Annual Report2011Management
Concept

The DNP Group will contributeto the emergently evolving
society of the 21st century.

Business
VisionWe will identify and solve the problems and issues
that consumers and corporate clients face within
the emergently evolving society by fusing ourPrinting Technologies (PT) andInformation Technologies (IT).

Guiding
Principles

1. Engage in Taiwa* with all persons concerned.
2. Work with an independent and collaborative mind-set in orderto solve problems.
3. Challenge courageously, even in the face of difficult issues.
4. Act with integrity, fairness, and impartiality, at all times.
5. Be responsible for your own decisions and conduct.

Management
concept
The DNP Group willcontribute to theemergently evolving
society of the
21st century.

Business vision

Guiding Principles

P&I Solutions

Five Principles

Concept Phrase [P&I Solutions DNP]

* Taiwa is a process that entails identifying problems and finding solutions through the exchange of viewpoints and ideas.

CONTENTS

2

S y n o p s i s o f Pe r fo r m a n c e

6

To O u r S h a r e h o l d e r s

12

S p e c i a l Fe at u r e :T h e D r i v i n g Fo r c e b e h i n d Eve n G r e at e r G r o w t h
14

30

42

Management Message:“DNP Group Vision for the 21st Century”
Progress and Prospect

66

76

C o r p o r at e G ove r n a n c e
68

Corporate Governance

75

Board of Directors, Statutory
Auditors and Corporate Officers

H o w D N P Wo r k s t o A c h i eve
S u s t a i n a b l e D eve l o p m e n t
78

Research and Development/
Intellectual Property

80

Proper Use and Management of Information

82

Disaster Preparedness and BusinessContinuity Plan

18

Management Message: Books and Magazines

20

Management Message: Commercial Printing

22

Management Message: Business Forms

24

Management Message: Energy Systems

83

Creating Lively Workplaces

26

DNP’s Global Development

84

Environmental Conservation andExpansion of Eco-Business

87

TopicsDNP in Brief
32

DNP at a Glance34

Our Products

36

Timeline of DNP’s Technological Development andBusiness Expansion

90

Management’s Discussion and Analysis

100

Selected Financial Data

38

Major Events of This Fiscal Year

102

Consolidated Financial Statements

40

Investor Information

S e g m e n t I n fo r m at i o n
44

52

60

88

Financial Section

124 A p p e n d i x
124

Technology-Centered Business Development

Information Communication

124

Technologies that Support P&I Solutions

44

Business Strategies

126

Technology-Centered Business Development

46

Financial Results

127

47

Portrait of Divisions

Examples of Products and Services
That Make Use of Printing andInformation Technologies

50

Topics130

Major Subsidiaries and Affiliates

Lifestyle and Industrial Supplies

132

Glossary

52

Business Strategies

135

Sources of Information about DNP

54Financial Results

55

Portrait of Divisions

58

TopicsElectronics

60

Business Strategies

62

Financial Results

63

Portrait of Divisions

65

TopicsThis 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 66-75), “DNP” refers to Dai Nippon Printing
Co., Ltd.)D N P A n n u a l R e p o r t 2 011

1

Synopsis of Performance

Grand Summary of Financial Results

Dai Nippon Printing Co., Ltd. and Consolidated Subsidiaries

2011

2010

Years ended March 31

change2009

2011/2010

Statements of Operations ( ¥ million)
Net sales¥ 1,589,373¥ 1,583,383¥ 1,584,844

0.4%

67,81966,514

46,1772.0%

Operating income
Ordinary income

62,786

68,84147,390-8.8%

Income (loss) before income taxes

52,69649,496(27,842)

6.5%

Net income (loss)

25,03323,278(20,933)

7.5%

Balance Sheets ( ¥ million)
Total net assets¥

Interest-bearing debt
Total assets

940,086-0.5%

229,140

166,751

124,26337.4%

1,649,784

1,618,854

1,536,557

1.9%

952,441¥

956,864¥

Cash Flow Statements ( ¥ million)
Cash flows from operating activities¥

Cash flows from investing activities

140,053¥(82,562)

131,569-0.4%(120,684)

140,574(100,726)–¥

Cash flows from financing activities

15,186

13,126(33,952)

15.7%

Free cash flow*

57,491

19,89030,843189.0%(32.35)

7.6%
-0.8%

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

¥

38.86

¥

36.13

¥

1,410.44

1,422.34

1,393.91

32

32

32

–

Operating income margin

4.27

4.20

2.91

0.07

EBITDA margin

9.65

9.07

5.09

0.58

Net income (loss) to net sales

1.57

1.47

-1.32

0.10

ROE (%)

2.74

2.57

-2.20

0.17

ROA (%)

1.53

1.48

-1.33

0.05

25

18

14

–

25.65

29.50

30.22

–

PER (times)

26.07

34.97

–

–

PBR (times)

0.72

0.89

0.64

–

EV/EBITDA (times)

4.29

5.77

7.19

–

PCFR (times)

5.30

7.08

6.74

–

Dividend yield (%)

3.16

2.53

3.56

0.63

Net assets
Cash dividend
Profit Margins (%)

Financial Ratios

D/E ratio (%)
Interest coverage ratio (times)
Valuations (against share prices on March 31)

Return to Shareholders––

26,550

–

82.3

88.6

–

–

AA (stable)

AA (stable)

AA (stable)

–

24.54

25.38

23.63

–

Value of shares repurchased (¥ million)
Dividend payout ratio (%)
OthersLong-term credit rating (R&I)
Foreign ownership (%)* Cash flows from operating activities - cash flows from investing activities

2** No diluting securities outstandingSynopsis of Performance

Synopsis of
Performance■We succeeded in increasing profits for the second consecutive term.
■Sales of color filters and optical films grew thanks to robust demand for LCDs.
■Despite posting an extraordinary loss of 6.1 billion yen related to the TohokuPacific Ocean Earthquake, we still increased net profits in the fiscal year throughMarch 2011.

Net Sales

Operating Income

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

2,000

150
1,557.8

1,616.1

1,584.8

1,583.4

1,589.4

1,500

80
60

120

45.2
96.1

90

40

87.1

1,000

66.5
60

500

67.8

46.2

08

09

10

11

08

09

10

11

07

ROE

ROA

(¥)

(%)

(%)

7

4

80

6

78.10
67.08

5.1

4
36.13

40

38.86

2.6

3

2.7

09

11

1.5

1.5

10

11

2.7

2
1

2
20

08

3.3

3

4.4

5

60

10

–20.9

– 40

07

Net Income (Loss) per Share
100

25.0

– 20

0

07

23.3
20
0

30

0

54.8

1
−32.35

0

0

0
–1

–20

–1

–2
– 2.2

–3

–40

07

08

09

10

11

07

08

09

–1.3

–2

10

11

07

08

09

D N P A n n u a l R e p o r t 2 011

3Income (Loss) Before Income Taxes

EBITDA(¥ billion)(¥ billion)

120

250

100

99.0
88.5

200

80
60

49.5

52.7

200.4

199.7

143.6

150

153.4

40
100

20

80.7

–27.8

0

50

– 20
0

– 40

07

08

09

10

11

07

08

09

10

11

1,393.9

1,422.3

1,410.4

09

10

11

1,618.9

1,649.8

10

11

Total Net Assets*

Net Assets per Share(¥ billion)

(¥)

1,200

1,099.4

2,000
1,040.1

1,000

940.1

956.9

952.4

1,544.0
1,500

1,516.4

800
600

1,000

400
500
200
0

0

07

08

09

10

11

07

08

Interest-bearing Debt

Total Assets(¥ billion)(¥ billion)

250

229.1

2,000
1,700.3

200
166.8
150

124.3

100
69.2

1,601.2

1,536.6

1,500

1,000

80.1
500

50

0

0

07

08

09

10

11

07

08

09

PER (Price Earnings Ratio)*

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

35

1.5
34.97

30
25

23.74

1.20
1.05

23.64

26.07

1.0

0.89

20

0.72

15
0.64

0.5

10
5
0

0

07

08

09

10

11

* The fiscal year through March 2009 is not shown
because there was a net loss that year.

4

07

08

09

10

11

Synopsis of Performance

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

200

40
35.6
162.9
30

150

33.8

33.1

09

10

11

30.1

119.1

116.1

102.2

96.2

100

34.1

Synopsis of
Performance

Capital Expenditures*

20

10

50

0

0

07

08

09

10

11

07

08

*Figures include capital expenditures for intangible fixed assets.

Depreciation Expense

Free Cash Flow*(¥ billion)(¥ billion)

120
100

109.9
100.2

80
106.9
98.0

91.7

57.5

60

80

40

60

20

40

0

20

– 20

0

34.8

30.8
19.9

-27.7

– 40

07

08

09

10

11

07

08

09

10

11

* Free cash flow = Net cash from operating activities –* Net cash from investing activities

Net Sales by Segment

Operating Income by Segment(¥ billion)(¥ billion)

Information
Communication

722.0

Lifestyle &Industrial Supplies

286.3

0

46.8

12.2

Electronics

63.0

Beverages

18.1

Lifestyle &Industrial Supplies

531.7

Electronics

Information
Communication

1.2

Beverages

200

400

600

800

0

10

20

Capital Expenditures by Segment

Employees by Segment(¥ billion)(persons)

Information
Communication

20.9

Lifestyle &Industrial Supplies

20.1

Beverages
1,104Electronics
4,583

30

40

50

Corporate
1,401

Information
Communication
20,201

56.5

Electronics

Lifestyle &Industrial Supplies
12,899

4.7

Others

0

20

40

60

80

D N P A n n u a l R e p o r t 2 011

5To Our Shareholders
Yo s h i t o s h i K i t a j i m a

President

I would like to express my sincere condolences
to those who lost loved ones in the TohokuPacific Ocean Earthquake that struck Japan on
March 11, 2011, and my heartfelt prayers for
speedy reconstruction.
The DNP Group and especially DNP Tohoku
Co., Ltd., which is based in Sendai, Miyagi
Prefecture, was forced to suspend operations
at some facilities that sustained damage fromthe earthquake. However, the entire Grouphelped with restoration so that we were able toresume operations almost completely by earlyMay. We worked hard to stabilize our
production system by using other facilities
throughout the country to make up for lost
production while the affected plants weredown, and by coordinating with materials
manufacturers and logistics providers. We
responded to power shortages byimplementing comprehensive energy-saving
measures and bringing our own power
generators online. We also took steps tominimize the effects of the disaster byimproving our business continuation plan andproposing optimal production plans.

We will take on the challenge ofachieving new growth forsociety and DNP
Today’s Japan faces a time of major trials. As
the Japanese people overcome the hardships

6of the recent earthquake and make a fresh
start to prepare for new development, DNP
also wants to contribute more than ever tosociety’s development. This is one reason why
the fiscal year through March 2012 will be avery important milestone year for DNP, as forthe whole country.
The year will also mark the 135th anniversaryof the founding of DNP’s corporate
predecessor, Shueisha. The Company started
out in 1876, shortly after the Meiji Restoration
which was an important turning point inJapan’s transition from feudal society tomodern nation. Shueisha’s founders had akeen desire to contribute to Japan’s
modernization and cultural enlightenment, andto support publishing businesses by making
full use of the letterpress printing that was thelatest technology of the time. This sentiment isexpressed in the company’s original motto,“Run a civilized business.”
DNP made Books and Magazines andCommercial Printing its mainstays, but
eventually came to perceive great danger insticking only to the business fields where it
already operated, as it would not be able to
grow. That is when DNP began to focus on“expansion printing,” meaning expansion into
new fields of business. This effort led to DNP’sentry into the fields of packaging anddecorative materials in 1951, exactly 60 years
ago. Then we branched out again and startedコーポレート・ガバナンス

To Our Shareholders

D N P A n n u a l R e p o r t 2 011

DNP Annual Repor t 20 1077

making display components in 1958 andelectronic devices in 1959, making DNP one of
the world’s very few “comprehensive printing
companies.”
The fiscal year through March 2012 also
marks 10 years since DNP came out with its
business vision of providing “P&I Solutions.”
DNP applies the printing and information
technologies that we have cultivated over thecourse of many years, along with other typesof knowledge and experience, to the solutionof a variety of problems faced by our
corporate clients and consumers and by thesociety that constitutes the basis for theiractivities. By doing so, we achieve not only
societal development but growth in our own
corporate group.
DNP was founded at a time when letterpress
printing was the latest technology in Japan.
The founders had a strong entrepreneurial
spirit, and one might say that the company
has ever since been taking on the challenge of
one new enterprise and one new environment
after another. Today, as Japanese society sets
out to rebuild in the aftermath of the 2011
earthquake, it faces a mountain of difficult
problems more complex than we have everfaced before. DNP takes a direct and earnest
approach to each of the problems that Japan
faces, including the need to protect theenvironment and energy-related problems.
We believe that by providing appropriate
solutions, we can stimulate growth in bothsociety and DNP. Autonomously andenthusiastically taking on the challenge ofsolving these problems is DNP’s true mission.
We firmly believe that moving forward toward
accomplishing our mission one step at a time
will earn us strong public trust and result ingreater corporate value for DNP.

8

To Our Shareholders

In the fiscal year ended March 2011, we observed
a certain degree of economic recovery resulting
from overseas economic growth, primarily inemerging countries. However, the economic
picture in Japan remained harsh due to factors
such as high unemployment, the stronger yen, andhigher crude oil prices. In the printing industry,competition increased in the face of stagnation
both in personal consumption and in corporate
advertising outlays. The earthquake that struck at
the end of the fiscal year caused a further drop in
demand and contributed to the continued severityof the business environment.
DNP met these challenges by actively expanding
its sales activities and providing products andservices aimed at solving our customers’
problems. For example, in the promising field ofelectronic publishing, we prepared the ground forthe startup of an e-book store and the sale ofe-publishing content by unifying standards,
promoting sound management of copyrights, andadjusting accounting methods. We geared up to
meet increased demand for electronic devices bybuilding a new color filter plant in Himeji, Hyogo
Prefecture and a new photomask plant in Hsinchu
City, Taiwan. In April 2011, we started up a newplant in Kitakyushu, Fukuoka Prefecture, toproduce back sheets and encapsulants forphotovoltaic cells, and “soft packs” for lithium-ion
rechargeable batteries.
At the same time, in addition to pursuing
structural reforms based on enhancing our
production systems and equipment and reexamination of our operations, we also set aboutstrengthening our profit base by implementing
thorough cost-cutting measures. In the fiscal year
through March 2011, we optimized production

sites, allocated personnel more appropriately, andimproved productivity. One way in which weachieved this was by merging and reorganizing our
Kanto and Kansai units, which previously had
separate organizations handling commercial
printing sales, planning, development andmanufacturing. We also integrated the divisions
that handle manufacturing and sales for the Chubu
region and established DNP Chubu Co., Ltd.
effective April 1, 2011. By tying operations closer tothe local community, we aim to win more orders
and boost efficiency.
As a result of these efforts, both net sales andoperating income in the fiscal year through March2011 increased relative to the previous term,
despite the effects of the earthquake.

To Our Shareholders

Major initiatives in the fiscal years
through March 2011 and March2012

Business strategies aimed atcorporate value enhancement
and sustained growth
DNP pursues its “P&I Solutions” business vision
with the aims of building the Group’s corporate
value in the long term and achieving continuous
growth. In order to achieve concrete results basedon this business vision, we implement businessstrategies that emphasize consumers’ point ofview, a global business development perspective,
and the establishment of a solid profit-generating
business structure.

1. Promoting P&I Solutions that emphasize
consumers’ point of view
In times like these, when business conditions andpeople’s everyday lives are undergoing majorchanges, it can be difficult for companies andconsumers to get a clear grasp of their own
problems, so it is probably difficult for people toforesee what problems should be addressed andin what order of priority. For a company like DNP
that expands its business by solving problems, it

D N P A n n u a l R e p o r t 2 011

9is particularly important to quickly notice changes
in society and markets, formulate hypotheses,
and remain one step ahead of other companies
and individuals in making proposals.
As we go about solving problems, we believe it
is important that we maintain our own“consumers’ point of view” and actively approachsociety and markets just as we would on our own
behalf. Picking up on changes in consumers’
point of view increases the accuracy of ourhypotheses and proposals and helps us provide
solutions that work well for corporate clients andconsumers. DNP emphasizes the consumer’s
point of view not only in sales and projectplanning but also in manufacturing, research anddevelopment, and the entire DNP Group. We
strive to maintain this perspective as we develop
new products and services, review existing
businesses, or establish new business models
and work to quickly get them up and running.

2. Taking a global view of business
The printing industry mainly revolves aroundprinting on paper. Since it is inherently dependenton domestic demand, it is heavily influenced bytrends among Japanese companies. Given thefact that the Japanese printing market is shrinking
due to the falling birth rate and other factors, andthe increasing speed at which companies are
moving their operations overseas and markets
are becoming borderless, we believe it isimportant for DNP to also look at its businessfrom a “global point of view.”
Our slogan for DNP’s global strategy is “making
the most of our strengths.” Rather than thinkingof taking our business overseas because we
can’t expect the Japanese market to grow, it isimportant for us to have the positive awarenessthat we can use DNP’s strengths to solve
problems faced by businesses and consumers
not only in Japan but all over the world.

10

DNP has a long history of developing its
business overseas, going back to the opening of
our Hong Kong office in 1964. From the 1970s
into the 1990s we added business bases in
Europe, Asia, the US, and Australia. One after
another, we established overseas subsidiaries
including DNP Europa GmbH, (headquartered inGermany), Tien Wah Press (Pte.) Ltd. (with offices
in Singapore and Malaysia), PT DNP Indonesia,
DNP America, LLC, Dai Nippon Printing Co.
(Australia) Pty. Ltd., and DNP Denmark A/S. As ofthis writing, DNP has 25 sales bases in 14
countries and a region, and 12 production plants
in nine countries and a region. As an example ofour success overseas, PT DNP Indonesia has
become the No. 1 packaging manufacturer andsales company in Southeast Asia. By promptly
providing excellent quality products that respond
meticulously to corporate clients’ needs, ourIndonesian subsidiary has come to export
products to other ASEAN countries.
In parallel with the development of ourbusiness bases around the world, DNP provides
translation of some 60 languages, as well asediting, design, and other information services
by linking corporate partners in 34 nations via a
digital network. We have also built an optimalsite production system using this network totransmit printing data to a production base neara client’s location, where we handle every stepfrom printing and binding to shipping of thefinished product.

3. Establishing a strong profit-generating
structure
We have implemented a variety of large and small
measures as a result of constant consideration of
how we can generate profits. We place particularemphasis on the idea of “designing in profit,”
meaning that manufacturing divisions cooperate
closely with sales and project planning divisions

To Our Shareholders

strengthening our management base.
We will continue to allocate internal reserves forinvestment in the research and development of
new products and technologies, capital investmentin the development of new businesses, andstrategic tie-ups and M&As. We believe that thesetypes of investment help build corporate value inthe medium and long term, and also help us return
profits to shareholders.
DNP values taiwa (dialogue) with all of ourvarious stakeholders. In order to stimulate livelier
taiwa through which we can discover and resolve
new issues, we disclose appropriate information ina timely fashion and work hard to achieve
accountability. Furthermore, we view corporate
governance as an important management
responsibility. We intend to build, operate andmaintain monitoring systems that adequately
support accurate, appropriate, and quick decisionmaking and business execution.

To Our Shareholders

and work at reviewing and streamlining businessprocesses.
We have been steadily reaping benefits fromthe “Production 21” activities that we launched in
2002 with the aim of boosting Group-wide
productivity. Based on the idea of overall
optimization, “Production 21” activities smooth
the workflow between processes and between
operating divisions, and promote the constructionof efficient production systems from which we
systematically eliminate waste.
We also take a systematic approach to themaintenance of production equipment andfacilities based on an awareness of how vitally
important maintenance is to manufacturing.
Through persistent daily effort, we can achieve
results including improved yields, reduced
materials loss, and shortened preparation time. In
addition, these types of measures can help us
respond more appropriately to unexpected
situations like the recent earthquake.
Along with considering consumers’ point ofview and a global perspective as we expand ourbusiness, the entire DNP Group maintains astrong awareness of the importance ofprofitability and enhances corporate value with aview toward establishing a solid profit-generating
business structure.

In order to earn the trust of our shareholders andall other stakeholders, the management of DNP willcontinue to increase the Group’s corporate value
through our business activities.
We look forward to your continued support andcooperation.

Toward even better relations with
our shareholders
We view the return of profits to shareholders as animportant management policy.
Our basic policy regarding allocation of profits is
to pay stable dividends to shareholders, withconsideration for such factors as businessperformance and dividend payout ratio. At thesame time, we support future businessdevelopment by securing retained earnings toenhance our financial constitution, and by

Yoshitoshi Kitajima, President

D N P A n n u a l R e p o r t 2 011

11

Special Feature:

The Driving Force behind Even
Greater Growth
New Challenges for DNP’s “Vision for the 21st Century
In 2001, at the start of a new century, the DNP Group unveiled its “Vision for the 21st Century”
̶ a vision of a company focused on providing “P&I Solutions.” In other words, DNP intended
to quickly pick up on the problems faced by businesses and individuals and apply printing
and information technologies in order to solve those problems. Our aim was to expand DNP’sbusinesses by dedicating ourselves to societal development.
Ten years have passed since we announced “Vision for the 21st Century.” In this Special
Feature, we will look at the results that we have attained so far, new issues that have surfacedin the interim, and our prospects for making big strides and achieving sustainable growth in themedium and long terms.

12CONTENTS

14 Management Message: “DNP Group Vision for the 21st Century” Progress and Prospect
18 Management Message: Books and Magazines
Special Feature:
The Driving Force behind
Even Greater Growth

20 Management Message: Commercial Printing
22 Management Message: Business Forms
24 Management Message: Energy Systems
26 DNP’s Global Development

D N P A n n u a l R e p o r t 2 011

13

Management Message: “DNP Group Vision for the 21st Century” Progress and Prospect

Global-scale solutions
for social problems,from the consumer’s
point of view
Tetsuji Morino Managing Director

14Special Feature:The Driving Force behind Even Greater GrowthSome Japanese refer to the 1990s,
when the economic bubble of the 1980s
collapsed, as the “lost decade.” Until
then, the Japanese style was marked by
uniform mass production and massconsumption. This has changed
completely, and as information networks
developed, it became normal for
consumers with diverse values toindependently select products andservices. For companies, it was nolonger sufficient to produce massive
quantities of the same product. It
became essential to respond
meticulously to consumers’ diverse
needs. DNP had already been
producing printed products tocustomers’ specifications since thecompany’s founding, basically treating
every job as custom-made. So for us,
the new trend only put wind behind oursails.
Also at the start of the new century in
2001, we said in our “Vision for the 21stCentury” that we would enhance taiwa

Net Sales and Operating Income during Ten Years
since Establishment of “DNP Group Vision for the 21st Century”(¥ billion)
Net Sales

Operating Income

1,700

220

1,600

200
180

1,500

160

1,400

140
1,300
120
1,200
100
1,100

Achievements and newissuesThroughout the 1990s, Japan’s
economy continued to stagnate. In thefiscal year ended March 1999, DNP’sperformance deteriorated due to thelackluster performance by Japanesecompanies and depressed personal
spending that followed the Asiancurrency crisis of 1997. We were so
greatly alarmed that when weformulated our “Vision for the 21stCentury” in 2001, it was with theintention of making a fresh start. In thatsame fiscal term, our businessperformance bottomed out, and then it
began to recover. In the term ended
March 2006, we achieved new record
highs for consolidated net sales andoperating income.
After getting off to such a good startin realizing our corporate vision, DNP’sperformance began to lag again aroundthe time of the worldwide financial crisisof 2008. We responded by creating new
businesses — through technologicaldevelopments, mergers, acquisitions,and other means — and by promoting
operational reorganization and reforms
aimed at boosting profitability, primarily
in the Electronics segment. As a result,
we were able to improve businessperformance during the two fiscal terms
through March 2011. However, because
we were not able to beat our previous
records for net sales and operating
income, we feel we still have a great
deal of room for improvement. I’d like tolook back at the results DNP has
achieved and the problems we haveuncovered during the past 10 years, anddiscuss the direction our company will
be taking in the future.

Special Feature:
The Driving Force behind
Even Greater Growth(dialogue) in order to more rapidly
uncover the problems faced bycorporations and individuals so that we
could focus on solving those problems.
When solving problems, we make use of
the comprehensive power of the entire
DNP Group, including printing andinformation technologies, the capacity toform hypotheses based on knowledge
and experience in management,planning, research and development,
and manufacturing, and the ability toflexibly combine products and services.
Our more than 30,000 corporate
customers, with whom we can engage
in taiwa on a daily basis, provide us withenergy and ideas for discovering
problems and solving them.
Ten years have passed since weestablished P&I Solutions as our
corporate vision. During that time, wehave actively made use of our strengths
and steadily achieved results.

Basic strategies forrealizing P&I Solutions

80

1,000

60

900

40

800

20

02
■ Net Sales

03

04

05

06

07

08

09

10

11

■ Operating Income
D N P A n n u a l R e p o r t 2 011

15

Management Message: “DNP Group Vision for the 21st Century” Progress and Prospect

Aiming for Greater Growth

Theme 1: Hybridization +Interactivity + Information
SecurityFirst, let’s look at issues related toInformation Communication. In recent
years, there has been a rapid increase in
the amount of information to which we areexposed due to the development of digital
networks and other technologies. It has
become difficult to appropriately process
all of this information. Given thisenvironment, we believe that it is very
important to use optimum combinationsof digital and paper media in order toincrease intellectual productivity.
DNP began digitizing its printing
production processes in the early 1970s.
After we produced the world’s firstelectronic dictionary on CD-ROM in 1985,
we developed an extensive track record in
the production of content for various
types of information terminals. We used
this capability to begin providing “hybrid
production solutions” for optimizing digital
data for use both in printing on paper andin e-publishing. In addition, we arebuilding Japan’s first “hybrid bookstore
network” that links physical bookstoressuch as Maruzen, Junkudo or Bunkyodo
with an Internet bookstore, “bk1,” and anelectronic bookstore, making it possible
to offer the same services regardless ofwhich sales channel a customer uses at agiven time. We believe that by promoting
our paper-digital hybrid model, we can
improve convenience for consumers andrevitalize the publishing market.
Meanwhile, it seems that people arequestioning the very nature and meaningof advertising and what can be expectedof it. People have come to place moreweight on information that they receivefrom someone they trust, or by word of
mouth, or through social network media
such as Twitter than they do on
advertising that was distributed to them
unilaterally. The key word is “interactivity.”
Whereas consumers used to be just thereceivers of a one-sided information flow,
they are now increasingly evaluating
information or products, broadcasting
opinions in their own words, sharing
information with friends, and linking that
information to future action. DNP iscreating businesses that support safe andeffective interactive communication.
Along with hybridization andinteractivity, information security is also
becoming increasingly important. DNP
has constructed advanced information
security environments wherein we provide
comprehensive services that include not
only accepting consumers’ personal
information from corporations, processing
data, outputting data in various formats,and sending materials, but also services
that involve interaction with consumers,
including operation of customer service
centers and data centers. By targeting theentire range of corporate businessprocesses as our field of potential
business and making use of our strength
in information security, we are branchingout into upstream processes like productdevelopment and marketing and working
to solve a variety of problems.

Aiming for Greater Growth

Theme 2: “Social” as a pointof view
Next let’s look at issues related to the DNPGroup as a whole, especially the Lifestyleand Industrial Supplies and Electronics
segments. Until recently, DNP wasprimarily concerned with solving the
problems of companies and consumers.
Today however, we sense that it has
become difficult for companies andconsumers to get an accurate grasp of
their own problems. We have come tothink that the reason for this may be theinstability that we find today in the very
foundations of society, i.e. the dramaticchanges that are occurring in the social
environment surrounding companies andconsumers. Before thinking about the
problems that companies or consumers
are facing, we feel it is more important tofirst deal with the problems of society itself.
When we shifted our emphasis to this“social” point of view and asked ourselves
what it is that society is looking for andwhat it is that troubles society, some of
the themes that emerged were ecology,

Special Feature:The Driving Force behind Even Greater Growth

make an all-out effort to generate social
innovations that will have a positive effecton society.

Aiming for Greater Growth

Theme 3: Social innovation ona global scale
When we think about social issues, we
become keenly aware of how Japan isconnected to the rest of the world anddoes not stand alone. For example,
environmental issues and energy issues
must literally be resolved at the global
level, and most Japanese businesses are
greatly affected by trends outside Japan.
As a more specific example, ourInformation Communication business isaffected by digital networks and social
media like Twitter that enable interactive,
real-time exchange of information as if
national borders did not exist. This
presents opportunities for DNP, which
has long been deeply involved inJapanese-language information
processing, to help lower language
barriers by solving such problems as how
to display Japanese fonts and how tominimize the burden of converting
between Japanese and other languages.
In the packaging and decorative
materials fields, there may be big
differences between the functions that
customers seek for products in theSoutheast Asian, European, American, orother markets compared to productspecifications required for domestic
consumption in Japan. It is important toincrease taiwa in the various regions andto provide the functions and solutions that
customers in those areas really want.
As far back as half a century ago, in
1964, DNP opened an office in HongKong. Since then, we established PT DNPIndonesia, the leading packaging
manufacturing and sales company inSoutheast Asia, and went on to open a
total of 25 sales offices in 14 countries
and a region and 12 manufacturing plants
in nine countries and a region. So far, wehave mainly developed separate overseas

businesses in each business field. In
recent years, however, we have also been
trying to create business bases that allow
us to bring into play the full range of the
DNP Group’s abilities.
Our slogan for DNP’s global strategy is“making the most of our strengths.” Wewould be unlikely to succeed if wethought “We can’t expect the Japanesemarket to grow so let’s take the businessthat we already operate in Japan andmove it overseas.” Rather, we are actively
working on taking products that solve
various problems and were successful inJapan and adapting them to the various
needs of overseas markets.

Special Feature:
The Driving Force behind
Even Greater Growthenergy, universal design, and life
sciences.
For example, all over the world people
are reviewing their energy policies. In April
2011, we opened a new factory in
Kitakyushu, Fukuoka Prefecture, in
response to expectations for rapid growthin the market for photovoltaic cells andlithium-ion rechargeable batteries. We aim
to triple our capacity for producing backsheets and encapsulants used inphotovoltaic cells and “soft packs” forlithium-ion rechargeable batteries, thereby
increasing DNP’s total sales of energyrelated products to 30,000 million yen by
the year ending March 2014.
Universal design (UD) is particularly
important in our Packaging Operations,where our product development
philosophy is to make “packaging that isdesigned to be as pleasant as possible
for anyone to use.” In addition to making
packages that can be opened with little
force and labels that are easy tounderstand, in recent years we have beendeveloping packaging that prevents
misuse of medical and pharmaceuticalproducts. We are also promoting UDrelated consulting services.
Regenerative medicine is another topic
that is attracting attention. This new typeof therapy uses artificially cultivated cells
to treat tissue or organs that were lost
due to disease or accident. Applying ourprinting technologies to the developmentof products that facilitate effective cell
cultivation is one of the ways in which
DNP meets society’s new demands.
We believe that the resolution of social
problems requires more than justproviding simple components or individual
products. We think it is important forcompanies with various strengths togather, combine their various
technologies and expertise, and form aunified organic system for implementing
solutions. In order to speed up suchinitiatives and increase their effectiveness,
it will probably be necessary to form
active corporate alliances, including
mergers and acquisitions. We want toPaying close attention to theconsumer’s point of view inorder to achieve long-term
growthThese days, the social environment
surrounding companies and consumers ischanging rapidly and there is a need forproblem solving at the global level. This
trend poses an immense opportunity for acompany like DNP, whose business vision
is to expand by providing solutions toproblems — P&I Solutions. We want tomake the most of this opportunity by
maintaining our own “consumers’ point ofview,” looking clearly at society through ourown eyes, and solving society’s problems
proactively with the understanding thatsociety’s problems are our own problems.
In this way, we can achieve further
business expansion and sustainablegrowth.

D N P A n n u a l R e p o r t 2 011

17

Management Message: Books and Magazines

DNP as “the publishing industry’s No. 1 partner”:
Creating an electronic publishing market andrevitalizing an industry
Motoharu Kitajima Managing Director

18

Special Feature:The Driving Force behind Even Greater Growth

What DNP Is Working On

Revitalizing the publishingmarketAiming for Greater Growth

Creating an electronic
publishing market and a
hybrid strategy
DNP is committed to actively addressing
the electronic publishing market, which
has great growth potential. In Japan, themarket is growing primarily from
distribution of comics to mobile terminals,
from 57.4 billion yen in the fiscal year
ended March 2010 to a projected 130
billion yen in the fiscal year through March
2015 according to a study by Impress
R&D. DNP is working with othercompanies in the industry to prepare theground for making the best use of thisopportunity, for example by unifying
standards for electronic publishingcontent, reducing production burdens,
constructing infrastructure for distribution
and sales, expanding points of contact
with customers and reinforcing marketing.
As we move toward greater growth, ourcatchphrases will be “hybrid production
solutions” and “hybrid bookstore
networks.”
In order for a publisher to create anelectronic publishing business, it needs todigitize content and produce data that iscompatible with various sales sites anddisplay terminals. DNP began digitizing its
printing manufacturing processes in theearly 1970s. We will make use of our trackrecord and expertise in this area toprovide publishers with a service that we

DNP’s Strengths
Close partnerships with publishing companies and publishing-related businesses
Advanced printing and information technologies cultivated over many years;
research and development capacity that generates new services● “Hybrid production solutions” that can address every type of information media fromprinted paper to digital media● Japan’s first “hybrid general bookstore” that can provide composite service throughphysical bookstores, net-based bookstores, and an e-book store all under one
corporate roof●●

call “hybrid production solutions.” This
service, which has received high acclaim
from the industry, uses DNP’s proprietary
general-use format for constructing digital
data so that it can be efficiently output inwhatever format the publisher or reader
desires, whether printing on paper,producing e-publishing content, or printing
on demand.
Meanwhile, we expect to see three
distribution and sales business formats
fuse as they continue to develop: book
vendors that operate physical stores,
Internet-based bookstores that sell printed
material through a website, and electronic
stores that sell e-publishing content. DNP
is the only corporate group in Japan thatowns all three of these sales channels.
We plan to expand our business by linking
the three to form Japan’s first “hybrid
bookstore network.” Members of a hybrid
bookstore network can receive various
services, including recommendations
based on their purchasing history andbonus points, when they purchase content
in any format from any outlet.
In November 2010, DNP established“honto,” an e-book sales service thatdelivers content to personal computers,
iPhones and iPads. In January 2011, weteamed up with NTT DoCoMo, Inc. toestablish 2Dfacto, Inc. which sells content
for delivery to smart phones operated by
NTT DoCoMo. We plan to expand
2Dfacto's product lineup to 100,000 titles,
with a focus on literary works and mangacomic books. In order to address overseas
markets, especially with regard to theJapanese comics that are very popular allover the world, we are stepping up efforts
related to translation, production of data for
sale, copyright processing, etc.
By offering “hybrid production
solutions,” we intend to lighten the burden
on publishing companies. Through our“hybrid bookstore networks” we want toprovide consumers with maximum
benefits. We expect the result to be thereinvigoration of the overall printing andpublishing industry and the achievement of
stable growth in DNP’s businesses.

