Business Results for the Year Ended December 31, 2017
[Japan GAAP] (Consolidated)
February 9, 2018

Company:
The Pack Corporation
Listed on the TSE1
Stock code:
3950
URL: http://www.thepack.co.jp
Representative: Yoshikazu Nakao, President & CEO
Contact:
Michihisa Fujii, Director, Divisional General Manager of Administration HQ
TEL: +81-6-6972-1221
Expected date of annual shareholders’ meeting:March 29, 2018
Expected starting date of dividend payment:
March 30, 2018
Expected date of filing of annual securities report:
March 29, 2018
Preparation of supplementary financial document:
Yes
Results briefing:
Yes (for institutional investors and securities analysts)(Rounded down to million yen)

1. Consolidated business results for the year ended December 31, 2017
(January 1, 2017 through December 31, 2017)(1) Consolidated results of operations(% change from the previous corresponding period)
Net sales

Operating profit

Million yen

Year ended Dec. 31, 2017
Year ended Dec. 31, 2016
(Note) Comprehensive income

90,31389,174%

Million yen

%

1.3
7,273
1.3
6,484
Year ended Dec. 31, 2017
Year ended Dec. 31, 2016

12.2
4.0

Basic earnings
per share

Diluted earnings
per share

Yen

Million yen

Million yen

%

7,589
11.2
5,209
6,825
5.5
4,540
5,811 million yen (up 40.1%)
4,148 million yen (down 7.8%)

14.7
11.6

Return on
equityYen

Year ended Dec. 31, 2017
265.56
Year ended Dec. 31, 2016
231.47(Reference) Investment earnings/loss on equity-method

Profit attributable toowners of parent

Ordinary profit%

Ratio of ordinary
profit to total assets%

265.2910.2
231.25
9.7
Year ended Dec. 31, 2017: - million yen
Year ended Dec. 31, 2016: - million yen

Ratio of operating
profit to net sales

%

%

9.6
9.1

8.1
7.3

(2) Consolidated financial position
Total assets

Net assets

Million yen

As of Dec. 31, 2017
As of Dec. 31, 2016
(Reference) Owner’s equity

Capital adequacy ratio

Net assets per share%

Yen

Million yen

81,92853,45776,291
48,603As of Dec. 31, 2017: 53,372 million yen

65.1
2,720.34
63.6
2,474.25
As of Dec. 31, 2016: 48,533 million yen(3) Consolidated cash flows
Cash flows fromoperating activities
Year ended Dec. 31, 2017
Year ended Dec. 31, 2016

Cash flows frominvesting activities

Cash flows fromfinancing activities

Cash and cash equivalents
at end of period

Million yen

Million yen

Million yen

Million yen

6,873
6,597

452
(4,144)

(992)
(995)

19,22812,9002. Dividends
Dividend per share
End of
1Q
Year ended Dec. 31, 2016
Year ended Dec. 31, 2017
Year ending Dec. 31, 2018
(forecasts)

Total
dividends(Total)Dividend
payout ratio(Consolidated)

Ratio of total
dividend to
net assets(Consolidated)

End of2Q

End of
3Q

Yen

Yen

Yen

Yen

Yen

Million yen

%

%

-

25.00
25.00

-

25.00
25.00

50.00
50.00

980
980

21.6
18.8

2.1
1.9

-

25.00

-

25.00

50.00

Year-end

Total

18.2

3. Forecast of consolidated business results for the year ending December 31, 2018
(January 1, 2018 through December 31, 2018)(% change from the previous corresponding period)
Net salesFirst half
Full year

Operating profit

Profit attributable toowners of parent

Ordinary profit

Basic earnings per
share

Million yen%

Million yen%

Million yen%

Million yen%

Yen

42,90094,000

2.8
4.1

3,100
7,400

1.5
1.7

3,300
7,700

2.6
1.5

2,200
5,400

4.4
3.6

112.13275.23

* Notes(1) Material changes in subsidiaries during this period (Changes in scope of consolidations resulting from changes
in subsidiaries): None
(2) Changes in accounting policies, accounting estimates and retrospective restatement
1) Changes in accounting policies based on revisions of accounting standard: None
2) Changes in accounting policies other than ones based on revisions of accounting standard: None
3) Changes in accounting estimates: None
4) Retrospective restatement: None

