of valuation and translation adjustments.
Non-marketable securities are stated at cost determined by the average method. For other than temporary declines in fair value,
investment securities are reduced to net realizable value by a charge to income.

84

D NP A n n ua l Re p or t 2 0 1 3 さ F in a n c ia l Se c tion さ Note s to C on solid a ted Financ ial S tatements

Synopsis of Performance

Property, plant and equipment and depreciation
Property, plant and equipment are carried at cost. Major renewals and additions are capitalized, while minor renewals maintenanceand repairs are charged to income when incurred. Interest expenses on capital expenditures during the construction stage are notcapitalized.
Depreciation of property, plant and equipment is principally computed by the declining-balance method at rates based on estimateduseful lives. However, depreciation of buildings acquired on or after April 1, 1998 is computed by the straight-line method.
The estimated useful lives for depreciation purposes range as follows:
3 to 50 years
2 to 13 years

Assets with an acquisition cost of ¥100,000 ($1,064) or more per unit and less than ¥200,000 ($2,128) per unit are depreciated overthree years on a straight-line basis, whereby one-third of such acquisition cost may be taken as depreciation expense each year.
Leased assets
Finance leases which do not transfer ownership were accounted for as operating lease prior to 2009 but are capitalized since 2009.
Depreciation for leased assets is computed on a straight-line basis over the lease period with a residual value of zero.

Liability for retirement benefits
The Company and several domestic significant consolidated subsidiaries applied the accounting standard for employees’ retirement
benefits. Under the accounting standard, accrued pension and liability for employees’ retirement benefits has been provided based on
the estimated amounts of projected pension and severance obligation and fair value of plan assets at the end of the fiscal year. Prior
service cost is being amortized as incurred by the straight-line method over the period within the average remaining service periods ofthe eligible employees. Actuarial gains and losses have been amortized from the following fiscal year by the declining- balance method
over the periods within the average remaining service periods of the eligible employees.

Income taxes
The asset and liability approach is used to recognize deferred tax assets and liabilities for the expected future tax consequences of
temporary differences between the carrying amounts and the tax bases of assets and liabilities. Deferred taxes are measured byapplying currently enacted tax laws to the temporary differences.

Appendix

Net assets and income per common share
Net assets per common share were computed based on the number of shares outstanding after deducting treasury stock at March
31, 2013 and 2012, respectively.
Primary amounts of net income per share were computed on the average number of shares of common stock outstanding after
deducting treasury stocks during each year. Fully diluted net income per share is not disclosed because of net loss in 2012.

Financial Section

Derivatives and hedging activities
The Company and certain consolidated subsidiaries use derivative financial instruments (“derivatives”) for foreign currency forward
contracts, currency options, interest rate swaps and currency swaps to manage the risk arising from fluctuation in foreign currency
exchange rate and interest rates. The Company and its subsidiaries do not enter into derivatives contracts for speculative purposes.
Derivatives are carried at fair value with change in unrealized gains or losses charged or credited to operations, except for thosewhich meet the criteria for deferral hedge accounting under which an unrealized gain or loss is deferred as an asset or a liability.
The trade accounts receivable and payable denominated in foreign currencies of the Company and domestic subsidiaries which areindividually covered by foreign currency forward contracts are translated at the contracted rates because such treatment is also
allowed to be elected under the accounting standard if the forward contracts qualify for hedge accounting.

Corporate GovernanceResearch and development expenses
Research and development expenses are charged to income as incurred.

DNP’s Businesses

Impairment of fixed assets
The Company and its subsidiaries review fixed assets for impairment whenever events or changes in circumstance indicate thecarrying amount of an asset or asset group may not be recoverable. An impairment loss would be recognized if the carrying amountof an asset or asset group exceeds the sum of the undiscounted future cash flows expected to result from the continued use andeventual disposition of the asset or asset group. The impairment loss would be measured as the amount by which the carrying
amount of the asset exceeds its recoverable amount, which is the higher of the discounted cash flows from the continued use andeventual disposition of the asset or the net selling price at disposition.

Special Feature

Intangible assets
Intangible assets included in other assets are carried at cost less accumulated amortization calculated by the straight-line method
over their estimated useful lives. Software for internal use included in intangible assets are amortized by the straight-line method over
five years.

To Our Shareholders

Buildings and structures
Machinery and equipment85

3. Basis of Translating Financial Statements
The consolidated financial statements are expressed in Japanese yen in accordance with accounting principles generally accepted inJapan. The Japanese yen amounts have been translated into U.S. dollar amounts, solely for the convenience of the readers, at therate of ¥94=U.S. $1, the approximate exchange rate on the Tokyo Foreign Exchange Market at March 31, 2013. Such translations
should not be construed as representations that the Japanese yen at that or any other rate could be converted into U.S. dollars.
4. Cash and Cash Equivalents
Cash and cash equivalents as of March 31, 2013 and 2012 were comprised of the following:Thousands of
U.S. dollars (Note 3)

Millions of yen

2012

2013
Cash and deposits(excluding time deposits with a maturity over three months)¥¥

212,062

216,2802013$

2,255,979

5. Marketable Securities and Investment Securities
The acquisition cost and aggregate fair value of marketable and investment securities classified as available-for-sale securities including
those with no fair value as of March 31, 2013 and 2012 were as follows:
Millions of yen

March 31, 2013
StocksOthers
Total

Acquisition cost
127,246
1,281¥
128,527¥

Unrealized gains
35,941
6¥
35,947¥

Unrealized losses
6,370
7
¥
6,377
¥

¥
¥

Fair value
156,8171,280
158,097

Thousands of U.S. dollars (Note 3)

March 31, 2013
StocksOthers
Total

Acquisition cost
1,353,681
13,627$
1,367,308$

Unrealized gains
382,35164$
382,415$

Unrealized losses$
67,76674$
67,840$$Fair value
1,668,266
13,617
1,681,883

Millions of yen

March 31, 2012
StocksOthers
Total

Acquisition cost
111,684392¥
112,076¥

Unrealized gains
20,196
1¥
20,197¥

Unrealized losses
13,263
9¥
13,272¥¥¥

Fair value
118,617384
119,001

The proceeds from sales of available-for-sale securities for the years ended March 31, 2013 and 2012 were ¥268 million ($2,851
thousand) and ¥166 million, respectively. The gross realized gains on these sales for the years ended March 31, 2013 and 2012 were¥155 million ($1,649 thousand) and ¥79 million, respectively, and the gross realized losses on these sales for the years ended March 31,
2013 and 2012 were ¥15 million ($160 thousand) and ¥42 million, respectively.
The redemption schedules for securities with maturities classified as other securities at March 31, 2013 and 2012 were as follows:
Millions of yen

March 31, 2013
Corporate bonds

Due in one
year or less¥–Due after one year
through five years
¥

1,030

Over five years¥

100

Thousands of U.S. dollars (Note 3)

March 31, 2013
Corporate bonds

Due in one
year or less$–Due after one year
through five years$

10,957

Over five years
$

1,064

Millions of yen

March 31, 2012
Corporate bonds

86

Due in one
year or less¥150

Due after one year
through five years¥

30Over five years¥

100D NP A n n ua l Re p or t 2 0 1 3 さ F in a n c ia l Se c tion さ Note s to C on solid a ted Financ ial S tatements

Thousands of
U.S. dollars (Note 3)

Millions of yen

Merchandise and finished products
Work in process
Raw materials and supplies

¥

¥

¥

2012
91,91239,356
19,851
151,119$$2013
968,596308,830
201,883
1,479,309

7. Short-term Bank Loans and Long-term Debt
Short-term bank loans at March 31, 2013 and 2012 were represented by bank loans and bank overdrafts, etc. bearing interest at an
average rate of 0.72% per annum for 2013 and 0.75% per annum for 2012.

To Our Shareholders¥

2013
91,04829,03018,977139,055

Synopsis of Performance

6. Inventories
Inventories at March 31, 2013 and 2012 consisted of the following:

Long-term debt at March 31, 2013 and 2012 consisted of the following:Thousands of
U.S. dollars (Note 3)

Millions of yen

¥

40
–

¥

40
40

$

426
–

¥

50,00050,000
100
340
680
1,680
50,720–¥50,00050,000
–
240
580
1,580
50,620620$

531,915
531,915
1,064
3,617
7,234
17,872539,574–

Mortgage loans, maturing 2013-2024
Unsecured loans, maturing 2013-2020
Current portion of long-term debt¥

10,613
14,183
178,516(6,308)172,208$

126,777
153,585
1,913,979(612,394)
1,301,585

Finance lease obligations at March 31, 2013 and 2012 which are included in other long-term liabilities consisted of the following:Thousands of
U.S. dollars (Note 3)

Millions of yen

Finance lease obligations
Current portion of lease obligations

¥

¥
¥

2012
26,165(7,987)
18,178$$

2013
206,755(81,745)
125,010

The assets pledged as collateral for the company and its consolidated subsidiaries’ indebtedness, such as property, plant andequipment and other assets, were ¥10,238 million ($108,915 thousand) and ¥7,037 million at March 31, 2013 and 2012, respectively.
With minor exceptions, interest rates on mortgage loans ranged from 0.60% to 2.86% per annum for 2013 and ranged from 1.11% to2.86% per annum for 2012, while interest rates on unsecured loans ranged from 0.64% to 2.00% per annum for 2013 and from 0.64%
to 2.35% per annum for 2012.