D N P A n n u a l R e p o r t 2 011

Special Feature:
The Driving Force behind
Even Greater GrowthBooks and Magazines has been our corebusiness since DNP’s founding. We havealways expanded this business with theawareness that we are contributing to thedevelopment of society and culture.
However, since peaking in 1996 at
2,656,400 million yen, the overallpublishing market has continued shrinking
to the point that in 2009 it dropped below
two trillion yen. The Japanese publishingindustry faces a multitude of problems
including a high return rate of unsold
books, increasing costs of digitization,
and a tendency among consumers toread fewer books. There is also a need toestablish magazine business models thatare not dependent only on advertising
revenues. Given this situation, in order for
our Books and Magazines business togain its former vitality, we believe it isimportant for the entire publishingindustry, including DNP, to undergo
structural reform.
In the past, DNP contributed to the
publishing industry as a printing company,
i.e. a manufacturer. Today, however, wehave expanded our fields of business toinclude marketing, project planning, sales
and distribution, customer service
improvement, and the entire range of preand post-media production processes.
Along with this “vertical expansion” into
the entire range of publishing processes,
we are also rapidly promoting “horizontal
expansion” into various information media
other than paper, including smart phones
and tablet PCs. Backed by the strengthsof the entire DNP Group, including

Maruzen Bookstores Co., Ltd., Junkudo
Co., Ltd., Bunkyodo Group Holdings Co.,
Ltd. and TRC, Inc., we will work on the
problems that need to be solved in order
to invigorate the publishing market.

19

Management Message: Commercial Printing

DNP aims for strategic expansion of its
communication business to cover the entire,
growing range of media types
Takao Shimizu Managing Director

What DNP Is Working On

From Total SP Solutions tocross media factory
For some years, DNP has been providing
products and solutions that boost theeffectiveness of corporate clients’ sales
promotion (SP) efforts based on an idea
we called “Total SP Solutions.” Total SP
Solutions combined three methods ofapproaching consumers: the “massapproach” of widely disseminatingpromotional information, the “direct
approach” of transmitting information
tailored to individual consumers’ needs,
and the “point-of-sale approach” ofinfluencing purchasing decisions at thetime and place they are made. DNP went
on to develop Total SP Solutions evenfurther, and launched its “cross media
factory” business during the fiscal term
ended March 2011.
The “cross media factory” is supported
by DNP’s Content Management System(CMS) for effectively disseminating clients’product and other information andkeeping it variably updated in formats
compatible with a wide range ofcommunication media including paper
media (flyers, catalogs, etc.), websites
and other electronic information services
accessed by personal computers ormobile terminals such as smart phones,
digital signage, and point-of-sale media.
Our CMS enables companies to exercise
uniform management of information andat the same time respond flexibly tovarious types of media. In addition, it
eliminates time lags between transmissionof information to multiple types of media.
Commercial Printing is one of DNP’score businesses. It has undergone

20

significant change in response to new
realities including Japan’s changing
demographic picture (characterized
mainly by longer life spans and a lower
birth rate), a shift from mass media toInternet-based advertising, andconsumers’ autonomous transmission of
product-related information. Commercial
Printing has also been affected by thediversification of communication media
and the rapid spread of highly interactive
forums such as social media.
We believe that the cross media factorybusiness that we are now promoting will behighly effective in this kind of environment.
We expect that businesses will rapidly
adopt this model, since it allows them toprovide information more efficiently andmore cost-effectively through a wide rangeof communication media.

Aiming for Greater Growth

Supporting “B to B”
communication, collaborating
across industry lines, andgoing global
We intend to actively promote our crossmedia factory as a strategic business thatwill support DNP’s long-term growth, andwe expect continued media diversification
to work in our favor. Because thisbusiness is supported by DNP’s originaltechnologies, we believe we can achieveeven greater profitability than we did in our
traditional businesses, including printing
on paper.
In the past, our Commercial Printing
business mainly helped corporationstransmit information to consumers, i.e.
“B to C” communication. In the future wewill also focus on expanding our business inthe “B to B” field, by optimizing information
communication within a single corporation
and between companies, and by providing
BPO (Business Process Outsourcing)
services that improve client companies’
operational efficiency. In addition, we areforming joint venture businesses thatcombine our own strengths with those of
corporate clients, sometimes even adopting
business models that did not exist in thepast. For example, we are making use ofstrengths that DNP has cultivated in thepast in order to develop new products andservices that we sell through our corporateclients’ sales channels.
We will also be working harder than everat expanding our overseas business. Under
our cross media factory business model, asmall number of employees positioned atbusiness bases around the world canreport accurately on the needs of individual
customers. Based on their instructions, we
can process information appropriately inJapan and use electronic networks todeliver it to the various overseas bases. For
example, we can enable a corporation that
operates outlet chains both in Japan andoverseas to implement uniform
management of data such as colormanaged logos and product images, andfacilitate use of the data by all of the various
outlets via an online network. DNP’sadvanced CMS forms the core of thisbusiness. Because the business doesn’t
require us to maintain the type of largescale rotary press used for printing paper
media on our premises, we believe it will beeasy to develop globally, particularly inSoutheast Asia, China, and elsewhere
within Asia.

Special Feature:The Driving Force behind Even Greater Growth

Special Feature:
The Driving Force behind
Even Greater Growth

Our cross media factory can even offer
additional functions such as Internet-based
product sales and account settlements,
and processing of personal information
within an advanced information security
environment. In order to provide these
services, we will collaborate withcompanies in other fields, such as financial
institutions with strong track records and ahigh level of expertise in relevant areas.
As corporate marketing methods
change, consumer needs become
increasingly diverse, and communication
between businesses and consumers
becomes more and more interactive, DNP
will use the strength of the cross media
factory business model to actively expand
its business.

DNP’s Strengths
Comprehensive ability to support every aspect of sales
promotion from planning and proposal of marketing and sales
strategies, information processing, all types of media production,
development of relevant technologies, server operation, operationof promotional campaign offices, and customer response services● Ability to develop technologies, produce content, and operate
systems that address a wide range of communication media
including paper media (flyers, catalogs, etc.), Internet-networked
media, point-of-sale media, and digital signage● Ability to provide color management enabling accurate
reproduction of vivid product colors whether on paper or in digitalmedia● Capacity for textual expression that maximizes communicative
effectiveness through the design of all types of media — printed
and electronic — by selecting the best fonts and type sizes
depending on the nature of the content and who will be reading it●

D N P A n n u a l R e p o r t 2 011

21

Management Message: Business Forms

Expanding DNP’s comprehensive service inorder to solve information security problems
in Japan and abroad
Sakae Hikita Managing Director
What DNP Is Working On

Developing businesses thatmake use of advanced
information security systems
In recent years, a strong need has
developed for safer, more appropriate
handling of sensitive corporate informationand consumers’ personal information.
When DNP began developing smart cards
30 years ago, in 1981, there was not muchinterest in information security. Even before
that, we had been printing valuable
products like stock certificates andmagnetic cards. Because our customer
base consists of a variety of companies
and individuals who handle information, we
have established a track record in providing
products and services that depend on
advanced information security systems.
We built our business on the strength of
DNP’s original security technologies related
to manufacturing and information
processing. On the manufacturing side, wehave primarily focused on secure printing,including the use of devices like holograms
to prevent counterfeiting of valuable
products such as stock certificates,vouchers, and all types of cards. There are
only a few companies in the world besides
DNP that are capable of producing
Lippmann holograms, which are extremely
effective at preventing counterfeiting. In theinformation processing field, we areworking primarily on improving operating
systems and application software for smart
cards, data encryption and verification
systems, and the development andoperation of information network-related
systems.
Another area of focus is Business
Process Outsourcing (BPO) services thatmake use of the technologies mentioned

22

Special Feature:The Driving Force behind Even Greater Growth

Forming alliances to meetincreasing demand at the
global level
above to support client companies’
overall business processes. DNP has
long provided Information Processing
Services (IPS) for clients, meaning that
we print millions of account statements
and other documents that require
variable printing, data processing,production of varied output materials,
envelope-stuffing, mailing, etc. In
addition to these processes, BPO adds
the performance of a wide range ofbusiness operations including intake andinspection of documents, database input
and maintenance, data analysis, andcustomer service center operation. In
order to promote this business, it isessential to gain customers’ trust basedon an impressive track record supportedby the ability to provide a high-security
environment.
As an example of how we can inspire
the necessary level of trust, in July 2010
DNP’s Warabi Plant was given the top“AAAis” rating out of 17 levels of
information security authorized by I.S.
Rating Co., Ltd., the world’s first private
information security rating company. The
rating is an indicator of the level of
security under which a company or otherentity handles technical information,
trade secrets, or personal information.
The highest level rating has only been
awarded to six workplaces operated byfour companies (including DNP). DNP
was the first company in the printing
industry to receive the highest rating.

Today, information networks extend
beyond national borders. We expect the
territory covered by our security businessto also spread out more and more. In
Japan, DNP is involved in theconstruction and operation of
mechanisms that combine a high degreeof convenience with a high degree of
information security, such as
government-issued smart cards that are
seen as necessary for the smooth
operation of social insurance, taxation,and other elements of next-generationsocial infrastructure. Outside Japan, too,
the need for information security isstronger than ever. DNP intends toactively provide manufacturing-based
solutions including Lippmann hologramsand various types of cards, as well as
information processing-based solutions
like our Card Data Management Service,an online application service thatmanages information entered on smart
cards. DNP has increasingly gained
recognition through participation inSpecial Feature:
The Driving Force behind
Even Greater Growth

Aiming for Greater Growthoverseas exhibits, and the number oforders and inquiries about the service israpidly growing. In the future, we plan topromote this business overseas,
particularly within Asia and in Westerncountries.
In order to speed up this kind of
venture and achieve satisfactory results,
we need to build cooperation withcorporate partners in Japan and abroad.
Toward that end, in April 2010 wewelcomed Intelligent Wave Inc. as a newmember of the DNP Group. Intelligent
Wave’s areas of specialty areauthentication and fraud detection
systems for credit card companies. The
company has also developed anti-money
laundering software and related
products. Amid growing demand for
office security, we are promoting andsupplying a uniform management systemthat uses a single smart card for each
employee to control office entry and exit,
computer login, and use of printers andother equipment in order to prevent
misuse of company facilities.
Following our acquisition of Intelligent
Wave, DNP intends to expand our
security business in Japan and overseas
by increasing cooperation with othercompanies that have special abilities,
and enhancing our services through therealization of synergistic benefits.

DNP’s Strengths
Advanced security systems for handling sensitive information including important
corporate information and consumers’ personal information● Capacity for technological development; track record in developing operating
systems and application software for smart cards● Comprehensive ability to provide a full range of services including all types of output
production, envelope-stuffing, mailing, and customer service center operation, in
addition to information processing● Ability to provide total support including consulting prior to introduction of new
systems, testing and verification, and post-introduction follow-up●

D N P A n n u a l R e p o r t 2 011

23

Management Message: Energy Systems

DNP wants to remain the world leader
in energy-related components
Shigeki Umise General Manager of Energy Systems Operations

24

Special Feature:The Driving Force behind Even Greater Growth

What DNP Is Working On

Energy as a new mainstay of
DNP’s business

Aiming for Greater Growth

Reinforcing our businessbase to allow rapid
responsiveness in a growing
marketWorldwide demand for clean energy is
expected to increase, and we believe thatphotovoltaic cells will play an importantrole in this market. At the present time,solar power generation systems are still
relatively expensive. We are working on
improving the functionality, increasing theadded value, and lowering the cost of thecomponents that we provide in order tobring the cost of solar power generation
down to the same level as power
generated by means of combustion orother conventional methods.
Demand for lithium-ion rechargeable
batteries is expected to grow not only foruse in mobile devices, but also for electricand hybrid vehicles and for household-use storage batteries, among other uses.
DNP is focusing on developing productswith optimal characteristics for thesevarious applications.
In response to this growing market, in
April 2011 DNP opened a new factory forenergy systems-related products in
Kitakyushu, Fukuoka Prefecture. We
invested some 6 billion yen in the newplant with the intention of increasing our
production capacity to three times what it
was before the new plant came online.
The very clean environment inside thenew plant enables us to manufacture
exceptionally high-performance, highquality products. We believe that we will beable to increase the already high degree ofconfidence that our corporate clients havein DNP. This buildup of our facilities willallow us to respond flexibly to continued
growth in demand for photovoltaic cells
and lithium-ion rechargeable batteries. By
the year ending March 2014, we expect toachieve 30 billion yen in annual sales ofenergy-related components. In addition,
the new plant will serve as an important
manufacturing hub from which we can
supply products to Europe and North
America, China and other developing
nations, and the entire world.

Special Feature:
The Driving Force behind
Even Greater Growth

DNP first started developing its energy
business back in the early 1990s, before
photovoltaic cells and lithium-ion
rechargeable batteries were the hot
topics that they are today. In 2003, wedeveloped commercially viable backsheets and encapsulants for photovoltaic
modules. In the past few years thebusiness has expanded nicely, thanks inpart to a favorable business environment.
Because photovoltaic cells do not burnpetroleum or other fossil fuels, they
constitute a promising source of clean
energy that can help reduce negative
impacts on the environment. Backed bystrong support from the governments ofvarious countries, in 2010 the world
market for solar cells doubled comparedto the previous year, resulting in anindustry worth some three trillion yen. In
the future, when technologicaldevelopment leads to improved power
generation efficiency and mass
production brings down the cost of solar
power generation, demand is likely togrow even more.
DNP serves the promising photovoltaic
cells market by manufacturing and selling“back sheets” that are applied to theback side of solar panels to keep out
wind and rain and “encapsulants” that
secure solar cells (power-generating
elements) and their wiring and protect
them from the outside environment.
Meanwhile, a rapid increase in the useof smart phones, tablet PCs, and othermobile devices caused the market forlithium-ion rechargeable batteries togrow to a size of one trillion yen in 2010.
Looking ahead, large-capacity lithium-ion
rechargeable batteries are expected tocome into widespread use in electricvehicles, which should cause evenfurther expansion of the market.
In the past, lithium-ion rechargeable
batteries were usually enclosed in metal
casings. More recently, we are seeing
greater use of “soft packs” made ofmultilayered film, which are lighter inweight, more durable, more flexible andeasier to work with than metal. DNP
controls the top share of the world market
for these soft packs.
Corporate clients in Japan andoverseas have been highly appreciative of
DNP’s energy-related products, whichmake use of various technologies that wehave cultivated over the years, including
materials, coating, and lamination
technologies.

As worldwide energy policies come underreview, we believe that corporate clients
will continue to place their trust in DNP’senergy systems-related products basedon our products’ advanced functionality
and high quality. We intend to keep
working to improve productivity anddevelop better technologies in order tocontribute to the market as a leading
company.

DNP’s Strengths
Materials development capacity that allows us to derive maximum functioning froma single material● Laminating and coating technologies that allow us to express each function to
the maximum degree possible and to realize the optimal combination of multiple
materials● Ability to propose solutions with flexible conditions according to each corporateclient’s processes and needs●

D N P A n n u a l R e p o r t 2 011

25

DNP’s Global Development

Looking at things fromconsumers’ point of view and turning
global problems into business opportunities
Overseas business development is one of the forces that has propelled DNP’srapid progress in the past and will drive it forward into the future. Currently weface a number of issues that transcend Japan’s borders, including the needto preserve and share the Earth’s environment and energy resources, and thedevelopment of worldwide information networks. One of DNP’s important growthstrategies is to view these issues as opportunities and take on the challenge ofresolving them from a global standpoint.

DNP’s Global Strategy: Takeon the challenge of resolving
issues on a global scale
As we implement our global strategy,a phrase we want to keep in mind is“making the most of our strengths inJapan and around the world.” There ismuch talk in Japan about how themarket is shrinking due to factors like thedeclining birth rate, aging society, andindustry reorganizations. DNP is not sosimplistic as to think that we will just go
overseas because we can’t expect any
more growth in Japan. We intend todevelop our business with a focus on
making the most of our strengths, finding
the most comprehensive solutions toproblems, and adapting to the realities ofthe various nations and communities of
the world.
DNP’s problem-solving ability is
supported by the printing and information
technologies and other expertise that wehave cultivated in the past. These
strengths allow us to provide optimal
products and services that meet theneeds of a variety of companies andconsumers in each region. Rather thantrying to secure sales simply bymarketing existing products andservices, we aim to contribute to thecreation of new value and grow alongwith regional communities by coming up

26

with solutions for the problems faced bycompanies, consumers, and the specificsocieties in which they function.

DNP’s Global Development:
Initiatives and issues
In 1964, almost 50 years ago, DNP
opened its first overseas representative
office in Hong Kong. We have been
actively developing our overseas
business since the 1970s. Currently, the
DNP Group has 12 overseas
manufacturing bases in nine countries
and a region and 25 overseas sales
offices in 14 countries and a region,
mainly in Asia, North America, andEurope. We manufacture and sell awide variety of products in theseregions, including commercial
printed matter such as
catalogs and flyers,
packaging products,
building materials, opticalfilms used in electronic
displays, color ink ribbons
for printing photos, andphotomasks used for
manufacturing
semiconductors.
In the fiscal year ended
March 2011, overseas sales
came to 197.6 billion yen andaccounted for 12.4% of the Group’s

Badhoevedorp (Holland)
London (England)

Karlslunde (Denmark)Düsseldorf (Germany)

Dinant (France)
Paris (France)

Agrate (Italy)

Hsinchu (Taiwan)

DNP Photomask Technology
Taiwan Co., Ltd.

Taipei (Taiwan)

DNP Taiwan Co., Ltd.
Johor Bahru (Malaysia)

TWP Sdn. Bhd.
Singapore

Tien Wah Press (Pte.) Ltd. (Singapore)
Singapore

DNP Singapore Pte. Ltd.
Jakarta (Indonesia)

PT DNP Indonesia

Special Feature:The Driving Force behind Even Greater Growth

Japan’ s GDP Compared to That of Other Asian Countries(US$ billion)

Asia(ex. Japan)
10,453

12,00010,000
8,000

Japan
5,458

6,000
4,000
2,000
0

2001

2002

■ Asia (ex. Japan)

2003

2004

Pittsburgh

China

Santa Clara
Los Angeles

Tokyo
Shanghai

New York
Concord

San Marcos

Chula Vista

2007

2008

2009

2010

advanced/ high-performance packaging
and building materials that DNP
provides, but also for books, magazines,
and commercial printed matter ̶ areas
where DNP’s advanced technology
enables true-to-life graphic expression of
beauty and ideas. Looking at DNP’s
Electronics segment, since a growing
proportion of the world’s production andtechnological development bases arelocated in Asia, enhancement of ourbusiness bases in the region is acornerstone of DNP’s global
development.
In the future, as DNP moves ahead
with solving problems not only within
Japan but on a broader, global basis, wewill increase Group-wide cooperation
and work on promoting research andproduct and services development andimproving profitability by optimizing
production locations and boosting
operational efficiency so that we can
expand sales and profits both in Japanand overseas.

U.S.A.
Seoul (South Korea)

2006

Bangkok(Thailand)Special Feature:
The Driving Force behind
Even Greater Growthconsolidated net sales.
As DNP plans its future overseas
business expansion, one of its main
strategies is to target the Asian region,
which is expected to experience
remarkable economic growth.
The Asian region, including China,
India, and particularly the member statesof the Association of Southeast Asian
Nations (ASEAN), holds great potential
for DNP to expand its business. We
expect to see growth in domestic
demand and improvement in quality oflife in Asian countries. We feel sure that
we will be able to capture demand not
only for everyday products like the

Beijing

2005■ Japan

Ho Chi Minh
(Vietnam)Australia
SydneyDNP’s Overseas Sales

DNP’s Overseas Sales to Net Sales(¥ billion)

（%）

300

20

250
197.6

200
150

15
12.4
10

100
5
50
0

0

02

03

04

05

06

07

08

09

10

11

02

03

04

05

06

07

08

09

10

11

D N P A n n u a l R e p o r t 2 011

27

DNP’s Global Development

Asia is the key to DNP’s Global Strategy.
Examples of DNP Group corporate activities in Indonesia,
Singapore, and Taiwan.

PT DNP Indonesia

Aiming to be Asia’s No. 1 packaging company
n Business Proﬁle: DNP founded PT DNPIndonesia in 1972 in order to spread“packaging culture” in Indonesia. From thevery beginning, we performed all
manufacturing processes in-house. This
allowed us to provide high-quality productsthat met the diverse needs of our corporateclients, and to build solid trust that
continues to the present. Today, in addition
to capturing the top local share of
packaging products in many fields including
everyday items, laundry detergent and foodproducts, we provide packaging products
made with high-quality offset printing
equipment to local subsidiaries of majorinternational cosmetics and sporting-goods
manufacturers. DNP has established itself
as the overwhelming industry leader andhas been securing stable profits not only
within Indonesia but in the ASEAN region
as a whole. DNP Indonesia provides all
types of packaging products ̶ fromgeneral-purpose to highly advanced ̶ tomeet the needs of its corporate clients andconsumers. The company has gained
increasing recognition for its ability to solve
the problems of businesses andconsumers.
n Business Environment: The Indonesian
economy has grown by more than 4%
annually for the past nine years. Future
growth is estimated at around 6 to 7% per
year. The Indonesian government recently
came out with a social infrastructure
investment plan totaling the equivalent of
about 15 trillion yen by 2014, and it isalready implementing a plan aimed atincreasing per capita GDP tenfold by 2021.
DNP views Indonesia’s economic situation
as a major business opportunity because

whenever people move things andconsume more, they require packages in avariety of business fields, including food,beverages, everyday items, andpharmaceuticals. We intend to respond to
future market trends by developing
products that reflect an accurate grasp of
consumers’ wishes, and by weighing
further increases in production capacity as
we expand our business.
n Growth Strategies: We aim to become“the Asian region’s No.1 packaging
company” by solidifying our position as theleading packaging company in the ASEAN
region and continuing to supply world-classtechnologies and high-quality products andservices. DNP Indonesia already supplies
products on a global level, primarily in Asia,
the Middle East, and Africa. By establishingproduction bases at points of consumption,
particularly in developing countries, we willfurther strengthen our existing global
product supply framework.
The ASEAN–China Free Trade Area
(ACFTA) took effect among ASEAN
member states, including Indonesia, and
the People’s Republic of China fromJanuary 2010, eliminating most importtariffs within the region. This should help
expand DNP Indonesia’s exports, but at thesame time it means that low-priced
products will flow into Indonesia from other
ASEAN nations and from China, suggestingthat the agreement will lead to more intensecompetition in the local market. DNP
Indonesia is far superior to its competitors
in the region in terms of scale of production,technological and developmental capacity,
product quality and customer service. By
responding meticulously to the diverse andsophisticated needs of our corporateclients, it will build a solid framework that noother company in Indonesia can hope tomatch. Our product development teams will
use the expertise and technologicalstrength of the DNP Group to add value
and further increase functionality, forexample by tailoring products like
Innovative Barrier (IB) Film (a transparent
packaging film with excellent oxygen andwater vapor barrier properties) to the needsof Southeast Asian markets.
Furthermore, we will actively “localize”
DNP Indonesia to root it more firmly in thesurrounding society. We believe thattraining of locally hired personnel isparticularly essential to our overseas
business development, and we are steadily
reaping the benefits of our efforts in thisregard. As a result of ensuring diversity in
our recruitment processes and developing
employees’ skills by enhancing training
programs, the company’s net sales haveroughly doubled compared to 10 years ago,although the number of employees isvirtually unchanged.

Checking packages for color tone

Tien Wah Press (Pte.) Ltd. (Singapore, Malaysia)

Southeast Asian hub factory to support the global development of DNP’s Books andMagazines segmentn Business Proﬁle: Tien Wah Press has
expanded its book and magazine
production business to serve the global
market. Its specialties are the production of
pop-up books and hardcover books,
including cookbooks. Tien Wah Press wasfounded in 1935 as a printer of pamphlets
and other commercial materials. DNP

28

acquired a stake in it in 1970, and made it awholly owned subsidiary in 2003.
Today, Tien Wah’s main clients are major
European and North American publishingcompanies, and exports account for about
95% of its net sales. While Singapore is themain base for the company’s businessactivities, it also has established sales

offices in the U.S., U.K., France, andAustralia, and opened a production base in
Malaysia.
n Business Environment: Like mostcompanies in Singapore, almost all of Tien
Wah Press’s sales come from exports to
European and North American markets, soSpecial Feature:The Driving Force behind Even Greater Growthn Growth Strategies: Over the course ofmany years, Tien Wah has establishedbonds of trust with the world’s largest
publishing companies and has built up
considerable brand strength by providing

high-quality products. Moreover, thecompany has achieved a dominant position
in its industry by establishing a global
network of sales offices, investing in thelatest printing equipment, and building an
excellent workforce. Tien Wah Press’s basic
strategy is to further refine its strengths andboost cost and quality competitiveness.
Besides reinforcing its function as the DNPGroup’s Southeast Asian printing
production hub, we plan to boost
collaboration between Tien Wah Press andthe DNP Group’s Books and Magazines
segment and have Tien Wah Press serve asa production base for the Japanese market.
In addition, we will take advantage of the
DNP Group’s technology and expertise tohave Tien Wah Press move into new
business fields other than printing andpublishing. The company recently started
information media supplies for barcodelabels business and is developing its
electronic publishing business by producing
content and building a distribution platform.

Going forward, Tien Wah Press willcontinue to pursue a variety of possibilities
and steadily expand its business.

Special Feature:
The Driving Force behind
Even Greater Growth

local economic conditions do not directly
affect the company’s businessperformance. At the same time, Singapore
is among the world’s most importanteconomic centers. Its international logistics
infrastructure and opportunities forbusiness networking are highly developed,
and government agencies in Singapore
actively support business by providing
many incentive programs to encourage
capital investment, improvements in
productivity, and the development of newtechnologies.
Given these favorable conditions, we
expect Tien Wah Press to contribute to
DNP’s international business expansion byserving as our printing production hub inSoutheast Asia.

Making pop-up books at our factory in Johor Bahru Plant

DNP Photomask Technology Taiwan Co., Ltd.

Reinforcing our framework for the global supply of cutting-edge photomasks in order tofurther boost market sharen Business Proﬁle: Ever since 1959, when
DNP first succeeded in developing
photomasks (original plates for making
semiconductor circuits), we worked hard todevelop new technologies and expand thebusiness. Today, DNP has grown to be thephotomask manufacturer with the largest
share of the world market. A photomask
consists of minute circuit patterns formed
on a glass substrate, so in order to produce
them we make use of the patterning andetching technologies that we cultivatedthrough our printing business. To date, DNP
has been producing photomasks at four
plants in Japan (Kamifukuoka Plant, Kyoto
Plant, Kawasaki Plant, and Kitakami Plant)
and at our Agrate Brianza Plant outside ofMilan, Italy. In 2010, we built our second
overseas production base in Taiwan’s
Hsinchu City, and began mass producing
photomasks.
n Business Environment: Taiwan is one of
the world’s main semiconductor production
bases, and most manufacturers have apresence there. In the past few years, thesemiconductor market has grown rapidly in
Taiwan and the rest of Southeast Asia, so
photomask demand is on an uptrend.

Although the semiconductor industry isaffected by constant technologicalinnovation and fluctuations in supply anddemand, semiconductor products areindispensable to most electronic devices,
so the market is expected to grow in thelong term.
In addition to developing cutting-edge
photomask technologies likenanoimprinting and extreme ultraviolet(EUV) lithography, we are working hard to
establish a production framework that can
respond to growing overseas demand. We
expect our new Taiwan plant to make amajor contribution toward boosting thecompetitive standing of DNP’s photomask
business in the world market.
n Growth Strategies: DNP Photomask
Technology Taiwan Co., Ltd., the DNP
subsidiary that operates the new plant,
started out mass producing 65nm
photomasks and plans to later expand its
operations to mass produce 45nm and40nm products. The new plant currently
focuses on supplying cutting-edge
photomasks to semiconductor
manufacturers in Taiwan, but in the future weplan to expand its market to target

semiconductor makers throughout South
East Asia as well as in Japan.
With chip manufacturers actively
investing in miniaturization and circuit line
widths becoming progressively more
minute, it has become essential for DNP asa photomask supplier to increase our shareof the market for cutting-edge products. As
demand for under-45nm products begins
to grow in earnest, our Taiwan plant willplay an increasingly important role as a
strategic production base.
DNP intends to reinforce its frameworkfor supplying the growing global market for
cutting-edge photomasks, and further
increase its share of the world market.

Exterior of the factory

D N P A n n u a l R e p o r t 2 011

29

DNP in Brief
CONTENTS

32 DNP at a Glance
34 Our Products
36 Timeline of DNP’s Technological Development and Business Expansion
38 Major Events of This Fiscal Year
40 Investor Information

30

DNP in Brief

D N P A n n u a l R e p o r t 2 011

31

DNP at a Glance

ProfileBusiness Portfolio

With printing and information technologies as ourstrengths, DNP is a comprehensive printing
company that is the world’s top supplier of many
products

A business portfolio that is well-balanced fromthe standpoints of stability, profitability, growthpotential and risk

DNP is one of the world’s largest comprehensive printing
companies. 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 world.
DNP’s main strengths are the printing and information
technologies that it has cultivated since its founding in 1876.
The Company has branched out from publishing andcommercial printing into diverse fields including packaging,decorative materials, display components, and electronic
devices. DNP has even grown to be the world’s largest supplierof many products in these areas, and we continue to take on
the challenge of expanding into new business fields, such asenvironment, energy, and life sciences.
From early in its development, DNP set about boosting theefficiency of the overall Group’s management by promoting
overall optimization, greater profitability, and effective use ofmanagement resources. We work hard to manage the company
efficiently, for example by concentrating functions such asplanning, sales, and research and development in our head officewhile positioning manufacturing divisions and specific technology
development divisions within various Group companies.
As of March 31, 2011, the DNP Group employed 40,188
people. The Group had 48 sales bases and 59 production
plants in Japan, 25 sales offices in 14 countries and a region,and 12 overseas production plants in nine countries and aregion. Overseas sales contributed 12.4% of the Group’s overall
net sales in the fiscal year through March 2011. In April 2011,
we established a Group company to coordinate sales, planning,and manufacturing functions for Japan’s Chubu region, as wehave already done for the Hokkaido, Tohoku, and Nishi Nippon
regions, to help us respond appropriately to the particularneeds of each region.

3 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.
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 thebook and magazine publishing 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 andcolor ink ribbons, and energy-related components, and (3)Electronics, which supplies display components and electronic
devices, among other products. These three segments
cooperate with each other and form a business portfolio that iswell-balanced from the standpoints of stability, profitability,
growth potential, and risk.
Our Beverages business takes advantage of the strength of
the Coca Cola brand while also developing original DNP
products. We are working on bolstering our beverages businessbase, for example by promoting production and procurement inliaison with bottlers in other parts of Japan.
Armed with this business portfolio, DNP aims to expand its
overall business and increase its corporate value by striving tosolve problems for corporate clients and consumers.

Information Communication● Books and Magazines● Commercial Printing● Business Forms

The 3
Segments of
DNP’s Printing
Business
Lifestyle and Industrial Supplies● Packaging

32● Lifestyle Materials● Industrial Supplies

Electronics● Display Components● Electronic Devices

DNP in Brief ▶ DNP at a Glance

Net Salesby Segment

Information Communication
Information
Communication
45.0%

Beverages
3.9%Electronics
17.9%

Net Sales(Net sales)
800
718.4

Operating Income (¥ billion)(Operating income)
120

739.7

722.0

Assets(Assets)
800(Depreciation)
120

100
600

Depreciation (¥ billion)

619.1

100

610.5

592.7

600
80
60

400

23.5

18.1

09

24.0
20
0

0

11

09

10

11

Lifestyle and Industrial Supplies

Operating Income
by Segment

Net Sales

Beverages
1.6%Electronics
15.6%

10

24.9

20
0

0

40

25.2

200

Information
Communication
23.1%

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

AssetsDepreciation (¥ billion)(Assets)
800(Depreciation)
120

100
600

551.8

536.6

60

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

2

71.7

10

40
20
0

0

11

09

10

11

Net Sales

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

AssetsDepreciation (¥ billion)(Assets)
800(Depreciation)
120

100

1.2

40

600
80
60

400

0.3

0

-1

11

0

397.0

387.9

329.0
46.0

40

200

– 0.6

80
400

286.3

257.5

256.0

0

10

100
600

1

09

26.1

63.0

62.8
60

20

27.7

Electronics

Beverages

80

29.5

20
0

09

80

400

200

19.9

0

Lifestyle andIndustrial Supplies
59.7%

518.3

46.8
40

200

522.3

513.1

80
60

43.7

100
600

531.7

400

Net Sales

DNP in Brief

Lifestyle andIndustrial Supplies
33.2%

60

400

40

31.7

200

80

33.4

60

41.9

40

200

2.6

09

8.3

12.2

20
0

10

11

20
0

0

09

10

11

D N P A n n u a l R e p o r t 2 011

33

Our Products

Information Communication
●

［1］

［2］

［3］

［9］

［ 10 ］［ 15 ］［ 16 ］［ 17 ］［ 23 ］［ 24 ］［ 25 ］［ 30 ］［ 31 ］

Books and Magazines[1] Magazines [2] Books (Pop-up books) [3] Dictionaries[4] Electronic book-reading software (Magazine Viewer)●

Commercial Printing[5] Catalogs [6] Calendars[7] Everybody’s Book Production Site – “DreamPages”[8] Augmented reality (AR)[9] Digital Signage “Tall Vision”●

Business Forms[10] Personalized mail[11] Smart cards[12] SIM cards [13] Hologram[14] OpenSTAGETM digital pen-based presentation software

Lifestyle and Industrial Supplies●

Packaging[15] Packaging for foods [16] Packaging for toiletries andpharmaceutical products [17] Easy-to-open universal design
products [18] Packages made of IB film[19] PET plastic bottles and preform[20] Aseptic filling systems for PET plastic bottle●

Lifestyle Materials[21] Residential interior materials [22] Automotive interiormaterials [23] Interior coverings for railway cars (ceilings; sideceilings)●

Industrial Supplies[24] Optical film for displays [25] Projector screens[26] Photovoltaic module components (back sheets andencapsulants)[27] Dye-sublimation thermal transfer printing media[28] Thermal-resin type transfer printing media[29] Self print terminal “PrintRush”

Electronics●

Display Components[30, 31] LCD color filters[32] Large-scale photomasks[33] Touch panel sensors●

Electronic Devices[34] Semiconductor photomasks[35] Lead frames for semiconductor packages[36] Embedded print wiring board[37] Camera modules[38] Reader/writer modules [39] IC tags[40] Ultracompact IC tags[41] MEMS (micro electro mechanical systems) products

Note: Numbers in square brackets correspond to photographs on p.34-35.

34［ 36 ］

DNP in Brief ▶ Our Products

［4］

［5］

［6］

［7］

［8］

［ 11 ］［ 12 ］［ 13 ］［ 18 ］［ 19 ］［ 20 ］［ 26 ］［ 27 ］［ 28 ］［ 29 ］［ 32 ］［ 33 ］［ 34 ］［ 35 ］［ 37 ］［ 38 ］［ 39 ］［ 14 ］

DNP in Brief［ 21 ］［ 40 ］［ 22 ］［ 41 ］

D N P A n n u a l R e p o r t 2 011

35

Timeline of DNP’s Technological Development andBusiness Expansion
1876 <Founding>

1950

1960

Printing▶1876 Founding of Shueisha, DNP s

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▶1951 Promotion of “ Expansion Printing”

predecessor; start of letterpress
printing

Information Communication
Books and Magazines▶ 1877 Produced first Western-style book in Japan, revised edition of “ Self-Help ” by Samuel Smiles▶1972 Begin digitalization of text and images (CTS)▶1912 Completion of DNP’s original Shueitai font
▶ 1925 Receive order to print 740,000 copies of the inaugural edition of “ King ” magazine▶ 1882 Begin sales of printing types▶1956 Print the inaugural edition of “Shukan Shincho,” the first weekly magazine issued by a publishing company

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

video printing systemtechnology

Business Forms▶1898 Printed Osaka City Harbor-Construction
Bonds (Begin printing of securities) ▶ 1954 Start of carbon-backed ledger printing▶1974 Full-scale production of magnetic plastic

cards▶ 1983 Development▶1965 Begin mass production of OCR ledgers▶1946 Begin printing new Bank of Japan notes after being designated to doof smart cardso by Japanese Ministry of Finance

Lifestyle and Industrial Supplies
Packaging▶1951 Full-scale entry into

▶1961 Start production of

paper container business▶1951 Begin in-houseblow-molded bottles▶1975 Begin producing retort pouches▶1983 Development of“Thermoject”▶1962 Begin producing paper cups
production of flexible packaging▶1969 Begin producing laminated tubes

technology for
simultaneous plastic
molding and printing▶1984 Begin producing
PET plastic
bottles

Lifestyle Materials▶1951▶1974 Introduction of Curlfit technology for printing
Development of specialized printing methods for vinyl,cellophane, cloth, and other decorative materials
on curved surfaces▶1977 Development of stainless▶1961 Begin printing directly onto steel plates
decorative sheet

Industrial Supplies▶1983 Start producing

projection screens▶ 1984 −85

Development of thermal
resin-type and dye
sublimation-type thermaltransfer recording media

Electronics
Display Components▶1958 Successful prototyping of

shadowmasks▶1973 Begin research and development of color filters▶1978 Development of new typeshadowmasks (flat masks)

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

36

DNP in Brief ▶ Timeline of DNP’s Technological Development and Business Expansion

1990

2000

2010

Information Communication

P&I Solutions▶2001 Commemorate the 125th anniversary of DNP’s founding by announcing the“DNP Group Vision for the 21st Century”▶1985 Development of world‘s first electronic dictionary on CD-ROM▶1992 Development of Shueitai True Type font
▶1997 Start of online publishing business▶ 2008 −10 Alliances with TRC Inc., Maruzen Co., Ltd., Junkudo Co., Ltd.

and Bunkyodo Group Holdings Co., Ltd.

▶2010 Startup of “honto” e-book sales service▶1989 Construction of global network system▶2001 Launch “Orikomio!” web site for Internet flyers▶1995 Begin operation of “Media Galaxy ” Internet service ▶2007 Launching of digital signage project▶1997 Establishment of “EC Galaxy” electronic commerce

Launch of IC tag project▶1992 Development of aseptic plastic bottle filling system

DNP in Brief▶1990 Development of “S-Mail ” peel-off postcards▶2004 Card Data Management Service (CDMS)▶1993 Production of contactless smart cards▶2005 Establishment of “SSFC ” office security consortium▶1999 Promotion of IPS business/▶2007 Begin providing dual biometric smart cash cards▶2007 Development of packaging for Japanese-style space foodand preform method▶1998 Development of transparent barrier film (IB Film)▶1995 Begin producing sheet with EB coating▶1996 Establishment of anti-glare film technology for LCDs
▶2004 Development of “JETBLACK” front projection screens▶2005 Begin development of “PrintRush” self-service printing system▶1985 Development of LCD color filter production technology(production started 1987)▶2002 Development of flexible organic EL displays▶2003 Development of full-color organic EL panels▶2006 Mass production of color filters using inkjet method▶ 1995 Launch multilayer wiring formation technology▶ 1999 Enter semiconductor package substrate field▶ 2001 Begin MEMS (micro electro mechanical systems) processing under contract▶ 2002 Complete production line for “B 2 it ” high-density build-up boards

New Businesses

Energy Systems▶1999 Commercialization of “soft packs” for lithium-ion rechargeable batteries▶ 2003 Development of photovoltaic module components▶ 2005 Development of fuel cell components▶ 2007 Development of printed organic photovoltaic cells

Life Science (Regenerative Medicine, etc.)▶ 2004 Successful formation of capillary patterns▶ 2008 Development of CytoGraph cell pattern culture substrates▶ 2008 Development of cell sheet culture film
D N P A n n u a l R e p o r t 2 011

37

Major Events of This Fiscal Year2010

● Startup of advanced photomask production base in Taiwan; strengthening of overseas supply

framework→See page 65 for details.

● Intelligent Wave Inc. becomes a consolidated subsidiary of DNP

April

Following a successful takeover bid, DNP acquired 50.61% of outstanding shares in Intelligent Wave Inc.,making this strong player in network authentication technology a DNP subsidiary. Looking ahead, DNP
plans to expand its business in the digital security field — including providing identity authentication for
online account settlements and ASP operation of a fraud detection system — and in back office operations
for financial institutions and business process outsourcing services.
● Startup of new color filter plant in Himeji, Hyogo Prefecture→See page 65 for details.

● Bunkyodo Group Holdings Co., Ltd. becomes a consolidated subsidiaryMay

In order to strengthen its education and publications distribution business, DNP acquired Bunkyodo Group
Holdings Co., Ltd. as a consolidated subsidiary through a private placement of new shares. By increasingcollaboration between Maruzen CHI Holdings Co., Ltd, operator of major bookstore chains including
Maruzen, Junkudo and Bunkyodo Group Holdings Co., Ltd., which operates a bookstore chain focused on
small- and medium-sized bookstores, DNP is moving forward with the construction of a publications
distribution platform suited to the digital age.

● Establishment of the Association for E-publishing Business Solution

July

Based on close cooperation with the Japanese publishing industry, DNP and Toppan Printing Co., Ltd.
founded the Association for E-publishing Business Solution to promote the establishment of anenvironment conducive to the growth and healthy development of Japanese e-publishing businesses. The
association aims to contribute to the growth of e-publishing business in Japan.
→See page 50 for related information.

● DNP establishes DNP Book Factory Co., Ltd. to enable integrated printing and binding of books

October

DNP established a dedicated production company, DNP Book Factory Co., Ltd., through the merger of
two Group companies that were involved in book production. In response to publishers’ need to quickly
print small lots of books, especially paperbacks, new titles, and comic books, DNP created a factory thatcan offer high-quality, fast-turnaround, low-cost book production. Looking ahead, DNP will further bolster
its ability to print on demand and handle e-publishing, thereby reinforcing its overall book printing business.

● Establishment of "honto," one of Japan’s largest e-book sales services

November

38

DNP established "honto," an online sales service offering one of the largest selections of electronicallypublished content in Japan. By increasing collaboration between honto, "bk1," an online bookstore forprinted books, and physical bookstore chain operators including Maruzen, Junkudo and Bunkyodo, DNP
formed a digital/physical hybrid bookstore network. DNP aims to expand its overall business by creating aplace where consumers are “certain to find a book they want to read” and “able to read the book they wantin the format they want.”→See page 50 for related information.

DNP in Brief ▶ Major Events of This Fiscal Year2011

● Startup of 2Dfacto online e-book store

January

DNP teamed up with NTT DoCoMo, Inc. and Maruzen CHI Holdings Co., Ltd. (formerly CHI Group Co.,
Ltd.) to establish 2Dfacto, Inc., a joint venture company aimed at operating a new type of hybrid retail
network that will sell paper and electronic publications, both online and in physical stores. As a step in that
direction, the partners established 2Dfacto online e-book store to sell e-publishing content for delivery tosmart phones operated by NTT DoCoMo and other types of information terminals in January. 2Dfacto’s
e-book store started out offering some 20,000 electronic books with a focus on literary works and mangacomic books, with plans to expand the inventory to around 100,000 titles.
→See page 50 for related information.

● Reorganization of promotion framework for education and publications distribution business(CHI Group acquires Junkudo and Yushodo)
DNP in Brief

February

DNP consolidated subsidiary CHI Group Co., Ltd. executed stock swaps to acquire Yushodo Co., Ltd.,and Junkudo Co., Ltd. as consolidated subsidiaries. Yushodo specializes in imported academic
publications, while Junkudo has a wealth of expertise in bookstore operations. In order to speed up
implementation of strategies in each area of business, the operating companies held under CHI Group Co.,
Ltd. were reorganized and CHI Group was renamed Maruzen CHI Holdings Co., Ltd. effective May 1, 2011.

● Procurement of 50 billion yen through the issue of a third series of unsecured corporate bonds

March

DNP issued a third series of unsecured corporate bonds on March 3, 2011, and raised 50 billion yen. Thislatest bond issue received a high rating of "AA with stable outlook" from Rating and Investment Information,
Inc. DNP plans to allocate the funds procured through this bond issue to invest in plant and equipment,
including a new packaging plant in Kyotanabe, Kyoto Prefecture, and facilities at our energy systems plantin Kitakyushu, Fukuoka Prefecture.
● Damages from the Tohoku-Pacific Ocean Earthquake; posting of 6.1 billion-yen

extraordinary loss
● DNP acquires Sony’s commercial digital photo printer business

DNP acquired Sony Corp.’s professional digital photo printer business, excluding manufacturing of theprinters. According to the agreement, Sony is to transfer to DNP its worldwide business base related to theprofessional digital photo printer business, while DNP is to provide supplies of dye-sublimation print media
for instant photo printing kiosks and ID photo printers installed by Sony. DNP aims to continue
strengthening and expanding its digital photo print business.

April● Startup of energy systems operations’ new plant

DNP constructed a new plant in Kitakyushu, Fukuoka Prefecture, to manufacture “soft packs” forlithium-ion rechargeable batteries and back sheets and encapsulants for photovoltaic cells. The plantbegan operating in April 2011. Looking ahead, we expect to see demand grow around the world for newenergy sources to replace fossil fuel. We will operate the new plant as an important manufacturing hub
from which we can supply products to Europe and North America, China and other developing nations,and the entire world.

D N P A n n u a l R e p o r t 2 011

39

Investor Information(as of March 31, 2011)

Dai Nippon Printing Co., Ltd.
Major Stock Indices in which DNP is a
Constituent:
Nikkei Stock Average
TOPIX Large70
MSCI World Index
S&P/TOPIX 150
Dow Jones Sustainability Indexes
FTSE4Good Index Series
Ethibel PIONEER Register& Ethibel EXCELLENCE Register
Morningstar Socially Responsible Investment Index

Head Office:1-1, Ichigaya-Kagacho 1-chome, Shinjuku-ku,
Tokyo 162-8001, Japan
Established:
1876
Number of Employees (consolidated):
40,188Paid-in Capital:¥114,464 million

Sustainable Asset Management
Stock Code:
7912

Number of Common Stocks:
Authorized 1,490,000,000 shares
Issued700,480,693 shares

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

Number of Shareholders: (more than 1,000 shares)
23,990Stock Exchange Listings:
Tokyo, Osaka
Major Shareholders:Shares (thousands) Percentage (%)

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

40,614

6.30

The Dai-ichi Life Insurance Co., Ltd.

30,882

4.79

The Bank of New York Mellon as Depositary
Bank for Depositary Receipts Holders
Japan Trustee Services Bank, Ltd. (Trust A/C)

29,411

4.56

27,525

4.27

Mizuho Corporate Bank, Ltd.

15,242

2.36

Nippon Life Insurance Co.

14,3492.23

Mizuho Bank, Ltd.

12,471

1.93

Employees’ Shareholding Association

12,323

1.91

SSBT OD05 OMNIBUS ACCOUNT – TREATY CLIENTS

11,2801.75

Japan Trustee Services Bank, Ltd. (Trust A/C 9)

10,385

1.61

Notes: 1. The number of treasury shares (55,814,518) is excluded from the figures above.
2. The ownership stakes are based on the total number of shares outstanding lesstreasury shares (644,666,175).

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.
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/

40

DNP in Brief ▶ Investor Information

Share Price Evolution (Tokyo Stock Exchange)(between April 1, 2008 and March 31, 2011)DNP Stock Price (yen)
−
−

2,000

Increase (%)*

−
10
0
1,500

-10

-30
1,000

DNP in Brief

-20

-40
-50
-60

500

09

10

11

*Index 100 = March 31, 2008

Voting RightsType(as of March 31, 2011)

Number of Stocks (stocks)

Number of Voting Rights (rights)

Stocks with no voting rights——

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

Stocks with limited voting rights (other)——

Stocks with voting rights (treasury stocks, etc.)

Common stocks

56,899,000—

Stocks with voting rights (other)

Common stocks 641,272,000

641,271

Stocks with less than trading units

Common stocks

Outstanding shares
Total voting rights of stockholders

2,309,693—

700,480,693——

641,271

Treasury Stocks
Holder(as of March 31, 2011)

No. of Stocks Held

Percentage of Holding to No. of Outstanding Shares

55,814,000

7.97

Kyoiku Shuppan Co., Ltd.

1,085,000

0.15

Total

56,899,000

8.12

Dai Nippon Printing Co., Ltd.

D N P A n n u a l R e p o r t 2 011

41

Segment Information
CONTENTS

42

44 Information Communication

52 Lifestyle and Industrial Supplies

60 Electronics

44 Business Strategies

52 Business Strategies

60 Business Strategies

46 Financial Results

54 Financial Results

62 Financial Results

47 Portrait of Divisions

55 Portrait of Divisions

63 Portrait of Divisions

50 Topics

58 Topics

65 TopicsD N P A n n u a l R e p o r t 2 011

43

Information
Communication

BUSINESS STRATEGIESOur Information Communication segment iscomposed mainly of Books and Magazines,
Commercial Printing and Business Forms. The
segment has grown far beyond the manufacturingcentered activities that were its original field of
business. Today it combines printing and information
technologies in order to provide a variety of solutions
that enhance communication between businesses
and consumers, businesses and businesses, andconsumers and consumers.

■ Basic Strategies
With the emergence of social media, consumers have begun
to receive and transmit their own information. Rather thanrelying on information that companies provide through mass
media or in retail stores, consumers are increasingly basingpurchasing decisions on information that they sought online,
including other consumers’ opinions and values andevaluations by experts. Companies are shifting from a mass
media-centered marketing style to a social media-oriented
style of cooperating with consumers and inviting them toparticipate in corporate activities.
In response to these changes, DNP’s Information
Communication segment will not only continue to produce
output in all types of formats, but will provide a variety ofsolutions including market analysis and consulting to help
businesses make the most of consumers’ opinions,promotional project planning, operation of campaign offices
and customer service centers, processing of gift requests andmailing of gifts, as well as website operations. Because theInformation Communication segment handles corporate andpersonal information, we have constructed a high-level
information security environment and worldwide information
networks, and we intend to make active use of these assets
as we develop our business.

44

Segment Information ▶ Information Communication ▶ BUSINESS STRATEGIES■ Major Policies■ Promotion of P&I Solutions
As the business segment that has the most direct involvementwith corporate and individual customers’ information,
Information Communication is actively developing products
and services that support our Group-wide vision of providing
P&I Solutions. We work to quickly uncover the problems facedby corporations, consumers, and society in general, and toprovide optimal solutions to those problems based on our
many strengths, including printing and information
technologies, the capacity to generate hypotheses andproposals, and the ability to develop products and services.
■ Strengthening our business process

outsourcing (BPO) services through a safeand reliable business platformhybrid bookstore network
The environment surrounding the publishing market remains
extremely harsh. In order to revitalize the market, we plan tomobilize the entire DNP Group and work at planning marketing
projects, improving the efficiency of sales and distribution, andimproving customer service, rather than approaching themarket only from the manufacturing-oriented standpoint of a
printing company. As the Japanese publishing industry’s “No. 1
partner,” we are focusing on solving a variety of problems andestablishing a new profit base, which includes expansion of
our electronic publishing business.
We aim to revitalize the publishing market through “hybrid
production solutions” that integrate paper book production
with print-on-demand and electronic book content
production, and by developing Japan’s first digital/physicalhybrid bookstore, which will link physical bookstore chainswith an online bookstore that sells printed books and an onlinee-book retail service.
■ Further global development
DNP is focusing on developing Asian markets by making useof the Shanghai subsidiary that we established in 2005 inaddition to production bases that we have operated in
Singapore and Indonesia for almost 40 years. We have built a
network of printing companies in 33 countries and a region
around the world. By making use of this network, amultilingual translation service capable of handling some 60
languages, and electronic transmission of printing data, wewill work harder than ever to promote production in thelocation that best suits each client.
DNP will actively work to solve overseas problems related to
information communication and expand our business on a
global level.

D N P A n n u a l R e p o r t 2 011

Segment Information

Because DNP is aware of its responsibility to handle
information entrusted to it by companies and consumers in asafe and secure manner, we have constructed an advanced
information security environment. This environment is avaluable asset. We use it to provide an information platform
which we employ not only for high-speed processing ofmassive amounts of data, but also for personalized
information services through which we can meticulously
address consumers individually.
We make use of this platform and the rest of the DNPGroup’s overall strengths as we focus on winning orders forour comprehensive business process outsourcing services. In
addition to production of optimal media and content, these
services include implementation of all types of surveys andstudies, consulting, development of promotional projects,
operation of online data centers and e-tail sites, operation ofcustomer service centers and promotional campaign offices,back office operations such as packaging and shipping ofpromotional items and gifts, and print-on-demand ofcustomized information.

■ Developing hybrid production solutions and a45

Information Communication

FINANCIAL RESULTS■ Financial Highlights
Net Sales

Operating Income (¥ billion)(Net sales)(¥ billion, %)800(Operating income)

739.7

718.4

120

722.0

					 2009.3		 2010.3		 2011.3
Net sales

¥

718.4

¥

739.7

¥

722.0

Operating income

31.7

23.5

18.1

Operating income margin

4.4%

3.2%

2.5%

100
600
80
60

400

40

31.7

200

23.5

18.1

20
0

0

09

10

11

■ Business Environment■ Summary of Financial Results

In the fiscal term through March 2011, total domestic sales
from the publishing of books and magazines declined year on
year for the sixth term in a row since 2005, offering no relief
from the industry’s prolonged downtrend. In addition, sales inareas such as commercial printed matter and magazine
advertisements suffered greatly from stagnation in both
personal consumption and corporate advertising spending.
Business Forms also continued to face a harsh environment
due to the increasing trend toward paperless recordkeeping,issuance of fewer invoices, etc., and reduced credit card
issuance as part of cost-cutting efforts. Demand waspressured even further because many businesses canceled
promotional campaigns to show solidarity with the victims of
the March earthquake, and because unit prices kept falling in
response to intensified competition. In short, the economic
environment remained as difficult as ever.

Operating(¥ billion) and magazines
In BooksNet
andSalesMagazines,
sales Incomeof both books
declined,
the publications market’s
prolonged(Net continuingsales)(Operating
income)120
slump. 800
In Commercial Printing, sales of advertising materials
such as flyers, pamphlets and point-of-purchase materials
100
declined
result of cutbacks
in corporate
advertising
600as a 551.8
536.6
531.7
80
budgets. In Business Forms, sales of smart cards declinedas
did sales
400of information processing services (IPS), a 60
43.7 every step
46.8
comprehensive service that handles
in the40
execution of mass mailings of personalized communications,200
19.9from data entry to printing and mailing.
20
Sales from DNP’s Education and Publication Distribution
00business increased thanks to the contribution from bookstore
09
10
11
operator Bunkyodo Group Holdings Co., Ltd., a newly
consolidated subsidiary. But total segment sales decreased
by 17,705 million yen, or 2.4% from the previous fiscal year, to721,980 million yen. Operating income, affected by decreased
net sales in areas such as Books and Magazines andCommercial
Printing aswell as bylower(¥unit
Net Sales
Operating
Incomebillion) prices, declined
by 5,321
millionyen,or
22.7%,
fromtheprevious
fiscal year to(Net sales)(Operating income)
18,145 800
million yen. The operating income margin also 120
declined, by 0.7 point to 2.5%. The Information
100
Communication
segment contributed 45.0% of DNP’s total
600
net sales (down from 46.3% in the previous term) and8023.1%of the Group’s operating income, compared to 31.1% last
60
400
term.
286.3
257.5

256.0

40

200

12.2

8.3

2.6

0

0

09

46

20

10

11

Segment Information ▶ Information Communication ▶ FINANCIAL RESULTS / PORTRAIT OF DIVISIONSPORTRAIT OF DIVISIONS

Books and Magazines
put out fewer copies of each issue and responded to falling
advertising revenues by reducing the number of pages andreviewing publishing cycles. Unit prices also declined.
These trends caused DNP’s overall net sales from Books
and Magazines to decline relative to the previous fiscal
term.

Strategic Opportunities and Future
Development

Main Businesses

Market Trends and Summary of Financial
Results

Segment Information

In addition to printing books and magazines, we handle a
broad range of digital content, for which we execute every
step from planning and production to network-based
distribution, sales, promotions, and analysis of consumer
trends. We are also working hard at the promising
electronic publishing market. In addition to conventional
publishing companies, our customers include a variety ofcontent holders in Japan and abroad. We edit and process
our customers’ content into the most appropriate formats
and provide products and services that resolve theirproblems.

DNP’s Books and Magazines is focusing on preparing the
ground to accommodate expected expansion in theelectronic publishing business. Our efforts toward this end
have included unifying standards and building frameworks
for copyright management and other areas needed tosupport the electronic publishing business, teaming up withNTT DoCoMo, Inc. to establish 2Dfacto, an online store thatsells electronic book content, and starting our own onlinee-book retail service.
DNP is accelerating the development of these new
businesses by creating a hybrid production solution
framework that can handle various formats ranging frompaper books to e-book content, and by establishing a
hybrid retail network that links an online store for e-bookswith an online store for printed books and physical storesfor printed books. We aim to generate synergistic benefits
by joining forces with Maruzen CHI Holdings Co., Ltd. andother partners in order to create an environment in which
consumers are “certain to find a book they want to read”
and “able to read the book they want in the format theywant.”

Stagnation continued in the traditional publishing market.
Domestic sales of books and magazines in the fiscal term
ended March 2011 declined by 3.2% from a year earlier, to
1,857.4 billion yen. Book sales declined by 2.5% from a year
earlier to 819.8 billion yen, and magazine sales fell 3.8% to1,037.6 billion yen. There is still no end in sight for the
prolonged slump in publishing sales: book sales have fallen
for four years in a row since 2007 and magazine sales havedeclined for 13 years in a row, since 1998. A women’smagazine that has attracted attention by bundling themagazine with merchandise in collaboration with popular
fashion brands, achieved a year-on-year increase in sales
for the third year in a row, but the overall magazine market
did not recover.
As a result of the sluggish market, magazine publishers

D N P A n n u a l R e p o r t 2 011

47

Information Communication

Commercial Printing

Main Businesses
Commercial Printing provides a wide variety of products
and services related to corporate sales promotions. For
example, in addition to printing promotional materials likecatalogs and pamphlets, we also handle in-store andInternet-based sales promotions, plan and develop sales
campaigns, provide marketing support, send promotional
gifts, and operate customer service centers. Commercial
Printing serves manufacturers, distributors, and othercorporate customers in a variety of industries by providing
a comprehensive service that closely links DNP’s sales,planning, development and manufacturing divisions tocover every aspect of sales promotion.

Market Trends and Summary of Financial
Results
Corporate sales promotion strategies have undergone
major changes recently in response to such factors as
prolonged economic stagnation and diversification in
consumers’ needs. There is a clear trend toward
approaching consumers on an individual basis rather than
through mass media advertising as was common in thepast. Advertisers are increasingly shifting theircommunications to the Internet, mobile information devices,and other methods of direct approach that stimulate agreater response than the old methods.
According to “Sales by Advertising-related Companies”
reported by the Ministry of Economy, Trade and Industry, inthe fiscal year ended March 2011, Japanese spending onmagazine advertising declined by 9.5% from the previous

48

term and spending on newspaper ads declined by 5.8%,
but total Japanese advertising outlays increased by 2.7%
thanks to year-on-year increases in television advertising(up 3.6%), Internet (17.3%) and direct mail (4.4%).
Nevertheless, advertising outlays have not recovered fromthe plunge they took in response to the international
financial crisis in 2008. Continued growth in spending on
Internet advertising suggests that businesses are
increasingly pinning their hopes on the Net and othermethods that are more cost-effective than traditional media.
As a result of these circumstances, Commercial
Printing’s net sales from campaign and event operation
increased relative to the previous term, while sales of flyers,
catalogs, and other printed matter declined. Overall net
sales decreased compared to the previous year. By
industry, sales from specialty retailers and applianceretailers increased relative to a year earlier, while sales fromthe advertising, service, and cosmetics sectors declined.

Strategic Opportunities and Future
Development
As Internet usage has become an integral part of daily life,
most companies have begun making maximum use ofInternet advertising. Before making purchasing decisions,many consumers now seek and use information frommultiple forms of media, including user comments posted
on web sites, point-of-purchase media, and digital signage,
rather than relying only on paper media such as flyers andcatalogs.
Based on the “cross media factory” concept, DNP offers
solutions that enliven the communications of our corporateclients and connect companies with consumers based on
multimedia distribution using the most effective mix ofprinted media and a diverse range of electronic media
including digital signage and tablet PCs.

Segment Information ▶ Information Communication ▶ PORTRAIT OF DIVISIONSBusiness Forms
from the current 170 million.
In this fiscal year, the IPS market was hurt as cutbacks inadvertising budgets translated to fewer mailings of flyers inenvelopes and the use of simpler direct mail, while
increased use of Internet-based communication led to adrop in mailings of notifications. As a result of these factors,
net sales for IPS and smart cards decreased relative to ayear earlier.

Strategic Opportunities and Future
Development

Main Businesses

Segment Information

In addition to printing ledgers, bank books, and gift
certificates, etc., DNP’s Business Forms Operations
manufactures and issues smart cards, develops various
types of computer systems, develops IC tag-related
services, and offers comprehensive information processing
services (IPS) — such as entering individually tailored data
into direct mail, then printing and mailing it. Every company
that handles personal information or other important
information is a potential customer. Based on our advanced
information security framework, we are actively developing
business process outsourcing (BPO) services whereby wehandle client companies’ business processes on theirbehalf.

DNP controls roughly 60% of the Japanese market for
smart cards issued by financial institutions including credit
cards, cash cards, etc. Going forward, we expect to see
growing demand for information security related to personal
information and sensitive corporate information. In addition
to financial applications, we intend to provide a variety ofindustries, including distribution, transportation,communications, and the public sector, with security
solutions based on the use of smart cards that can process
large amounts of data safely and reliably. In the IPS field, we
intend to make use of our ability to process large amountsof data individually and under highly secure conditions, andto expand our BPO services by combining non-printing
services such as online distribution, office operation,customer service center operation, and shipping of
merchandise and gifts.

Market Trends and Summary of Financial
Results
Demand for credit cards, cash cards, and other smart
cards issued by financial institutions was sluggish, while
demand for mobile phone SIM cards also declined.
At the same time, corporate clients and consumers are
increasingly seeking advanced security for personal
information and other sensitive information. There is more
and more demand for high added value services capable ofprocessing large amounts of information securely andreliably. In view of this increasing demand, corporate clients
have come to harbor great expectations for smart card
solutions that increase security or improve convenienceand customer satisfaction. We expect that the number ofsmart cards issued annually in Japan will further increase

D N P A n n u a l R e p o r t 2 011

49

Information Communication

TOPICS

Books and Magazines● Launch of digital magazine with video andaudio content
Using the same DTP data and software that we use to
produce paper magazines, DNP has launched aservice that produces digital magazines combining
text with multimedia components including
photographs, illustrations, video and audio content.
The service makes it possible to simultaneously
publish a paper version and digital version of amagazine.
The service’s initial offering is a digital version of“Hütte,” an outdoor magazine for women produced
jointly with Yama-kei Publishers Co., Ltd. which wehave already started distributing to iPads. In the
future, DNP intends to reinforce its “hybrid production
solutions” for handling both paper and digital content,
in order to help publishing companies expand theirbusinesses.

“Hütte” by Yama-kei Publishers
Left: Layout image of digital version
Right: Front-cover page of the third issue● Focus on startup of electronic publishingmarket
The electronic publishing market has begun to growrapidly with the appearance of smartphones, tablet
PCs, and other e-book readers in addition to mobile
phones. DNP has taken steps to take advantage ofthis trend, which we view as a new opportunity to
expand our business.
In July 2010, DNP participated in the establishmentof the Association for E-publishing Business Solution
as one of its founding members. DNP Executive Vice
President Koichi Takanami serves as chairman of theassociation, which already has 150 corporations and50

groups participating in its activities.
In November 2010, DNP launched an e-book sales
service called “honto,” which delivers electronicallypublished content to iPhones and iPads. In January
2011, DNP tied up with NTT DoCoMo, Inc. toestablish an e-bookstore called 2Dfacto, which has
begun selling e-book content for delivery to smart
phones and e-book readers supplied by NTT
DoCoMo. The new e-bookstore started out offering
primarily literary works and Japanese manga comic
books, with plans to gradually add new book titles,
magazines, and “rich media” embedded with video
and audio contents.

Commercial Printing● DNP becomes the first commercial printerin Japan to acquire the right to use theCarbon Footprint MarkDNP became the first company in Japan to acquire
the right to use the Japanese government-sponsored
Carbon Footprint Mark in posters, pamphlets, andother commercial printed matter. A product’s carbon
footprint is the CO2 equivalent of greenhouse gases
emitted during the product’s entire life cycle from theprocurement of raw materials through manufacturing,
distribution, usage, disposal, all the way to recycling.
The Carbon Footprint Mark displays the amount ofemissions in an easy-to-understand format. Efforts topromote carbon footprint labeling are spreading
throughout the world, with international standards
expected to be established during the fiscal term
through March 2012.
In addition to assessing its own printed material,
DNP also calculates and labels the carbon footprint ofcommercial printed matter that it produces on behalfof corporate clients as a service to clients. DNP also
actively develops other eco-friendly products andservices that contribute to the realization of asustainable society.

Segment Information ▶ Information Communication ▶ TOPICS

Security Solutions Business● DNP hologram designs give products

a luxurious feel and provide effective
protection against counterfeiting

Lippmann hologram card

● DNP becomes the first company in Japan● DNP becomes the first printing company toreceive highest information security rating
DNP’s Warabi Plant (in Saitama Prefecture), whichhandles massive amounts of personal information andproduces personalized mail, received the top “AAAis”
rating out of 17 levels of information security
authorized by information security rating company I.S.
Rating Co., Ltd. The highest level rating has only been
given to six workplaces operated by four companies(including DNP). DNP was the first company toreceive the highest rating for both data processing
and manufacturing divisions. It was also the firstcompany in the printing industry to receive the highest
rating.
The rating is an indicator of the level of security
under which a company or other entity handles
technical information, trade secrets, and/or personal
information. Factors on which the rating is based
include the degree of maturity of the company’s
management, the strength of measures taken toprevent information leakage, and the quality of efforts
to ensure compliance with laws and regulations. DNP
will continue to actively promote its Information
Processing Services and other businesses on thestrength of its advanced information security
environment.

Segment Information

In recent years, many card-issuing companies havesought not only to gain new members, but also to
improve the added value services they provide for
their preferred members. As part of this trend, there
is a great deal of demand for elegant designs to
distinguish premium membership cards. DNP has
developed a card with an embedded Lippmann
hologram, a type of hologram that offers particularlyrich three-dimensional expression of designs.
By rethinking the materials and manufacturing
processes used to make hologram cards, DNP wasable to achieve more flexibility in determining thehologram’s size and position on the card and to makethe holograms more durable. Because the
manufacture of Lippmann holograms requires
specialized materials and knowledge, they provide
more effective protection against counterfeiting. DNP
intends to step up efforts to market these cards to awide variety of industries, starting with financial
institutions and distributors.

card production system with integrated manufacturing
and personalization. DNP is also the only domestic
Japanese card vendor that has acquired certification
to both manufacture and personalize all of the world’s
six biggest global payment brands: Visa, MasterCard,
JCB, American Express, Diners and UnionPay.
By offering magnetic and smart cards with highadded value to financial institutions not only in Japanbut also overseas — and particularly within Asia —DNP aims to expand its UnionPay brand-related
business.

certified to manufacture and personalize
China UnionPay cards
DNP’s Ushiku Plant (in Ibaraki Prefecture), which
manufactures and personalizes smart cards, hasbeen certified as a personalizer for China UnionPay
brand credit cards. The Ushiku Plant was alreadycertified to manufacture the UnionPay card in July
2009, and has now become the first company inJapan capable of establishing a coherent UnionPay

Evaluation mark for AAAis

D N P A n n u a l R e p o r t 2 011

51

Lifestyle and Industrial
Supplies

BUSINESS STRATEGIESThe Lifestyle and Industrial Supplies segment iscomposed of three business divisions: Packaging,
Lifestyle Materials, and Industrial Supplies, with thelatter being further divided into Opto-Materials,
Information Media Supplies, and Energy Systems.
The segment plays vital roles in corporate clients’manufacturing processes and provides products thatare important in the daily life of consumers. By
applying and developing printing technologies, thissegment continuously takes up the challenge ofentering new fields like environmental preservation,energy, and life sciences.

■ Basic Strategies
In recent years, consumers have come to insist that theirlifestyles reflect more consideration for the global environment,
and to demand greater safety and peace of mind regarding
food, clothing, and housing. It is important that we contributeto resource saving, make use of cleaner energy sources, anddesign products according to universal design principles tomake them as easy as possible for anyone to use. In responseto the diverse needs of corporate clients and consumers, theLifestyle and Industrial Supplies segment will continue todevelop and supply a wide range of products that areimportant to people’s daily lives and products that are
indispensable to the manufacturing processes of ourcorporate clients. In addition to ensuring safety and ease ofuse, we will reduce negative impact on the environment andenergy resources throughout each product’s life cycle.
DNP takes a very broad view of the “printing” field. We havedesignated areas of great social concern, such asenvironmental preservation, energy, and life sciences, as new
fields in which we intend to provide cutting-edge, original
products. We will speed up the development of these new
businesses by making use of DNP’s original technologies andby actively forming alliances with companies and research
institutes that have special capabilities.

52

Segment Information ▶ Lifestyle and Industrial Supplies ▶ BUSINESS STRATEGIES■ Major Policies■ Packaging:

Creating new value with a focus onenvironmental consciousness and highfunctionality■ Lifestyle Materials:

Focusing on the environment, health, comfort,
safety and peace of mind
Our Lifestyle Materials Operations addresses many different
types of spaces where people spend time. Our focus is on thedevelopment of high-added value products that make use of
DNP’s original and highly acclaimed electron beam (EB)coating technology. EB-coated products provide exceptionalabrasion resistance, soil resistance, and durability. We are
expanding application of this technology to interior andexterior products for homes and offices, including floor andwall coverings, room dividers, storage units, and entrance
doors. By joining forces with manufacturers of residential
facilities and decorative materials to approach builders anddevelopers while they are still in the project planning stages
we are working to develop a broad-based business that
addresses the entire building industry supply chain. As an
example of how DNP is working harder to respect theenvironment, DNP has its own facility for measuring andassessing volatile organic compounds (VOCs) emitted bybuilding materials in residential environments. We are also
actively promoting the overseas development of our business,
especially in Europe, North America, and the markets ofdeveloping nations.

Aiming for medium to long-term growth by
supplying a variety of products● Opto-Materials: Our opto-materials business supplies

various types of optical films used in flat-panel displays. At
the business’ core are “clean converting technologies” that
boost product precision and quality through the development
and application of technologies like coating, lamination, andpatterning. DNP controls roughly 70% of the world market for
anti-reflection films used in liquid crystal displays. Looking
ahead, we aim to further expand this business into the field oftouch-activated interactive displays, including touch panelsand electronic paper.
● Information Media Supplies: We intend to broadly expand
our photo print-related business based on our “more thanjust a photo” concept. In dye-sublimation thermal transfer
recording media (color ink ribbons and receiver paper), wewant to use our comprehensive manufacturing and sales
framework to boost sales of DNP-brand products andincrease our share of the world market. We will also focus ondeveloping, operating, and expanding PrintRush self-service
printing systems and Ki-Re-i photo ID kiosks.
● Energy Systems: One of the mainstays of DNP’s new
businesses, energy systems business responds to increased
demand for clean energy amid rapid growth in related
markets. We plan to actively promote this business in world
markets. In January 2009, energy systems business
inaugurated a dedicated facility for manufacturing
photovoltaic module components in Izumizaki, Fukushima
Prefecture. Then in April 2011, we opened a new plant in
Kitakyushu, Fukuoka Prefecture, to manufacture soft packs
for lithium-ion rechargeable batteries and photovoltaic
module components, allowing us to triple production
capacity in this field. Regarding photovoltaic cells, we will
work on developing products that meet the needs of ourcorporate clients with a focus on improving the functionality
and lowering the cost of back sheets and encapsulants.
DNP has already won the top share of the world market forsoft pack packaging material for lithium-ion rechargeable
batteries. We intend to further expand this business byproviding soft packs for products such as mobile devices
including smart phones and tablet PCs, and for batteryassisted bicycles and electric cars.