Financial Section¥

2013
19,435(7,684)
11,751

Corporate Governance¥

11,917
14,437
179,914(57,565)
122,349

DNP’s Businesses

Unsecured debentures
1.358% due 2021
1.705% due 2020
0.400% due 2018
0.40~0.79% due 20170.40~0.79% due 2016
0.40~0.79% due 2015
0.40~1.67% due 2014
0.59~1.35% due 2013

2013

Special Feature

2012

2013
Secured debentures
1.05% due 2014
1.05% due 2013

Appendix87

The aggregate annual maturities of long-term debt after March 31, 2013 were as follows:
Thousands of
U.S. dollars (Note 3)

Millions of yen

Years ending March 31
2014
2015
2016
2017
2018
2019 and thereafter

57,565
11,202
7,116
2,444
1,107
100,480
179,914

¥

¥

$

$

612,394
119,170
75,70226,00011,777
1,068,936
1,913,979

The aggregate annual maturities of finance lease obligations after March 31, 2013 were as follows:
Thousands of
U.S. dollars (Note 3)

Millions of yen

Years ending March 31
2014
2015
2016
2017
2018
2019 and thereafter

¥

¥

7,684
5,527
2,050
1,032
673
2,469
19,435$$81,74558,79821,808
10,9797,159
26,266
206,755

8. Retirement Benefits
The Company and its domestic subsidiaries have several defined benefit retirement plans covering all of their employees, i.e. defined
benefit corporate pension plan, a governmental welfare contributory pension plan, lump-sum retirement plan and defined contribution
pension plan. Upon retirement or termination of employment for reasons other than the cause of dismissal, employees are entitled to
lump-sum payments based on the current rate of pay, length of services and accumulated number of points determined based on theemployment services.
Under the Defined Benefit Pension Plan Law, the Company has established new defined benefit pension plans on March 1, 2005
under which ninety percent of the retirement benefit liability of the Company is covered by the employees’ pension fund.
The liability for employees’ retirement benefits at March 31, 2013 and 2012 consisted of the following:Thousands of
U.S. dollars (Note 3)

Millions of yen

Projected benefit obligation
Fair value of plan assets
Unrecognized actuarial gain/loss
Unrecognized prior service cost
Prepaid pension cost
Net liability

¥

¥

2013
211,159(178,478)(7,337)(1,689)2,787
26,442¥¥

2012
191,217(144,647)(14,341)(1,918)2,919
33,230$$The components of net periodic benefit costs were as follows:

Thousands of
U.S. dollars (Note 3)

Millions of yen

Service cost
Interest cost
Expected return on plan assets
Actuarial gain/loss
Amortization of prior service cost
Loss on plan assets
Other
Net periodic benefit costs

¥

¥

2013
10,440
4,582(3,580)
2,516
442
–
163
14,563¥¥2013
2,246,372(1,898,702)(78,053)(17,968)
29,649281,2982012
10,253
4,478(3,297)
3,281
574
999
135
16,423$$

2013
111,064
48,745(38,085)
26,766
4,702
–
1,734
154,926

Assumptions used for the years ended March 31, 2013 and 2012 were set forth as follows:

Attribution method of estimated benefits to periods of services
Discount rate
Expected rate of return on plan assets
Recognition period of actuarial gain/loss
Amortization period of prior service cost

88

2013
Straight-line method
1.6%
2.5%
9 years
6 years

2012
Straight-line method
2.5%
2.5%
9 years
6 years

D NP A n n ua l Re p or t 2 0 1 3 さ F in a n c ia l Se c tion さ Note s to C on solid a ted Financ ial S tatements

Thousands of
U.S. dollars (Note 3)

Millions of yen

¥

2013
7,818
1,317
32,569
545
602
6,424
256
777

¥

2012
8,369
450
17,712
2,884
640
6,060
195
610

$

2013
83,17014,011
346,479
5,798
6,404
68,3402,723
8,266

Financial Section

Trade receivables
Other current assets
Investment securities
Long-term loans
Other investments
Trade payables
Accrued expenses
Other current liabilities

Corporate Governance

10. Accounts with Non-consolidated Subsidiaries and Associated Companies
Account balances with non-consolidated subsidiaries and associated companies as of March 31, 2013 and 2012 were summarized
as follows:

DNP’s Businesses(c)Treasury stock and treasury stock acquisition rights
The Companies Act also provides for companies to purchase treasury stock and dispose of such treasury stock by resolution of
the Board of Directors. The amount of treasury stock purchased cannot exceed the amount available for distribution to thestockholders which is determined by specific formula.
Under the Companies Act, stock acquisition rights are presented as a separate component of net assets.
The Companies Act also provides that companies can purchase both treasury stock acquisition rights and treasury stock. Suchtreasury stock acquisition rights are presented as a separate component of net assets or deducted directly from stock acquisitionrights. At present, the Company has not issued such stock acquisition rights.

Special Feature(b) Increases/decreases and transfer of common stock, reserve and surplus
The Companies Act requires that an amount equal to 10% of dividends must be appropriated as a legal reserve (a component ofretained earnings) or as additional paid-in capital (a component of capital surplus) depending on the equity account charged upon
the payment of such dividends until the total of aggregate amount of legal reserve and additional paid-in capital equals 25% of thecommon stock. Under the Companies Act, the total amount of additional paid-in capital and legal reserve may be reversed without
limitation. The Companies Act also provides that common stock, legal reserve, additional paid-in capital, other capital surplus andretained earnings can be transferred among the accounts under certain conditions upon resolution of the stockholders.

To Our Shareholders(a) Dividends
Under the Companies Act, companies can pay dividends at any time during the fiscal year in addition to the year-end dividend
upon resolution at the stockholders meeting. For companies that meet certain criteria such as; (1) having the Board of Directors,(2) having independent auditors, (3) having the Board of Corporate Auditors, and (4) the term of service of the directors isprescribed as one year rather than two years of normal term by its articles of incorporation, the Board of Directors of suchcompany may declare dividends (except for dividends in kind) at any time during the fiscal year if the company has prescribed soin its articles of incorporation. The Company meets all the above criteria. However, its articles of incorporation have not stipulated
that the Board of Directors may declare dividends at any time during the fiscal year.
The Companies Act permits companies to distribute dividends-in-kind (non-cash assets) to stockholders subject to a certain
limitation and additional requirements.
Semiannual interim dividends may also be paid once a year upon resolution by the Board of Directors if the articles ofincorporation of the company so stipulate. The Companies Act provides certain limitations on the amounts available for dividends
or the purchase of treasury stock. The limitation is defined as the amount available for distribution to the stockholders, but theamount of net assets after dividends must be maintained at no less than ¥3 million.
Cash dividends of ¥16.00 ($0.2) per share, aggregating ¥10,313 million ($109,713 thousand) were approved at the generalstockholders’ meeting held in June 2013 with respect to the year ended March 31, 2013.

Synopsis of Performance

9. Net Assets
Japanese companies are subject to the Companies Act of Japan (the “Companies Act”). The significant provisions in the Companies
Act that affect financial and accounting matters are summarized below;

Appendix8911. Selling, General and Administrative Expenses
Selling, general and administrative expenses for the years ended March 31, 2013 and 2012 consisted of the following:Thousands of
U.S. dollars (Note 3)

Millions of yen

Salaries and allowances
Accrued bonuses
Provision for retirement benefits
Depreciation
Research and development expenses
Other

¥

¥

2013
66,708
5,636
4,521
13,34527,976
106,083
224,269¥¥

2012
67,6595,265
4,907
12,64429,318106,542
226,335$$

2013
709,660
59,95748,096
141,968
297,617
1,128,543
2,385,841

Total research and development expenses (including manufacturing costs) amounted to ¥30,821 million ($327,883 thousand) and¥31,690 million for 2013 and 2012, respectively.
12. Other Income (Expenses)
The following types of income (expenses) from non-consolidated subsidiaries and associated companies were included in otherincome.
Thousands of
U.S. dollars (Note 3)

Millions of yen

2012

2013
Interest and dividends income
Leasing fees

¥

44
172

¥

74
191

(7)

Contributions

$

2013
468
1,830
(74)

–

13. Income Taxes
The Company and its domestic consolidated subsidiaries are subject to a number of different taxes based on income, which, in theaggregate, resulted in a normal effective statutory tax rate of approximately 38.0% and 40.7% for the years ended March 31, 2013
and 2012, respectively.
The actual effective tax rate reflected in the accompanying consolidated statements of operations differs from the normal effective
statutory tax rate primarily due to the effect of permanently non-deductible expenses, current operating losses and different tax rates
applicable to foreign subsidiaries, etc.
The following is a reconciliation of the difference between the normal effective statutory tax rate and the actual effective tax rate forthe year ended March 31, 2013 and 2012, respectively.
201240.7 %(14.0)
30.8
591.5
(1.7)
155.9
(73.2)
730.0 %

2013
38.0%
6.6
2.0
4.5
(0.2)
–
(3.2)
47.7%

Normal effective statutory tax rate
Expenses not deductible for income tax purposes
Amortization of consolidation goodwill
Change in valuation allowance
Special tax credit
The effective income tax rate change
Other
Actual effective tax rate

Net deferred tax assets at March 31, 2013 and 2012, resulting from temporary differences between the carrying amounts and thetax bases of assets and liabilities were reflected on the accompanying consolidated balance sheets under the following captions:Thousands of
U.S. dollars (Note 3)

Millions of yen

90

Prepaid expenses and other current assets
Other assets¥

Other current liabilities
Other long-term liabilities
Net deferred tax assets

¥
¥

2013
10,27825,167(12)(2,170)33,263

¥

¥
¥

2012
8,692
34,580(19)(1,963)
41,290

$

$
$

2013
109,340
267,734(128)(23,085)
353,861

D NP A n n ua l Re p or t 2 0 1 3 さ F in a n c ia l Se c tion さ Note s to C on solid a ted Financ ial S tatements

Thousands of
U.S. dollars (Note 3)

Millions of yen

2012

2013

Net deferred tax assets:

15,241
4,258
1,928
5,659
1,437
45,93812,91018,398105,769(53,239)
52,530$$¥(1,625)(3,853)(1,581)(4,181)(11,240)$(106,702)(5,989)(8,586)(28,585)(149,862)¥

41,290$353,861

13,022
4,559
1,721
6,018
1,341
45,59013,497
17,069102,817(55,467)
47,350¥¥¥(10,030)
(563)
(807)
(2,687)(14,087)¥

33,263¥¥¥$

138,532
48,50018,30964,021
14,266
485,000
143,585
181,585
1,093,798(590,075)
503,723

Thousands of
U.S. dollars (Note 3)

Millions of yen

¥

¥

2013
925
1,844
795
3,564

¥

¥

2012
7,266
8,584
9,163
25,013

$

$

2013
9,840
19,617
8,458
37,915

Operating leases
The amounts of outstanding future payments under non-cancelable operating leases as of March 31, 2013 and 2012 were also
summarized as follows:
Thousands of
U.S. dollars (Note 3)

Millions of yen

¥
¥

4,871
22,69327,564¥¥

5,658
26,86932,527

2013$$

51,819241,415
293,234

Appendix

2012

2013
Future lease payments:
One year or lessMore than one year

Financial Section

15. Leases
Finance leases
Effective the year ended March 31, 2009, the Company and its domestic subsidiaries adopted “Accounting Standard for Lease
Transactions.” Under this standard, finance lease transactions without ownership-transfer whose inception date is on or before
March 31, 2008 are still allowed to be accounted for as operating leases.