D N P A n n u a l R e p o r t 2 011

Segment Information

Our aim in this field is to support both a sustainable society
and abundant lifestyles. Toward that end, we will enhance ourlineup of eco-friendly products and products with advanced
functionality. We will also focus on analyzing consumers’
awareness and how they actually use products, in order tocreate the value that society seeks.
Our Packaging Operations develops materials as well as
finished products. As an example of an eco-friendly packaging
material developed by DNP, in 2011 we were first in the world
to begin marketing polyethylene terephthalate (PET) plastic
film made with material derived from sugar cane. Meanwhile,
we have positioned our Innovative Barrier (IB) film, atransparent packaging film with excellent barrier properties, asa strategic product. In addition to boosting overseas sales
efforts to expand its use in packaging foods, we intend tofurther improve its functionality in order to use it for medical
supplies, pharmaceuticals, and industrial materials.

■ Industrial Supplies:

53

800

739.7

718.4

120

722.0

100

Lifestyle and Industrial Supplies

600
80
60

400

FINANCIAL RESULTS

40

31.7

200

23.5

18.1

20
0

0

09

10

11

■ Financial Highlights
Net Sales

Operating Income (¥ billion)(Net sales)(¥ billion, %)(Operating income)

800

120

					 2009.3		 2010.3		 2011.3
Net sales

¥

551.8

¥

536.6

¥

531.7

Operating income

19.9

43.7

46.8

Operating income margin

3.6%

8.1%

8.8%

100
600

551.8

536.6

531.7

80
60

400

43.7

46.8
40

200

19.9

20
0

0

09

54

10

11

■ Business Environment■ Summary of Financial Results

In the fiscal year through March 2011, Lifestyle and Industrial
Supplies benefited from government stimulus measures suchas eco-car subsidies and an “eco-point system” aimed atpromoting eco-friendly appliances and residential
construction. Personal consumption improved somewhat in
the first half of the term due to factors like an extremely hotsummer. However, the business environment became veryharsh in the second half. After the summer, higher crude oil
prices combined with a stronger yen to push up materials
prices. On top of stagnant consumption, the Tohoku-Pacific
Ocean Earthquake dealt a heavy blow.
Housing starts in the fiscal term ended March 2011
increased by 5.6% year on year to 820,000 units, but demandfor optical films was stagnant as manufacturers of flat-panel
displays implemented production adjustments in the second
half of the term. On the other hand, there was growththroughout the fiscal term in the market for batteries, including
photovoltaic modules and lithium-ion rechargeable batteries.

Sales
Operating
Income(¥ billion)crystal displays
Sales ofNet
anti-reflection
films for use
in liquid(LCDs)(Net
increased
year
on
year
in
the
fiscalterm
throughsales)(Operating
income) March
800
2011, despite
lackluster sales in the second half due to120
production adjustments by LCD panel manufacturers. Sales of100
ink ribbons
and lifestyle materials also increased. However, in
600
80 filling
the packaging sector, sales of aseptic PET plastic bottle
systemsand paper containers declined. In the Lifestyle
and
60
400
Industrial Supplies segment as a whole,286.3
net sales declined by
257.5
256.0
40
0.9%, or 4,924 million yen, from the previous fiscal year
to200
531,714 million yen. Despite increased material costs primarily
20
12.2
8.3
related to packaging2.6
and the slump
in demand that resulted
from the 0disastrous earthquake, operating income for 0the09
10
11
segment as a whole increased by 7.0% or 3,076 million yen
from the previous term to 46,790 million yen thanks toincrease sales of anti-reflection films used in LCDs and solid
sales related to lifestyle materials. The segment contributed
33.2% of DNP’s total net sales (down from 33.6% in theprevious term) and 59.7% of the Group’s operating income,compared to 57.9% last term.

Segment Information ▶ Lifestyle and Industrial Supplies ▶ FINANCIAL RESULTS / PORTRAIT OF DIVISIONSPORTRAIT OF DIVISIONS

Packagingtrend that we expect will only keep increasing in the future.
DNP was quick to pick up on this trend, and set to work
using its advanced technical capabilities and wealth ofexpertise to develop packaging-related technologies andproducts that address these concerns.
In the fiscal year through March 2011, our Packaging
Operations achieved a year-on-year increase in sales ofplastic containers, including PET plastic bottle preforms
used with aseptic filling systems, but sales of paper
containers, flexible packaging and aseptic filling systems for
PET plastic bottles declined. Overall, the subsegment’s net
sales decreased slightly relative to the previous term.

Main Businesses

Market Trends and Summary of Financial
Results
In recent years, lifestyles have become more diverse due
to such factors as consumers’ growing awareness ofhealth and environmental issues, the declining birth rate,
aging society, and women’s increasing participation in
the world outside the home. The economic situation in
Japan remains tough, as evidenced by sluggishness inthe job market and consumer spending. In this type ofenvironment, important themes for our business include
the facilitation of comfortable and convenient lifestyles,
resource saving, and reducing negative environmental
impact. Businesses and consumers have become more
discriminating in their selection of products designed toprotect human health and the natural environment — a

In our view, the changes that are occurring in people’s
lifestyles and awareness present DNP’s Packaging
Operations with important business opportunities. For
example, in response to increased concern for reducing
negative environmental impact, we developed commercially
viable biomass plastic packaging material containing
plant-derived material. For the increasing number of people
who live alone or in households where both spouses work,
we developed single-portion packaging that preserves
package contents for a longer period of time. In addition,
we established guidelines related to universal design, i.e.
making products easy for all kinds of customers to use, andwe are developing packaging products with theseguidelines in mind. We also have a proven track record in
the development of products like transparent barrier films(IB films) that shut out water vapor and oxygen in order toprotect package contents, and aseptic filling systems that
preserve the flavors and aromas of container contents.
As part of DNP’s product development process, we
propose a variety of solutions based on the use of tools like“human-centered marketing” — which entails analyzing
consumer behavior as a basis for formulating product andmarketing strategies — and findings from our “Shoku-MAP”
system of monitoring consumers’ actual eating habits. DNP
addresses the demands of corporate clients andconsumers by creating more efficient, more eco-friendly
manufacturing processes and by developing products thatare designed to be easy to use.

D N P A n n u a l R e p o r t 2 011

Segment Information

DNP’s Packaging Operations does not simply
manufacture packaging products. In addition to providing
designs and ideas for all types of packaging based onparticipation from the earliest stages of project planning,
DNP uses its flexible, nationwide network of
manufacturing bases to provide timely supplies offinished packaging products. Our comprehensive
packaging business even includes the development offunctional films and other specialized materials, and thedesign and manufacture of aseptic filling systems.
Manufacturers of foods, beverages, medical supplies,
pharmaceuticals, electronic components — and anyother company that has a need to “wrap things” — are all
potential customers. We plan to expand this business bymaking products easy for consumers to use and by
meticulously meeting the needs of client companies.

Strategic Opportunities and Future
Development

55

Lifestyle and Industrial Supplies

Lifestyle Materials
captured a larger share of the market, while sales of otherproducts including automotive interior materials also
increased. On the whole, the subsegment’s net sales
increased compared to the previous term.

Strategic Opportunities and Future
Development

Main Businesses
Lifestyle Materials Operations supplies a wide range of
products including interior and exterior materials for homes,
offices, and commercial facilities, room dividers andstorage products, and interior materials for automobiles
and railroad cars. Any company that deals in “comfortable
dwelling spaces” is a potential customer, whether in Japanor abroad. Backed by the strength of DNP’s original EB(Electron Beam) coating technology*, we provide a large
number of advanced, eco-friendly products that have beenvery well received by corporate clients and consumers.
Lifestyle Materials also works with construction companies
to provide solutions to problems related to construction
methods.

Market Trends and Summary of Financial
Results
In the fiscal year through March 2011, the number ofdomestic housing starts increased by 5.6% from a year
earlier to about 820,000 as new tax incentives and othergovernment measures stimulated sales of condominiums in
the Tokyo metropolitan area and construction of low-priced
single-family homes. As in the previous year, there was
growth in demand for high-added value products such as
those designed with health or the environment in mind, andproducts with exceptional design appeal or functionality.
In the fiscal year through March 2011, environmentallyfriendly decorative materials using DNP’s original EB
coating technology continued to win high acclaim in themarketplace. Our EB-coated wall and floor coverings

56

DNP’s superior EB-coated products provide exceptionalabrasion resistance, soil resistance, and durability. Because
they make maintenance easier, they have won high praisein the market and have captured an increasing share of themarket. There is also increasing demand for products thatuse water-based inks and non-vinyl chloride (olefin) basematerials, which are less likely to emit toxic gas whenburned, and for products that do not contain volatileorganic compounds like formaldehyde, which are said tocause sick house syndrome. DNP views this increased
demand for eco-friendly products as a business
opportunity, and plans to step up sales efforts both inJapan and in overseas markets, particularly in newly
developing nations.
Meanwhile, amid expectations of widespread use ofelectric cars in the future, automotive manufacturers arelooking for materials that are strong enough to use in auto
bodies but lightweight enough to compensate for the heavy
battery that an electric car must carry. As a result, DNP
anticipates an increasing trend toward replacing metal withplastic as the main material used in automobiles. In order totake advantage of that new demand, we are working on
applying our EB coating technology to boosting thestrength and functionality of plastic materials.
In addition, EB coating makes products highly weather
resistant, and keeps dirt from adhering to product surfaces.
We plan to take advantage of these characteristics toexpand sales of advertising-related products such as
outdoor signs and displays.
*EB (Electron Beam) coating technology
DNP’s original technique for hardening a coat of resin by exposing
it to electron beams. EB technology makes it possible to form films
with greater surface hardness than products coated with urethaneor UV-cured resin. It also makes it possible to provide products withsuperior abrasion and soil resistance, photo-resistance, durability,
and stability. In addition, the EB coating technique uses less energy,
generates less carbon dioxide, and enables coating without the useof solvents, making it an eco-friendly, next-generation manufacturingmethod.

Segment Information ▶ Lifestyle and Industrial Supplies ▶ PORTRAIT OF DIVISIONS

Industrial Supplies
barcodes) increased due to overseas demand for printing
barcodes.
In our battery-related business, a government subsidy
system boosted demand for photovoltaic cells, leading to alarge increase in sales of photovoltaic module components.
The popularity of smart phones and other mobile products
led to solid sales of packaging for lithium-ion rechargeable
batteries. Overall, net sales from Industrial Supplies
increased slightly over the previous term.

Strategic Opportunities and Future
Development

Main Businesses

Market Trends and Summary of Financial
Results
Due to growth in the market for LCD panels, there isincreasing demand for anti-reflection films that improve
picture quality by preventing glare on LCD screens.
Although sales of electromagnetic interference shielding
film used in plasma display panels (PDPs) decreased in thefiscal year through March 2011, we sold more contrast
improvement film, and overall optical film sales increased
relative to the previous term.
In information media supplies, there was increased
demand for dye-sublimation thermal transfer recording
media used for printing photos. There was also solid
demand related to ID cards and the entertainment andmedical fields.Sales of thermal-resin type transfer recording
media (monochrome ink ribbons generally used for printing

D N P A n n u a l R e p o r t 2 011

Segment Information

DNP is the world’s top supplier of many products suppliedby our Industrial Supplies Operations, including antireflection films used in LCDs and dye-sublimation thermaltransfer recording media (ink ribbons and receiver paper)
used for printing photos. Although the subsegment’s main
customers are appliance manufacturers and electronics
companies in Japan and overseas, our photo print
business provides DNP’s own brand of products andservices directly to consumers. DNP’s energy systems
business supplies photovoltaic module components andsoft packs (packaging products) for lithium-ion
rechargeable batteries that meet market expectations.

The market for LCDs is expected to grow in the future,largely due to demand for LCD televisions in developing
countries. Some analysts even expect that China and otherdeveloping countries will account for more than 50% of
total demand for LCDs in 2012. Sales of small and mediumsized display panels are also expected to continue toincrease due to increasing penetration of smart phones andtablet PCs. In response to this expected increase in LCD
panel demand, DNP will work to sell more anti-reflection
films. We will also concentrate on supplying other products,
like surface films that protect touch panels from scratches
and dirt, in order to achieve growth in our functional opticalfilms business.
Meanwhile, there is increasing demand for printing
photos taken with digital cameras and mobile terminals. We
expect to see growth in demand for dye-sublimation
thermal transfer recording media, which offer many
advantages over other printing methods, including much
faster printing and much more durable prints. We intend to
expand our thermal transfer recording media business by
installing more self-service printing kiosks and developing
applications that serve commercial and industrial users.
In order to respond to robust demand for photovoltaic
cells and lithium-ion rechargeable batteries, in April 2011,
we opened a new plant in Kitakyushu that will triple DNP’sprevious battery-related production capacity. This newplant will serve as the main base from which we will supply
products that deliver exceptionally high performance andquality to customers throughout the world, including China
and other developing countries as well as Europe andNorth America, thereby increasing DNP’s share of themarket for battery-related products.

57

Lifestyle and Industrial Supplies

TOPICS

Packaging● “Biomatech PET” plastic film containing

plant-based material
Based on DNP’s recognition of the importance of
biodiversity and sustainability, we have been working
on commercializing biomass plastic packaging
material that contains plant-derived material. The
material is attracting attention for its potential toreduce negative environmental impact since it uses
less petroleum and emits less CO2 when burned
compared to conventional plastics.
DNP began mass producing “Biomatech PET”
polyethylene terephthalate (PET) plastic film in May
2011. We reduced the plastic’s petroleum content bysourcing ethylene glycol — which accounts for about
30% of the raw material in PET film — from sugar
cane rather than from petroleum. DNP will graduallyswitch to the new biomass PET film in packaging
materials used for foods, beverages, and everyday
articles. We will also continue working to reduce costs
and enhance our business related to packaging
materials containing plant-derived materials.

Lifestyle Materials● Portable anti-virus isolation booth for

medical facilities
DNP and major construction company Shimizu Corp.
jointly developed a low-cost portable medical-use
isolation booth. The booth is simple to set up and takedown.
Medical facilities increasingly use isolation facilities
to prevent the spread of viruses. The new isolation
booth is made with paper support posts andtransparent film walls. It is easy for anyone to set up
and can be disposed of after use by burning on the
grounds of the medical facility. Because it is compact
enough to allow storage of many units in a small
space, it can enable medical facilities to respondadequately to influenza epidemics or other situations
where there is a need to suddenly establish or
increase the number of isolation facilities.
Sample shipments began in February 2011 andproduct sales are expected to begin in earnest in
September of the same year. In the future, DNP plansto sell products with antibacterial or antivirus functions
for medical or welfare applications.

Isolation booth components

Samples of products made with Biomatech PET plastic

Disposable isolation booth58

Segment Information ▶ Lifestyle and Industrial Supplies ▶ TOPICS

Energy Systems● Polyolefin encapsulants suitable foruse with crystalline silicon photovoltaic
modules

Segment Information

DNP is actively engaged in the energy-related
business, primarily by manufacturing and selling backsheets and encapsulants used in the production ofphotovoltaic cells, for which demand is rapidly
growing. In June 2010 we developed “CVF1” polyolefin
encapsulants suitable for use with crystalline silicon
photovoltaic cells.
In the past, cracking was sometimes a problem
when silicon used in crystalline silicon photovoltaic
cells was applied thinly in order to reduce costs.
Because the new product maintains a high degree of
flexibility and does not crack even at temperatures
below 0°C, it can help enable the production ofthinner photovoltaic cells and thinner encapsulants.
DNP will further refine this development to allow mass
production and will actively promote sales tophotovoltaic module makers in Japan, China, Europe
and North America.
DNP also plans to develop back sheets made withfluoride resin film for use in crystalline silicon
photovoltaic cells.

businesses in 2006, and in April 2011 we acquiredSony Corp.’s commercial-use digital photo printerbusiness, as part of our global business development.
Especially in recent years, people are using digital
cameras and mobile terminal-mounted cameras totake more photographs, leading to increased demandfor convenient ways to print photographs andproduce photo albums. In response to this demand,
DNP’s wholly owned subsidiary DNP Fotolusio Co.,
Ltd. has installed over 2,500 (as of March 2011)
PrintRush self-service printing terminals all overJapan. The PrintRush PhotoBook service has also
proved to be very popular. It allows customers toquickly and easily produce a themed photo book at aretail outlet, in commemoration of such events as
weddings, school ceremonies, or family trips. DNP
has further heightened the enjoyment that customers
can get from their photographs by developing
additional features such as “split printing” that makes
it possible to display multiple pictures on a single
print, a “drawing mode” that allows customers tointegrate handwriting or hand drawings withphotographs, and a function that makes it possible totransmit image data directly from an iPhone or iPad toa PrintRush printer.

Information Media Supplies● New features and new models for ourPrintRush self-service printing systems
DNP began its Information Media Supplies businessin the 1980s, after successfully developing two typesof thermal transfer recording media dye-sublimationand thermal resin by applying coating technologies
that we cultivated through our printing business.
Thermal resin-type transfer materials are primarily
used in monochrome ink ribbons for bar-code
printers, while dye-sublimation materials are generally
used in color ink ribbons for printing photographs.
DNP holds the top share of the world market for bothtypes. DNP actively promotes alliances withcompanies that have special strengths. We acquired
the Konica Minolta Group’s ID photo business andphotography-related product manufacturing and sales

Samples of "split printing"

New PrintRush model: T-2101

Samples of pictures created in"drawing mode"

D N P A n n u a l R e p o r t 2 011

59

Electronics

BUSINESS STRATEGIES

DNP’s Electronics segment applies the mostadvanced printing technologies in the world,
including microfabrication and patterningtechnologies, to provide a variety of display
components and electronic devices that sustain
today’s information society. By developing a steadystream of products that meet our corporate clients’needs, including color filters for liquid crystal displays(LCDs), photomasks (masters for making LSI circuits),
and multilayer wiring boards, we will continue toexpand our business.

■ Basic Strategies
Widespread use of a variety of electronic devices including
household appliances, smart phones and tablet PCs has
made our lives more convenient than ever. While consumers
always seek new features and greater ease of use in electronic
devices, it is important that the devices also be affordable.
In order to meet both of these conflicting needs, we must
simultaneously pursue advanced functionality and lower costs
as we develop and manufacture electronic devices.
More than half a century ago, in 1958, DNP developed thefirst made-in-Japan shadow masks for color televisions.
In 1959, we succeeded in developing photomasks used in the
manufacture of semiconductors. Ever since, we haveremained at the forefront of these industries by continuallyrefining our advanced technologies. Despite the rapidchanges inherent in electronics-related markets, DNP has
established itself as the world’s top vendor of a variety of
products. Going forward, we intend to meet market demands
for increasingly advanced and increasingly low-cost electronic
devices. In addition to actively developing cutting-edge
technologies and new products, we will speed up ourbusiness development by forming alliances with a large
number of companies.

60

Segment Information ▶ Electronics ▶ BUSINESS STRATEGIES■ Major Policies■ New Product Development and Profit Base

Reinforcement:
Respond quickly to market needs andoptimize overall production framework■ Color Filters:

Choose flexible business models with anemphasis on profitability
As the size of LCD panel substrates continues to grow anddemand for small and medium-sized displays increases, it isimportant to use color filter business models that respondflexibly to the needs of the market and to the needs of our
specific corporate clients. DNP responds quickly to changes
in manufacturing processes, with ample consideration for
return on investment (ROI*1). This sometimes leads us to build
a new facility as a “by-plant” adjacent to a customer’s factoryor as an “in-plant” directly connected to a customer’s
production line. In overseas markets as well is in Japan, we
consider a wide array of business models, including corporate
tie-ups and royalty businesses based on DNP’s proprietary
technologies, and choose to build business models thatemphasize ROI.
■ Photomasks:

Maintain the top share of the world market on thestrength of DNP’s world-class technology
DNP’s photomasks have established such a solid reputation■ Build a strong business constitution bycultivating new mainstays for our electronic
devices businessWe intend to apply microfabrication and other printing
techniques to the active development of a wide range of otherproducts in addition to photomasks, including components forhard disk drives, metal substrates for LEDs, wiring boards withembedded components, and MEMS*4 products. Of theseproducts, we view image processing modules and otherelectronic modules as a particularly promising growth area inwhich we intend to concentrate management resources. In
this way, we intend to build a strong and flexible businessconstitution that is less dependent on the semiconductor
market.

Segment Information

In order to enable us to respond promptly to rapid changes indemand for electronic devices, we will focus allocations ofmanagement resources on boosting production capacity anddeveloping new technologies and new products.
For example, DNP is the only company in the world thatsuccessfully mass produces color filters for LCDs using bothinkjet and photolithography methods. We intend to build on
this success by improving productivity, optimizing our overall
production framework, and making other improvements thatwill further increase profit potential and competitiveness.
Additionally, we will further expand our business by enhancing
our lineup of new products with a focus on the developmentof products related to touch panels and organic EL displays,
while also improving the performance and increasing theadded value of existing products.

for outstanding quality that we have secured the top share of
the global photomask market (excluding in-house production
by semiconductor manufacturers). We are expanding ourbusiness by meeting corporate clients’ need for further
miniaturization. For example, DNP controls more than half of
the world market for cutting-edge photomasks with line widthsof 45nm or less.*2 Following the construction of our factory inAgrate Brianza, Italy, we opened a second overseas
production base during the fiscal term through March 2011 in
Hsinchu City, Taiwan, where we began mass producing
photomasks. This new plant will serve as our base forsupplying advanced photomasks within the Asian region,
which has experienced remarkable growth in demand forsemiconductors.
Going forward, we aim to increase collaboration withcustomers and use the results of joint development to preparea framework for developing and supplying cutting-edge
products with line widths of 22nm or less. In addition, we aim
to solidify our hold on the top share of the world photomask
market by moving forward with the development of nextgeneration semiconductor manufacturing technologies suchas extreme ultraviolet (EUV) exposure*3 and nanoimprinting.

*1 ROI (return on investment): the ratio of profit returned relative to theamount invested*2 nm (nanometer): one billionth of a meter*3 EUV (Extreme Ultra-Violet) exposure: a technique for using ultraviolet
rays with extremely short wavelengths to burn minute circuit patterns
onto a wafer*4 MEMS (micro electro mechanical system): a group of components
1-100 micrometers in size, made with semiconductor device
microfabrication technologies

D N P A n n u a l R e p o r t 2 011

61

800

120
100

Electronics

600

551.8

536.6

531.7

80
60

400

FINANCIAL RESULTS

43.7

46.8
40

200

19.9

20
0

0

09

10

11

■ Financial Highlights
Net Sales

Operating Income (¥ billion)(Net sales)(¥ billion, %)(Operating income)

800

120

					 2009.3		 2010.3		 2011.3
Net sales

¥

256.0

¥

257.5

¥

286.3

Operating income

2.6

8.3

12.2

Operating income margin

1.0%

3.2%

4.3%

100
600
80
60

400

286.3

257.5

256.0

40

200

12.2

8.3

2.6

0

0

09

62

20

10

11

■ Business Environment■ Summary of Financial Results

According to one research company’s figures for worldwide
shipments of electronic devices in calendar 2010, there werelarge year-on-year increases in shipments of LCD televisions(to more than 190 million units), and personal computers (345
million units). Shipments of mobile phones increased 19%
over the previous year, mainly due to the popularity of smart
phones. At the start of 2011, the growth trend slowed for LCD
televisions and personal computers. However, shipments ofmobile phones still increased sharply in the first quarter ofcalendar 2011, growing 20% year on year, largely due tostrong sales of smart phones in developing countries.

In the fiscal term ended March 2011, net sales of photomasks
declined due to sluggish domestic demand, in spite of ourefforts to capture overseas demand. Color filter sales
increased relative to a year earlier. Sales of color filters forlarge-scale televisions increased with help from our new
10th-generation color filter plant in Sakai, Osaka Prefecture,and the start up of production in April 2010 at the Himeji Plant
in Hyogo Prefecture. Products aimed at small and mediumsized LCDs also met greater demand. Overall segment sales
increased by 28,793 million yen or 11.2% over the previous
year to 286,296 million yen.
Although profitability was hindered in the fourth quarter by
the Tohoku–Pacific Ocean Earthquake, operating income still
jumped up 47.0% to 12,223 million yen thanks to robust
first-half demand for color filters for LCD panels — a bigger
proportion of which were made for large-scale TVs — andthanks to greater sales of high-definition, high-added value
products for use in smart phones and tablet PCs.
The Electronics segment contributed 17.9% of DNP’s total
net sales, compared to 16.1% the previous year, and 15.6% of
the Group’s operating income, up from 11.0% a year earlier.

Segment Information ▶ Electronics ▶ FINANCIAL RESULTS / PORTRAIT OF DIVISIONSPORTRAIT OF DIVISIONS

Display Components
Main Businesses

Market Trends and Summary of Financial
Results
In the fiscal year through March 2011, worldwide demandfor LCDs was bolstered by growth in developing countries,
while Japanese demand was spurred by the government’s“ecopoint” program, which rewarded purchases of energyefficient appliances, including televisions. The panel
manufacturers who are DNP’s customers actively ramped
up production in response to this increased demand, andwere operating at full capacity until around the summer of2010. After the summer of that year, however, producers
built up excess inventories, so from August until the end of
the year manufacturers around the world adjusted
production levels downward. At the same time, however,new demand began to emerge for small and medium-sized
LCD panels used in smart phones and tablet PCs. Given
these trends, DNP had moved to capture the robust
demand for LCD panels for televisions by boostingproduction capacity: we opened the Sakai Plant for 10thgeneration color filters in Osaka Prefecture in October

Strategic Opportunities and Future
Development
Demand for LCD televisions is expected to keep growing,
primarily in developing countries. According to one
research company’s forecast, China and other developing
countries are expected to account for more than half ofworldwide LCD television demand in 2012. However, basicmodels aimed at developing countries account for a
growing proportion of the overall television market, and we
expect that intense competition for sales may cause large
reductions in price, making it more difficult than ever to turna profit on finished products or components. In anticipationof demand for a greater number of their major products,
major panel makers based in South Korea, Taiwan, andChina have made plans to build large-size panel factories in
China, prompting observers to warn increasingly loudly that
excess production capacity may cause prices to crash.
Meanwhile, in Japan, Europe, North America, and othermore advanced markets, demand is expected to continue
to shift toward higher-added value displays, such asenergy-saving LED-backlit models and 3D-compatiblemodels.
DNP will continue its efforts to both lower the cost andraise the advanced technology development level of color
filters used in televisions.

Segment Information

DNP’s Display Components Operations started out morethan half a century ago, in 1958, with the first successful
development of shadowmasks for CRT televisions in Japan.
Today, Display Components focuses on manufacturingcolor filters for liquid crystal displays (LCDs), which are now
the main type of display used in personal computers andtelevisions. The division supplies products mainly to
Japanese manufacturers, but also meets the global needsof manufacturers in South Korea, China, Taiwan, andelsewhere. As display panel size increased, we brought ourcolor filter production facilities closer to client companies’
LCD panel plants. In addition to strengthening ourpartnership with our corporate customers, we developed
an inkjet-based production method and other new
technologies as part of our efforts to improve quality andbolster cost competitiveness. We are now stepping up
efforts to use our small and medium-size production lines
to make high-definition, high-added value color filters in
response to demand for smart phones and tablet PCs,
which has increased sharply in recent years. We are also
actively engaged in creating new sources of revenue, suchas sensors for touch panels and components for organic
EL displays.

2009, and in April 2010 we started up the Himeji Plant for
8th-generation color filters in Hyogo Prefecture.

Meanwhile, in the market for small and medium-size LCD
panels, there has been a surge in demand for state-of-theart LCD panels due to the rapid spread of smart phones,
tablet PCs, and other advanced products. Japanese LCD
panel manufacturers with superior technologicalcapabilities are stepping up production and in some cases
building new factories for small and medium-size products.
DNP is working harder to produce cutting-edge color
filters for small and medium-size LCD panels that support
higher definition and greater brightness.

D N P A n n u a l R e p o r t 2 011

63

Electronics

Electronic Devices
Main Businesses
DNP first succeeded in developing photomasks (masters
for making semiconductors) in 1959. We applied thepatterning and etching technologies that we cultivated in
our printing business to photomask manufacture, which
entails forming minute semiconductor circuit patterns on
glass substrates. In 1964, we succeeded in developing leadframes used for wiring semiconductors. Since then, we
have increased collaboration with other manufacturers inJapan and overseas in order to provide a variety of
products that are indispensable to electronic devices. In
recent years, we have been focusing on the development ofhigh-precision, advanced products that require finer microprocessing, such as build-up wiring boards and MEMS
products.

Market Trends and Summary of Financial
Results
In calendar 2010, the global semiconductor market
emerged from a worldwide economic recession that
continued from 2008 to 2009. Backed by increased
demand for electronic devices from developing countries,
the market grew 32% compared to the previous year. The
size of the market even exceeded the previous record set in2007, and is expected to continue growing gradually.
We did our best to capture overseas demand by making
use of our plant in Agrate Brianza, Italy and a new plant that
we started up in Taiwan in 2010. However, because
domestic demand remained lackluster and we wereaffected by rolling blackouts following the Tohoku–Pacific
Ocean Earthquake at the end of the fiscal term, DNP’sphotomask sales in the term ended March 2011 fell below
those of the previous year.
Looking at etched products, sales of lead frames
increased from the previous year, but sales of suspensions
and other hard disk drive components declined.
There was also a year-on-year drop in sales of highdensity build-up wiring boards, which are primarily used incamera modules for mobile phones, due to decreased
demand for the camera modules.

64

Strategic Opportunities and Future
Development
As the semiconductor market recovers, chip makers are
stepping up investment in miniaturization. We aim toincrease our share of the market for cutting-edge
photomasks as circuit line widths decrease. We started
mass producing 45nm products, for which demand has
begun to grow in earnest. We are also supplying productsthat are suitable for use with a photolithography techniquethat combines double patterning and ArF immersion inorder to make 32nm and 28nm products. We will make themost of our strength as the world leader in these and othermicro-processing technologies to take advantage of thebusiness opportunities presented by increasing
miniaturization.
In addition to cooperating with semiconductor
manufacturers to speed up research and development of
next-generation chip lithography technologies like EUV
exposure and nanoimprinting, we will carefully address thetrend among chip makers to outsource production to
foundries in Taiwan and other countries.
Amid growing demand for thin, compact, high-density
semiconductor packages, we will continue to capitalize on
our strength in microfabrication to increase our share of themarket for etched products. We will also actively develop
non-semiconductor applications for etched products, suchas metal substrates for LEDs, and new products including
various types of electronic modules and MEMS products.

Segment Information ▶ Electronics ▶ PORTRAIT OF DIVISIONS / TOPICSTOPICS

Color Filters● Startup of new 8th-generation color filter

plant in Himeji, Hyogo Prefecture● Accelerating development of nano-imprinting technology in order to establish
next-generation semiconductor production
technology
Nano-imprint lithography technology is attracting
attention as a next-generation method of
manufacturing ultrafine semiconductors. Among otheradvantages, it reduces manufacturers’ capital
investment burden compared to conventional opticalmethods of production. However, nano-imprinting
requires more frequent replacement of the templates
that transfer electronic circuit patterns, which pushes
up running costs. DNP became the first player in thephotomask industry to adopt nano-imprint template
replication equipment developed by Molecular Imprint
Inc. of the U.S. The equipment brings down
production costs by producing multiple template
replicas from a single master template. DNP iscommitted to ongoing development of nextgeneration mass production technologies.

Segment Information

In April 2010, we began operating our new 8thgeneration color filter plant in Himeji, Hyogo
Prefecture. We invested some 30 billion yen in the
new factory, and increased its productivity by building
it adjacent to Panasonic Liquid Crystal Display Co.,
Ltd.’s Himeji LCD panel plant. With the startup of our
Himeji Plant following the October 2009 inaugurationof a 10th-generation color filter plant in Sakai, Osaka
Prefecture, DNP now has more color filter production
capacity than any other company in the world.
In addition to being the only company in the worldthat uses both photolithography and inkjet methods ofmanufacturing color filters, DNP supplies color filters
for every type of LCD panel, including verticalalignment and in-plane switching. DNP will continue
supplying optimal products that meet the needs of ourcorporate clients in the worldwide LCD market, whichis expected to keep growing for some time.

out mass producing 65nm photomasks and added
cutting-edge products with line widths of only 45nm
and 40nm during the fiscal year ended March 2011.
With the startup of our new plant in Taiwan, we haveestablished a framework for the stable supply ofphotomasks to the rapidly growing Southeast Asian
semiconductor market. Following DNP's factoryin Agrate Brianza in Italy, the Hsinchu plant is our
second overseas photomask production base. We
will increase cooperation between our overseas
plants and our production bases in Japan as we gear
up to meet expected growth in worldwide demandfor electronic devices.

Himeji Plant

Electronic Devices● Startup of new photomask plant in Hsinchu

City, Taiwan
In April 2010, DNP held a ceremony to celebrate theopening of our new advanced photomask plant in
Taiwan’s Hsinchu Science Park, where we beganmass producing photomasks. The new plant started

Template duplicator: PERFECTATM
MR5000Master template for nano-imprinting

D N P A n n u a l R e p o r t 2 011

65

Corporate Governance
CONTENTS

68 Corporate Governance
75 Board of Directors, Statutory Auditors and Corporate Officers

66Corporate Governance

D N P A n n u a l R e p o r t 2 011

67

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 to society
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 and manage 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 and training to improve each employee’s awarenessof compliance 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 (as of June29, 2011), 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 andcorporate officers hold executive committee meetings threetimes a month to exchange information that is helpful for
efficient decision making. To speed up the Company’s
activities and make them more efficient, DNP has also

68established a Management Committee consisting of
directors at the senior managing director level and above.
The committee meets once a month, in principle, to review
and discuss management policies, strategies, and importantbusiness matters.
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 17
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:

Corporate Governance ▶ Corporate Governance● Certified public accountants who performed the(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.

accounting audits (continuous audit years)
Senior partners and managing partners
Hirofumi Nikaido (2 years), Kazuhiko Terada (4 years),
Tsuguhiro Tsukakoshi (2 years), Junko Shima (4 years)● Audit firm
Meiji Audit Corporation● Number of accounting audit assistants
10 certified public accountants, 10 others(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 orminimize losses to the DNP Group. Certain divisions anddirectors are promptly established and appointed for
responding to risks that have newly developed.

(5) A diagram of the corporate governance structure illustrating points (1)- (4) above is shown below.
General Meeting of Shareholders
Audit

Audit

Board of Directors
Management Committee

Corporate Ethics Committee

Corporate Governance

Representative Directors
ReportingOpen Door Room
Directors in charge

ReportingInformation Disclosure Committee

Group companies

Audit

Information Security Committee
Product Safety Committee
Environmental Committee
Complaint Handling Committee
Central Disaster Prevention Council

Audit

Audit
Guidance

Auditing Department

Divisions

Oversight of internal controls

Head office

Operating units

Accounting Auditors

Corporate officers

Audit

ReportingBoard of Statutory Auditors

Insider Trading Prevention Committee

Assistance

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)

Audit
Guidance
Reporting

Coordination

D N P A n n u a l R e p o r t 2 011

69

(6) Interests between DNP and its outside director andoutside statutory auditors
DNP has one outside director and three outside statutory
auditors. Neither the outside director nor the outside
statutory auditors have personal, financial, business, or otherinterests with DNP, and they conduct neutral supervision
and auditing of DNP’s management from a standpoint
independent from DNP’s operations. The role of the outside
director is to supervise inside directors and to contribute toimproving the transparency and accountability of the boardof directors by providing management advice based on their
judgment. The role of outside statutory auditors is toenhance the propriety of accounting and operational audits
and to supervise management. Outside director Tadao
Tsukada and outside auditor Shin-ichi Ikeda and Makoto
Matsuura have been designated as independent directors
because they do not fall under requirements set forth in “a”
through “e” of Article 211, Paragraph 4, Item 5 of the
Enforcement Rules for Securities Listing Regulations, andthey have no conflicts of interest with general shareholders infulfilling their roles.
Outside director Tadao Tsukada and outside statutory
auditor Shin-ichi Ikeda each own 2,000 shares in DNP.
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
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.

flexible capital structure policy in response to changes inbusiness conditions.