Corporate Governance

Buildings and structures
Machinery and equipment
Others
Total

DNP’s Businesses

14. Impairment Loss on Fixed Assets
The Company and its consolidated subsidiaries reviewed the fixed assets for impairment for the years ended March 31, 2013 and2012. Fixed assets were, in principle, grouped at the business unit for impairment testing purposes. Idle assets were grouped in each
asset. Loss on impairment of fixed assets for the years ended March 31, 2013 and 2012 were recognized in the amount of ¥3,564
million ($37,915 thousand) and ¥25,013 million, respectively due to a significant decline in profitability. The recoverable amounts ofthe business assets were measured at their value in use which was calculated by discounting future cash flows. The discount rate
was mainly 10%. The recoverable amounts of the idle assets were measured at the net selling value. The carrying amounts of the idle
assets were devalued to the nominal amount since calculation of its net selling value was difficult to measure and its future cash flows
were negative. The losses on impairment of fixed assets for the years ended March 31, 2013 and 2012 were as follows.

Special Feature

Deferred tax liabilities:
Unrealized gain on available-for-sale securities
Reserve for special depreciation
Undistributed earnings of subsidiaries
Other
Total

¥

2013

To Our Shareholders

Deferred tax assets:
Excess provision for retirement benefits
Loss on devaluation of investment securities
Excess provision for doubtful receivables
Accrued bonuses
Loss on write-down of inventories
Operating loss carryforwards
Impairment loss on fixed assets
Other
Total deferred tax assets
Less: valuation allowance
Total

Synopsis of Performance

Significant components of deferred tax assets at March 31, 2013 and 2012 were as follows:9116. Financial Instruments
1. Management policy
The Company and its consolidated subsidiaries manage fund surpluses through financial assets that have high levels of safety, andraise funds through bank loans and bond issuances. The Company and its subsidiaries also utilize derivative financial instruments
to hedge the risk of exchange rate and interest rate fluctuations and do not enter into derivatives for trading or speculative
purposes.
The trade receivables are exposed to credit risk of customers and the Company and its subsidiaries minimize the credit risk inaccordance with internal customer credit management rules.
Long-term investments are mainly equity securities. Listed stocks are stated at fair value based on market prices quarterly.
2. Fair value of financial instruments
Fair value and difference compared to the carrying amounts reported in the consolidated balance sheet as of March 31, 2013 and2012 were as follows.
Millions of yen

March 31, 2013
(1) Cash and deposits(2) Trade receivables(3) Short-term and long-term investment securities(4) Long-term loan receivables
Allowance for doubtful receivables*1
Assets(1) Trade payables(2) Short-term bank loans(3) Long-term debts
Liabilities
Derivatives*2[1]Hedge accounting is not applied[2]Hedge accounting is applied
Total

Carrying amounts
reported in the
consolidatedbalance sheet¥¥

213,630
367,765
140,924
9,658(1,385)
8,273
730,592
249,568
47,297
179,914476,779
(702)
(3)
(705)

Fair value¥¥

213,630
367,765
144,565
9,541

Difference
¥

–
–
3,641

9,541
735,501
249,568
47,297
188,006
484,871

1,268
4,909
–
–
8,092
8,092

(702)
(42)
(744)

–
(39)
(39)

¥

Thousands of U.S. dollars (Note 3)

March 31, 2013
(1) Cash and deposits(2) Trade receivables(3) Short-term and long-term investment securities(4) Long-term loan receivables
Allowance for doubtful receivables*1
Assets(1) Trade payables(2) Short-term bank loans(3) Long-term debts
Liabilities
Derivatives*2[1]Hedge accounting is not applied[2]Hedge accounting is applied
Total

92

Carrying amounts
reported in the
consolidatedbalance sheet
2,272,660$
3,912,394
1,499,191
102,745(14,734)
88,011
7,772,256
2,654,979
503,160
1,913,979
5,072,118$(7,468)(32)(7,500)Fair value$$

2,272,660
3,912,394
1,537,926
101,500

Difference$––
38,735

101,500
7,824,480
2,654,979
503,160
2,000,064
5,158,203

13,48952,224––86,08586,085(7,468)(447)(7,915)

–
(415)
(415)

$

D NP A n n ua l Re p or t 2 0 1 3 さ F in a n c ia l Se c tion さ Note s to C on solid a ted Financ ial S tatements¥

217,519
385,102100,805
1,765
(219)
1,546
704,972
276,354
51,809178,516
506,679
(514)
(20)
(534)

¥

217,519
385,102100,806
1,606

Difference
¥

–
–
1

1,606
705,033
276,354
51,809184,233
512,396

60
61
–
–
5,717
5,717

(514)
(81)
(595)

–
(61)
(61)

¥

¥

*1. Allowance for doubtful receivables associated with long-term loan receivables is deducted.
*2. Derivative assets and liabilities are on a net basis.

Special Feature

Assets(1) Trade payables(2) Short-term bank loans(3) Long-term debts
Liabilities
Derivatives*2[1]Hedge accounting is not applied[2]Hedge accounting is applied
Total

¥

Fair value

To Our Shareholders

March 31, 2012
(1) Cash and deposits(2) Trade receivables(3) Short-term and long-term investment securities(4) Long-term loan receivables
Allowance for doubtful receivables*1

Carrying amounts
reported in the
consolidatedbalance sheet

Synopsis of Performance

Millions of yen

Note A: Fair value of financial instruments, marketable securities and derivatives(3) Marketable and investment securities
The fair values of equity securities are measured at the quoted market price of the stock exchange and the fair values of debt
securities are measured at the quoted price provided by financial institutions.

DNP’s Businesses

Assets(1) Cash and deposits and (2) Trade receivables
The carrying amounts approximate fair value because of the short maturities of these instruments.

(4) Long-term loan receivables
The fair values of long-term loans are mainly determined based on the present value of the future cash flows discounted bygovernment bonds rates plus certain credit risk premiums by categories according to the internal ratings.
Corporate Governance
Financial Section
Appendix93

Liabilities(1) Trade payables and (2) Short-term bank loans
The carrying amounts approximate fair value because of the short maturities of these instruments.
(3) Long-term debts
The fair values of bonds issued by the Company and its subsidiaries are measured based on market price, if available. The fair valuesof bonds without market price are measured at the present value of total principal and interest discounted by using a rate whichreflects its remaining period and credit risk.
The fair values of long-term debts are based on the present value of total principal and interest discounted by using the current
borrowing rate for similar debt.
Derivatives
The information of the fair value for derivatives is included in Note 17.
Note B: Financial instruments whose fair value is extremely difficult to measure
Thousands of
U.S. dollars (Note 3)

Millions of yen

March 31, 2013
Unlisted equity securities
Other

March 31, 2012
Unlisted equity securities
Other

Carrying amounts
48,534¥
209

Carrying amounts
516,319
2,223$

Millions of yen

Thousands of
U.S. dollars (Note 3)

Carrying amounts
18,024¥172

Carrying amounts
219,805$
2,098

The above are not included in “(3) Marketable and investment securities” because there is no market value and it is extremely
difficult to measure the fair value.
17. Derivative Financial Instruments
Nature of derivative financial instruments:
The Company and certain consolidated subsidiaries enter into derivative financial instruments (“derivatives”) for foreign currency
forward contracts, currency swap contracts, currency option contracts and interest rate swaps to manage the risk arising fromfluctuation in foreign currency exchange rates and interest rates. Derivatives related to currency are utilized to hedge foreignexchange risks associated with certain accounts receivable, accounts payable and other debts, including forecasted transactions,denominated in foreign currencies. Interest rate swaps are utilized to hedge interest rate risks on interest-bearing debts. The
Company and its subsidiaries do not hold derivatives for speculative purposes.
Derivatives are subject to market risks and credit risks. Because the counterparties to those derivatives are limited to majorinternational financial institutions, the Company and its subsidiaries do not anticipate any losses arising from credit risks. The basic
policies for the use of derivatives are established in the Company’s internal regulations and the execution and control of derivatives
are controlled by the Accounting Department.

94

D NP A n n ua l Re p or t 2 0 1 3 さ F in a n c ia l Se c tion さ Note s to C on solid a ted Financ ial S tatements

Synopsis of Performance

Fair value of derivative financial instruments:
The contracted amount and fair value of derivatives at March 31, 2013 and 2012 were as follows:
Derivative transactions to which the Company and its subsidiaries did not apply hedge accounting
Millions of yen

Currency swap contracts
Receive U.S. dollars, and pay Japanese yen:

Fair value¥¥

14,682
1,987
16,669¥¥¥¥Unrealized gain (loss)

¥

¥

(683)
(90)
(773)

¥

(683)
(90)
(773)

900

¥

70

¥

70

124
124
248

¥

(4)
4
0

¥

(4)
4
0

¥

¥

Thousands of U.S. dollars (Note 3)

Currency swap contracts
Receive U.S. dollars, and pay Japanese yen:
Currency option contracts
Buying Euro
Selling Euro

Contracted amount$

Fair value$$(7,266)(957)(8,223)$(7,266)(957)(8,223)

9,574

$

745

$

745

1,319
1,319
2,638

$

(43)
43
0

$

(43)
43
0

$

$

156,191
21,138177,329$$$

Unrealized gain (loss)$$

March 31, 2012
Foreign currency forward contracts
Receivables:
U.S.dollars
Euro

Currency option contracts
Buying Euro
Selling Euro¥

Fair value

¥

¥

(268)
(100)
(368)

¥

(268)
(100)
(368)

1,200

¥

(124)

¥

(124)

169
169
338

¥

(7)
(14)
(21)

¥

(7)
(14)
(21)

¥

¥

7,405
2,044
9,449

¥

¥
¥

Unrealized gain (loss)¥¥

Financial Section

Currency swap contracts
Receive U.S. dollars, and pay Japanese yen:Contracted amountCorporate GovernanceMillions of yen

DNP’s Businesses

March 31, 2013
Foreign currency forward contracts
Receivables:
U.S.dollars
Euro

Special Feature

Currency option contracts
Buying Euro
Selling Euro

Contracted amountTo Our Shareholders

March 31, 2013
Foreign currency forward contracts
Receivables:
U.S.dollars
Euro

Appendix95Derivative transactions to which the Company and its subsidiaries applied hedge accounting
Millions of yen

March 31, 2013
Foreign currency forward contracts
Receivables:
U.S.dollars
Euro
Payables:U.S.dollars
Sterling pound
Euro
Japanese yen

Currency swap contracts
Receive U.S.dollars, and pay Japanese yen:Interest rate swaps
Receive floating and pay fixed

Hedged items

Trade receivables
Trade receivables

Contracted amount¥

Trade payables
Trade payables
Trade payables
Trade payables

¥

(37)
(1)

¥

933
104
204
200
2,281

¥

5
0
6
(16)
(43)

¥

429
429

¥

–
–

¥

5,558

¥

–

Long-term loan payables

Long-term loan payables
and corporate bonds

599
241

Fair value

Thousands of U.S. dollars (Note 3)

March 31, 2013
Foreign currency forward contracts
Receivables:
U.S.dollars
Euro
Payables:U.S.dollars
Sterling pound
Euro
Japanese yen

Currency swap contracts
Receive U.S.dollars, and pay Japanese yen:Interest rate swaps
Receive floating and pay fixed

96

Hedged items

Trade receivables
Trade receivables

Contracted amount$

Trade payables
Trade payables
Trade payables
Trade payables

$

(394)
(11)

$

9,926
1,106
2,170
2,128
24,266

$

53
0
64
(170)
(458)

$

4,564
4,564

$

–
–

$

59,128$–Long-term loan payables

Long-term loan payables
and corporate bonds

6,372
2,564

Fair value

D NP A n n ua l Re p or t 2 0 1 3 さ F in a n c ia l Se c tion さ Note s to C on solid a ted Financ ial S tatements

Hedged items

Trade receivables
Trade receivables

Contracted amount¥

Trade payables
Trade payables¥

Currency swap contracts
Receive Japanese yen, and pay Danish krone:
Receive U.S. dollars, and pay Japanese yen:

Trade payables
Long-term loan payables

Long-term loan payables
and corporate bonds

¥

(47)
(31)
0
(8)
(86)

¥

¥

¥

42
53
95

¥

2
(1)
1

¥

4,275

¥

–

¥

¥

3
–
3

Corporate Governance

18. Contingent Liabilities
The Company and its consolidated subsidiaries were guarantors of bank loans of other companies, amounting to approximately ¥34
million ($362 thousand) and ¥56 million at March 31, 2013 and 2012, respectively. It is common practice in Japan for companies, in theordinary course of business, to receive promissory notes in settlement of trade accounts receivable and to subsequently discount such
notes at banks. At March 31, 2013 and 2012, the Company and its consolidated subsidiaries were contingently liable on trade notes
discounted in the amount of ¥643 million ($6,840 thousand) and ¥704 million, respectively. Notes discounted were accounted for as
sales. One of the consolidated domestic subsidiaries securitized deposits for its leased property and sold them to third parties for ¥928
million ($9,872 thousand) and ¥807 million at March 31, 2013 and 2012, respectively.

DNP’s Businesses

The fair values of currency swap contracts subject to alternative method and interest rate swaps subject to exceptional accrual
method are included in the fair values of hedged items, long-term debts, because such hedging instruments are embedded in thecorresponding hedged items.
Fair value of derivatives is based on information provided by financial institutions at the end of the fiscal year.
Foreign currency forward contracts which are qualified for hedge accounting are assigned to the associated assets and liabilities ordeferred until completion of the forecasted transactions.

Special Feature

Interest rate swaps
Receive floating and pay fixed

Trade receivables
Trade receivables

44
233
1,887

¥

43
585
628

¥
¥

Currency option contracts
Buying U.S. dollars:
Selling U.S. dollars:

1,048
562

Fair value

To Our Shareholders

March 31, 2012
Foreign currency forward contracts
Receivables:
U.S. dollars
Euro
Payables:U.S. dollars
Japanese yen

Synopsis of Performance

Millions of yen

Financial Section
Appendix9719. Business Segment Information
Outline of reportable segments:
The Company and its consolidated subsidiaries’ reportable segments are components of the group whose operating results are regularly
reviewed by the Board of Directors to make decisions about resources to be allocated to the segments and assess their performance,
for which discrete financial information is available. The group’s reportable segments consist of Information Communication, Lifestyleand Industrial Supplies, Electronics, and Beverages, based on a classification by commonality in manufacturing and marketing methodof products.

Information on sales and profit (loss), identifiable assets and other items by business segment
Millions of yen
Segment report

For 2013:
Net sales and operating income
Net sales
Outside customers
Intersegment
Total
Segment income
Segment assets
OthersDepreciation and amortization
Amortization of goodwill
Impairment loss
Tangible/intangible fixed assets increased

Information
Communication

Lifestyle andIndustrial
Supplies

Electronics

Beverages

Total

Consolidated

Adjustment¥ 698,362 ¥ 511,465 ¥ 180,506 ¥
6,365
9,960
1
704,727
521,425
180,507
15,94428,029(304)¥ 606,572 ¥ 583,120 ¥ 238,828 ¥

56,274 ¥ 1,446,607 ¥– ¥ 1,446,607
3–(16,329)
16,32956,277
1,446,607(16,329)
1,462,936
471
35,780(8,360)44,14045,888 ¥ 1,474,408 ¥ 104,568 ¥ 1,578,976¥

3,976 ¥
032
7,115

22,256 ¥1,533
705
27,26826,467 ¥
1,411
2,762
32,59725,957 ¥326
10
20,12878,656 ¥
3,270
3,509
87,108

1,544
–
55
1,207

¥

80,2003,270
3,564
88,315

Thousands of U.S. dollars
Segment report
Information
Communication

Lifestyle andIndustrial
Supplies

Electronics

Beverages

Total

Consolidated

Adjustment

For 2013:
Net sales and operating income
Net sales
Outside customers
Intersegment
Total
Segment income
Segment assets$ 7,429,382 $ 5,441,117 $ 1,920,277 $ 598,660 $15,389,436 $– $ 15,389,436
67,713105,957
11
32–(173,713)
173,713
7,497,095
5,547,074
1,920,288
598,692 15,563,149(173,713) 15,389,436
169,617
298,180(3,234)
5,011
380,638(88,936)
469,574$ 6,452,894 $ 6,203,404 $ 2,540,723 $ 488,170 $15,685,191 $ 1,112,426 $ 16,797,617

OthersDepreciation and amortization
Amortization of goodwill
Impairment loss
Tangible/intangible fixed assets increased$ 236,766 $ 281,564 $ 276,138 $
16,30815,011
3,468
7,500
29,384106
290,085346,777
214,128

42,298 $0340
75,691

836,766 $34,78737,330926,681

16,425–585
12,840$853,191
34,78737,915939,521

Millions of yen
Segment report

For 2012:
Net sales and operating income
Net sales
Outside customers
Intersegment
Total
Segment income
Segment assets
OthersDepreciation and amortization
Amortization of goodwill
Impairment loss
Tangible/intangible fixed assets increased

98

Information
Communication

Lifestyle andIndustrial
Supplies

Electronics¥ 708,531 ¥ 516,818 ¥ 224,810 ¥
6,106
6,025
2
714,637
522,843
224,812
15,48831,839(4,647)¥ 620,616 ¥ 565,398 ¥ 287,957 ¥¥

24,041 ¥
1,586
235
29,90525,532 ¥
1,672–
39,52040,442 ¥168
24,77323,503

Beverages

Total

57,069 ¥ 1,507,228 ¥3
12,13657,072
1,519,364
1,334
44,01445,660 ¥ 1,519,631 ¥

3,436 ¥
1
5
3,865

93,451 ¥3,427
25,013
96,793

Consolidated

Adjustment– ¥ 1,507,228–(12,136)
1,507,228(12,136)
34,015(9,999)89,175 ¥ 1,608,806

2,378
–
–
1,396

¥

95,8293,427
25,01398,189

D NP A n n ua l Re p or t 2 0 1 3 さ F in a n c ia l Se c tion さ Note s to C on solid a ted Financ ial S tatements

Information regarding regions
Millions of yen

For 2013 :Net salesJapan¥

1,250,987

Asia¥

137,538¥

Other region
58,082

Total
1,446,607

Other region
617,894$

15,389,436

Other region
58,817¥

1,507,228

Thousands of U.S. dollars (Note 3)

For 2013 :Net salesJapan$

13,308,372

Asia$

1,463,170

$

Total

To Our Shareholders¥

Synopsis of Performance[Relative information]

Millions of yen

Japan
¥

1,314,934¥

Asia
133,477¥

Total

Special Feature

For 2012 :Net sales

DNP’s Businesses
Corporate Governance
Financial Section
Appendix99Independent Auditor’s Report