(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.

(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.

(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 a702) 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
September 30 of each year and shareholders with actual
stock certificates, so that profits can be flexibly passed on toshareholders.

Corporate Governance ▶ Corporate Governance■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
Category of director/
statutory auditor
Directors(excluding outside directors)

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

Base compensation

Bonus

Number of directors
and statutory
auditors covered

1,541

1,356

185

24

82

82

–

2

94

94

–

4

Total compensation

Statutory auditors(excluding outside auditors)

Outside directors
and auditors

Notes: 1. Bonuses are provisions for bonuses for directors and statutory auditors for the fiscal year.
2. There were 23 directors (excluding outside directors), two statutory auditors (excluding outside auditors), and four outside
directors and auditors as of the end of the fiscal year.

(2) Company directors and total compensation
Name(director type)
Yoshitoshi Kitajima(Director)

Total
compensation

Company

Base compensation

Bonus

Dai Nippon Printing Co., Ltd.

289

25

Hokkaido Coca-Cola Bottling Co., Ltd.

38–(¥ million)

353

Total compensation by type (¥ million)

126

Dai Nippon Printing Co., Ltd.

113

12

Satoshi Saruwatari

121

Dai Nippon Printing Co., Ltd.

109

12

Masayoshi Yamada

126

Dai Nippon Printing Co., Ltd.

113

12

(Director)(Director)(Director)

Corporate Governance

Koichi Takanami

Notes: 1. Total compensation is shown only for those with compensation of at least 100 million yen.
2. The portion of base compensation accounted for by Hokkaido Coca-Cola Bottling Co., Ltd. includes a portion corresponding
to bonuses, as the company combines bonuses into annual compensation.
3. Bonuses of Dai Nippon Printing Co., Ltd. are the amounts expected to be paid as bonuses for the current fiscal year.

(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.
The compensation of each of the directors is determined based on a broad range of factors, including
the operations 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 of the statutory auditors is determined based on
discussions with the statutory auditors.

D N P A n n u a l R e p o r t 2 011

71

■Stockholdings(1) Stocks held for reasons other than for pure investment purposes
No. of stocks 433
Total on the balance sheet 110,943 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
Company name

Number ofsharesAmount recordedon balance sheet(¥ million)

Holding purpose

Terumo Corporation

1,081,000

5,383

Enhance business relationship

Taisho Pharmaceutical Co., Ltd.

2,309,000

3,925

Enhance business relationship

Ezaki Glico Co., Ltd.

3,215,751

3,508

Enhance business relationshipAsahi Breweries, Ltd.

1,860,029

3,260

Enhance business relationshipMizuho Financial Group, Inc.

15,501,000

2,867

Enhance business relationship898,7112,826

Enhance business relationshipFujifilm Holdings Corporation

685,965

2,208

Enhance business relationshipToshiba Corporation

4,547,000

2,196

Strengthen business alliance

Yamato Holdings Co., Ltd.

1,660,600

2,182

Enhance business relationshipToyo Suisan Kaisha, Ltd.

794,980

1,922

Enhance business relationship

ROHM Co., Ltd.

265,101

1,850

Enhance business relationship

Mitsubishi Chemical Holdings Corporation

3,598,790

1,720

Strengthen business alliance

Nippon Steel Corporation

4,594,768

1,686

Strengthen business alliance

SMK Corporation

3,200,000

1,536

Enhance business relationshipLion Corporation

3,140,665

1,479

Enhance business relationshipShiseido Co., Ltd.

677,619

1,375

Enhance business relationship

Aica Kogyo Co., Ltd.

1,293,743

1,348

Enhance business relationship

NSK Ltd.

1,814,000

1,338Strengthen business alliance

10,0001,232Strengthen business alliance

Sharp Corporation

1,011,140

1,182

Enhance business relationship

Mitsubishi UFJ Financial Group, Inc.

2,399,760

1,175

Enhance business relationship

Daikin Industries, Ltd.

300,000

1,147

Enhance business relationshipNissin Foods Holdings Co., Ltd.

NuFlare Technology, Inc.

72

Corporate Governance ▶ Corporate Governance(Current fiscal year)
Stocks held for reasons other than pure investment purposes
Company name
The Dai-ichi Life Insurance Co., Ltd.

Number ofsharesAmount recordedon balance sheet(¥ million)

Holding purpose

66,066

8,291

Enhance business relationship

Terumo Corporation

1,081,000

4,740

Enhance business relationship

Taisho Pharmaceutical Co., Ltd.

2,309,000

4,156

Enhance business relationshipMizuho Financial Group, Inc.

25,385,680

3,503

Enhance business relationship

Ezaki Glico Co., Ltd.

3,218,348

3,108

Enhance business relationshipNissin Foods Holdings Co., Ltd.

898,7112,635

Enhance business relationshipAsahi Breweries, Ltd.

1,860,029

2,572

Enhance business relationship

Yamato Holdings Co., Ltd.

1,660,600

2,142

Enhance business relationship

Mitsubishi Chemical Holdings Corporation

3,598,790

1,882

Strengthen business allianceToshiba Corporation

4,547,000

1,850

Strengthen business allianceFujifilm Holdings Corporation

685,965

1,767

Enhance business relationshipToyo Suisan Kaisha, Ltd.

794,980

1,435

Enhance business relationship

Aica Kogyo Co., Ltd.

1,293,743

1,410

Enhance business relationship

ROHM Co., Ltd.

265,706

1,384

Enhance business relationship

NuFlare Technology, Inc.

10,0001,355Strengthen business alliance

Lion Corporation

3,140,665

1,328

Enhance business relationship

NSK Ltd.

1,814,000

1,300

Strengthen business alliance

Mitsubishi Electric Corporation

1,300,000

1,276

Enhance business relationship

3,200,000

1,235

Enhance business relationship

4,594,768

1,222

Strengthen business alliance

Sapporo Holdings Limited

3,796,388

1,176

Enhance business relationshipShiseido Co., Ltd.

677,619

975

Enhance business relationship

Kurita Water Industries Ltd.

387,000

951

Strengthen business alliance

Meiji Holdings Co., Ltd.

282,200

943

Enhance business relationship

Ushio Inc.

572,957

932

Strengthen business allianceSinfonia Technology Co., Ltd.

3,664,000

923

Strengthen business allianceCorporate Governance

SMK Corporation
Nippon Steel Corporation

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

Number ofsharesAmount recordedon balance sheet(¥ million)

Holding purpose

Terumo Corporation

1,930,500

8,465

Hold voting instruction rights forshares in retirement benefit trust

TV Asahi Corporation

40,3005,234

Hold voting instruction rights forshares in retirement benefit trust

Astellas Pharma Inc.

913,770

2,814

Hold voting instruction rights forshares in retirement benefit trust

Japan Tobacco Inc.

5,000

1,502

Hold voting instruction rights forshares in retirement benefit trust

Note: 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.

(3) Stocks held for pure investment purposes
None

D N P A n n u a l R e p o r t 2 011

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2. Compensation Paid to Accounting Auditor(1) Compensation paid to accounting auditor
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.

91

–

83

–

Consolidated subsidiaries

106

–

130

–

Total

197

–

213

–

(2) Other material compensation details
None(3) Compensation paid to accounting auditor 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.

74

Corporate Governance ▶ Board of Directors, Statutory Auditors and Corporate Officers

Board of Directors, Statutory Auditors and Corporate Officers(As of June 29, 2011)

President

Managing Directors

Standing Statutory Auditors

Corporate Officers

Yoshitoshi Kitajima

Kazumasa Hiroki

Kenji Noguchi

Jun-ichi Tsuchiya

Tetsuji Morino

Minoru Yoneda

Tokuji Kanda

Executive Vice Presidents

Kunikazu Akishige

Shin-ichi Ikeda*

Takashi Wada

Koichi Takanami

Yoshiaki Nagano

Satoshi Saruwatari

Motoharu Kitajima

Statutory Auditors

Masato Koike

Masayoshi Yamada

Takao Shimizu

Makoto Matsuura*

Masato Yamaguchi

Yoshinari Kitajima

Yoshiki Nozaka

Kuniaki Nomura*Yasuo Takeda

Ryuji Minemura

Masaki Tsukada
Senior Managing Directors

Morihiro Muramoto

Sakae Hikita

Mitsuhiko Hakii

Senior Corporate Officers

Kenji Miya

Tatsuya Nishimura

Yoshio Ogawa
Toshiki Sugimoto

Osamu TsuchidaDirector

Tatsuo Komaki

Teruomi Yoshino

Tadao Tsukada*

Tatsuro Kitayuguchi

Yujiro Kuroda

Fujio Yamazaki

Masahiko Wada

Takashi Saito
Shigemi Furuya*Outside director or auditors

Corporate Governance

Masayoshi Yamada

Koichi Takanami

Yoshitoshi Kitajima

Satoshi Saruwatari

Yoshinari Kitajima

D N P A n n u a l R e p o r t 2 011

75

How DNP Works to Achieve
Sustainable Development
CONTENTS

78 Research and Development/Intellectual Property
80 Proper Use and Management of Information
82 Disaster Preparedness and Business Continuity Plan
83 Creating Lively Workplaces
84 Environmental Conservation and Expansion of Eco-Business
87 Topics76Through its business activities, DNP solves problems faced bycorporations, consumers, and society as a whole in order torealize sustainable growth as a company that has the public’s
trust. Toward that end, DNP strives to simultaneously fulfill three
corporate responsibilities: providing society with new value (i.e.
useful products and services), acting in good faith (i.e.
executing business processes fairly and equitably), anddemonstrating a high degree of transparency andaccountability.
DNP’s business activities constitute social contributions inand of themselves. We work at expanding our business basedon the premise that the products and services that we supply
will lead to the resolution of a variety of problems. As we work
to increase corporate value, we consider a number of important
themes including development of products and services,
research and development/intellectual property, information
security, business continuity plan, human resources
development, and environmental preservation. Our efforts inthese areas have attracted public recognition as evidenced by
the inclusion of DNP shares in several major socially
responsible investment indices. Below is a list of those that
included DNP shares as of May 2011.

○ Dow Jones Sustainability Indexes○ FTSE4 Good Index Series○ Ethibel PIONEER Register & Ethibel EXCELLENCE Register○ Morningstar Socially Responsible Investment Index○ SAM Group Holding AG’s Sustainable Asset Management

Research and Development / Intellectual Property

Research and development are extremely important for DNP since our business vision entails providing P&I Solutions and expanding
our business by applying and developing printing and information technologies. Especially in today’s rapidly changing world, we needto take a consumers’ point of view, look carefully at what is happening in society, and be quick to discern where and what problems
exist and which technologies are needed to solve them. In order to accelerate technological development, we actively pursue
alliances with other companies that have special strengths rather than relying solely on DNP’s original technologies.
In addition to inventing products and services, DNP also innovates new business models. It is important to secure and manage ourrights to the resulting intellectual property so that we can benefit appropriately. We will further strengthen our research anddevelopment and intellectual property management functions in order to increase DNP’s corporate value when we bring to market,
before other companies do, the products and services sought by corporate clients, consumers and society.

Investment in Research and Development
DNP conducts many types of research and development,
including new business creation, new product and service
development, and production technology development.
Continuous investment in research and development isimportant for increasing DNP’s corporate value in the medium
and long term. In the fiscal year through March 2011, DNP
invested 33.1 billion yen (compared to 33.8 billion yen in theprevious fiscal term), or roughly 2% of consolidated net sales, inresearch and development. These funds are used to support afull range of research and development activities including
long-term (up to five years) basic research, medium-term (up to
three years) production technology development, and shortterm (up to one year) development of new products andtechnologies.

Intellectual Property Strategies
In order to raise the DNP Group’s overall level of skills related tointellectual property generation and use, we conduct training
sessions that cover every aspect of intellectual property frombasic knowledge to application. We promote the acquisition ofstrong rights and at the same time, we foster a corporate
culture of fairness that respects other companies’ rights just as
we want our own rights respected, and a corporate climate ofcompliance with legal regulations.
In order to increase the value of intellectual property to DNP’s(¥ billion)

40

30

20

10

0

02

03

04

05

06

07

08

09

Number of Patents and Utility Model Rights Held(case)(case)

800

3,500

700

3,000

600

(3)

500

(1)
(2)

300

(4)

200
100
0

06

07

08

09

10

11

(3)

2,500
2,000
■

■

■

■

(5)

10

business, we work to enhance DNP’s patent portfolio, filestrategic patent applications, evaluate the quality of patent
specifications, fulfill legal obligations, and provide meaningful
benefits to business units.
In addition to sending representatives to an intellectual
property-related association where we actively make proposals,
DNP proactively engages in support activities involving othercompanies, such as sponsoring seminars or proposing projects
related to copyrights, premiums and representations, ortrademark laws.

Number of Patent Disclosures

400

78

Research and Development Expenditures■(1) Basic Research(2) Information Communication(3) Lifestyle and Industrial Supplies(4) Electronics(5) Other(calendar year)

(1)
(2)

1,500
1,000

■

■

(4)

500

(5)

0

■

■

■

07

08

09

10

11

(1) Basic Research(2) Information Communication(3) Lifestyle and Industrial Supplies(4) Electronics(5) Other

How DNP Works to Achieve Sustainable Development ▶ Research and Development / Intellectual Property

Research and Development
DNP’s research and development section develops originaltechnologies that lead to the resolution of a variety of problems
in a wide range of fields. In addition to building up new
businesses around these original technologies, we have createda flexible framework that leaves room for forming alliances withother companies that possess technological strengths.

DNP’s research and development framework consists
primarily of seven laboratories that each specialize in a different
field, including the Research and Development Center, theNano Science Research Center, the Media Technology
Research Center, the Electronic Module Development Center,and the Technology Development Center. The various
laboratories cooperate closely with relevant business units asthey focus on creating new value.

Controlled by Head Office
Development
supportProduction
technologies;
equipment
development

Controlled by Business Units

Corporate R&D Division

Technology Development Center

Improvement of existing products and technologies/
Development of products and technologies
for the division

R&D for new products
and technologies

Books and Magazines
Commercial Printing

Information Media Supplies
Energy Systems
Display Components

Electronics

Media Technology Research Center

Opto-Materials

Nano Science Research Center

Lifestyle Materials

Lifestyle andIndustrial Supplies

Electronic Module Development Center

Packaging
Industrial Supplies

Research and Development Center

IPS/Business Forms

Technical section of each operations

Information
Communication

Electronic Devices

Packaging Laboratory
Advanced Industrial Supplies Laboratory
Lifestyle Materials Laboratory
Opto-Materials Laboratory
Information Media Supplies Laboratory—
Display Components Laboratory
Electronic Devices Laboratory

Commercialization projects

New Business Fields

Functions and Time Frames of R&D Facilities
R&D facility

Function

Head Office
Research Centers

Electronic Module Development Center

Develops technologies, products and services related to electronic modules

Nano Science Research Center

Develops materials, and researches and develops technologies for analyzing products and processes

Media Technology Research Center

Researches and develops core technologies for the information communication field; develops
and refines technologies, products, and services

Technology Development Center

Researches and develops production technologies

Packaging Laboratory

Develops packaging materials technologies, and freshness preservation technologies

Advanced Industrial Supplies Laboratory

Researches and develops industrial materials

Lifestyle Materials Laboratory

Develops surface materials for interior and exterior building décor

Opto-Materials Laboratory

Researches and develops optical materials

Information Media Supplies Laboratory

Researches and develops all kinds of information media

Display Components Laboratory

Researches and develops all kinds of display devices and components

Electronic Devices Laboratory

Conducts research and development related to cutting-edge photomasks, mounting
components and LSI design

Development term

Medium to long term(less than three to five years)

Medium term(less than three years)

Short term(less than one year)

D N P A n n u a l R e p o r t 2 011

How DNP Works to
Achieve Sustainable
Development

Conducts research and development related to new products and new production processes

New Product Development

Business Unit Laboratories

Research and Development Center

79

Proper Use and Management of Information

Information Management
Building credibility with our various stakeholders is essential tothe ongoing development of DNP. In order to increase
stakeholders’ understanding of our businesses and corporate
activities, and in order for DNP itself to gain a proper awarenessof how the corporate group is perceived by society, we make apoint of engaging in lively taiwa with a wide range ofstakeholders.
DNP endeavors to build better relationships with all of its
stakeholders, including shareholders and investors, corporateclients and consumers, suppliers, students and job-seekers,
mass media and news agencies, local communities, andemployees and their family members. We take responsibility for
explaining our corporate activities by disclosing appropriate
information in a timely fashion. At the same time, we respect theimportance of properly managing sensitive or personal
information. We also need to focus on information management
in order to reflect stakeholders’ opinions in the creation of
products and services and to improve DNP’s corporate climate.

Information Management Flow
Feedback
Consideration of new businesses, etc.

Preparation for announcement

Appropriate management of important, undisclosed information(prevention of information leaks and insider trading)

Use of information

Disclosure

Compilation・Recording・Preservation

Disclosure of accurate
information at appropriate times

Compilation and analysis of
opinions and reactions

Fostering of shared awarenesswithin the Group● Start of projects, plans, etc.

● Development and production of

all types of communication tools● Determination of disclosure
method, etc.
When developing new products,
services, or technologies, or whenpursuing business alliances or M&As,
the relevant divisions of DNP
consider, discuss and flesh out
specific themes with representativesof relevant companies ororganizations.
Relevant DNP departments

Once there is a solid outline for the
new development or new alliance,
etc., DNP’s Press and Public
Relations Department gets involved
and prepares to disclose information
to stakeholders.

DNP PR Department

Taiwa

Sharedawareness● Identification of areas that needstakeholders

improvement● Recording of results and storageof data

We demonstrate our accountability
by disclosing accurate information to
stakeholders at appropriate times
and by communicating in ways that
increase transparency, including
question-and-answer exchanges.

We continue to focus on taiwa withstakeholders even after disclosing
information by compiling opinions
and ideas that reflect consumers’
perspective.
We record the results of these efforts
and preserve them as Group assets.

Mass media, news
organization

News releases

Taiwa● Promotion of taiwa with various

Shareholders,investors, analysts

Local community

Taiwa

Suppliers

Taiwa

Taiwa

Taiwa

Investor reports
Taiwa

Taiwa
Taiwa

Website, etc.

Collaborating companies,
organizations, etc.

80

Employees andtheir families

Customers,
consumers

Students,
job-seekers

How DNP Works to Achieve Sustainable Development ▶ Proper Use and Management of Information

Information Security
Without question, every company is responsible forappropriately managing consumers’ personal information andclient companies’ important information in the course of its
business operations. Because DNP views complete information
security as one of its most important management priorities, we
maintain strict, comprehensive controls over information assets.
In 1999 DNP established a Group-wide information security
framework including Personal Information Protection Policies
and a Personal Information Protection Office. DNP has also
been active in gaining official recognition for its information
protection systems, for example by establishing a personal
information management system based on Japanese Industrial
Standards’ “Personal Information Protection Management

Systems Requirements” (JISQ15001), and by acquiring andmaintaining PrivacyMark certification. In addition, DNP takes
personnel-related measures, such as holding training sessions
and providing online courses to enhance each and every
employee’s awareness of security issues; physical measures,such as using smart employee ID cards at security gates andother access points; and technological measures, such as
introducing a biometric authentication system to control accessto data processing equipment.
Through these various endeavors, DNP has accumulated
expertise in the area of information security. We have built up
our security solutions business by developing a variety ofrelated products and services that we provide to corporateclients.

Examples of Computer Rooms where Personal Data is Handled

Entry/exit controls using biometrics preventing
access by unauthorized persons● Surveillance cameras that keep improper
behavior in check● Pocket-free uniforms for on-site workers thatprevent data from being taken out● Separating the locations where information is
written on media● Checks using metal detectors●

Physicalmeasures●

Technologicalmeasures

Finger vein authentication
systemIris verification turnstile gate

Implementation of access logs
→ Minimal number of employees engaged in the work of writing on recording media→ Limiting work of writing on recording media to DNP Group employees→ Increased the frequency of recording media writing log checks

effort, developed method for assessing products’ overall
conformance with universal design principles (including color
universal design, which considers color blindness), and weorganize all types of related seminars and training sessions.

How DNP Works to
Achieve Sustainable
Development

Universal Design
In a society that is increasingly tolerant of diversity, there is
growing recognition for the importance of “universal design”
that makes it possible for people in a variety of situations tomake use of products. In order to realize a society in which
everyone can live safely and comfortably, we established the
DNP Group’s Five Principles of Universal Design as a guide to
developing products and services that emphasize theconsumer’s point of view.
The DNP Group takes a universal design approach to
product development throughout the wide range of businessfields in which we participate. For example, we developed
packages that can be used intuitively and with minimal physical

Universal design package "USE-FULL packaging"

D N P A n n u a l R e p o r t 2 011

81

Disaster Preparedness and Business Continuity Plan

In order to increase the DNP Group’s overall disaster preparedness, we established the “DNP Group Basic Code for Disaster
Response.” Aiming for a “disaster-proof DNP Group,” we implement disaster prevention and preparedness measures on a daily basis
in line with our disaster prevention plan. We also prepared a business continuity plan (BCP) to help us restore operations as quickly
as possible in the event of a major disaster.

Organization and Framework
In order to prepare the overall DNP Group for handlingemergency situations, we established the DNP Group Central
Disaster Prevention Council at DNP’s head office. To promote
practical measures to be taken by each business unit and Group
company, we had each one establish its own disaster prevention
council.

Enhancing our Disaster Prevention Plans
and Business Continuity Plan (BCP)
Specific disaster prevention and response measures are to be
implemented in accordance with the “DNP Group Basic Plan for
Disaster Response,” a comprehensive, long-term plan
formulated by the head office’s Central Disaster Prevention
Council, and in accordance with each business unit or groupcompany’s “Emergency Operation Plan.”
In addition, we prepared a BCP to guide the resumption of
key businesses and operations within a certain maximum
period of time in the event that a major disaster occurs.

Reinforcing Preventative Measures
The fact that none of our employees were personally injured in
the recent earthquake was the most important confirmation of
the effectiveness of our preventative measures. We are working
to further improve those measures by reassessing disaster risks
in each region where we have operating units and enhancing
inspections and reinforcement of buildings and equipment,

An example of a teleconference between central disaster response headquarters andregional headquarters affected by the Tohoku-Pacific Ocean Earthquake82

In addition, we established regional disaster councils to
promote horizontal disaster prevention and response measures
suited to the needs of each particular region. In the event of amajor catastrophe, these councils will act as disaster response
headquarters that supervise and implement restoration andreconstruction measures as well as emergency measures.

In the Tohoku-Pacific Ocean Earthquake, the printing industry
faced rolling blackouts and fuel shortages as well as delayeddeliveries of printing paper, ink, film, and other supplies due todamages to distributors and manufacturers, all of which affected
production plans and distribution. DNP will strive to minimize theeffects of emergency situations on its business by reviewing its
BCP and considering the entire supply chain as we prepare
frameworks for distribution and alternative production and think
about the distribution of production bases within Japan andoverseas.

emergency equipment and supplies, and infrastructure. We arealso beefing up our disaster response headquarters frameworkand emergency information-gathering and disseminating
functions. To ensure that employees act calmly and remain safe
even in times of emergency, we implement disaster preparedness
education and training on an ongoing basis.

Displaying earthquake information in affected region

How DNP Works to Achieve Sustainable Development ▶ Disaster Preparedness and Business Continuity Plan /Creating Lively Workplaces

Creating Lively Workplaces

Human Resource Development that
Increases Vitality
In order to ensure DNP’s continuous growth, it is essential thateach individual employee grows and enriches our corporate
activities by cooperating with others in the company andoutside. Human resources are the source of a company’svitality. DNP strives to establish better systems andmechanisms and to enhance its training framework in order toenable each employee to fulfill his or her role as fully as possible
and realize his or her full potential.
DNP has formulated a vision for its human resource
development. The organizational unit in charge of employee
training cooperates with each business unit and each GroupIn order to energize DNP’s business activities, it is essential thateach member of our diverse workforce can work and fulfill his
or her assigned role according to his or her particular way ofworking. In recent years, the business environment has
undergone major changes. In order to transform these changes
into opportunities that lead to the achievement of results, it isimportant that each and every member of our workforce

expresses his or her maximum potential.
As a first step in that direction, we are improving operational
efficiency by reviewing our work flow and mechanisms andchanging our working style in ways that generate “timeresources.” We believe that these efforts will lead us to take up
the challenge of new types of work, develop products andservices from consumers’ point of view, create new value, andhelp each employee to achieve a good balance between workand personal life.

D N P A n n u a l R e p o r t 2 011

How DNP Works to
Achieve Sustainable
Development

Respect for Diversity and Flexible Working
Stylescompany to implement training programs in accord withsocietal needs and DNP management priorities. DNP operates
multiple training facilities where employees can gain specializedskills. In order to provide environments where employees can
get away from their workplace and concentrate on learning, we
maintain a seminar hall in Tokyo’s Shinjuku Ward and a training
center in Hakone. In addition to in-house training sessions, we
provide opportunities for a variety of stakeholders to engage intaiwa. For example, we organize seminars where employees
can meet with people in different industries, overnight sessions
where each business segment establishes its medium andlong-term goals, and overnight events that foster discussion
with corporate clients.

83Environmental Conservation and Expansion of Eco-Business

Establishment and Operation ofEnvironmental Management Systems
As a company that provides products and services to solve
the problems of businesses, consumers, and society, DNP
views coexisting with the Earth’s environment as an importantmanagement task. Our mission is to coexist with nature andpass on the Earth to the next generation without wasting its
limited resources. We implement specific measures in Japan andoverseas in line with our basic environmental policies — “preserve
the Earth’s environment,” and “use resources effectively.”
DNP’s environmental management framework consists of
the DNP Group Environmental Committee, which establishes

Information Communication

Group-wide environmental policies and plans and monitors
progress towards the achievement of goals, and each business
unit’s environmental committee, which takes specific actions inaccordance with the characteristics of its field of business.
DNP reduces the negative effects of its business activities on
the environment to the absolute minimum. In addition to using
resources effectively, we are working harder than ever on thedevelopment of eco-friendly products.
DNP provides diverse products and services. The main raw
materials that we use are paper, film, resins, metals including
steel and aluminum, and ink. Following are the special
characteristics of each of our business segments.

Manufactures printed materials including magazines and commercial printed matter,primarily using offset printing; uses a large amount of printing paper.

Lifestyle and Industrial
Supplies

Manufactures packaging and decorative materials, optical films and color ink ribbons, etc.,
using such processes as gravure printing, coating, and lamination; uses large quantities ofplastic films and solvents, etc.

Electronics

Manufactures products like LCD color filters and semiconductor photomasks by applying
etching and photolithography technologies; uses a large amount of water for washingproducts.

President
DNP Group Environmental Committee

12 members
Promotion Office

27 members

Each business unit s
environmental committee

256 members
Promotion Office

126 members(1) Determines Group-wide environmental policies, goals, and plans(2) Approves policies, goals, and plans made by each business unit’s environmental committee(3) Monitors implementation of plans and achievement of goals by each business unit’s environmental
committee(1) Proposes environmental policies, goals, and plans for the DNP Group; reports to the Committee(2) Communicates the environmental policies, goals, and plans determined by the DNP Group Environmental Committee to each business unit’s environmental committee; monitors each unit’s progress andsupports their activities(3) Reports to the DNP Group Environmental Committee regarding progress (results, implementation ofpolicies, etc.) achieved by each business unit’s environmental committee(1) Discusses and determines the business unit’s own environmental policies, goals, and plans(2) Monitors implementation of the business unit’s own plans and achievement of its goals(3) Convenes regular committee meetings(1) Drafts environmental policies, targets, and plans and submits them to the business unit’s environmental
committee(2) Communicates environmental policies, targets, and plans determined by the committee to all
workplaces; monitors implementation(3) Reports to its committee regarding progress (results, progress of the measures, etc.) being achieved by
all workplaces
Technical・Production Group

Eco-friendly Product Development GroupRegional Action Group

Environmental Preservation・VOC Group

Office・Working Environment Group

Industrial Waste Reduction Group
Energy-Saving Group

Each business unit’s workplaces84

Total: 897 members

How DNP Works to Achieve Sustainable Development ▶ Environmental Conservation and Expansion of Eco-Business

Environmental Management System
DNP was among the first Japanese printing companies to takeaction to protect the environment. In 1972, we became the firstcompany in our industry to establish a special section toaddress environmental issues (currently the Environmental
Safety Department), and to initiate antipollution measures andtaiwa with residents of local communities. From 1990 on, we
have also focused on global-level environmental issues. We
created our own environmental management system (EMS) in
1993, even before the International Organization forStandardization published its ISO14001 EMS standards in
1996. Our EMS is the basis for the environmental management
activities that we perform every six months in the form of“Plan-Do-Check-Action” cycles.
In order to further increase the effectiveness of our EMS, in
1996 we began conducting Eco-Audits. In the event that anaudit reveals the need for corrective action, the DNP Group
Environmental Committee sends a written request to therelevant operational base and receives a written response.
Through activities such as Eco-audits and regular issuance of“Eco-Reports,” DNP keeps its business activities in line with
relevant laws and regulations. We have also established and do
our best to strictly observe our own voluntary standards (for air
quality, water quality, noise, vibration, and odor generation), andvoluntary guidelines (for chemical substance management andsoil contamination measures), which exceed legal requirements.

Management Concept
Code of Conduct

DNP

DNP Group Environmental Committee
Environmental VisionMan
Workplace
Eco-Report
Action Plans Set Group-wide environmental goalss Determine workplace Eco-Report formats

PLAN

Give instructions
for improvement

ACTIONDNP Group
Eco-Report

Environmental committee foreach workplace (60 workplaces)DO

Submissionof workplace
Eco-Reports

Workplaceenvironmental
committee
implementation
reportPLAN

ACTION

Workplace
Eco-Report

CHECK
Approval ofcommittee head

Explanation of Eco-Reports

Protecting Biodiversity
In March 2010, we issued the “DNP Group Biodiversity
Declaration” and stepped up our efforts to create a society that
fosters biodiversity. As we engage in our business activities,
DNP is committed to always keeping biodiversity in mind andcontributing to the formation of a sustainable society.
As an example of one of our eco-minded activities, DNP is

DO

Workplace
Eco-Reportenvironmental
goals

Environmental
activities

D
m
Imple
Compilation ofenvironmental
regulations

Workplaceeco-report:
Monthlyreport ofworkplace
activities

How DNP Works to
Achieve Sustainable
Development

CHECK

Set goals forworkplace

Workplace
Eco-Report
evaluation;planning fornext fiscal term
Give instructions
for improvement

Approval ofCommittee
Chairman

Co

Internal environmental audits (Eco-Audits)working on commercializing packaging material made of
biomass plastic containing plant-derived material. By using arenewable resource, we help reduce dependency on petroleum.
We plan to gradually replace the polyethylene terephthalate(PET) plastic packaging film that we supply to manufacturers offoods, beverages, and everyday items with the new biomass
plastic.

D N P A n n u a l R e p o r t 2 011

85

Development of Environmentally Conscious
Products
DNP is working to reduce the burden that our products
place on the environment in every phase of their life cycle:
from design and development to manufacturing,
distribution, consumption, disposal, and recycling. In thefiscal year through March 2011, sales of products
1 Reducing environmental pollutants

2 Conserving resources and energy

3 Using resources sustainably

Eliminating ozone-depleting substances, heavy
metals, and organic chlorides; reducing the release of
substances like nitrogen oxides into the environment.

Energy-saving products and systems; reducing
consumption of metal resources and fossil fuels

Sustainable use of natural resources

Example ● Resin Black Matrix Color Filters

Example ● Elbow Pouch

Example ● HI-CUP

We make LCD color
filters using film
instead of heavy metal
for the black matrix.
By developing thisproduct, we reduced
negative impact on
the environment andlowered costs at thesame time.

A refill pouch that iseasier to open andeasier to pour from.
Conserves resources
used for making
products containers;
collapses after use for
efficient disposal.

A heat-insulating,double-walled paper
container consistingof a paper cup withan outer paper sleevearound it. After use,
it can be crushed forcompact disposalor the paper can berecycled.

4 Enabling long-term use

5 Reusability

6 Recyclability

Supporting long-term product use by simplifying repairs
and parts replacement, offering long-term maintenanceand repair services, allowing for expansion offunctionality, etc.

In the case of parts, consideration for ease ofdisassembly, washing, refilling etc; establishment of
convenient collection and reuse systems.

Making products from easy-to-recycle materials,
designing them for ease of disassembly and sorting into
different materials, or creating collection and recycling
systems that are easy for consumers to use.

Example ● Safmalle

Example ● Easily removable shipping labels

Example ● Eco-friendly calendar

DNP’s original olefinbased decorative
sheet for furniture andhome fittings; facilitatescreation of the healthy,
clean, safe living
spaces that consumers
want.

Shipping labels thatstick well to paper or
cardboard packaging
but come off easily.
Single-ply shippinglabels save paper,
leave no marks whenremoved, facilitating
reuse of boxes
and other packing
materials.

Calendars made ofrecycled paper andeco-friendly ink.
Because the calendars
are processed without
the use of metal orplastic, they do notneed to be taken apartand sorted after use.

7 Use of recycled materials

8 Ease of processing and disposal

Products made with a significant amount of recycled orreused materials or parts

Placing minimal burden on waste incinerators andlandfills

150

Example ● Magazines and pamphlets

Example ● IB (Innovative Barrier) film

120

Printed materials
made of recycled
paper, containing
used magazines ornewspapers, etc. We
are also using moreenvironmentally friendly
inks, such as soy ink
and non-VOC ink.

Transparent, moistureproof packaging film ismade without chemicals
that contain chlorine,
so it does not emit
dioxins when burned.
It is used to package alarge number of foodproducts, toiletries andeveryday items that
require good barrier
protection.

made of recycled paper

86

developed according to DNP’s “Environmentally Conscious
Product Development Guidelines” amounted to 318.0
billion yen, compared with 312.1 billion yen a year earlier.
By increasing our efforts in this area, we plan to boost
sales of eco-friendly products and services to 400.0 billion
yen in the fiscal term through March 2016.

BM

Sales of DNP’s Eco-friendly Products(¥ billion)

(2)
(3)

90
60

(4)
(1)

30
0

07
■

■

08

09

10

(1) Information Communication(2) Lifestyle and Industrial Supplies

11
■

■

(3) Electronics(4) Other

How DNP Works to Achieve Sustainable Development ▶ Topics

TopicsTraveling Science Class Demonstrates the Wonder of Color
One of the important themes of DNP’s social contributions is“developing the next generation,” and one way we achieve this is byactively educating and cultivating a future generation of scientists.
In the fiscal year through March 2011, we conducted “traveling scienceclasses” at four elementary schools in Chiba Prefecture, where ourhead office’s research laboratory is located. This activity supports an
initiative by the Ministry of Economy, Trade and Industry to get working
people to support education. DNP’s representatives explained to thechildren in terms they could understand how printing technologies areuseful in society. The lessons were designed to pique the children’sinterest in science and technology.
Printed material using halftone dots in the three primary colors (cyan,
magenta, and yellow) to express a variety of colors

Local Contribution Activities Overseas
Tien Wah Press (Pte.) Ltd. (Singapore) primarily manufactures hardcover books
and pop-up books. The company works with the local community to help solve
social problems, mainly in the area of education, which is closely related to Tien
Wah Press’s main business.
For example, in 2007 Tien Wah Press became the first private company toparticipate in the activities of South West Community Development Council(SWCDC), an organization that uses money raised through recycling and otheractivities to support the education of disadvantaged children in southwestern
Singapore. In the fiscal term ended March 2011, SWDC/ Tien Wah Press
employees sold Chinese New Year greeting cards and sketchbooks decorated withlocal children’s drawings illustrating environment-related themes. Between
proceeds of the sales, donations, and contributions from the local community, theorganization raised a total of S$35,000 that was used to pay educational expenses
for 282 children.