To the Board of Directors of Dai Nippon Printing Co., Ltd.:
Report on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheet of Dai Nippon Printing Co., Ltd. and consolidated
subsidiaries as of March 31, 2013 and the related consolidated statements of income, comprehensive income, changes
in equity, and cash flows for the year then ended, and a summary of significant accounting policies and other explanatory
information (all expressed in Japanese yen).
Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements inconformity with accounting principles generally accepted in Japan, and for such internal control as management
determines is necessary to enable the preparation of consolidated financial statements that are free from material
misstatements, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted
our audit in conformity with auditing standards generally accepted in Japan. Those standards require that we plan andperform the audit to obtain reasonable assurance about whether the consolidated financial statements are free frommaterial misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated
financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of therisks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making thoserisk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of theconsolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not forthe purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating
the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management,
as well as evaluating the overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
OpinionIn our opinion, the consolidated financial statements referred to above present fairly, in all material respects, theconsolidated financial position of Dai Nippon Printing Co., Ltd. and consolidated subsidiaries as of March 31, 2013, andthe consolidated results of their operations and their cash flows for the year then ended in conformity with accounting
principles generally accepted in Japan.
Convenience Translation
Our audit also comprehended the translation of Japanese yen amounts into U.S. dollar amounts and, in our opinion, suchtranslation has been made in conformity with the basis stated in Note 3 to the consolidated financial statements. Such U.S.
dollar amounts are presented solely for the convenience of readers outside Japan.
Report on Internal Control
We have audited management’s report on internal control over financial reporting of the consolidated financial statementsof Dai Nippon Printing Co., Ltd. as of March 31, 2013.
Management’s Responsibility for Report on Internal Control
Management is responsible for designing and operating effective internal control over financial reporting and for the
preparation and fair presentation of its report on internal control in conformity with assessment standards for internal
control over financial reporting generally accepted in Japan. There is a possibility that misstatements may not becompletely prevented or detected by internal control over financial reporting.
Auditor’s Responsibility
Our responsibility is to express an opinion on management’s report on internal control based on our audit. We conducted
our internal control audit in conformity with auditing standards for internal control over financial reporting generally
accepted in Japan. Those standards require that we plan and perform the audit to obtain reasonable assurance about
whether management’s report on internal control is free from material misstatement.

100

D NP A n n ua l Re p or t 2 0 1 3 さ F in a n c ia l Se c tion さ In d e pendent Audito r’s R epo rt

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Synopsis of Performance

An internal control audit involves performing procedures to obtain audit evidence about the results of the assessment ofinternal control over financial reporting in management’s report on internal control. The procedures selected depend on theauditor’s judgment, including the significance of effects on reliability of financial reporting. An internal control audit includes
examining representations on the scope, procedures and results of the assessment of internal control over financial
reporting made by management, as well as evaluating the overall presentation of management’s report on internal control.

OpinionTo Our Shareholders

In our opinion, management’s report on internal control referred to above, which represents that the internal control
over financial reporting of the consolidated financial statements of Dai Nippon Printing Co., Ltd. as of March 31, 2013 iseffectively maintained, presents fairly, in all material respects, the results of the assessment of internal control over financial
reporting in conformity with assessment standards for internal control over financial reporting generally accepted in Japan.

MEIJI AUDIT CORPORATION
Special Feature

Tokyo, Japan
June 27, 2013

DNP’s Businesses
Corporate Governance
Financial Section
Appendix101

Investor Information(as of March 31, 2013)

Dai Nippon Printing Co., Ltd.
Major Stock Indices in which DNP is a
Constituent:
Nikkei Stock Average
TOPIX Large70
S&P/TOPIX 150
Dow Jones Sustainability Indexes
FTSE4GoodETHIBEL PIONEER & EXCELLENCE

Head Office:1-1, Ichigaya-Kagacho 1-chome, Shinjuku-ku,
Tokyo 162-8001, Japan
Established:
1876
Number of Employees (consolidated):
39,445Morningstar Socially Responsible Investment Index
Stock Code:
7912

Paid-in Capital:¥114,464 million

Administrator of Shareholder Register:Mizuho Trust & Banking Co., Ltd.
2-1, Yaesu 1-chome, Chuo-ku,
Tokyo 103-8670, Japan

Number of Common Stocks:
Authorized 1,490,000,000 shares
Issued700,480,693 shares
Number of Trading Unit Shareholders (own 1,000 or more shares):32,480Stock Exchange Listings:
Tokyo Stock Exchange
Major Shareholders:Shares (thousands) Percentage (%)

The Master Trust Bank of Japan, Ltd. (Trust A/C)

41,081

6.37

The Dai-ichi Life Insurance Co., Ltd.

30,882

4.79

Japan Trustee Services Bank, Ltd. (Trust A/C)

30,085

4.67

Mizuho Corporate Bank, Ltd.

15,242

2.36

Employees’ Shareholding Association

15,157

2.35

SSBT OD05 OMNIBUS ACCOUNT-TREATY CLIENTS

12,5991.95

Mizuho Bank, Ltd.

12,471

1.93

Nippon Life Insurance Company

10,762

1.67

The Bank of New York Mellon as Depositary Bankfor Depositary Receipts Holders

10,487

1.63

STATE STREET BANK AND TRUST COMPANY 505225

8,491

1.32

Notes: 1. The number of treasury shares (55,942,953) is excluded from the figures above.
2. The ownership stakes are based on the total number of shares outstanding lesstreasury shares (644,537,740).

American Depositary Receipts:
Ratio (ADR:ORD): 1:1
Exchange: OTC (Over-the-Counter)
Symbol: DNPLYCUSIP: 233806306
Depositary:
The Bank of New York Mellon
101 Barclay Street, 22 West, New York,NY 10286, U.S.A.
Telephone: (201) 680-6825
U.S. toll free: 888-269-2377 (888-BNY-ADRS)URL: http://www.adrbnymellon.com/
Annual Meeting of Shareholders:
The annual meeting of shareholders of DNP is
normally held in June each year in Tokyo, Japan.
Investor Relations:
Dai Nippon Printing Co., Ltd.
Corporate Communication Head Office
IR Group, Press and Public Relations
1-1, Ichigaya-Kagacho 1-chome, Shinjuku-ku,
Tokyo 162-8001, Japan
Tel: +81-3-5225-8220
Fax: +81-3-5225-8239
Web Site Address:
http://www.dnp.co.jp/eng/102

D N P A n n u a l R e p o r t 2 0 1 3 さ A p p e nd i x さ Investor Information

Synopsis of Performance

Share Price Evolution (Tokyo Stock Exchange)(between April 1, 2010 and March 31, 2013)

Increase (%)*
−

1,500

−

10

−

To Our Shareholders

DNP Stock Price (yen)

0
1,200

– 20
900

Special Feature

– 10

– 30
– 40

– 60

DNP’s Businesses

– 50

600

300

11

12

13

Voting Rights(as of March 31, 2013)

Number of Stocks (stocks)

Type

Number of Voting Rights (rights)––

Stocks with limited voting rights (treasury stocks, etc.)––

Stocks with limited voting rights (other)––

55,942,000
1,085,000––

Stocks with voting rights (other)

Common stocks 641,241,000

641,240

Stocks with less than trading units

Common stocks

Stocks with voting rights(treasury stocks, etc.)

Outstanding shares
Total voting rights of stockholders(Treasury held stocks) Common stocks(Mutually held stocks) Common stocks

2,212,693

Financial Section

Stocks with no voting rights–

700,480,693––

641,240

Treasury Stocks(as of March 31, 2013)

No. of Stocks Held

Percentage of Holding to No. of Outstanding Shares

Dai Nippon Printing Co., Ltd.

55,942,000

7.99

Kyoiku Shuppan Co., Ltd.

1,085,000

0.15

Total

57,027,000

8.14

Appendix

HolderCorporate Governance*Index 100 = March 31, 2010

103

Major Subsidiaries and Affiliates(As of March 31, 2013)

Printing
DNP Hokkaido Co., Ltd.
Film making, printing, bookbinding; production and sale of packaging
DNP Tohoku Co., Ltd.
Film making, printing, bookbinding; production and sale of packaging
DNP Chubu Co., Ltd.
Film making, printing, bookbinding; production and sale of packaging
DNP Nishi Nippon Co., Ltd.
Film making, printing, bookbinding; production and sale of packaging
DNP Shikoku Co., Ltd.
Film making, printing, bookbinding; production and sale of packaging
Information Communication
Books and Magazines
DNP Book Factory Co., Ltd.
Offset printing and bookbinding
DNP Media Art Co., Ltd.
Film making
OGUCHI BOOK BINDING & PRINTING CO., LTD.
Printing and bookbinding
Tien Wah Press (Pte.) Ltd.
Film making, printing and bookbinding				Commercial Printing
DNP Media Techno Kansai Co., Ltd.
Planning, production, film making, printing and bookbinding
DNP Graphica Co., Ltd.
Printing and bookbinding
DNP Media Create Co., Ltd.
Planning, production and film making
DNP Multi Print Co., Ltd.
Film making, printing and bookbinding
Business Forms
INTELLIGENT WAVE, INC.
Credit card business; security systems construction
DNP Data Techno Co., Ltd.
Production of plastic cards
DNP Data Techno Kansai Co., Ltd.
Production of business forms and plastic cards
DNP Total Process Warabi Co., Ltd.
Film making and plate making
NBC Co., Ltd.*
Mailing of printed matter etc.
DNP Media Support Co., Ltd.
Production and sale of all types of printing
OthersDNP Art Communications Co., Ltd.
Planning, production and sale of artistic images and videos
DNP AV Center Co., Ltd.
Planning, production and sale of TV programs, movies and video software
DNP Digitalcom Co., Ltd.
Website planning, production and delivery
YouToo Co., Ltd.*
Provision of information over the Internet and mobile phones
CP Design Consulting Co., Ltd.*
Consultation for privacy protection and crisis management
M’s Communicate Co., Ltd.*
Consultation and mediation for customer membership services
At Table Co., Ltd.*
Research, consulting and planning for production and sales promotions for grocery supermarkets
DNP Social Links Co., Ltd.
Planning, development and operation of online advertising and computer systems
Lifestyle and Industrial Supplies
Packaging
LIFESCAPE MARKETING CORPORATION
Survey and provision of various information
DNP Technopack Co., Ltd.
Production, printing and processing of packaging
Sagami Yoki Co., Ltd.
Production of laminated tubes
Aseptic Systems Co., Ltd.
Productions, sale and consultation for aseptic systems
DNP Hoso Co., Ltd.
Filling and processing of packages
DNP Field Eyes Co., Ltd.
Survey and provision of various information
PT DNP Indonesia
Production and sale of packaging products
				
DNP Vietnam Co., Ltd.
Production and sale of packaging products
				Lifestyle Materials
DNP Lifestyle Materials Marketing Co., Ltd.
Sale of decorative products
DNP Ellio Co., Ltd.
Printing and processing of steel, aluminum and other metals
DNP Lifestyle Materials Co., Ltd.
Production, printing, processing of decorative materials
Industrial Supplies
DNP Fotolusio Co., Ltd.
ID photo business and sale of photo materials and accessories
DNP Dream Page Co., Ltd.
Digital processing and sale of image and text data
DNP Energy Systems Co., Ltd.
Production and sale of coating films, multilayer films, and other films
DNP Photo Imaging Co., Ltd.
Investment in operating companies
DNP IMS Co., Ltd.
Production of ink ribbons for thermal resin-type transfer printers and for dye-sublimation thermal transfer printers
DNP Advanced Optics Co., Ltd.
Manufacturing of optical products
DNP ID System Co., Ltd.
Sale of equipment for making driver licenses and ID photos
DNP Denmark A/S
Production and sale of precision electronic components				
DNP IMS Malaysia Sdn. Bhd.
Production and sale of ink ribbons for dye-sublimation thermal transfer printers
				
DNP IMS America Corporation
Production and sale of ink ribbons for thermal resin-type transfer printers and for dye-sublimation thermal transfer printers
				
DNP Electronics America, LLC
Production and sale of precision electronic components				Compagnie de Découpe de l’Ouest-CDO SAS
Production and sale of ink ribbons for dye-sublimation thermal transfer printers
				
DNP Photo Imaging Europe SAS
Sale of photo-related products				
DNP IMS Netherlands B.V.
Production and sale of ink ribbons for thermal resin-type transfer printers and for dye-sublimation thermal transfer printers				Electronics
Display Components
DNP Color Techno Kameyama Co., Ltd.
Production and sale of color filters for LCDs
DNP Precision Devices Himeji Co., Ltd.
Production of display related components

104

Capital(¥ million)

Ownership ratioof voting rights (%)

350		
350		
350		
400		
50		

100.0
100.0
100.0
100.0
97.0

200		
180		
49		
(S$1,000)
4,600

100.0
100.0
84.9
100.0

200		
100		
100		
100		

100.0
100.0
100.0
100.0

843		
100		
100		
80		
20		
10		

50.6
100.0
100.0
100.0
100.0
95.0

300		
100		
100		
50		
40		
30		
30		
10		

100.0
100.0
100.0
100.0
92.5
95.0
66.7
100.0

430		
300		
200		
100		
80		
50		
(US$1,000)
26,000(US$1,000)
17,500		

50.7
100.0
90.0
100.0
100.0
100.0
51.0

300		
300		
200		

100.0
50.0
100.0

450		
400		
200		
100		
100		
100		
60		
(Dkr 1,000)
135,000(RM 1,000)
119,000(US$1,000)
71,980		
(US$1,000)
15,045		
(Euro 1,000)
3,040(Euro 1,000)
2,408		
(Euro 1,000)
1,000

100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0

2,500		400

(15.2)

100.0(20.0)

100.0
100.0(100.0)100.0(100.0)23.4
100.0(100.0)
100.0

100.0
100.0

(33.3)(100.0)D N P A n n u a l R e p o r t 2 0 1 3 さ A p p e nd i x さ M a jo r S ubsidiaries and Affiliates

Capital(¥ million)

Synopsis of Performance

65.0
100.0
100.0
100.0
80.6
100.0
(0.3)
22.1
73.8
53.0
17.2
42.9
51.9
100.0

(1.0)
(10.3)(16.1)

32.1
100.0
33.4

To Our Shareholders

49.0
86.8
(53.0)(100.0)(53.0)(53.0)(53.0)(53.0)(53.0)(53.0)

100.0

100.0
100.0
100.0
88.8
100.0
100.0

100.0
(7.2)
100.0
100.0

Corporate Governance

100.0

DNP’s Businesses

53.0
100.0
100.0
94.3
53.0
100.0
48.3
99.8
53.0
53.0
53.0
53.0
53.0
100.0

Special Feature

100.0
100.0
100.0
(100.0)100.0(100.0)
100.0
100.0

Financial Section

Electronic Devices
DT Fine Electronics Co., Ltd.
Production and sale of semiconductor components
490		
DNP Fine Electronics Co., Ltd.
Production of display related and semiconductor components
300		
DNP LSI Design Co., Ltd.
Designing and production of drawings used in semiconductor production100		
DNP Micro Technica Co., Ltd.
Inspection, processing and loading of precision electronic components
40		
DNP Photomask Europe S.p.A.
Production and sale of photomasks(Euro 1,000)
				
47,200DNP Photomask Technology Taiwan Co., Ltd.
Production and sale of photomasks(NT 1,000)
				
5,170,618		
OthersDevelopment and sale of software; computer system support services
5,483		Nihon Unisys, Ltd.
2Dfacto, Inc.
Production, agency and sale of digitized books, magazines and other publications
4,340		Maruzen CHI Holdings Co., Ltd.
Investment in operating companies
3,000		BOOKOFF CORPORATION LIMITED
Used bookstore operation; development and operation of new used goods businesses; management guidance for affiliated stores 2,564		
SHUFUNOTOMO Co., Ltd.
Publishing
2,111		BUNKYODO GROUP HOLDINGS CO., LTD.
Sale of books, magazines, CDs, DVDs, stationery, games, hobby-related products, etc.
2,035		DNP Fine Chemicals Co., Ltd.
Production and sale of chemical products (precision processing materials and specialized industrial materials)
2,000		Operation of website offering lifestyle information from specialists in various areas and Internet advertising
All About, Inc.
1,169
DNP Logistics Co., Ltd.
Packing, shipping operations, freight transport and warehouse management626		
DIC Graphics Corporation
Production and sale of printing ink
500		
Electronic publishing and distribution platform services and e-book distribution service
mobilebook.jp, Inc.
497
Development, sale, and maintenance of computer software
VISUAL JAPAN. INC.*
435
Toshokan Ryutsu Center Co., Ltd.
Sale of books, creation of data, library operation support, and consulting
266		
DNP Fine Chemicals Utsunomiya Co., Ltd.
Production, procurement and sale of organic and inorganic chemicals
100
D.N.K. Co., Ltd.
Production, sale and repair of printing equipment and machine tools
100		
DNP Trading Co., Ltd.
Sale and purchase of paper and other products
100		
Maruzen Co., Ltd.
Educational and academic business; store operation; academic publishing and interior design, etc.
100		
DNP SP Tech Co., Ltd.
Planning and production of promotional material
80		
Kyoiku Shuppan Co., Ltd.
Editing and sales of textbooks and educational materials
60		
My Earth Projects LLC *Planning, production and sale of trading cards
50		
Maruzen Bookstores Co., Ltd.
Educational and academic business; store operation; academic publishing and interior design, etc.
50		
MARUZEN PUBLISHING CO., LTD.
Publishing50		
honto Book Service Co., Ltd.
Production, agency and sale of digitized books, magazines and other publications
50		
Junkudo Co., Ltd.
Sale of books
39		
Yushodo Co., Ltd.
Import and sale of books, magazines, and other publications
35		
DNP Asia Pacific Pte. Ltd.
Coordination of DNP businesses in the Southeast Asia/Oceania region(S$1,000)
				
2,000
DNP Business Consulting (Shanghai) Co., Ltd.*
Study of Chinese market and business feasibility(US$1,000)				
420
Personal Welfare, Facility Service and Others
DNP Facility Services Co., Ltd.
Building management, cleaning and security; operation of public health and recreation facilities
350		
DNP Information Systems Co., Ltd.
Design, development and maintenance of information systems; production and sale of software100		
DNP Human Services Co., Ltd.
Planning and management related to personnel plans
90		
Uzumine Country Club Co., Ltd.*Management of golf courses
32		
DNP Accounting Services Co., Ltd.
Accounting agency and consulting services
30		
DNP Techno Research Co., Ltd.*
Studies related to patents and the preparation of contracts
20		
Overseas Sales
DNP Korea Co., Ltd.*Sale of precision electronic components(Krw 1,000)
				
500,000
DNP Corporation USA
Investment in operating companies(US$1,000)				
62,164DNP Taiwan Co., Ltd.
Sale of precision electronic components(NT 1,000)
				
10,000DNP International Trading (Shanghai) Co., Ltd.*Sale of printed matter (commercial printing and packaging materials)(US$1,000)
				
5,400
DNP Singapore Pte. Ltd.*Sale of precision electronic components and decorative materials(S$1,000)				
350
DNP UK Co., Ltd.*Sale of decorative materials(£1,000)
				120
DNP America, LLC
Sale of printed materiais, precision electronic components, and decorative materials(US$1,000)
				100
DNP Holding USA Corporation
Investment in operating companies(US$1,000)
				100
DNP Europa GmbH*
Sale of precision electronic components and decorative materials(Euro 1,000)
				92
Dai Nippon Printing Co. (Australia) Pty. Ltd.*Sale of printed materials and decorative materials(A$1,000)				70

Ownership ratioof voting rights (%)

Beverages
60.0
(6.8)

Appendix

Beverages
Hokkaido Coca-Cola Bottling Co., Ltd.
Production and sale of soft drinks
2,935								

Notes: 1. Ownership ratios of voting rights (in brackets) indicate the percentage of shares owned through DNP’s subsidiaries or affiliates.
2. Companies with an asterisk are neither consolidated nor accounted for by the equity method.