March 2011: Some 250 people, including Tien Wah
Press employees, the head of South West Community
Development Council, and local primary and middle
school children participate in a charity run

How DNP Works to
Achieve Sustainable
Development

Exhibition of DNP’s Original Shueitai Font
In 2011, exhibitions were held at three galleries operated by DNP to mark the 100th
anniversary of the creation of DNP’s original Shueitai font.
The Shueitai font was created in 1912, and has attracted high praise for being
easy to read and for its elegant design. It was originally used in letterpress printing,and later adapted for use in desktop publishing, e-book publishing, and subtitles
and other text displayed on television and/or movie screens. DNP is currently
working on a Shueitai renewal project that we call the “Heisei no Dai Kaikoku”(engraving improvement project).
We updated the Mincho font in which this sentence is written in order to make itcompatible with the latest printing environments. We also digitized and beganmarketing fonts from the days of letterpress printing. These fonts are being
increasingly widely used in new areas such as e-books, movie subtitles, mobile
phones and computer games.

Poster for the Exhibition “Shueitai 100”

D N P A n n u a l R e p o r t 2 011

87

Financial Section
CONTENTS
90 Management’s Discussion and Analysis
100 Selected Financial Data
102 Consolidated Financial Statements

88

Financial Section

D N P A n n u a l R e p o r t 2 011

89

Management’s Discussion and Analysis

Operating Results
Business Environment
Economic conditions in Japan remained challenging during the current fiscal
year. Despite some signs of recovery driven by overseas economic growth,
especially in emerging countries, the economy was affected by a stronger
yen, rising crude oil prices, and high unemployment. Additionally, theTohoku-Pacific Ocean Earthquake in March 2011 could possibly have a verylarge impact on the Japanese economy, making the future outlook evenmore uncertain.
The printing industry continued to face a difficult business environment.
Unit prices declined in response to stiffer competition prompted by weak
consumer spending and corporate advertising spending. The earthquake
also weakened demand further at the end of the fiscal year.
The Information Communication segment faced challenging conditions. In
the books and magazines market, estimated sales of publications in Japanin the year ended March 2011 declined by 3.2% year over year, extending adowntrend that started in 1997. Moreover, although five books sold one
million copies in 2010, new publication circulation decreased by 4.9%.
Additionally, the earthquake appears to have affected the publishing market
through delivery delays caused by fuel shortages and poor road conditions
and the suspension of new releases and delay of publications due to paper
and ink shortages. In the commercial printing business, sales at advertisingrelated companies in the year ended March 2011 rose by 2.7% year overyear. Magazine advertising fell by 9.5% and newspaper advertising was
down by 5.8%, but television advertising grew by 3.6%, internet advertisingrose by 17.3%, and direct mailing was up by 4.4%. However, advertising has
still not recovered to the level prior to the global financial crisis in 2008. The
business forms business continued to struggle, as cutbacks in corporate
spending resulted in simpler forms and the credit and cash card businesses
were sluggish.
In the Lifestyle and Industrial Supplies segment, the packaging business
was weak overall owing to deflation and a slump in consumer spending inJapan’s market. In the lifestyle materials business, sales rose by 5.6% year
over year on a recovery in new housing starts in Japan during the year
ended March 2011, after slumping and falling below 800,000 for the firsttime in 45 years during the year ended March 2010. In the industrial supplies
business, optical films used in displays recorded strong sales on growth indemand for LCD TVs.
In the Electronics segment, worldwide shipments of LCD TVs surpassed
190 million units in 2010, and PC shipments totaled 345 million units, up
sharply from the previous year. Mobile phone shipments increased by 19%,due partly to growth for smart phones. However, domestic electronicsrelated companies were seriously affected by the earthquake in March, interms of both demand and supply chains, including temporary difficulties
with component supplies.

90

Financial Section ▶ Management’s Discussion and Analysis

Overview
The DNP (Dai Nippon Printing Co., Ltd.) Group sought to aggressively
develop its business and deliver products, services, and solutions tailored to
the needs of its customers, based on its P&I Solutions business vision (P&I
stands for “printing technologies” and “information technologies”). The
Group also pursued Production 21 activities to establish a robust production
structure in all facets of production, including quality, cost, and delivery time,and it worked to secure earnings.
DNP’s consolidated net sales for the year ended March 2011 grew by
0.4% from the previous year to 1,589.4 billion yen. Sales in the Information
Communication segment fell by 2.4%, due to a slump in the publications
market, cutbacks in corporate expenditures and advertising, and a reaction
to a large increase in sales of some products in the previous year. Sales inthe Lifestyle and Industrial Supplies segment decreased by 0.9%, due to an
overall decline for food packaging and other products on a slump in
consumer spending. Sales in the Electronics segment rose by 11.2% on
growth in demand for LCD displays, mainly large displays. Sales in the
Beverages segment increased by 0.3%.
Turning to profits, although the Information Communication segment
continued to face a difficult market environment, including a slump in the
publications market and cutbacks in corporate advertising expenditures,
overall profits were firm on growth for anti-reflection films and decorative
materials in the Lifestyle and Industrial Supplies segment and for LCD color
filters in the Electronics segment. However, the March earthquake resulted
in lower sales for some products and a decline in plant capacity utilization,and this significantly eroded profitability. As a result, consolidated operating
income grew by only 2.0% from the previous year.
The consolidated operating income margin rose by 0.1 percentage points
to 4.3%, but the consolidated ordinary income margin declined by 0.3
percentage points to 4.0%. Net income totaled 25.0 billion yen, rising by
7.5%, or 1.8 billion yen, from the previous year, due partly to earthquakerelated extraordinary losses of about 6.1 billion yen.
The consolidated operating income margin declined by 0.7 percentage
points to 2.5% in the Information Communication segment, rose by 0.7
percentage points to 8.8% in the Lifestyle and Industrial Supplies segment,
increased by 1.1 percentage points to 4.3% in the Electronics segment, andimproved by 2.9 percentage points to 2.0% in the Beverages segment.

Financial Section

D N P A n n u a l R e p o r t 2 011

91

Net sales (¥ million)

2011.32010.3¥ 1,589,373¥ 1,583,383

2009.3¥

1,584,844

Gross margin (%) 		

19.0% 		18.7%		

16.4%Operating income margin (%) 		

4.3% 		

4.2%		

2.9%

Ordinary income margin (%)		

4.0% 		

4.3%		

3.0%

Net income margin (%)		

1.6% 		

1.5%		–Net income (loss) per share (¥)

¥

38.86

¥

36.13

¥

(32.35)Net sales

Net Sales by Segment(year ended March 2011)

Beverages
Electronics
17.9%

3.9%

Information
Communication
45.0%

Lifestyle andIndustrial Supplies
33.2%

92

Net sales in the current fiscal year totaled 1,589,373 million yen, up 0.4%, or
5,990 million yen, from the previous year. Unit prices decreased as a result ofCorporate
stiffer competition prompted by weakBeverages
consumerspending and corporate
0,000
0,000
advertising expenditures, but sales
benefitedfromrobust demand for LCDElectronics
0,000
related products and growth for decorative
materials on a recovery in housing
Information
starts.
Communication
In the Information Communication segment, sales in the Books
0,000 andMagazines business gained momentum from the second half of the fiscal
year, buoyed by a recovery
for books,
but resumed a decline in January–Lifestyle&
Industrial Supplies
March, due partly to the earthquake
impact,and decreased year over year for
0,000
the full year. Book sales were on par with the previous year as the Group
Beverages
worked to expand sales, but magazine sales fell
below year-ago levels on
3.9%
decreases in circulation, page numbers,inInformation
Electronicsand prices and an increase
Communication
16.1% and publications distribution
discontinued publications. The education
46.3%
business achieved sales growth, due partly to an increase in newly
consolidated subsidiaries, including Bunkyodo Group Holdings Co., Ltd. In
the Commercial Printing business, sales increased for services such as event
planning and campaign administration, but decreased for flyers, catalogs,
LifestyleSales
andand point-of-purchase materials.
increased to specialty retailers andIndustrial Supplies
33.6%
consumer electronics retailers, but decreasedin the advertising, planning,and promotion, services, and cosmetics industries. In the Business Forms
business, IPS (information processing services) demand decreased on
cutbacks in corporate expenditures. For smart cards, the issuance of credit
cards, cash cards, and other financial cards was sluggish, and sales of ETC
cards for expressways decreased after recording strong sales last year. As aresult, net sales in the Information Communication segment declined by
2.4%.
In the Lifestyle and Industrial Supplies segment, sales of flat-panel display
anti-reflection film in the Industrial Supplies business rose above year-ago
levels despite production adjustments during the second half of the fiscal
year. Sales of ink ribbons for digital photo printers also increased. Lifestyle
Materials recorded strong sales on an upturn in the market. Packaging sales
decreased on lower sales of aseptic filling bottling systems for PET plastic
bottles and a general decline for food packaging. As a result, net sales in theLifestyle and Industrial Supplies segment declined by 0.9%.
In the Electronics segment, LCD color filters benefited from rising demand
for large panels in emerging countries and robust demand in Japan in
response to the Eco-point program. Demand for small and medium-sizedpanels used in smart phones and other products was also strong. The MarchFinancial Section ▶ Management’s Discussion and Analysis

earthquake caused some demand and supply chain disruptions, including
stoppages of component supplies, and although this caused sales todecrease during the fourth quarter, sales increased for the full year. For
photomasks, despite focusing on acquiring overseas demand, domestic
demand remained weak, and because the earthquake also had a major
impact on the domestic semiconductor industry, full-year sales decreased.
Net sales in the Electronics segment grew by 11.2% as a result of meetingrobust demand for LCD panel color filters during the first half of the year bylaunching operations at a new plant.
In the Beverages segment, amid a tough market environment,characterized by a slump in consumer spending and intensified sales
competition, net sales increased by 0.3% as a result of growth in demand
due to the hot summer and efforts to expand sales of Coca-Cola andGeorgia, both core products, and I LOHAS, a brand of mineral water thatuses “ecoru Bottle Shiboru,” Japan’s lightest bottle.

Gross Profit Margin(%)

25

Cost of Sales
The cost of sales edged up 0.1%, or 899 million yen, from the previous year
to 1,287,581 million yen. The gross margin improved by 0.3 percentage
points from 18.7% to 19.0%.
Crude oil prices surged during the year, reaching a high of 92 dollars per
barrel in January 2011, due partly to an inflow of surplus funds frommonetary easing in the US, growth in demand in emerging countries, andprospects for an economic recovery in the US. Prices for films, resins, andother raw materials were also raised several times. Additionally, althoughprices for paper raw materials increased, domestic printing demandremained weak and printing paper prices were maintained throughout theyear. As a result, higher prices for raw materials, mainly films, had a 3.4
billion yen impact during the year, and DNP passed about 20% of this
impact through to product prices through negotiations with customers.
The DNP Group has been pursuing Production 21 activities since April
2002, placing priority on efforts to enhance production efficiency, improveyields, reduce material losses, shorten production preparation and leadtimes, and otherwise reduce costs. DNP also worked to reduce indirect
costs, achieving a reduction of 32.2 billion yen for the year.

20

25
18.6

17.8

18.7

19.0

20

16.4

15

15

10

10

5

5

0

0

07

08

09

10

11

SGA Expenses to Net Sales(%)

Selling, General and Administrative Expenses

15

13.5
12.4

12.4

15

14.5

14.7

12

12

9

9

6

6

3

3

Financial Section

For selling, general and administrative expenses, DNP worked to reduce
variable costs by using information technology to enhance efficiency and bystrengthening budget management, and as a result of continuous cost
reduction efforts, it managed to reduce variable costs by 500 million yen.
However, overall selling, general and administrative expenses rose by 1.6%,
or 3,786 million yen, from the previous year to 233,973 million yen, duepartly to higher sales promotion costs and higher personnel costs fromnewly consolidated subsidiaries. Selling, general and administrative
expenses accounted for 14.7% of net sales, up 0.2 percentage points fromthe previous year.

0

0

07

08

09

10

11

D N P A n n u a l R e p o r t 2 011

93

Operating Income

Operating Income Margin
(%)

10

8
6.2
6

5.4

4

4.2

4.3

10

11

2.9

2

0

07

08

09

Operating income grew by 2.0%, or 1,305 million yen, from the previous year
to1067,819 million yen. Although DNP was affected by the Tohoku-Pacific
Ocean Earthquake at the end of the fiscal year, it achieved growth driven by
the8 Lifestyle and Industrial Supplies segment and the Electronics segment.
The operating income margin improved by 0.1 percentage points from 4.2%
6
to 4.3%.
In the Information Communication segment, operating income declined by4
22.7%, or 5.3 billion yen, from the previous year to 18.1 billion yen, due partly
to a slump in the Books and Magazines business, a decrease in Business2
Forms sales, and a decline in the profitability of the education andpublications
distribution business. In the Lifestyle and Industrial Supplies0
segment, operating income rose by 7.0%, or 3.1 billion yen, to 46.8 billion yen,buoyed by growth for anti-reflection films and decorative materials. In theElectronics segment, operating income grew by 47.0%, or 3.9 billion yen, to12.2 billion yen, on growth in sales of color filters, which sold well during thefirst half of the fiscal year. In the Beverages segment, operating income
improved by 1.8 billion yen to 1.2 billion yen on higher sales prompted byextremely hot summer weather.

ROE
(%)

Nonoperating
Income (Expenses) and Extraordinary Income
7.00(Losses)

7
6

5.75

5.1
4.4

5
4
3

2.6

2.7

10

11

2
1
0
–1
–2
– 2.2

–3

07

08

09

Nonoperating income totaled 9,671 million yen, down 21.8%, or 2,690 million
4.50
yen, from the previous year; and nonoperating expenses totaled 14,704
3.25
millionyen, up 46.6%, or 4,671 million yen. As a result, net nonoperating
2.00
expenses
were 5,033 million yen. Extraordinary income totaled 4,416 million
0.75
yen,
up 233.8%, or 3,093 million yen, from the previous year; andextraordinary
losses totaled 14,506 million yen, down 29.8%, or 6,163 million
-0.50
yen,
despitedisasterlosses and provision for disaster of 6,088 million yen. As-1.75
a result,
net
extraordinary
losses were 10,090 million yen, versus losses of-3.00
19,346 million yen in the previous year.
As a result of the above, income before income taxes and minority interests
grew by 6.5%, or 3,200 million yen, to 52,696 million yen.

Net Income
As a result of the above, net income grew by 7.5%, or 1,755 million yen, fromthe previous year to 25,033 million yen.
Net income per share was 38.86 yen, up from 36.13 yen in the previous
year.

94

Financial Section ▶ Management’s Discussion and Analysis

Liquidity and Capital Resources
To expand its business, DNP considers it important to steadily increase cash
flow through aggressive operating activities and to prioritize investment instrategic areas. DNP also believes that strengthening its financial position isessential to sustain stable medium- to long-term growth, and it worked
toward this goal during the current fiscal year.
Cash Flow
2011.32010.32009.3

Cash flow from operating activities ¥140,053

Cash flow from investing activities		（ 82,562 ）		 （120,684）		 （100,726）

Free cash flow 		

¥57,491 		

140,574¥

19,890		

131,569

30,843(¥ million)

This fiscal year, net cash provided by operating activities decreased by 0.4%
to 140,053 million yen.
Net cash used in investing activities totaled 82,562 million yen, down by
31.6%, or 38,122 million yen, from 120,684 million yen in the previous year,
due partly to lower payments for purchases of property, plant and equipment.
Net cash provided by financing activities totaled 15,186 million yen, up
15.7%, or 2,060 million yen, from 13,126 million yen in the previous year.
As a result of these activities, cash and cash equivalents at the end of the
fiscal year totaled 222,057 million yen, up 46.4%, or 70,347 million yen, fromthe previous year.
Free cash flow — i.e., net cash provided by operating activities minus net
cash used in investing activities — was 57,491 million yen, up 37,601 million
yen from 19,890 million yen in the previous year.

Interest-bearing Debt to Cash Flow Ratio(times)

2.0
1.6
1.5
1.2
0.9

1.0
0.6
0.5

0.5

0

07

08

09

10

11

Financial Section

D N P A n n u a l R e p o r t 2 011

95

Capital Expenditures, Research and Development
Expenditures, etc.
Capital Expenditures and Free Cash Flow(¥ billion)

200
162.9
150
119.1

116.1

102.2

96.2

100

57.5
50

34.8

30.8

19.9

0

– 50

-27.7

07

08

Capital expenditures

09

10

11

Free cash flow

DNP focuses capital expenditures primarily on strategic areas to ensurecompetitive advantages and on improving existing plants and equipment.
Capital expenditures
this fiscal year totaled 102.2 billion yen,down 14.2%, or200
200
16.9 billion yen, from the previous year.
Key capital 150
investments during the year included a new150
color filter plant in
Himeji City, Hyogo Prefecture and a new photomask plant in Taiwan.
100
100
By segment,
capital expenditures in the Information Communication
segment decreased by 2.9 billion yen from the previous year to 20.9 billion
50
50
yen, accounting for 21% of total capital expenditures. The Lifestyle andIndustrial Supplies
segment decreased by 2.7 billion yen to 20.1 billion yen, or
00
20% of the total. The Electronics segment decreased by 11.5 billion yen to56.5 billion yen, or 55% of the total. Other businesses increasedby 121 million-50
yen, to 4.7 billion yen, or 4% of the total.
Depreciation totaled 98.0 billion yen, up 6.9%, or 6.3 billion yen, from theprevious year. By segment, depreciation in the Information Communication
segment decreased by 877 million yen from the previous year to 24.0 billion
yen, accounting for 25% of total depreciation. The Lifestyle and Industrial
Supplies segment decreased by 1.7 billion yen to 26.1 billion yen, or 27% of
the total. The Electronics segment increased by 8.5 billion yen to 41.9 billion
yen, or 43% of the total. Other businesses increased by 320 million yen to 6.0
billion yen, or 5% of the total.
Research and development expenditures totaled 33.1 billion yen, down
2.1%, or 703 million yen, from the previous year.

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.

Total assets (¥ million)

Current Ratio(%)

2010.32009.3¥ 1,649,784¥ 1,618,854¥ 1,536,557

Current ratio (%) 		

177% 		

157%		

144%

Working capital/net sales (%)		

22% 		

17%		13%

Debt-to-equity ratio (%) 		

25% 		

18%		14%

Net assets per share (¥)¥ 1,410.44¥

1,422.34¥

1,393.91

200

200
166

177
157

157
144

150

100

50

0

07

96

2011.3

08

09

10

11

DNP’s total assets at the end of this fiscal year amounted to 1,649,784
million yen, an increase of 1.9%,
150 or 30,930 million yen, from the previous year.
Among current assets, cash, cash equivalents, and time deposits
increased by 46.9%, or 71,432
million yen, from the previous year to 223,848
100
million yen. Trade receivables decreased by 10.0%, or 45,034 million yen, to403,986 million yen. Inventories of finished products, work in process, raw
50materials, and supplies increased by 16.7%, or 19,787 million yen, to 138,607
million yen. As a result, current assets increased by 6.9%, or 50,992 million
0yen, to 790,943 million yen.
Among long-term assets, property, plant and equipment decreased by
0.3%, or 2,021 million yen, to 614,827 million yen. Intangible assets increased

Financial Section ▶ Management’s Discussion and Analysis

by 3.4%, or 1,174 million yen, to 35,891 million yen. Investments and otherassets decreased by 8.4%, or 18,863 million yen, to 206,868 million yen. As aresult, long-term assets decreased by 2.2%, or 19,709 million yen, to 857,587
million yen.
Current liabilities decreased by 5.1%, or 24,177 million yen, to 447,768
million yen.
Long-term liabilities increased by 31.3%, or 59,530 million yen, to 249,575
million yen, due mainly to bonds increasing by 52,353 million yen to 153,520
million yen.
As a result, total liabilities increased by 5.3%, or 35,353 million yen, to697,343 million yen.
Net assets for the fiscal year decreased by 0.5%, or 4,423 million yen, to952,441 million yen.
DNP repurchased about 112.86 million of its shares during the six years
from February 2003 to June 2008 and retired 59 million treasury shares
during the five years from 2004 to 2008. As of March 31, 2011, the number oftreasury shares totaled 55.81 million shares, or 7.97% of total shares
outstanding of 700,480,693 shares.

Equity Ratio
(%)

80

80
63.0

62.6

60

70
58.5

56.6

60

55.1

50
40

40

30
20

20

10
0

0

07

08

09

10

11

Financial Section

D N P A n n u a l R e p o r t 2 011

97

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

The Japanese economy and consumption trends
The Group engages in a wide range of businesses with an extremely large number ofcustomers. It conducts business so as not to be overly dependent on specific customers.
The Group does most of its business in the Japanese market and overseas sales accountfor about 12% 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 remains a strategic one that the Company intends to continue to
strive to expand. The Company aims to secure steady profits from it by focusing on building
business strategies based on a careful compilation of information and the development of
profitable, high-added-value products. However, the market for display components andsemiconductor products is subject to sudden changes. It is possible that the segment’s
performance could be affected by sudden changes affecting products that the Company
handles, such as dramatic fluctuations in demand or a plunge 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
The DNP Group uses its printing and information technologies to develop and provide to abroad range of industries products, technologies, and services that meet the needs ofcorporate clients and consumers. In recent years, the pace of technological innovation inthese areas has become faster than ever, and customers’ needs have been rapidly
diversifying. The Company believes that in the future, competition in the area of productdevelopment will become more intense than ever before, and it is possible that DNP’sperformance could fluctuate significantly due to unforeseeable changes in market trends ora shortening of product life cycles.

98

Financial Section ▶ Management’s Discussion and Analysis

Currency ﬂuctuations
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.

Legal compliance
The Company conducts business based on strict compliance with the law and social
ethics. Wherever it operates, in Japan or overseas, it is subject to a wide variety of legal
regulations and restrictions, including laws related to product liability, monopoly
prohibitions, the protection of personal information, patents, taxes, imports and exports,
etc. The Company expects that in the future such regulations could become even more
restrictive. Market and industry trends may change substantially as a result of deregulation.
If that should occur, it is possible that the Company’s business activities could be affectedby limitations on its business activities, the burdens of adapting to the changes, orincreased costs.

Environmental protection and stricter regulations
The Group 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, if soil iscontaminated 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’sbusiness could be substantially affected.

Information system security
With 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 Group regards the protection of data and personal information as a top priority. 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.

Disasters
Financial Section

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.

D N P A n n u a l R e p o r t 2 011

99

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

2011

2010

2009

2008

¥ 1,584,844¥ 1,616,053

Statements of Operations Data (¥ million)¥

1,589,373¥

1,583,383

Cost of sales		

1,287,581

		

1,286,682

		

1,324,522

		

1,327,872

Gross profit		301,792		

296,701		

260,322		

288,181

Selling, general and administrative expenses

		

233,973		

230,187		

214,145		

201,077

Operating income		

67,819		

66,514

		

46,177

		87,104

Ordinary income		

62,786

		68,841

		

47,390		

86,502

Income (loss) before income taxes and minority interests		

52,696

		

49,496

		(27,842)

		

88,469		

25,033

		23,278

		

(20,933)

		

45,172¥

1,649,784¥

1,618,854

Property, plant and equipment – net		614,827

		

616,848		

604,904		

639,343

Long-term liabilities		

249,575		

190,045

		

126,671		

106,691

Total liabilities		

697,343		

661,990		

596,471		

561,058

Total stockholders’ equity

		

–

		

–

		

–

		

–

Stockholders’ equity

		925,702		

921,775		

917,348		

990,122

Total net assets

		952,441		

956,864		

940,086		

1,040,135¥

102,173¥

119,063¥

96,156¥116,139

Depreciation expenses

		97,977

		

91,695

		

106,883		

109,902

R&D expenditures		33,147

		

33,850		

34,112

		

35,556

¥

38.86

¥

36.13

¥

(32.35)¥

67.08

Earnings (loss) per share – fully diluted

		

–

		

–

		

–

		

–

Dividends paid per share

		

32.00

		

32.00

		

32.00

		

36.00

Book value per share		

1,410.44

		

1,422.34

		

1,393.91

		

1,516.35

No. of common shares outstanding (exc. treasury shares)

644,142,530

Net sales

Net income (loss)
Balance Sheet Data (¥ million)
Total assets¥ 1,536,557¥ 1,601,193

Other Selected Data (¥ million)
Capital expenditures

Common Share Data (¥, shares)
Earnings (loss) per share – primary		 644,238,930

		644,357,076

		661,366,377

Financial Ratios (%, times)
As a percent of net sales:100		 Gross profit

18.99%

		18.74%

		16.43%

		17.83%

		 Selling, general and administrative expenses

14.72

		

14.54

		

13.51

		

12.44

		 Operating income

4.27

		

4.20

		

2.91

		

5.39

		 Income (loss) before income taxes and minority interests

3.32

		

3.13

		

-1.76

		

5.47

		 Net income (loss)

1.57

		

1.47

		

-1.32

		

2.80

Return on equity

2.74

		

2.57

		

-2.20

		

4.35

Current ratio

177

		

157

		

144

		

157

D/E ratio

25

		

18

		

14

		

8

Financial Section ▶ Selected Financial Data

2007

2006

2005

2004

2003

2002

¥ 1,557,802¥ 1,507,506¥ 1,424,943¥ 1,354,101¥ 1,309,002¥ 1,311,934

		

1,268,072

		

1,202,160

		

1,121,374

		

1,073,118

		

1,043,456

		

1,071,163

		

289,730		

305,346		

303,569

		

280,983		

265,546		

240,771		

193,585

		

184,676

		

183,041

		

178,545

		

175,665

		

168,529

		

96,145

		120,670		

120,528		

102,438		

89,881

		72,242

		

101,348

		

124,715

		

120,485		

97,276

		

88,177

		

74,775

		

98,950		

114,640

		

107,686

		

93,137

		42,244

		

26,150		

54,842

		

65,188

		

59,937

		

52,971

		

28,774

		

15,609¥ 1,700,250¥ 1,662,377¥ 1,600,129¥ 1,513,734¥ 1,450,027¥ 1,432,458

		635,784		

568,966		

528,009		

513,175

		

540,874		

543,962		

118,437

		

118,287

		

115,801		

119,277

		

66,821

		

79,013

		

600,811

		

571,170		

566,796		

510,970		

484,581		

460,691		–		

1,063,309

		

1,007,944

		

978,736		

942,083		

946,998		

1,027,475

		

–

		

–

		

–

		

–

		

–

		

1,099,439

		

–

		

–

		

–

		

–

		

–

¥

162,886¥

136,059¥

86,057¥

69,834¥73,789¥85,096

		100,161		87,264

		

80,440		

85,182

		

89,239		

94,870		

30,113

		28,692

		

26,386

		

26,050		

24,097

		

23,367

¥

78.10

¥

91.23

¥

82.56

¥

71.49

¥

37.80

¥

20.55

		

–

		

–

		

–

		

–

		

37.67

		

20.53

		

32.00

		

26.00

		

24.00

		

21.00

		

19.00

		

18.00

		

1,544.02

		

1,507.90

		

1,409.18

		

1,348.40

		

1,270.81

		1,246.99

		694,226,171

		704,972,101

		715,076,830

		725,677,422

		741,161,150

		759,480,693

18.60%

		

20.26%

		21.30%

		20.75%

		

20.29%

		18.35%

		

12.43

		

12.25

		

12.85

		

13.19

		

13.42

		

12.85

		

6.17

		

8.00

		

8.46

		

7.57

		

6.87

		

5.51

		

6.35

		

7.60

		

7.56

		

6.88

		

3.23

		

1.99

		

3.52

		

4.32

		

4.21

		

3.91

		

2.20

		

1.19

		

5.14

		

6.29

		

6.03

		

5.52

		

3.02

		

1.65

		

166

		

178

		

186

		

197

		

171

		

181

		

6

		

6

		

7

		

7

		

6

		

7

D N P A n n u a l R e p o r t 2 011

Financial Section

		

101

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, 2011 and 2010

2010

2011

2011

AssetsCurrent assets:
Cash and cash equivalents (Notes 4 and 16)
Time deposits (Note 16)
Securities (Notes 5 and 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¥

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

Property, plant and equipment, at cost (Notes 7 and 14):Land
Buildings
Machinery and equipment
Leased assets
Construction in progress
Total
Accumulated depreciation
Net property, plant and equipment
Other assets (Notes 7,13,14 and 16)

Total assets¥

222,0571,791
9
403,986(6,995)
138,607
31,488790,943

151,710706
9449,020(4,328)118,820
24,014739,951$

2,675,386
21,578108
4,867,301(84,277)
1,669,964
379,374
9,529,434

22,104
114,438
2,334
138,876

23,359124,715
1,988
150,062

266,313
1,378,771
28,121
1,673,205

138,650
531,440
1,028,119
33,51647,037
1,778,762(1,163,935)
614,827

135,485
508,518
1,006,219
26,30951,434
1,727,965(1,111,117)
616,848

1,670,482
6,402,892
12,386,976
403,807566,710
21,430,867(14,023,313)
7,407,554

105,138

111,993

1,266,723

1,649,784

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

102

¥

¥

1,618,854$

19,876,916

Financial Section ▶ CONSOLIDATED FINANCIAL STATEMENTS

Thousands of
U.S. dollars (Note 3)

Millions of yen

Dai Nippon Printing Co., Ltd. and Consolidated Subsidiaries
March 31, 2011 and 2010

2010

2011

2011

Liabilities and Net Assets
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)
Provision for loss from a disaster
Other current liabilities (Notes 7, 10 and 13)
Total current liabilities¥

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

51,403
11,019275,525
37,952
10,487
4,648
56,734
447,768¥

50,547
4,240
308,630
35,566
15,623–57,339471,945$619,313
132,759
3,319,578
457,253
126,349
56,000683,5435,394,795

168,323
39,261
41,991
249,575

112,186
43,23034,629190,045

2,027,988
473,024505,916
3,006,928

114,464
144,898
760,453

114,464
144,898
756,430

1,379,084
1,745,759
9,162,085(94,113)925,702(94,017)921,775(1,133,892)
11,153,036

833
(12)
(18,000)(17,179)
16
43,902
952,441

8,060(11)(13,499)(5,450)–40,539956,864

10,036(145)(216,867)(206,976)
193
528,940
11,475,193

Contingent liabilities (Note 18)

Net 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
56,338,163 shares in 2011 and 56,241,763 shares in 2010 (Note 9)
Total stockholders’ equity
Accumulated other comprehensive income
Net unrealized gains on available-for-sale securities
Net deferred losses on derivatives
Foreign currency translation adjustments
Total accumulated other comprehensive income
Share acquisition rights
Minority interests
Total net assets
Total liabilities and net assets¥

1,649,784¥

1,618,854$

19,876,916
Financial Section

D N P A n n u a l R e p o r t 2 011

103

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

Millions of yen

Dai Nippon Printing Co., Ltd. and Consolidated Subsidiaries
Years ended March 31, 2011 and 2010

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¥¥

1,589,373
1,287,581
301,792
233,973
67,819Other income (expenses) (Note 12):Interest and dividend income
Interest expenses
Equity in losses of associated companies
Foreign exchange transaction loss
Net loss on 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)
Amortization of consolidation goodwill
Disaster losses and provision for disaster
Other

Income before income taxes and minority interests
Income taxes (Note 13):
Current
Deferred

Net income before minority interests
Minority interests
Net income

2010

2011

$

3,197
(2,363)(103)(117)(6,086)40(1,200)(378)(11,063)–
1,055(17,018)

40,398(33,434)(4,976)(20,145)(10,892)
8,361(5,253)(20,301)–(73,349)(62,613)(182,204)

52,69649,496

634,892

20,027
8,003
28,03022,062
3,700
25,762

241,289
96,422
337,711

24,66623,734

297,181¥(456)
23,278$

4,421
301,602

U.S. dollars (Note 3)

Yen

2010

2011

2011

Net assets per common share¥

1,410.44¥

1,422.34$

16.99

Net income per common shareprimary

¥

38.86

¥

¥36.13$

0.47

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

104

19,149,072
15,513,024
3,636,048
2,818,952
817,096

3,353(2,775)(413)(1,672)
(904)
694
(436)
(1,685)–(6,088)(5,197)(15,123)367
25,033¥

1,583,383
1,286,682
296,701
230,187
66,5142011

Financial Section ▶ CONSOLIDATED FINANCIAL STATEMENTS

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

Millions of yen

Dai Nippon Printing Co., Ltd. and Consolidated Subsidiaries
Years ended March 31, 2011

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

2011¥

24,6662011$(7,108)(2)(5,023)(59)(12,192)
12,474¥

13,302(828)

297,181(85,639)(24)(60,518)(711)(146,892)
150,289$

160,265(9,976)

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

Financial Section

D N P A n n u a l R e p o r t 2 011

105

Consolidated Statements of Changes in Net Assets
Millions of yen

Dai Nippon Printing Co., Ltd. andConsolidated Subsidiaries
Years ended March 31, 2011 and 2010

Balance at March 31, 2009
Changes of items during the period
Net income
Cash dividends paid
Net increase resulting from changes
in consolidated subsidiaries
Increase due to stock transfer
Purchases of treasury stock
Disposal of treasury stock
Changes in unrealized gains
on available-for-sale securities
Changes in deferred losses
on derivatives
Changes in foreign currencytranslation adjustments
Changes in minority interests
Total changes of items during the period
Balance at March 31, 2010
Changes of items during the period
Net income
Cash dividends paid
Purchases of treasury stock
Disposal of treasury stock
Changes in unrealized losses
on available-for-sale securities
Changes in deferred losses
on derivatives
Changes in foreign currencytranslation adjustments
Changes in share acquisition rights
Changes in minority interests
Other
Total changes of items during the period
Balance at March 31, 2011

Stockholders’ equity

Accumulated other comprehensive income
Net unrealized
Foreign
gains (losses) on Net deferredcurrency
available-for-sale gains (losses) translation
on derivatives adjustments
securities

Number ofsharesissued(in thousands)

Commonstock

CapitalsurplusRetainedearnings

700,480

114,464

144,898

751,870(93,884)(3,883)

(5)

–
–

–
–

–
–

23,278(19,345)

–
–

–
–

–
–
–
–

–
–
–
–

–
–
–
–

192
442
–
(7)

–
–
(154)
21

–

–

–

–

–

–

–

–
–
–
700,480–––
114,464

–
–
–
–

Share
acquisitionrightsMinority
interests(15,285)–

41,911

–
–

–
–

–
–

–
–

–
–
–
–

–
–
–
–

–
–
–
–

–
–
–
–

–
–
–
–

–

11,943

–

–

–

–

–

–

–

(6)

–

–

–

–
–
–
144,898––
4,560
756,430––(133)(94,017)––
11,943
8,060

–
–
(6)
(11)

1,786
–
1,786
(13,499)

–
–
–
–

–
(1,372)(1,372)40,539

–
–
–
–

–
–
–
–

25,033(20,632)
–
(8)

–
–
(118)
22

–
–
–
–

–
–
–
–

–
–
–
–

–
–
–
–

–
–
–
–

–

–

–

–

–

(7,227)

–

–

–

–

–

–

–

–

–

–

(1)

–

–

–

–
–
–
–
–
700,480–––––
114,464–––––
144,898

–
–
–
(370)
4,023
760,453

–
–
–
–
(96)
(94,113)––––(7,227)
833

–
–
–
–
(1)
(12)

(4,501)–––(4,501)(18,000)

–
16
–
–
16
16

–
–
3,363
–
3,363
43,902

ShareacquisitionrightsMinority
interests

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

Balance at March 31, 2010
Changes of items during the period
Net income
Cash dividends paid
Purchases of treasury stock
Disposal of treasury stock
Changes in unrealized gains
on available-for-sale securities
Changes in deferred losses
on derivatives
Changes in foreign currencytranslation adjustments
Changes in share acquisition rights
Changes in minority interests
Other
Total changes of items during the period
Balance at March 31, 2011

Stockholders’ equity
Treasurystock,
at cost700,480 1,379,084 1,745,759

9,113,614(1,132,735)

97,108(133)(162,639)–

488,422

Capitalsurplus

–
–
–
–

–
–
–
–

–
–
–
–

301,602(248,578)
–
(96)

–
–
(1,422)
265

–
–
–
–

–
–
–
–

–
–
–
–

–
–
–
–

–
–
–
–

–

–

–

–

–

(87,072)

–

–

–

–

–

–

–

–

–

–

(12)

–

–

–

–
–
–
–
–
–
–
(4,457)(1,157)
48,471
9,162,085 (1,133,892)––––(87,072)
10,036

–
–
–
–
(12)
(145)

(54,228)–––(54,228)(216,867)

–
193
–
–
193
193

–
–
40,518–40,518528,940

–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
700,480 1,379,084 1,745,759

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

106

Accumulated other comprehensive income
Net unrealized
Foreign
gains (losses) on Net deferredcurrency
available-for-sale gains (losses) translation
on derivatives adjustments
securities

Retainedearnings

CommonstockFinancial Section ▶ CONSOLIDATED FINANCIAL STATEMENTS

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

Millions of yen

Dai Nippon Printing Co., Ltd. and Consolidated Subsidiaries
Years ended March 31, 2011 and 2010

52,696¥¥¥49,496

2011$

634,892

97,9781,685
1,146(4,177)413
2,554(3,353)
2,775
(694)
436
904
48,851(7,135)(36,477)
4,781
162,383(22,330)
140,053

91,695
378
(80)
2,263
103
16,220(3,197)
2,363
(52)
1,200
6,086
(39,672)
1,970
17,8992,775
149,447(8,873)
140,574

1,180,458
20,30113,807(50,325)
4,976
30,771(40,398)
33,434(8,361)
5,253
10,892588,566(85,964)(439,482)
57,602
1,956,422(269,036)
1,687,386(171)(89,846)
7,059(2,156)
11,095
3,502(12,045)(82,562)6,130(108,596)
2,557(13,456)
7,048
3,163
(17,530)(120,684)(2,060)(1,082,482)
85,048(25,976)
133,675
42,193(145,121)(994,723)(12,447)
14,699(9,786)53,700(2,660)(21,094)(118)(7,108)15,186(2,458)70,219151,710–(10,119)
3,340(3,702)50,000(2,201)(19,684)(155)(4,353)
13,126889
33,905
117,200
605(149,964)
177,096(117,904)
646,988(32,048)(254,145)(1,422)(85,637)
182,964(29,615)
846,012
1,827,832–

128
222,057¥–
151,710$1,542
2,675,386

Financial Section

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 losses of associated companies
Amortization of consolidation goodwill (net)
Interest and dividend income
Interest expenses
Net gain on sales of investment securities
Loss on devaluation of investment securities
Net loss on disposal of property, plant and equipment(Increase) decrease in trade receivables(Increase) decrease in inventories
Increase (decrease) in trade payables
Other
Sub-total
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
Interest and dividend received
Other
Net cash used in investing activities
Cash flows from financing activities:
Net (decrease) in short-term bank loans
Proceeds from long-term debt
Repayments of long-term debt
Proceeds from issuance of unsecured debentures
Interest paid
Dividend paid
Payments for purchases of treasury stocks
Other
Net cash provided by financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents of newly consolidated subsidiaries
Increase in cash and cash equivalents resulting from merger with
non-consolidated subsidiaries
Cash and cash equivalents at end of year

2010

2011

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

D N P A n n u a l R e p o r t 2 011

107

Notes to Consolidated Financial Statements

Dai Nippon Printing Co., Ltd. and Consolidated Subsidiaries March 31, 2011 and 2010
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. Under Japanese GAAP, aconsolidated statement of comprehensive income is required from the fiscal year ended March 31, 2011 and has been presented
herein. Accordingly, accumulated other comprehensive income is presented in the consolidated balance sheet and the consolidated
statement of changes in net assets. In addition, “net income before minority interests” is disclosed in the consolidated statement ofincome from the year ended March 31, 2011. Certain reclassifications of accounts and modifications have been made in theaccompanying consolidated financial statements to facilitate understanding by readers outside Japan. Certain reclassifications havealso been made in the 2010 financial statements to conform with current classifications. In addition, the notes to the consolidated
financial statements include additional information which is also not required for 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-five subsidiaries
whose fiscal years end December 31 and twenty-five 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.
Nine subsidiaries whose fiscal years end August 31 and one subsidiary whose fiscal year ends June 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 not exceeding 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.
Property, plant and equipment and depreciation
Property, plant and equipment are carried at cost. Major renewals and additions are capitalized, while minor renewals, maintenance108

Financial Section ▶ CONSOLIDATED FINANCIAL STATEMENTS

and 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:
Buildings
Machinery and equipment

3 to 50 years
2 to 13 years

Assets with an acquisition cost of ¥100,000 ($1,205) or more per unit and less than ¥200,000 ($2,410) per unit are depreciated over three
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.
Intangible assets
Intangible assets included in other assets are carried at cost less accumulated amortization calculated by the straight-line method over theirestimated useful lives. Software development costs for internal use included in intangible assets are amortized by the straight-line method
over five years.
Impairment of fixed assets
The Company and its subsidiaries review fixed assets for impairment whenever events or changes in circumstance indicate the carrying
amount of an asset or asset group may not be recoverable. An impairment loss would be recognized if the carrying amount of an asset or
asset group exceeds the sum of the undiscounted future cash flows expected to result from the continued use and eventual 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 and eventual disposition of the asset or the
net selling price at disposition.
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 theestimated 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 of the 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.
Research and development expenses
Research and development expenses are charged to income as incurred.
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 by applying
currently enacted tax laws to the temporary differences.
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 those whichmeet 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 tobe elected under the accounting standard if the forward contracts qualify for hedge accounting.

Change in accounting policies
Application of “Accounting Standards for Asset Retirement Obligations”
Beginning with the first quarter of the fiscal year ending December 31, 2011, “Accounting Standards for Asset Retirement Obligations”(Accounting Standards Board of Japan (ASBJ) Statement No. 18, issued on March 31, 2008) and “Guidance on Accounting Standards for
Asset Retirement Obligations” (ASBJ Guidance No. 21, issued on March 31, 2008) have been applied. Under this accounting standard, an
asset retirement obligation is defined as a legal obligation imposed either by law or contract that results from the acquisition, construction,
development and the normal operation of a tangible fixed asset and is associated with the retirement of such tangible fixed asset. As aresult, operating income decreased by ¥265 million ($3,193 thousand), ordinary income decreased by ¥449 million ($5,410 thousand) andincome before income taxes and minority interests decreased by ¥950 million ($11,446 thousand).

D N P A n n u a l R e p o r t 2 011

Financial Section

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,
2011 and 2010, 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 the Company has not issued any dilutive
securities.

109

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 ¥83=U.S. $1, the approximate exchange rate on the Tokyo Foreign Exchange Market at March 31, 2011. 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, 2011 and 2010 were comprised of the following:Thousands of
U.S. dollars (Note 3)

Millions of yen

2010

2011
Cash and deposits(excluding time deposits with a maturity over three months)¥¥

222,057

151,7102011$

2,675,386

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, 2011 and 2010 were as follows:
Millions of yen

March 31, 2011
StocksOthers
Total

Acquisition cost
112,167411¥
112,578¥

Unrealized gains
14,7342¥
14,736¥

Unrealized losses
12,8598¥
12,867¥¥¥

Fair value
114,042405
114,447

Thousands of U.S. dollars (Note 3)

March 31, 2011
StocksOthers
Total

Acquisition cost
1,351,410
4,952$
1,356,362$

Unrealized gains
177,518
24$
177,542$

Unrealized losses
154,92896$
155,024$$$

Fair value
1,374,000
4,880
1,378,880

Millions of yen

March 31, 2010
StocksOthers
Total

Acquisition cost
100,741
10,295¥
111,036¥

Unrealized gains
21,452
4¥
21,456¥

Unrealized losses
7,762
6
¥
7,768
¥

¥
¥

Fair value
114,431
10,293
124,724

The proceeds from sales of available-for-sale securities for the years ended March 31, 2011 and 2010 were ¥946 million ($11,398
thousand) and ¥163 million, respectively. The gross realized gains on these sales for the years ended March 31, 2011 and 2010 were ¥696
million ($8,386 thousand) and ¥46 million, respectively, and the gross realized losses on these sales for the years ended March 31, 2011
and 2010 were ¥2 million ($24 thousand) and ¥5 million, respectively.
The redemption schedules for securities with maturities classified as held-to-maturity debt securities and other securities at March 31,
2011 and 2010 were as follows:
Millions of yen

March 31, 2011
Corporate bonds

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

180

Over five years¥

100

Thousands of U.S. dollars (Note 3)

March 31, 2011
Corporate bonds

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

2,169

Over five years
$

1,205

Millions of yen

March 31, 2010
Corporate bonds
Other bonds

110

Due in one
year or less
¥
¥

–
–
–

Due after one year
through five years
¥
¥

180
–
180

Over five years
¥
¥

–
5,000
5,000

March 31, 2011
Corporate bonds

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

Over five years¥Financial Section
180 ▶ CONSOLIDATED¥
100FINANCIAL STATEMENTS
Thousands of U.S. dollars (Note 3)

March 31, 2011
Corporate bonds

Due in one
year or lessDue after one year
through five years

–

$

$

2,169

Over five years
$

1,205

Millions of yen

March 31, 2010
Corporate bonds
Other bonds

Due in one
year or lessDue after one year
through five years

–
–
–

¥
¥

¥

180
–
180

¥

Over five years
¥
¥

–
5,000
5,000

6. Inventories
Inventories at March 31, 2011 and 2010 consisted of the following:Thousands of
U.S. dollars (Note 3)

Millions of yen

Finished products
Work in process
Raw materials

¥

¥

2011
87,446
31,585
19,576
138,607¥¥2010
71,341
29,722
17,757
118,820$$2011
1,053,566
380,542
235,856
1,669,964

7. Short-term Bank Loans and Long-term Debt
Short-term bank loans at March 31, 2011 and 2010 were represented by bank loans and bank overdrafts, etc. bearing interest at an
average rate of 0.74 % per annum for 2011 and 1.41 % per annum for 2010.
Long-term debt at March 31, 2011 and 2010 consisted of the following:Thousands of
U.S. dollars (Note 3)

Millions of yen

2011
Secured debentures
1.05% due 2014
1.05% due 2013
0.66~1.13% due 2012
0.78~1.13% due 2011
Unsecured debentures
1.358% due 2021
1.705% due 2020
0.65% due 2016
0.55~0.65% due 2015
0.45~1.67% due 2014
0.65~1.35% due 2013
0.65~1.75% due 2012
1.04% for 2009 and 1.75% for 2010 due 2012

2010

2011

¥

40
40
87
–

¥

40
40
87
220

$

482
482
1,048
–

¥

50,00050,000340
1,340
51,380
380
1,516
–

¥

–
50,000––50,000
–
–
1,000

$

602,410602,410
4,096
16,145
619,036
4,578
18,265–Mortgage loans, maturing 2011-2015
Unsecured loans, maturing 2011-2018
Current portion of long-term debt¥

3,262
20,957
179,342(11,019)
168,323

¥

5,146
9,893
116,426(4,240)112,186$

Thousands of
U.S. dollars (Note 3)

¥
¥

2011
23,120(7,662)
15,458¥¥2010
22,192(6,237)
15,955$$

2011
278,554(92,313)
186,241

D N P A n n u a l R e p o r t 2 011¥

Financial Section

Finance lease obligations
Current portion of lease obligations¥

39,301
252,494
2,160,747(132,759)
2,027,988

Finance lease obligations at March 31, 2011 and 2010 which are included in other long-term liabilities consisted of the following:
Millions of yen¥

111

Mortgage loans were secured by property, plant and equipment and other assets amounting to ¥14,985 million ($180,542 thousand)and ¥9,784 million at March 31, 2011 and 2010, respectively.
With minor exceptions, interest rates on mortgage loans ranged from 1.34 % to 2.25 % per annum for 2011 and ranged from 0.73 %to 2.86 % per annum for 2010, while interest rates on unsecured loans ranged from 0.64 % to 2.35 % per annum for 2011 and from0.54 % to 2.86 % per annum for 2010.
The aggregate annual maturities of long-term debt after March 31, 2011 were as follows:
Thousands of
U.S. dollars (Note 3)

Millions of yen

Years ending March 31
2012
2013
2014
2015
2016
2017 and thereafter

11,0194,531
55,212
4,238
3,577
100,765
179,342

¥

¥

$

$

132,759
54,590665,205
51,06043,0971,214,036
2,160,747

The aggregate annual maturities of finance lease obligations after March 31, 2011 were as follows:
Thousands of
U.S. dollars (Note 3)

Millions of yen

Years ending March 31
2012
2013
2014
2015
2016
2017 and thereafter

¥

¥

7,662
5,439
3,252
1,262
743
4,762
23,120$$92,31365,53039,181
15,205
8,952
57,373
278,554

8. Retirement Benefits
The Company and its domestic subsidiaries have several defined benefit retirement plans covering all of their employees, i.e.
corporate pension plan, tax-qualified non-contributory 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 causeof 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 the employment 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, 2011 and 2010 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

¥

¥

2011
186,008(132,698)(16,010)(1,526)
3,487
39,261¥¥

2010
176,040(123,243)(11,490)(2,181)
4,104
43,230$$2011
2,241,060(1,598,771)(192,891)(18,386)
42,012
473,024

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
Other
Net periodic benefit costs

112

¥

¥

2011
10,227
4,291(3,177)
2,084
2,147
142
15,714

¥

¥

2010
9,627
4,094
(2,355)
7,712
2,356
108
21,542$$

2011
123,217
51,699(38,277)
25,10825,867
1,711
189,325

Financial Section ▶ CONSOLIDATED FINANCIAL STATEMENTS

Assumptions used for the years ended March 31, 2011 and 2010 were set forth as follows:
2011
Straight-line method
2.5%
2.5%
9 years
6 years

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

2010
Straight-line method
2.5%
2.5%
9 years
6 years

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;(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 (expect 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 ¥10,314 million ($124,265 thousand) were approved at the generalstockholders’ meeting held in June 2011 with respect to the year ended March 31, 2011.
(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.
(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.
10. Accounts with Non-consolidated Subsidiaries and Associated Companies
Account balances with non-consolidated subsidiaries and associated companies as of March 31, 2011 and 2010 were summarized
as follows:
Thousands of
U.S. dollars (Note 3)

Millions of yen

¥

2011
5,396
538
16,355
5,159
590
4,102
269
724

¥

2010
4,484
329
17,667
5,416
275
4,965
263
855

$

2011
65,012
6,482
197,048
62,1597,10849,422
3,241
8,723

D N P A n n u a l R e p o r t 2 011

Financial Section

Trade receivables
Other current assets
Investment securities (stock)
Long-term loans
Other investments
Trade payables
Accrued expenses
Other current liabilities11311. Selling, General and Administrative Expenses
Selling, general and administrative expenses for the years ended March 31, 2011 and 2010 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

¥

¥

2011
66,754
5,980
4,515
11,21330,619114,892
233,973¥¥2010
65,3655,804
7,183
10,85731,063109,915230,187$$2011
804,265
72,04854,398135,096368,904
1,384,241
2,818,952

Total research and development expenses (including manufacturing costs) amounted to ¥33,147 million ($399,361 thousand) and¥33,850 million for 2011 and 2010, respectively.
12. Other Income
The following types of income from non-consolidated subsidiaries and associated companies were included in other income.
Thousands of
U.S. dollars (Note 3)

Millions of yen

Interest and dividend income
Leasing fees

¥

2010

2011
103
203

¥

120
262

$

2011
1,241
2,446

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 40.7% for the years ended March 31, 2011 and 2010,
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, 2011 and 2010, respectively.
2010
40.7 %
3.0
12.6
(1.8)
(2.0)
(0.5)
52.0 %

2011
40.7 %
(0.7)
1.3
11.7
1.6
(1.4)
53.2 %

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

Net deferred tax assets at March 31, 2011 and 2010, 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

114

Prepaid expenses and other current assets
Other assets¥

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

¥
¥

2011
10,41537,196(8)(2,628)44,975

¥

¥
¥

2010
9,775
40,575(13)(2,711)
47,626

$

$
$

2011
125,482
448,144(96)(31,663)541,867

Financial Section ▶ CONSOLIDATED FINANCIAL STATEMENTS

Significant components of deferred tax assets at March 31, 2011 and 2010 were as follows:
Thousands of
U.S. dollars (Note 3)

Millions of yen

2011
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
Deferred tax liabilities:
Unrealized gain on available-for-sale securities
Reserve for special depreciation
Undistributed earnings of subsidiaries
Other
Total
Net deferred tax assets :¥2010
20,276
5,016
5,573
6,515
1,046
36,363
15,506
14,868105,163(41,259)
63,904$$¥(5,554)(5,524)(1,480)(3,720)(16,278)$(3,964)(61,952)(19,398)(61,590)(146,904)¥

47,626$

541,867

18,919
5,883
5,955
6,686
986
36,9499,641
18,078103,097(45,929)
57,168

¥

¥

¥

(329)
(5,142)(1,610)(5,112)(12,193)¥

44,975

¥

¥

2011

¥

227,940
70,88071,74780,554
11,880445,169
116,157
217,806
1,242,133(553,362)
688,771$

14. Impairment Loss on Fixed Assets
The Company and its consolidated subsidiaries reviewed the fixed assets for impairment for the years ended March 31, 2011 and2010. 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, 2011 and 2010 were recognized in the amount of ¥1,685
million ($20,301 thousand) and ¥378 million, respectively due to a significant decline in profitability. The recoverable amounts of thebusiness assets were measured at their value in use which was calculated by discounting future cash flow. The recoverable amountsof the idle assets were measured at the net selling. The carrying amounts of the idle assets were devalued to the nominal amountsince calculation of its net selling value was difficult and its future cash flow was negative. The losses on impairment of fixed assets
for the years ended March 31, 2011 and 2010 were as follows.

2011
2010
2011
2010
2011
Buildings and structures Deferred tax assets:
18,976
158
1,575
¥
$
¥
¥
¥
18,91920,276
Excess provision for retirement benefits
Others
1,325
220
110
5,883
5,016
Loss on devaluation of investment securities ¥Total
20,301
378
1,685
$
¥
5,955
5,573
Excess provision for doubtful receivables
6,686
6,515
Accrued bonuses
986
1,046
Loss on write-down of inventories
36,94936,363Operating loss carryforwards
15. Leases
9,641
15,506
Impairment loss on fixed assets
Finance leases
18,07814,868Other31, 2009, the Company and its domestic subsidiaries adopted “Accounting
Effective the year ended March
Standard for Lease
103,097
105,163
Total deferred tax assets
Transactions.” Under this standard, finance lease transactions without ownership-transfer whose inception date is on or before(45,929)(41,259)
Less: valuation allowance
March 31, 2008 are still allowed to be accounted for as operating leases. Pro forma information such as acquisition cost,¥
57,168¥63,904
Total

accumulated depreciation and net book value of the leased properties for such finance lease transactions was as follows:
Millions of yen

2011
20,526(15,785)
(235)
4,506

¥

(329)
(5,142)
2010(1,610)34,032¥(5,112)(25,494)(12,193)
¥
(349)
8,189
¥ ¥
44,975

Thousands of
U.S. dollars (Note 3)¥(5,554)(5,524)2011(1,480)247,301$(3,720)(190,181)¥(16,278)(2,831)54,289$¥47,626

2011
$

$

$

227,940
70,88071,74780,554
11,880445,169
116,157
217,806
1,242,133(553,362)
688,771$(3,964)(61,952)(19,398)(61,590)(146,904)$

541,867

D N P A n n u a l R e p o r t 2 011

Financial Section

Deferred tax liabilities:
Unrealized gain on available-for-sale securities
Reserve for special depreciation
Undistributed earnings of subsidiaries
Acquisition cost¥
Other
Accumulated depreciation
Total
Accumulated impairment losses
Net book value¥
Net deferred tax assets :Thousands of
U.S. dollars (Note 3)

Thousands ofMillions of yen
U.S. dollars (Note 3)

Millions of yen

115

The amounts of lease expenses, reversal of allowance for impairment loss on leased assets and lease impairment losses undersuch finance leases for the years ended March 31, 2011 and 2010 were as follows:
Thousands of
U.S. dollars (Note 3)

Millions of yen

Lease expenses
Reversal of allowance for impairment loss on leased assets
Lease impairment losses

¥
¥

2011
4,041
113
2

¥
¥

2010
8,564
1,046
93

$
$

2011
48,687
1,361
24

The amounts of outstanding future payments under such finance leases due on March 31, 2011 and 2010, including the portion ofinterest thereon, were summarized as follows:
Thousands of
U.S. dollars (Note 3)

Millions of yen

2010

2011
Future lease payments:
One year or lessMore than one year

¥
¥

2,153
2,589
4,742

¥
¥

4,686
3,852
8,538

2011
$
$

25,94031,19357,133Operating leases
The amounts of outstanding future payments under non-cancelable operating leases as of March 31, 2011 and 2010 were also
summarized as follows:
Thousands of
U.S. dollars (Note 3)

Millions of yen

2010

2011
Future lease payments:
One year or lessMore than one year

¥
¥

3,935
16,86520,800¥¥4,527
27,58032,107

2011$$

47,409203,193
250,602

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, 2011 and2010 were as follows:116

Financial Section ▶ CONSOLIDATED FINANCIAL STATEMENTS

Millions of yen

March 31, 2011
(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¥¥

223,848
403,986
96,356
1,990
(203)
1,787
725,977
275,525
51,403
179,343506,271
(217)
(20)
(237)

Fair value¥

223,848
403,986
96,3581,967¥

Difference
¥

–
–
2

1,967
726,159
275,525
51,403
182,745509,673

180
182
–
–
3,402
3,402

(217)
(26)
(243)

–
(6)
(6)

¥

Thousands of U.S. dollars (Note 3)

March 31, 2011
(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$$

2,696,964
4,867,301
1,160,916
23,976(2,446)
21,5308,746,711
3,319,578
619,313
2,160,760
6,099,651(2,614)(241)(2,855)

Fair value$

2,696,964
4,867,301
1,160,940
23,699Difference
$

–
–
24

23,6998,748,904
3,319,578
619,3132,201,748
6,140,639

2,169
2,193
–
–
40,98840,988(2,614)(313)(2,927)

–
(72)
(72)

$

$

Millions of yen

March 31, 2010
(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¥¥

152,416
449,020
104,232
1,741
(108)
1,633
707,301
308,630
50,547
116,426475,603
(221)
(16)
(237)

Fair value¥¥

152,416
449,020
104,233
1,676

Difference
¥

–
–
1

1,676
707,345
308,630
50,547
118,692
477,869

43
44
–
–
2,266
2,266

(221)
(1)
(222)

–
15
15

¥

Financial Section

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

D N P A n n u a l R e p o r t 2 011

117

Note A: Fair value of financial instruments, marketable securities and derivatives.
Assets(1) Cash and deposits and (2) Trade receivables
The carrying amounts approximate fair value because of the short maturities of these instruments.
(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.
(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. (Long-term loan receivables
are included in other assets in the consolidated balance sheet.)
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
Fair values of forward-exchange contracts are based on the foreign exchange forward market rates. Fair values of interest rate swaps
are based on those provided by financial institutions.
Note B: Financial instruments whose fair value is extremely difficult to measure.

March 31, 2011
Unlisted equity securities
Other

March 31, 2010
Unlisted equity securities
Other

Millions of yen

Thousands of
U.S. dollars (Note 3)

Carrying amounts
17,907¥
184

Carrying amounts
215,747$
2,217

Millions of yen

Thousands of
U.S. dollars (Note 3)

Carrying amounts
20,403¥89

Carrying amounts
219,387$957

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.

118

Financial Section ▶ CONSOLIDATED FINANCIAL STATEMENTS

Fair value of Derivative Financial Instruments:
The contracted amount and fair value of derivatives at March 31, 2011 and 2010 were as follows:
Derivative transactions to which the Company and its subsidiaries did not apply hedge accounting.
Millions of yen

March 31, 2011
Foreign currency forward contracts
Receivables:
U.S. dollars
Euro

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

Contracted amount

Fair value

¥

¥

6,114
1,836
7,950

¥

¥

¥

¥

Unrealized gain (loss)

¥

¥

6,175
1,921
8,096

¥

(61)
(85)
(146)

1,464

¥

(47)

¥

(47)

215
215
430

¥

(11)
(13)
(24)

¥

(11)
(13)
(24)

¥

¥

Thousands of U.S. dollars (Note 3)

March 31, 2011
Foreign currency forward contracts
Receivables:
U.S. dollars
Euro

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

Contracted amount$

Fair value$$

74,39823,14497,542$(735)(1,024)(1,759)17,639

$

(566)

$

566

2,590
2,590
5,180

$

(132)
(157)
(289)

$

(132)
(157)
(289)

$

$

73,66322,12095,783$$$

Unrealized gain (loss)$$

Millions of yen

March 31, 2010
Foreign currency forward contracts
Receivables:
U.S. dollars
Euro

Contracted amount

¥
¥

8,987
1,504
10,491

Fair value

¥
¥

9,266
1,446
10,712

Unrealized gain (loss)

¥
¥

(279)
58
(221)

Financial Section

D N P A n n u a l R e p o r t 2 011

119

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

March 31, 2011
Foreign currency forward contracts
Receivables:
U.S. dollars
Euro
Payables:U.S. dollars
Japanese yen

Interest rate swaps
Receive floating and pay fixed

Hedge items

Trade receivables
Trade receivables

Contracted amount¥

Trade payables
Trade payables

Long-term loan payables
and corporate bonds

1,175
454

Fair value

¥

1,176
478

¥

11
32
1,672

¥

11
29
1,694

¥

4,425

¥

(123)

Thousands of U.S. dollars (Note 3)

March 31, 2011
Foreign currency forward contracts
Receivables:
U.S. dollars
Euro
Payables:U.S. dollars
Japanese yen

Interest rate swaps
Receive floating and pay fixed

Hedge items

Trade receivables
Trade receivables

Contracted amount$

Trade payables
Trade payables

Long-term loan payables
and corporate bonds

14,157
5,470

Fair value$

14,169
5,759

$

133
385
20,145$133
349
20,410$53,313$(1,482)Millions of yen

March 31, 2010
Foreign currency forward contracts
Receivables:
U.S. dollars
Euro
Payables:U.S. dollars

Interest rate swaps
Receive floating and pay fixed

Hedge items

Trade receivables
Trade receivables

Contracted amount¥

Trade payables

Long-term loan payables

1,599
1,415

Fair value

¥

1,645
1,372

¥

37
3,051

¥

38
3,055

¥

3,172

¥

(104)

Fair value of derivatives were, in principle, determined based on the market rates.
Foreign currency forward contracts which qualified for hedge accounting was assigned to the associated assets and liabilities ordeferred until completion of the forecasted transactions.
18. Contingent Liabilities
The Company and its consolidated subsidiaries were guarantors of bank loans of other companies, amounting to approximately ¥75
million ($904 thousand) and ¥78 million at March 31, 2011 and 2010, respectively. It is common practice in Japan for companies, inthe ordinary course of business, to receive promissory notes in settlement of trade accounts receivable and to subsequently discountsuch notes at banks. At March 31, 2011 and 2010, the Company and its consolidated subsidiaries were contingently liable on tradenotes discounted in the amount of ¥704 million ($8,482 thousand) and ¥670 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 partiesfor ¥891 million ($10,735 thousand) and ¥358 million at March 31, 2011 and 2010, respectively.

120

Financial Section ▶ CONSOLIDATED FINANCIAL STATEMENTS

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/liabilities and other items by business segment.
Millions of yen
Segment report
Information
Communication

For 2011:
Net sales and operating income
Net sales
Outside customers
Inter-segment
Total
Segment income
Segment assets
OthersDepreciation and amortization
Amortization of goodwill
Impairment loss
Tangible/intangible fixed assets increased

Lifestyle andIndustrial
Supplies

Electronics

Beverages

Total¥ 715,519 ¥ 524,529 ¥ 286,286 ¥
6,461
7,185
10
721,980
531,714286,296
18,145
46,79012,223¥ 610,457 ¥ 518,259 ¥ 387,890 ¥

63,039 ¥ 1,589,373 ¥
6
13,662
63,045
1,603,035
1,249
78,40744,377 ¥ 1,560,983 ¥¥

3,351 ¥–
19
3,471

24,036 ¥
1,408
225
20,93926,070 ¥1,293–
20,06841,878 ¥161
1,441
56,49895,335 ¥
2,862
1,685
100,976

Consolidated

Adjustment– ¥ 1,589,373–(13,662)
1,589,373(13,662)
67,819(10,588)
88,801 ¥ 1,649,784

2,642
–
–
1,197

¥

97,9772,862
1,685
102,173

Thousands of U.S. dollars
Segment report
Information
Communication

Lifestyle andIndustrial
Supplies

Electronics

Beverages

Total

Consolidated

Adjustment

For 2011:
Net sales and operating income
Net sales
Outside customers
Inter-segment
Total
Segment income
Segment assets$ 8,620,711 $ 6,319,627 $ 3,449,229 $ 759,505 $19,149,072 $– $ 19,149,072
77,84386,566121
72–(164,602)
164,6028,698,554
6,406,193
3,449,350
759,577 19,313,674(164,602) 19,149,072
218,615563,735
147,265
15,048817,096(127,567)
944,663$ 7,354,904 $ 6,244,084 $ 4,673,373 $ 534,663 $18,807,024 $ 1,069,892 $ 19,876,916

OthersDepreciation and amortization
Amortization of goodwill
Impairment loss
Tangible/intangible fixed assets increased$ 289,590 $ 314,096 $ 504,554 $
16,964
15,578
1,940
2,711
–
17,361
252,277
241,783
680,699

40,374 $ 1,148,614 $–
34,482229
20,301
41,8191,216,578

31,832––
14,422$ 1,180,446
34,482
20,301
1,231,000(Note)
Effective for the year ended March 31, 2011, the Company adopted the “Accounting Standard for Segment Information” (ASBJ
statement No. 17, March 27, 2009) and “Guidance on Accounting Standard for Segment Information” (ASBJ Guidance No. 20, March
21, 2008).

[Relative information]
Millions of yen

For 2011 :Net salesJapan¥

1,391,676

Asia¥

134,734¥

Other region
62,963

Total¥

1,589,373$

19,149,072

Financial Section

Information regarding regions

Thousands of U.S. dollars (Note 3)

For 2011 :Net salesJapan$

16,767,181

Asia$

1,623,301$

Other region
758,590

Total

D N P A n n u a l R e p o r t 2 011

121

Industry segments:
Millions of yen
Printing
Information
Communication

Lifestyle andIndustrial
Supplies

Electronics

Beverages

Elimination
and/orcorporate

Total

Consolidated

For 2010:
Net sales :Outside customers
Inter-segment
Total
Costs and expenses
Operating income (loss)¥ 732,709 ¥ 530,401 ¥ 257,479 ¥
6,976
6,237
24
739,685536,638
257,503716,219492,924
249,187¥
23,466 ¥43,714 ¥
8,316 ¥

62,794 ¥ 1,583,383 ¥
35
13,27262,8291,596,655
63,405
1,521,735(576) ¥
74,920 ¥– ¥ 1,583,383–(13,272)
1,583,383(13,272)
1,516,869(4,866)
66,514(8,406) ¥Assets, depreciation, impairment loss andcapital expenditures :AssetsDepreciation
Impairment loss
Capital expenditures¥ 592,670 ¥ 522,335 ¥ 397,007 ¥24,91327,73633,373264
2–23,80022,763
67,953

43,169 ¥ 1,555,181 ¥3,398
89,420
112
378
3,173
117,689

63,672
2,275
–
1,374

¥ 1,618,853
91,695378
119,063

Overseas sales:
Millions of yen

2010

For 2010:
AmountOverseas sales
Asia
Other
Total

Consolidated net sales (b)122

Ratio:(a)/(b)(a)¥

130,836
62,308
193,144¥

1,583,383

¥

8.3%
3.9%
12.2%

Independent Auditors’ Report

To the Board of Directors of
Dai Nippon Printing Co., Ltd.
We have audited the accompanying consolidated balance sheets (expressed in Japanese yen) of Dai Nippon Printing
Co., Ltd. and consolidated subsidiaries as of March 31, 2011 and 2010, and the related consolidated statements
of income for the years then ended, and the related consolidated statement of comprehensive income for the year
ended March 31, 2011, and the related consolidated statements of changes in net assets, and cash flows for theyears then ended. These consolidated financial statements are the responsibility of the Company’s management. Our
responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in Japan. Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial
statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting theamounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, thefinancial position of Dai Nippon Printing Co., Ltd. and consolidated subsidiaries as of March 31, 2011 and 2010,
and the results of their operations and cash flows for the years then ended in conformity with accounting principles
generally accepted in Japan.
We have also audited the management’s report on internal control over financial reporting of Dai Nippon Printing Co.,
Ltd. as of March 31, 2011. The Company’s management is responsible for designing and operating effective internal
control over financial reporting and for preparing its report on internal control over financial reporting. Our responsibility
is to express an opinion on the management’s report on internal control over financial reporting based on our audit.
There is a possibility that misstatements may not be completely prevented or detected by internal control over financial
reporting.
We conducted our internal control audit in accordance with auditing standards for internal control over financial
reporting generally accepted in Japan. Those standards require that we plan and perform the audit to obtainreasonable assurance about whether the management’s report on internal control over financial reporting is free ofmaterial misstatement. An internal control audit includes examining, on a test basis, representation 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 over financial reporting. We believe that
our internal audit provides a reasonable basis for our opinion.
In our opinion, the management’s report on internal control referred to above, which represents the internal control
over financial reporting of Dai Nippon Printing Co., Ltd. as of March 31, 2011 is effectively maintained, presents fairly,
in all material respects, the assessment of internal control over financial reporting in conformity with assessment
standards for internal control over financial reporting generally accepted in Japan.
Our audits also comprehended the translation of Japanese yen amounts into U.S. dollar amounts and, in our opinion,such translation 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.

Tokyo, Japan
June 29, 2011

D N P A n n u a l R e p o r t 2 011

Financial Section

MEIJI AUDIT CORPORATION

123

Appendix : Technology-Centered Business Development

Technologies that Support P&I Solutions

Printing and information technologies are DNP’s coretechnologies. We endeavor to solve the problems of businesses,
consumers, and society by combining these core technologies
with the quality control and quality assurance technologies that
support DNP products and services, and with knowledge,
experience and skills in sales, project planning, research anddevelopment, and manufacturing.
There are three core printing technologies that we use to give
shape to the information or functions that customers want:materials technologies, patterning technologies, and converting
technologies. And there are three core information technologies
that we use to enrich communication: information processing
technologies, Human Media Interaction (HMI) technologies, andinformation security technologies.
DNP has created new printing and information technologies,
improved existing ones, and freely combined all of them toachieve a large number of successful solutions. Today, in addition
to making individual products, our business addresses the entire
range of operations surrounding manufacturing; we even focus ondeveloping business models and building the infrastructure thatsociety wants. We intend to continue engaging in taiwa with
DNP’s stakeholders so that we will be among the first to detectsigns of change and use our unique technologies andcomprehensive strength in order to contribute to society bysolving problems.