105

Glossary

1. Terms Related to the DNP Group■ Management Concept

The DNP Group will contribute to theemergently evolving society of the 21st
century.
■ Business Vision “P&I Solutions

DNP”
We will identify and solve the problems
and issues that consumers andcorporate clients face within theemergently evolving society by fusing
our Printing Technologies (PT) andInformation Technologies (IT).
■ Guiding Principles

Actions DNP should take in order toachieve our business vision and realize
our management concept
1. Engage in Taiwa * with all persons
concerned.
2. Work with an independent andcollaborative mind-set in order tosolve problems.
3. Challenge courageously, even in theface of difficult issues.
4. Act with integrity, fairness, andimpartiality, at all times.
5. Be responsible for your own decisions
and conduct.
■ The DNP Group Code of Conduct

A set of codes underlying all types ofactivities that express DNP’s corporate
ethics. All DNP Group employees mustobey these codes.
● Contributing to the development ofsociety● Social contribution as a good
corporate citizen● Compliance with the law and social
ethics● Respect for human dignity anddiversity● Environmental conservation and therealization of a sustainable society● Realization of a universal society’● Ensuring the safety and quality of our
products and services● Ensuring information security● Proper disclosure of information● Realization of a safe and vibrantworkplace■ DNP Group’s CSR

CSR (Corporate Social Responsibility) is
generally defined as “the responsibilities
of a corporation to society,” but we at
the DNP Group go further, viewing CSR
as “being a company that is trusted bysociety.”
By simultaneously meeting the threevital corporate responsibilities—“Value
Creation,” “Integrity In Conduct,” and“Transparency (Accountability)”—
we seek to continue being a trusted
company.
1. Value Creation:
Providing new value to society
2. Integrity in Conduct:
Practicing fairness and impartiality inthe value creation processes
3. Transparency (Accountability):
Being a company that is accountable
and highly transparent

2. Information Communication■ Augmented reality (AR)A technology for synthesizing images,
text, or other virtual information with anactual scene or object in the physicalpresence of the user, so as to createa rich expression that augments theexperience of reality. For example, a
web cam or mobile phone-mounted
camera may record images or
identification codes along with imagesof the surrounding environment, all ofwhich are synthesized and displayed
together with preregistered informationsuch as 3D computer graphics.

A picture book using augmented reality■ Business Process Outsourcing(BPO)
Contracting out the execution of someof a company’s business processes toan outside provider that has specialized
technology or expertise.
■ Digital signage

An advertising medium that uses
large, flat-panel displays linked to
an information network in order tobroadcast up-to-the-minute, highly
localized information in stores, train
stations, or other public spaces. Digital
signage may include an interactive
component that enables consumers
to display the specific information theyneed by using a touch panel or mobile
phone, etc.

’

“Tall Vision” display consisting of 12 linked panels* Taiwa is a process that entails identifying problems andfinding solutions through the exchange of viewpoints and ideas.

106

D N P A n n u a l R e p o r t 2 0 1 3 さ Appendix さ Glossary■ IC tag; also called RFID (radio

frequency identification) tag
An electronic device combining a
miniature antenna with an IC chipthat records information. Radio
communication between an IC tag anda dedicated reading device makes it
possible to distinguish the individual
item that has a particular IC tag
attached to it. IC tags take a variety
of forms, including labels, cards, andcoins.

■ Lippmann hologram

A type of hologram, which is a threedimensional image recorded using a
split laser beam. Lippmann holograms
are excellent for expressing vertical andhorizontal three dimensionality and asense of depth. In addition, they are
extremely hard to counterfeit because
their manufacture requires special
equipment. These holograms havegarnered praise around the world forproviding a high level of security andpotential for outstanding designs.

To Our Shareholders
Special Feature

A ser vice that sells both paper andelectronic books by integrating
DNP’s e-book sales ser vice, online
bookstore for printed books, andphysical bookstore chain operators
Maruzen, Junkudo and Bunk yodo.
The ser vice provides such features
as a “recommend function” thatsuggests products a customer
might like based on their previous
purchase histor y from all threesales formats, a shared customer
loyalty “point ser vice” that allows
customers to accumulate hybrid
points regardless of which sales
format they use, and an “electronic
book shelf function” that displays
all of the paper books and e-books
a particular customer has purchased.
The service has been fully operating
since June 2012.

Synopsis of Performance■ Hybrid bookstore network “honto”■ Information Processing Services(IPS)■ Hybrid production solutions

A set of international standards for
short-range wireless communication
technology that is expected to be
adopted in infrastructure which will
be used in many countries. NFC iscompatible with IC tags (ISO 15693)
as well as three types of contactlesscommunication: FeliCa type which has
been widely used in Japan for sometime, Type B which is used for Japanese
government-issued ID cards, and Mifare(Type A) which is most widely usedworldwide. Because of the possibility
for two-way communication between
devices that both have NFC capability.

Corporate Governance

Personalized mail■ Pre-press

Appendix

The parts of the overall printing
process that are done before actual
printing, including digitalization of text,
photographs, and illustrations, etc.,
editing and layout, and film and platemaking. Thanks to the development ofdesktop publishing (DTP), most prepress operations can now be done bycomputer. Parts of the overall printing
process that are done after printing,such as bookbinding and processing,are called post-press.

Financial Section

Comprehensive services, mainly aimed
at publishing companies, including
printing of paper books, print on
demand (POD) of small-lot publications,and production of content for electronic
publishing and distribution. These
services make use of the technologies
and expertise that DNP has accumulated
as a company that began digitizing
printing production processes in theearly 1970s, produced the world’s firstelectronic dictionary on CD-ROM in
1985, and currently porduces content
for personal computers and mobile
devices.

■ Near Field Communication (NFC)

DNP’s Businesses

Maruzen’s main bookstore inTokyo’s Marunouchi district

DNP offers a uniquely broad menu
of business services including
inputting massive amounts of personal
information and other data, editing andprocessing, printing, producing, mailing
and/or distributing invoices, statements,and other forms of personalized mail—all in environments protected byadvanced information security.

107

■ Shueitai

3. Lifestyle and Industrial Supplies

An original font that DNP has beendeveloping since the early 1900s.
This beautiful, easy-to-read font witha graceful, sleek design has wonhigh praise from book publishers andreaders. We created a digital version in
the 1970s and began licensing its use
as of 2001. In 2005, we undertook aproject called “Heisei no Dai Kaikoku”(engraving improvement project), which
is aimed at improving the existing digital
font and developing new fonts.

■ Anti-reflection (AR) film

Film applied to the surface of display
screens in devices like computers or
televisions in order to prevent outside
light or interior light from reflecting off
the screen. There are various types ofAR films including anti-glare (AG) andlow reflection (LR) films. DNP supplies
a variety of these products by making
use of coating and other technologies
to apply thin, uniform coatings of lightdiffusing materials to rolls of base film.
■ Biomass material■ Smart card

A card that contains one or more IC(integrated circuit) chips enablingdata input, output and computing.
Smart cards that employ advanced
methods of user authentication, suchas biometrics or encryption, are widelyused in a broad range of applications
including cash cards, credit cards,
electronic money, transportation cards,
and employee ID cards. Compact SIM(Subscriber Identity Module) cards
that identify mobile phone subscribers
are also a type of smart card. DNP
entered the smart card business in the
1980s. In addition to developing the
MULTOS operating system and various
software applications for smart cards,
we provide a wide variety of services
such as smart card manufacture andpersonalization, and provision of online
security services.

“Biomass” may refer to the total
quantity of organisms living in aparticular area, or it may mean organic
resources derived from living thingsother than petroleum or other fossil
resources. Biomass material is madefrom resources of biological origin, suchas vegetable resins or natural fibers.
Biomass material has attracted attention
as a material that puts relatively little
strain on the environment due to theidea that CO2 absorbed by plants
during their growing process cancels
out the CO2 emitted when the material
is burned. Since biomass material isa renewable resource, supplies are
expected to be stable.
■ EB (Electron Beam) coating

technology
DNP’s original technique for hardening
a coat of resin by exposing it toelectron beams. EB technology makes
it possible to form films with greater
surface hardness than products coatedwith urethane or UV-cured resin. It
also makes it possible to provide
products with superior abrasion andsoil resistance, photo-resistance,
durability, and stability. In addition,
the EB coating technique uses lessenergy, generates less carbon dioxide,and enables coating without the useof solvents, making it an eco-friendly,
next-generation manufacturing method.

Smart card

A rolled strip of film to which a thin,uniform layer of ink has been applied;
used in thermal transfer printers. There
are two types of thermal transfer
printers. Heat from the thermal head ofa thermal resin-type printer transfers
ink from the ribbon by melting it, while
dye-sublimation-type printers vaporize
ink in order to transfer it to paper.
Most of the thermal-resin ink ribbons
that DNP provides are monochrome
ribbons used for barcode printers, whilemost of the dye-sublimation type arecolor ribbons used for photo printing.
DNP has developed a lineup of dyesublimation thermal transfer printing
media consisting of ink ribbons in thethree primary printing colors (yellow,
magenta, and cyan, or YMC) andspecial receiver paper. These products
make it possible to express very smoothcolor tones.
thermal headdye-based ink
layerbase film

heattransfer
film

receiving layer

receiver paperrollerdye

substrate

Dye-sublimation
type thermaltypetransferrecording media
Dye-sublimation
thermaltransfer printing media■ IB (Innovative Barrier) film

Packaging film made by DNP that is
highly impermeable to water vaporand oxygen, highly transparent, andhighly heat-resistant. It is used mainly
for wrapping foods, medical supplies
and pharmaceuticals, and electronic
components. IB film is made by forminga thin, uniform coating of a material that
boosts impermeability on a transparent
base film.

IB film packaging

EB Coating (an image)108■ Ink ribbon

D N P A n n u a l R e p o r t 2 0 1 3 さ Appendix さ Glossary■ Regenerative medicine

A therapeutic method using artificiallycultivated cells or tissues to restore or
recover the function of tissue or organs
lost through disease or accident.

4. Electronics■ B 2 it (pronounced “bee-square-it")

DNP’s proprietary technology forconnecting layers in a buildup board
by using bumps of conductive paste
formed by means of screen printing. A
buildup board is a printed board madeby alternating insulating layers andwiring layers.

■ “Soft pack” for lithium-ion battery

A laminated packaging film that seals inbattery materials such as electrolytes
and separators. Compared toconventional metal can-type packaging,a soft pack allows greater freedom
in designing a battery’s shape anddimensions and can help reduce its
weight and cost. Another advantage
is that the soft pack releases pressure
from inside the battery, preventing
deformation from excess heat.

A metal component inside asemiconductor package that supports
the semiconductor chip or chips andtransmits electric signals.
■ Liquid crystal display (LCD) color

filterPhotovoltaic cell
The smallest unit that functions as aphotovoltaic battery; in crystalline
photovoltaic modules, a cell consistsof a silicon wafer“soft pack”

Array
An arrangement ofmultiple modules

Structure of an array of photovoltaic cells (solar cells)
Encapsulants

Metal frame, etc.
Sunlight

Surface glass

Cell
Back sheet
Weatherproof film that protects the back of thephotovoltaic module from the roof or othersurface that it rests on

(mm)
2,850

10th-generation

8th-generation
170 cm tall

7th-generation

1,500

6th-generation
5th-generation

Financial Section

2,160
1,870

1,100

Corporate Governance

Wiring, etc.

A sheet of material that seals thecell and protects it from theelements, i.e. rain, wind, snow,
and temperature changes

DNP’s Businesses

ModuleA unit that is packaged in special
material to maintain the photovoltaic
cells’ electrical efficiency and to allow
them to withstand harshenvironmental conditions

A component needed for colorizing
LCDs. It consists of pigments in thethree primary colors of light—red,
green, and blue (RGB)—arrayed in apattern on a glass substrate. Passing
light through the color filter causes
colored images to be displayed.
There are also different methods ofaligning liquid crystal molecules whenmanufacturing LCD panels: the verticalalignment (VA) method and the InPlane
Switching (IPS) method. LCDs display
images by using variations in voltage tochange the orientation of liquid crystal
molecules, thereby controlling theamount of light that passes through.
With the VA method, the liquid crystal
molecules are arranged vertically,
whereas with the IPS method, they arearranged horizontally. DNP provides
color filters that suit the characteristics
of LCD panels manufactured by bothmethods.

Special Feature

Structure of an array of photovoltaic cells (solar cells)■ Lead frame

To Our Shareholders

Back sheets are weatherproof films
that protect photovoltaic modules
from external elements. They prevent
precipitation from entering modules,
making it possible to use themoutdoors for a long period of time.
Back sheets must be very durable
and moisture-proof, and have goodelectrical insulating properties.
● Encapsulants are protective sheets
used to secure photovoltaic cells
and their peripheral wiring in place,and to form photovoltaic modules.
An encapsulant forms a strong bond
between a module’s back sheet andits front glass.
●

Synopsis of Performance■ Photovoltaic module components

730

4th-generation
550
3rd-generation
370
300

400 470 650 920

1,300

1,800

2,200

2,400

3,050

(mm)

Relative Sizes of Glass Substrates Used in LC Panels

Appendix

Relative sizes of glass substrates
used in LCD panels

109

■ MEMS (Micro Electro Mechanical

System)An electronic device that integrates
components like IC chips, sensors
and electronic circuits into a threedimensional structure mounted on abase, which is usually a silicon wafer.
■ Nanoimprinting■ Touch panel sensor

A technology for exposing the surface ofa substrate coated with photosensitive
material to light, so that the exposed
areas and unexposed areas form aparticular pattern. DNP has honed its
photolithographic techniques throughthe production of masters used
for printing. Today, we apply thesetechnologies to the manufacture ofcolor filters and various other typesof electronic devices. In recent years,
we have been developing the nextgeneration photolithography techniques
using extreme ultraviolet (EUV) rays as a
new light source.

Touch panels are used on devices likesmart phones and tablet PCs. They
enable intuitive manipulation of data—
for example enlarging, shrinking, or“turning pages” by touching the screenwith fingertips. Touch panel sensors
receive signals indicating the locations
where a fingertip has touched thepanel. DNP makes a piece of glass orfilm function as a sensor by forming
electrodes on it in a grid pattern, anddelivers the final products to touch
panel manufacturers. DNP uses its
micro patterning technologies in the
manufacture of touch panel sensors.
front surface of display (direction in which light moves)■ Semiconductor photomask

A photomask is a master used forforming semiconductor circuits. It
consists of minute circuit patterns drawn
on a glass substrate. Semiconductors
are made by passing light through a
photomask in order to transfer circuit
patterns onto a wafer coated with aphotosensitive resist, and then using
etching or a similar process to embed
the pattern in the wafer.

cover glass
touch panel
polarizer
glass (CF) side
glass (TFT) sidepolarizer

light guide plate

Example of a touch panel
combined with a liquid crystal display panel

light source
lensphotomask
projection lensMaster template for nanoimprinting
siliconwafer

Photolithography machine for making semiconductors

Photolithography machine for making
semiconductors

About the Illustration on the Cover of this Report
The cover of this report matches the cover of “DNP Group CSR Report 2013;” both covers depict various
types of seeds rapidly growing and evolving. The covers express DNP’s rich diversity and bright future.

Norito Shinmura, Graphic designer
Born in Yamaguchi Prefecture in 1960. Graduated from Osaka Designers’ College. Founded Shinmura
Design Office after working for Shin Matsunaga Design Inc. Notable projects include work for ShiseidoCo., Ltd., Muji Campground, McDonald’s Japan, SSP Co., Ltd., Shinmura Fisheries and the Tokyo
Olympic bid committee. Major awards include the Japan Graphic Designers Association (JAGDA) New
Designer Award, Mainichi Advertising Design Award (Grand Prix), Environmental Advertising Contest
Award (Grand Prize), New York Art Directors Club (ADC) Award (Silver Prize), International Biennale ofGraphic Design in Brno Award (Gold Prize), and Tokyo Art Directors Club (ADC) Award.

110

liquid crystal display panel

Nanoimprinting is a manufacturing
process used to make next-generation
semiconductor products. Making
semiconductors by nanoimprinting
entails pressing a template against a
resin-coated silicon wafer so that theminute, nanometer-level pattern on thetemplate is physically transferred to theresin. Because nanoimprinting uses
relatively simple production equipment
compared to the complicated opticalequipment required for conventional
methods, it can bring down the cost of
manufacturing.

■ Photolithography

D N P A n n u a l R e p o r t 2 0 1 3 さ A p p e nd i x さ S o u r c e s of Information about DNP

Sources of Information about DNP

Synopsis of Performance

Web Site (English: http://www.dnp.co.jp/eng/)
Our web site introduces our operations in a format that is easy to understand. In
addition to disclosing information at appropriate times and in appropriate ways, we arecontinuously improving the site. The following publications and reports are also available
as PDF files that can be downloaded from the web site.

Publications
Annual Report (Japanese and English versions)

Near the end of July every year, we release a Japanese version and an English
version. The report contains financial information, explanations of our businessstrategies, and other relevant information about our business activities during aparticular fiscal year.
■

DNP English Web Site
(http://www.dnp.co.jp/eng/)

Data Book (Bilingual: Japanese/English; available only as PDF file for 		
download from web site)■“DNP Report” Report to Shareholders (in Japanese)“DNP Report” to shareholders

This report is delivered quarterly to all shareholders. Its contents include summaries
of financial results, special features about business activities, and introductions tovarious technologies.
■

Special Feature

Issued near the end of July every year, the Data Book contains values from financial
statements of the past 10 years, and financial analysis values in the form of tables
and graphs, etc. The Data Book is published in PDF format on DNP’s Investor
Relations site. Financial statement values are taken from securities reports.

To Our Shareholders■

DNP Group CSR Report (Japanese and English versions; English version
available only as PDF file for download from web site)

Each year around the end of June, we issue a yearly report about DNP’s corporatesocial responsibilities. We also have been issuing an annual “Eco-Report” since theﬁrst issue appeared in 1998.

Corporate Information (Japanese and English versions)This publication introduces each segment’s products and services, operating
locations in Japan and around the world, company history, a summary of ouractivities, and other basic information about DNP.

DNP Group CSR Report

DNP’s Businesses■

Reports■“Yuho” Annual Securities Report, etc. (in Japanese)■“Tanshin” Earnings Release (Japanese and English versions)

In accordance with Tokyo Stock Exchange rules, we prepare earnings releases for each quarter. In addition to consolidated financial
statements, we report on the status of sales, etc.

Corporate GovernanceIn accordance with Article 24 of the Securities Exchange Law, DNP submits quarterly reports to the Finance Ministry in August,November, and February. In June, DNP submits a quarterly report combined with a “Yuho” annual securities report. These arebroad-ranging reports that include consolidated financial statements with auditing reports attached, non-consolidated financial
statements, performance reviews, information about shares and corporate directors, etc.

Note: Trademarks mentioned in this annual report in connection with DNP products or services are used or registered in Japan.
Financial Section

DNP calculated and published the Carbon Footprint Mark of the Japanese edition of this annual report.
A product’s carbon footprint (CFP) is the CO 2 equivalent of the amount of greenhouse gases emitted during the product’s entire
life cycle from raw materials procurement through disposal and recycling. The Carbon Footprint Mark is a format for displaying a
product’s CFP. DNP has participated in a carbon footprint labeling pilot project run by the Japanese government since the project’s
inception. In addition to calculating and displaying the CFP of most of its own publications, DNP works to promote widespreadparticipation in the CFP labeling program.

Appendix111