Basic Process of Printing and DNP’s Core Technologies
Feedback

Information
processing

PlanningFilmmakingPlate making

Printing

Processing

ProductdeliveryMeasurementof effectiveness

PT = Printing Technologies
Materials Technologies

Patterning Technologies

Converting Technologies

IT = Information Technologies
Information Processing
Technologies

Human Media Interaction(HMI) Technologies

Information Security Technologies

Combination of printing technologies and information technologies with various resources
Production technologies

Quality control and quality
assurance technologies

Knowledge, experience, skills, etc

Providing products and services that solve problems faced by businesses, consumers, and society
Information Communication

Lifestyle and Industrial Supplies

Electronics

Beverages

Examples of comprehensive business development which includes ancillary businesses made possible
through cooperation across business division lines

124

Cross-media development

Textual information
processing

DB construction
and management

Server operation

Distribution
management

Research

Promotion planning

Production ofstill and video images

Program development

Information security

Running various offices

Marketing

Product planningIntellectual property
management

System development

Customer information
management

Customer
service center

Alliances▶ ○○○○○○
参考情報 Development
Appendix ▶ Technology-Centered Business

Printing Technologies
Materials Technologies
Materials technologies are technologies for synthesizing newmaterials or dispersing and mixing materials, including techniques
for designing or producing inks, adhesives, photosensitive
materials or coatings, etc.
One basic printing process is the application of ink from a printing
plate onto paper so that it adheres to the paper. As an example of
how we have branched out from basic printing technologies, we havebeen developing various types of optical films by applying — insteadof ink — material that prevents glare or static electricity to film or
another material instead of paper. By printing on plastic film insteadof paper, we are supplying packaging products and ink ribbons, andby printing on metal, we are supplying decorative materials and otherproducts. We strive to develop new materials in order to achieve thebest possible results from these various products.

Patterning Technologies
Patterning means the formation of letters, images or patterns, etc.,
on a base material. Patterning technologies include plate-making
technologies, letterpress, offset, and gravure printing techniques,as well as lithography, inkjet, and other plateless printing
techniques.
DNP has refined these techniques to the point of achieving oneof the highest levels of precision in the world. This includes

developing our own production equipment and manufacturingsystems to handle everything from high-quality prints composedof halftone dots that measure about 100th of a millimeter tophotomasks that require nanometer-level accuracy (within one
millionth of a millimeter). DNP is the only company in the worldthat mass produces color filters by both the inkjet andphotolithographic methods.

Converting Technologies
Converting technologies change a material’s form or form
compound materials. Examples include film formation, coating,lamination, molding, transferring, cutting and polishing, bagmaking, forming, bookbinding, etc., and the processing ofmaterials like paper or film.
Simply printing on paper or film does not produce a finishedproduct. There are processes that are essential to turning printed

pages into books and magazines, or to making consumer-friendly
packaging for food or everyday items. DNP is working on a wide
variety of related technologies, including 3-D processing
technologies, forming and processing technologies for films,
plastics, and a variety of other materials, and developing
laminated tubes and aseptic PET plastic bottle filling systems.

Information Technologies
Information Processing Technologies
Information processing technologies are related to the conversion,accumulation, or transmittal of information. Examples include text
processing technologies, color analysis and editing of text andimages, raster-vector conversion, digital-analog conversion, database design, server management, and networking technologies.
As the world becomes increasingly digitized and networked, there
is growing demand for the rapid processing of massive amounts

of information, including not only text, photographs andillustrations, but also audio and video data. DNP meets a variety of
information processing needs, including digitization andappropriately timed data maintenance, processing of both paperand digital media, and the use of its worldwide network of
information bases.

Human Media Interaction (HMI) Technologies
Human media interaction (HMI) technologies relate to interaction
between people and information. Examples include expressive
technologies like font design, color matching and tone
reproduction, design planning and photorealistic computer
graphics, screen design and other interface design technologies,
natural language processing and cognitive engineering.

Since its founding, DNP has been working to support pleasantcommunication, including through the development of its original
Shueitai font. We are working to enhance HMI technologies, forexample by coordinating color reproduction in paper and digital
media, adopting universal design, and developing augmented
reality (AR) programs that use computer graphics.

Information Security Technologies
as important corporate data and consumers’ personal
information, it is essential to establish infrastructure for advanced
information security. In addition to creating such infrastructure,
DNP is developing a variety of security systems. For example, we
provide systems that use smart cards to authenticate personal
identification, control access to information devices, encrypt data,and exercise uniform entry/exit control over gates and rooms.

D N P A n n u a l R e p o r t 2 011

Appendix

Information security technologies help transmit information to theintended destination, store it properly, and prevent its improperuse, etc. Examples include encryption, personal information
processing and management technologies, copyright
management technologies, biometrics, and smart card-related
information technologies.
In order to safely and reliably handle sensitive information, such

125

Appendix : Technology-Centered Business Development

Technology-Centered Business Development: Past and Future
DNP’s business growth has been supported by the evolution andapplication of our two core technologies — printing and information
technologies. Since its founding in 1876, DNP has always continued
to pursue the most advanced technologies of each era, and has
refined those technologies to world-class levels. In the 1950s, webuilt businesses outside of the Information Communication segmentthat had mainly done business by printing on paper. Based on theconcept of “Expansion Printing,” we worked actively to expand ourfields of business around our core technologies.
By applying printing technologies, we gained the ability to print on
non-paper materials such as plastic film and metal, and in 1951 westarted a packaging business and a decorative materials business.
Later, we built on technologies like lamination and coating, createdproducts such as dye-sublimation thermal transfer recording media
for photo printing and anti-reflection film for flat-panel displays, andestablished our Lifestyle and Industrial Supplies segment.
In 1958, DNP became the first Japanese company to succeed in
the development of shadow masks for television production, and weestablished our Electronics segment. Making shadow masksrequired making millions of ultramicroscopic holes in copper plate
only 0.2 mm thick, a technology that we developed by applying
photolithography and other micro-processing techniques used formaking printing plates. In 1959, DNP succeeded in developing
photomasks used in semiconductor manufacturing. Later we went
on to develop and provide color filters for LCDs, lead frames, andother electronic devices.
Meanwhile, we continued to develop the “information
technologies” that we had cultivated since the company’s founding
as part of our quest for the most comfortable and pleasant ways of
expressing text and images and the safest ways of handlinginformation of companies and consumers. We cultivated a widearray of technologies, including ongoing development of DNP’soriginal Shueitai font since the early 1900s, color management
systems and design development, and production of printed
materials in a high-security environment.
We began digitizing information as far back as the early 1970s— 40 years ago. By nimbly adapting to the rapid trend toward
digitalization and networking, for example by developing theworld’s first electronic dictionary in 1985, we accumulated thetechnologies and expertise that led us to operate the electronic
publishing business that we have today. Furthermore, we focusedon establishing infrastructure to support advanced information
security, and developed a comprehensive business that handles
everything from the development of software for smart cards andoperation of information processing services (IPS) to
manufacturing.
Today, DNP wants to simultaneously expand its business andcontribute to society by solving the problems of corporate clients,
consumers and society through the development and applicationof printing and information technologies. We call this businessvision “P&I Solutions.” We are strategically developing
technologies in line with trends toward increasingly sophisticatedinformation processing, increasingly high-definition patterning,
and increasingly intelligent materials. By using these newtechnologies to expand in new fields such as photovoltaic module
components and other energy-related areas, and formation ofcapillary blood vessel patterns, cell sheet engineering, and otherareas of life sciences, and by boosting profitability in our existing
businesses, we aim to make the most of DNP’s unique strengths
and achieve further growth.

Strategies for promoting
commercialization of technologicaldevelopmentss 4HREE AXES OF TECHNOLOGICAL DEVELOPMENT#OMBINING THEM TO CREATE NEW BUSINESSES2ECOMMENDATION ENGINE)NFORMATION FILTERING$ATA MINING

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0HOTOVOLTAIC MODULECOMPONENTS

Printing
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(PT)

126

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Technologies(IT)

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5LTRA BARRIER FILM FOR
ELECTRONIC DEVICES

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0HOTOMASKS&UEL CELLCOMPONENTS

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so

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0ACKAGING MATERIALSTHAT ARE IMPERMEABLE TO GASES

Creation of new products and services
Creating new businesses
s %NERGY BUSINESSs ,IFE SCIENCE BUSINESS
s %NVIRONMENT RELATED BUSINESSs /THER NEW BUSINESSES

Appendix ▶ Technology-Centered Business Development

Examples of Products and Services That Make Use of
Printing and Information Technologies

I

Examples of DNP products that are an integral part of daily life
Products and technologies that support mobile terminals (smart phones and mobile phones)

It would be hard to imagine life today without information devices andinformation services. Most of these devices and services are supported
by products and services that make use of DNP’s technologies. For
example, a variety of DNP products are used in smart phones and othermobile terminals, including color filters, electronic devices, SIM cards

that distinguish individual users, “soft packs” for lithium-ion
rechargeable batteries, and touch panel sensors. We also provide alarge number of information services for mobile terminals, including
novels, comics, and other e-books as well as recommendations basedon individual users’ interests.

Color filters / Optical films
As more people watch One Seg TV and view content
on mobile terminals, there is growing demand for
displays that offer better visibility. DNP provides
products that meet demand for better outdoor visibility
and wider viewing angles, including anti-reflection films
and color filters.
LCD color filter

Touch panel components
A growing number of terminals use touch panels. In
addition to supplying surface films that protect displays
from dirt and scratching, in 2009 we developed atransparent conductive film sensor. Because the sensor
only requires a single layer of base material, it enables
the production of very thin, lightweight, high-quality
touch panels.

Touch panel sensor

Electronic devices
In addition to improved functionality in mobile terminals, the market is always looking forthinner, more compact models. DNP provides a wide range of products that meet thisneed by applying our microfabrication, patterning, and etching technologies. We makephotomasks (original plates for making IC chips and other semiconductor products) withcircuit lines that are accurate to within one nanometer. We also developed lead frames(which secure IC chips on printed wiring boards and transmit electric signals) only
0.15 mm thick, or one twentieth the thickness of conventional products. We use DNP’sunique B2it (pronounced “bee-square-it”) technology to supply manufacturers of camera
modules and other electronic devices with embedded-component printed wiring boards
that are smaller and higher density than ever before.

IC chips
Semiconductor photomask

Lead frame

Substrate(for camera modules, etc.)

SIM cards and other smart cards
Smart cards(SIM cards)

Since DNP began developing smart cards in 1981, we have made use of ourtechnological strengths to consistently lead the market. DNP holds the top share of theoverall Japanese market for smart cards, starting with SIM (subscriber identity module)
cards for mobile phones, which record users’ identifying information and telephone
numbers, etc., and including cash cards, credit cards, electronic money, and ETC(electronic toll collection) cards.

“Soft packs” for lithium-ion rechargeable batteries

Battery module consisting ofmultiple soft packs in a single
case

Appendix

Soft pack for lithium-ion
rechargeable batteries

DNP developed “soft pack” material made of multilayer
film for packaging high-capacity, high-output lithium-ion
rechargeable batteries. The material is more flexible andmore easily formable than the metal containers that wereused in the past, allowing for the manufacture of lighter,thinner batteries. It is being used in an increasingly wide
range of products including mobile terminals and electricvehicles. Today, DNP is the world’s leading provider ofsoft packs.

D N P A n n u a l R e p o r t 2 011

127

Appendix : Technology-Centered Business Development

I

Aseptic filling systems offer potential for growth
DNP’s comprehensive framework handles every aspect from technological development to equipment manufacture and installation

One of the important roles of packaging is to enable the safeand reliable delivery of foods and beverages to consumers.
“Aseptic packaging” consists of filling sterilized containers or
packaging material with sterilized contents and sealing themshut within a bacteria-free environment. In addition to being safeand reliable, this type of system preserves nutrients, flavors,
textures, colors and aromas by eliminating the necessity tosterilize at high temperatures for a long period of time.
In 1978, DNP became the first Japanese company todevelop aseptic packaging when we began working on
single-portion containers for coffee whitener. We went on to
innovate new technologies as these packages became more
complex. In 1994, we became the first Japanese company todevelop a system for aseptically filling PET plastic beveragebottles, which we first used for milk-based beverages. In 1997,
we started operating a 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 holdthe largest share of the Japanese market for aseptic bottle
preform-filling systems. We have refined our converting
technologies (technologies that change a material’s form) andthe sterilization techniques that we have been working on forsome 40 years, and built a comprehensive framework forhandling every step from technological development toequipment design, manufacture, and installation. Now we areworking on market development.

I① Primary preform② Aseptic filling system③ PET plastic bottle

①

②

③

Hybrid production solutions and our hybrid bookstore network
Comprehensive service combines our strengths in manufacturing and information technologies

DNP has handled all types of information media by combining printing
and publishing technologies and expertise that we accumulated during
the 135 years since our founding with the digitization techniques andknowledge that we have been working with since the early 1970s.
Currently, we are focusing on providing “hybrid production solutions” forboth paper and digital media, including construction of efficient digital
data, production of paper books and e-books, and printing in small lots
on demand.
We do not see ourselves as just a printing company, i.e. amanufacturer, but rather also as a provider of various solutions in our

Business Flowcapacity as the Japanese publishing industry’s “No. 1 partner.” Forexample, we are working on establishing all of the basic functions neededfor distribution and sales, expanding points of contact with consumers,
reinforcing marketing efforts, and unifying e-book standards. In the areaof distribution and sales, we linked bookstore chains that operate physicalbookstores, an online store that sells printed material through a website,
and an online service that sells e-book content in order to develop
Japan’s first “hybrid bookstore network” as a business that no othercompany can imitate.

DNP
Hybrid production solutions

Author128

Publisher

Creationof digital
data

Production ofedited datafor printing

Production ofedited data fore-publishing

Printing, film making
Print-on-demand

e-book content(common frameworkfor distribution and sales)

Readers

Hybrid bookstore
network

Physical bookstores
On-line bookstore
e-book store

・Books・Magazines
Readers
・Mobile phones
・Smart phones
・PC・Dedicated terminals
for e-books
・Multi-function
information terminals

Appendix ▶ Technology-Centered Business Development

I

Meeting society’s need for clean energy
Applying materials technologies and manufacturing technologies in order to provide advanced photovoltaic module components

Worldwide, there is growing demand for photovoltaic cells as a source ofclean energy that does not use petroleum or other fossil fuels. DNP began
researching and developing photovoltaic module components more than
10 years ago. By applying our proprietary materials technologies andmanufacturing technologies, we succeeded in developing back sheetsand encapsulants for photovoltaic cells in 2003.
Back sheets are made of weatherproof film that protects photovoltaic
modules from the elements. DNP’s back sheets make use of proprietarylamination and film formation technologies to improve weatherability whileat the same time reducing production costs. Encapsulants are adhesive,

Structure of an array of photovoltaic cells (solar cells)

protective sheets used to secure photovoltaic cells and their peripheral
wiring in place within a photovoltaic cell. DNP provides a wide range ofencapsulants that meet manufacturers’ needs. For example, we offer
products with excellent moisture resistance that do not emit acidic gasthat causes photovoltaic cells to deteriorate, and we offer products thatmaintain excellent flexibility even in cold weather. We aim to further
expand this business on the strength of our advanced technicalcapabilities and a production framework including the new plant in
Kitakyushu that we started operating in April 2011.

Structure of an array of photovoltaic cells (solar cells)

Photovoltaic cell
The smallest unit that functions as aphotovoltaic battery; in crystalline
photovoltaic modules, a cell consists of asilicon wafer

Encapsulants
Metal frame, etc.

ModuleA unit that is packaged in special material tomaintain the photovoltaic cells’ electricalefficiency and to allow them to withstandharsh environmental conditions

Surface glass

A sheet of material that seals the celland protects it from the elements, i.e.
rain, wind, snow, and temperaturechanges

Cell
Weatherproof film that protects the back of thephotovoltaic module from the roof or other surface that it
rests onBack sheet

Array
An arrangement of multiple
modulesI

Sunlight

Wiring, etc.

Expanding our business to serve the entire range of corporate clients’ businessprocess needs
Focusing on solving problems through technological development from consumers’ point of view

A growing number
consumers actively gather information, transmit
Promotionof taiwaofwith
corporate
information customers
or opinions, and engage in active communication withand consumers
companies.
As interactive networks reach around the world, consumer
behavior has changed and relationships between consumers andcompanies
have changed significantly.
Media promotion
In responseDistribution
to these changes,
rather than simply manufacturing
supportand management
printed paper products,
DNP seeks to develop in a horizontal direction— by handling a variety of information media including digital media — aswell as in a vertical direction, by offering market analysis and projectplanning proposals, implementation of sales promotions and support for

distribution, and operation of promotional campaign offices and customer
service centers. In all of these businesses, we handle consumers’
personal information and corporate clients’ important information
appropriately, in an environment protected by advanced information
security measures.
DNP is looking at things from consumers’ perspective, honing its
capacity for suggesting hypotheses and proposals aimed at solving
problems, and focusing on providing a variety of solutions that combine
information technologies with printing technologies.

Increasing corporate value
Brand management
Trading area analysis
Mapping solutions
Market analysis and research
CRM marketing
Purchase data analysis

Consumers

In-store promotions(Shelf displays, point of purchase, etc.)
Campaign headquarters

Promotion planning

Businessstrategy
proposals

Universal design
Product
development
Servicedevelopment

All types of content production

Corporate
customers’
business
processes

Promotion of taiwa withcorporate customers
and consumers

Production of all types of sales
promotion tools

Production/
Manufacturing

Appendix

Customer and consumer
information management

Consulting
Business planning support

Distribution/
Sales

Media promotion
Distribution supportand management

Cross-media factory
・Paper media
・Web sites (PCs/mobile phones)

D N P A n n u a l R e p o r t 2 011

129

Major Subsidiaries and Affiliates
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 Tokai Co., Ltd.
Film making, printing, bookbinding; and production 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.
Film making, printing and bookbinding
DNP Media Art Co., Ltd.
Film making
DNP Total Process Maebashi Co., Ltd.
Film making
DNP Uniprocess Co., Ltd.
Film making
DNP Total Process Nagaoka 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, designing and film making
DNP Multi Print Co., Ltd.
Film making, printing and bookbinding
Business Forms
INTELLIGENT WAVE, INC.
Credit card security; 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
NexantiS Corporation*
Sale of smart card related software and products
NBC Co., Ltd.*Shipping
DNP France SAS*
Smart card and security business research		Communication & Information
DNP Dream Pages Co., Ltd
Production and sale of photobooks
am3 Inc.*
Planning, production and sale of images, contents, etc.
DNP 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 softwares
DNP Digitalcom Co., Ltd.
Website planning, production and delivery
DNP Corporate History Center Co., Ltd.
Planning, production and sale of history archives for corporations and organizations
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 relationship management
At Table Co., Ltd.*
Research, consulting and planning for sales promotions for grocery supermarkets
DNP Social Links Co., Ltd.
Direct marketing services
Lifestyle and Industrial Supplies
Packaging
DNP Technopack Tokai Co., Ltd.
Production, printing and processing of packaging
LIFESCAPE MARKETING CORPORATION
Various types of information services and surveys
DNP Technopack Co., Ltd.
Production, printing and processing of packaging
DNP Technopack Yokohama Co., Ltd.
Production, printing and processing of packaging
DNP Technopack Kansai 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 Techno Polymer Co., Ltd.
Molding, processing and printing of plastic containers
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 Plastic Molding (Shanghai) Co., Ltd.
Molding, printing, processing and sale of plastic containers		Lifestyle Materials
DNP Lifestyle Materials Marketing Co., Ltd.
Sale of decorative products
DNP Ellio Co., Ltd.
Printing and processing of steel and other metal plates
DNP Lifestyle Materials Co., Ltd.
Production, printing, processing of decorative materials
Opto-Materials/Industrial Supplies
DNP Photo Imaging Co., Ltd.
Investment in operating companies
DNP ID System Co., Ltd.
Sale of equipment for making driver licenses and ID photos
DNP Fotolusio Co., Ltd.
ID photo business and sale of photo materials and accessories
DNP IMS Odawara Co., Ltd.
Production and sale of photographic materials
DNP Energy System Co., Ltd.
Production of photovoltaic module components
DNP IMS Co., Ltd.
Production of ink ribbons for thermal transfer printers and for thermal-resin type printers
DNP OptoMaterials Co., Ltd.
Manufacturing of optical products for displays
DNP IMS America Corporation
Production and sale of ink ribbons for thermal transfer printers and for thermal-resin type printers
		
DNP Photo Imaging America Corporation
Sale of digital photo printing systems and photographic materials
		
DNP Electronics America, LLC
Manufacturing and sale of precision electronic components		Compagnie de Découpe de l’Ouest·CDO SAS
Production and sale of ink ribbons for thermal transfer printers and for thermal-resin type printers
		
DNP Photo Imaging Europe SAS
Sale of photo-related products		

130

Capital(¥ million)

Ownership ratio
(%)

350
350
120
400
50

100.0
100.0
100.0
100.0
97.0

200
180
100
80
50
49
(S$1,000)
4,600

100.0
100.0
100.0
100.0
100.0
84.9 (15.2)
100.0

200
100
100
100

100.0
100.0
100.0
100.0

843
100
100
80
25
20
(Euro 1,000)
37

50.6
100.0
100.0
100.0
100.0
100.0 (100.0)
100.0

400
340
300
100
100
50
50
40
30
30
10

100.0
85.9
100.0
100.0
100.0
100.0
100.0
92.5
95.0
95.0
100.0

430
430
300
280
200
200
100
100
80
50
(US$1,000)
26,000(US$1,000)
6,350

100.0
50.7
100.0
100.0
100.0
90.0
100.0
100.0
100.0
100.0
51.0

300
300
200

100.0
50.0
100.0

9,680
60
450
300
200
100
100
(US$1,000)
71,980(US$1,000)
45,898(US$1,000)
15,045(Euro 1,000)
3,040(Euro 1,000)
2,408

100.0
100.0 (100.0)
100.0 (33.3)
100.0
100.0
100.0
100.0
(100.0)100.0(99.9)
99.9(100.0)
100.0
23.4

100.0

(66.0)
66.0

Appendix ▶ Major Subsidiaries and Affiliates

Capital(¥ million)
DNP IMS Netherlands B.V.
Production and sale of ink ribbons for thermal transfer printers and for thermal-resin type printers
		
DNP Denmark A/S
Manufacturing and sale of precision electronic components		Electronics
Display Components
DNP Color Techno Kameyama Co., Ltd.
Production and sale of color filters for LCDs
DNP Precision Devices Co., Ltd.
Production of display related components
DNP Precision Devices Himeji Co., Ltd.
Production of color filters for LCDs
DNP Color Techno Sakai Co., Ltd.
Production of color filters for LCDs
Electronic Devices
DT Fine Electronics Co., Ltd.
Production and sale of semiconductor components
DNP Fine Electronics Co., Ltd.
Production of semiconductor components
DNP LSI Design Co., Ltd.
Designing and production of drawings used in semiconductor production
DNP Micro Technica Co., Ltd.
Inspection, processing and loading of precision electronic parts
DNP Photomask Europe S.p.A.
Manufacturing and sale of photomasks		
DNP Photomask Technology Taiwan Co., Ltd.
Manufacturing and sale of photomasks
		
OthersCHI Group Co., Ltd.
Investment in operating companies
Maruzen Co., Ltd.
Sale of books, magazines and stationary
Maruzen Bookstores Co., Ltd.
Sale of books, magazines and stationary
MARUZEN PUBLISHING CO., LTD.
Publishing
TRC, Inc.
Sale of books and creation of data
honto Co., Ltd.
Development of e-publishing contents
Junkudo Co., Ltd.
Sale of books
Yushodo Co., Ltd.
Sale of books
BOOKOFF CORPORATION LIMITED
Sale of books
SHUFUNOTOMO Co., Ltd.
Publishing
BUNKYODO GROUP HOLDINGS CO., LTD.
Investment in operating companies
DNP Fine Chemicals Co., Ltd.
Development and sale of ink, varnish, pigments and dyes
DNP Fine Chemicals Fukushima Co., Ltd.
Production and sale of photographic chemicals
DNP Logistics Co., Ltd.
Packing, shipping operations and warehouse management
DIC Graphics Corporation
Production and sale of printing ink
2Dfacto, Inc.
Development of e-books and terminals
D.N.K. Co., Ltd.
Manufacturing, sale and repair of printing equipment and machine tools
DNP Trading Co., Ltd.
Sale and purchase of paper and other products
Direc Co., Ltd.
Educational consulting, etc.
DNP SP Tech Co., Ltd.
Planning and production of promotional material
Kyoiku Shuppan Co., Ltd.
Editing and sales of textbooks and educational materials
My Earth Projects LLC *Planning, production and sale of trading cards
DNP Business Consulting (Shanghai) Co., Ltd.*
Study and analysis of Chinese market and business feasibility
		Personal Welfare, Facility Service and Others
DNP Facility Services Co., Ltd.
Building management, cleaning and security; operation of public health and recreation facilities
DNP Information Systems Co., Ltd.
Design, development and maintenance of information systems; production and sale of software
DNP Human Services Co., Ltd.
Planning and management related to personnel plans
Uzumine Country Club Co., Ltd.*Management of golf courses
DNP Accounting Services Co., Ltd.
Accounting and consulting services
DNP Techno Research Co., Ltd.*
Studies related to patents and the preparation of contracts
Overseas Sales
DNP Corporation USA
Investment in operating companies
		
DNP America, LLC
Sale of printing materiais, electronic precision parts, and decorative materials
		
DNP Holding USA Corporation
Investment in operating companies
		
DNP Europa GmbH*
Sale of electronic precision parts and decorative materials
		
DNP UK Co., Ltd.*Sale of decorative materials
		
Dai Nippon Printing Co. (Australia) Pty. Ltd.*Sale of printed materials and decorative materials
		
DNP Singapore Pte. Ltd.*Sale of electronic precision parts and decorative materials
		
DNP Korea Co., Ltd.*Sale of electronic precision parts		
DNP Taiwan Co., Ltd.
Sale of electronic precision parts		
DNP International Trading (Shanghai) Co., Ltd.*Sale of printing solutions and packaging products		(Euro 1,000)
1,000(Dkr1,000)
135,000

Ownership ratio
(%)
100.0
100.0

2,500
450
400
400

100.0
100.0
100.0
100.0

490
300
100
40
(Euro 1,000)
47,200(NT$1,000)
5,170,618

65.0
100.0
100.0
100.0
80.6
(0.3)
100.0

3,000
4,821
50
50
266
50
39
35
2,564
2,111
2,035
2,000
100
626
500
490
100
100
96
80
60
50
(US$1,000)
420

53.0
53.0 (53.0)
53.0 (53.0)
53.0 (53.0)
53.0 (53.0)
53.0 (53.0)
53.0 (53.0)
53.0 (53.0)
16.5 (9.9)
56.7
45.3 (14.0)
100.0
100.0 (100.0)
100.0
33.4
60 (9.0)
100.0
94.3
100.0
100.0
48.3
99.8
100.0

350
100
90
33
30
20

100.0
100.0
100.0
88.8
100.0
100.0

(US$1,000)
62,164(US$1,000)
100(US$1,000)
100(Euro 1,000)
92(£1,000)
120(A$1,000)
70(S$1,000)
350(Krw1,000)
500,000(NT$1,000)
10,000(US$1,000)
5,400

(7.2)
100.0
(100.0)100.0(100.0)
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0

Beverages
(6.5)
57.5

Appendix

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

Notes: 1. Ownership ratios (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.

D N P A n n u a l R e p o r t 2 011

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Glossary

General Terms,
Product and Service Names■ 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.
■ Aseptic filling system

A system for filling sterilized PETplastic bottles or other containers
with sterilized beverages or food in an
aseptic manufacturing environment(aseptic chamber). DNP supports every
aspect of aseptic filling operations, fromdesigning systems to manufacturing,
installing and maintaining equipment
and supplying bottle preforms.
Examples of applications for which wehave designed and built filling systems
include single-portion containers (forcoffee whitener, etc.), retort pouches
that can contain solid food, and PETplastic beverage bottles that do not
impair the flavor of their contents.
■ 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 printed images or
identification codes along with imagesof the surrounding environment, all ofwhich are synthesized and displayed
together with preregistered informationsuch as 3-D computer graphics.
■ Biomass material“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

132

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.
■ Business Process Outsourcing(BPO)

Contracting out the execution of someof a company’s business processes toan outside provider that has specialized
technology or expertise.
■ Content Management System(CMS)

A system or software application thatfacilitates integrated managementof digital content used for website
operation, such as text, images, andlayout information, and efficiently
handles tasks like updating andtransmitting website content.
■ 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.
■ 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.

■ Ink ribbon

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 recording
media consisting of ink ribbons in thethree primary printing colors (yellow,
magenta, and cyan, or YMC) andspecial receiving paper. These products
make it possible to express very smoothcolor tones.
■ Lead frame

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

filterA 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.
Multicolor filters have yellow andcyan or other color layers in addition
to RGB. There are two methods offorming coloration layers as part of thecolor filter manufacturing process: thephotolithographic method, which forms
patterns by exposing substrates coatedAppendix ▶ Glossary

with photosensitive material to light,
and the inkjet method, which sprays ink
onto substrates through nozzles withtiny holes. DNP is the only company
in the world that mass produces color
filters by both methods. There are also
different methods of aligning liquid
crystal molecules when manufacturing
LCD panels: the vertical alignment (VA)
method and the InPlane Switching (IPS)
method. LCDs display images by using
variations in voltage to change theorientation of liquid crystal molecules,
thereby controlling the amount oflight that passes through. With the VA
method, the liquid crystal molecules
are arranged vertically, whereas with
the IPS method, they are arranged
horizontally. DNP provides color filtersthat suit the characteristics of LCD
panels manufactured by both methods.
■ 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.
■ Nano-imprinting

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.
■ Organic EL (electroluminescent)display

A display based on an organic
compound that emits its own lightwhen electricity is passed through it.
It is superior to other types of displays
in various ways, for example becauseof its wider viewing angle and greater
contrast.

■ Photolithography

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 original plates used
for printing. Today, we apply thesetechnologies to the manufacture ofcolor filters and various other types ofelectronic devices. In recent years, wehave been developing photolithography
techniques using extreme ultraviolet(EUV) rays as a new light source forthe production of next-generation
semiconductors.
■ Photovoltaic module components

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.
●■ Prepress

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 developmentof desktop publishing (DTP), mostprepress operations can now be doneby computer. Parts of the overall printing
process that are done after printing,such as bookbinding and processing,are called postpress.

■ Semiconductor photomask

A photomask is an original plateused for forming semiconductor
circuits. It consists of minute circuit
patterns drawn on a glass substrate.
Semiconductors are made by passing
light through a photomask in order totransfer circuit patterns onto a wafer
coated with a photosensitive resist, andthen using etching or a similar process
to embed the pattern in the wafer.
■ 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.
■ “Soft pack” for lithium-ion

rechargeable 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.
■ Universal design■ 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.

According to the International
Association for Universal Design (IAUD),
universal design means “to design, fromthe start, equipment, a building, or living
space so that it will be utilized by as
many people as possible.”
Appendix

D N P A n n u a l R e p o r t 2 011

133

DNP Product andService Names■ 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.
■ CDMS (Card Data Management

Service)

A service that provides comprehensive,
online management of informationentered on smart cards. CDMS enables
immediate smart card issuance at
customer service counters, PIN
code revision at ATMs, distributionof applications and personal data
to mobile phone chips, and identity
authentication for online shopping. DNP
began offering the service in 2004.
■ EB (Electron Beam) coating

technology

DNP’s original technique forhardening a coat of resin byexposing it to electron beams.
EB technology makes it possible
to form films with greater sur facehardness than products coatedwith urethane or UV-cured resin.
It also makes it possible toprovide products with superiorabrasion and soil resistance,
photo-resistance, durability, andstability. In addition, the EB coating
technique uses less energy,
generates less carbon dioxide, andenables coating without the use ofsolvents, making it an eco-friendly,
next-generation manufacturingmethod.
■ “Expansion Printing” and“P&I Solutions”“Expansion Printing” expresses DNP’spolicy of expanding our business bydeveloping the printing technologies
that we have cultivated since thefounding of the company and applying
them to a variety of fields. As examples
of how we have implemented thispolicy, we entered the packaging anddecorative materials businesses in
1951, and the electronics businessin 1958 after successfully developing

134

shadowmasks. In 1959, we also
succeeded in developing photomasks.
“P&I Solutions” is the business visionthat we spelled out in the “DNP Group
Vision for the 21st Century.” DNP makes
the most of printing and information
technologies and other expertise toresolve problems faced by businesses,
consumers, and society. By doing so,
we increase DNP’s corporate value
and contribute to society at the sametime. Based on the “P&I Solutions”
vision, we are actively developing new
businesses in fields such as energy andlife sciences, along with expanding ourexisting businesses.
■ 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 forming a thin,uniform coating of a material that
boosts impermeability on a transparent
base film. In the past, such films wereusually formed through physical vapor
deposition (PVD), whereby the coating
material was vaporized by heat. DNP
made it possible to mass produce
highly impermeable film using chemical
vapor deposition (CVD), whereby film
is formed as a result of a chemical
reaction between the coating material
and the base film. Because the CVD
method results in a strong bond
between the coating material and basefilm, the coating does not break easily
even when the final product is bent.
■ Information Processing Services(IPS)

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.

■ Production 21 Activities

A program based on Total Productive
Maintenance (TPM) that helps DNP
respond to customer requirements
flexibly and quickly by implementing
ongoing improvements that boost
profitability and lead to even greater
quality and efficiency and lower costs.
Its aim is to establish production
frameworks that are robust from avariety of standpoints, including quality,
cost, and delivery speed.
■ Shueitai

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.

Sources of Information about DNPWeb Site (English: http://www.dnp.co.jp/eng/)
Our web site introduces our Printing segment's three main operations in a format thatis easy to understand. In addition to disclosing information at appropriate times and in
appropriate ways, we are continuously improving the site. The following publications andreports 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. In addition to a message from the president, the report contains features,consolidated financial statements, business strategies, summaries of financial results,
news from each business sector, and financial analysis, etc.
■

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)

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.
■“DNP Report” Report to Shareholders (in Japanese)“DNP Report” to shareholders

This report is issued quarterly, in September, December, March and June, and is
mailed to shareholders. Examples of its content include summaries of financial
results, interviews with management, information about new businesses, andinformation about shares.
■

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)

It introduces each operation and addresses aspects like products, services, sales,planning, research and development, production facilities, company history, and asummary of our activities.

DNP Group CSR Report

Reports■“Yuho” Annual Securities Report, etc. (in Japanese)

In 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 are broadranging reports that include consolidated financial statements with auditing reports attached, non-consolidated financial statements,
performance reviews, information about shares and corporate directors, etc.
■

“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.
* Trademarks mentioned in this annual report in connection with DNP products or services are registered in Japan.

2620g

CO 2 の「見える化」
カーボンフットプリント

http://www.cfp-japan.jp
検証番号：CV-BS01-017

DNP calculated and displayed the carbon footprint 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 an easy-to-understand format for displaying a product’s CFP. DNP is one of the firstcompanies to participate in the Japanese government’s carbon footprint labeling system. In addition to
calculating and displaying the CFP of its own publications, DNP works to promote widespread participation in
the CFP labeling program.

Appendix

D N P A n n u a l R e p o r t 2 011

135

Press and Public Relations
1-1, Ichigaya-Kagacho 1-chome, Shinjuku-ku
Tokyo 162-8001, Japan
TEL: +81-3-3266-2111
URL: http://www.dnp.co.jp/eng/