(3) Number of issued and outstanding shares (common stock)1) Number of issued and outstanding shares at the end of the year (including treasury shares)
As of Dec. 31, 2017:

19,900,000 shares

As of Dec. 31, 2016:

19,900,000 shares

As of Dec. 31, 2016:

284,592 shares

2) Number of treasury shares at the end of the year
As of Dec. 31, 2017:

280,247 shares

3) Average number of sharesYear ended Dec. 31, 2017:19,618,564 sharesYear ended Dec. 31, 2016:

19,615,465 shares(Reference) Summary of non-consolidated business results
1. Non-consolidated business results for the year ended December 31, 2017
(January 1, 2017 through December 31, 2017)(1) Non-consolidated results of operations
Operating profit(% change from the previous corresponding period)
Ordinary profit
ProfitMillion yen%

Million yen%

Million yen%

Million yen%

81,78380,912

1.1
1.1

6,661
5,959

11.8
5.3

7,051
6,395

10.3
6.7

4,858
4,150

17.1
12.7

Net salesYear ended Dec. 31, 2017
Year ended Dec. 31, 2016

Basic earnings per share
Year ended Dec. 31, 2017
Year ended Dec. 31, 2016

Diluted earnings per share

Yen

Yen

247.66211.57247.40211.37(2) Non-consolidated financial position
Total assets

Net assets

Million yen

As of Dec. 31, 2017
As of Dec. 31, 2016
(Reference) Owner’s equity

Capital adequacy ratio

Net assets per share%

Yen

Million yen

76,12950,551
71,20946,247
As of Dec. 31, 2017: 50,494 million yen

66.3
2,573.66
64.9
2,355.51
As of Dec. 31, 2016: 46,204 million yen

2. Forecast of non-consolidated business results for the year ending December 31, 2018
(January 1, 2018 through December 31, 2018)(% change from the previous corresponding period)
Net salesFirst half
Full year

Ordinary profit

ProfitBasic earnings per share

Million yen%

Million yen%

Million yen%

Yen38,10083,400

1.1
2.0

3,000
7,100

0.0
0.7

2,100
4,900

2.2
0.9

107.03249.75*The current financial summary is not subject to audit procedures.
*Explanation regarding appropriate use of business forecasts and other special instructions
Note concerning forward-looking statements
Forecasts regarding future performance in these materials are based on assumptions judged to be valid and information availab leto the Company’s management at the time the materials were prepared. These materials are not promises by the Company
regarding future performance. Therefore, actual results may differ significantly from the forecasts due to various factors. Pleaserefer to “1. Analysis of Results of Operations and Financial Position, (1) Analysis of Results of Operations” on page 2 forforecast assumptions and notes of caution for usage.

The Pack Corporation (3950) Financial Report for Fiscal Year 2017

Contents of Attachments
1. Analysis of Results of Operations and Financial Position

2(1) Analysis of Results of Operations

2(2) Analysis of Financial Position

3(3) Basic Policy Concerning the Distribution of Profits and Dividend Distributions for the Fiscal Year
Under Review and the Subsequent Fiscal Year4(4) Business Risks

4

2. The Pack Group6

3. Management Principles

8(1) Fundamental Management Principles

8(2) Goals and Performance Indicators

8(3) Medium-term Business Strategy

8(4) Important Issues

8(5) Other Important Business Matters

8

4. Basic Approach for the Selection of Accounting Standards

8

5. Consolidated Financial Statements and Notes

9(1) Consolidated Balance Sheet

9(2) Consolidated Statement of Income and Consolidated Statement of Comprehensive Income11(3) Consolidated Statement of Changes in Equity

13(4) Consolidated Statement of Cash Flows

15(5) Notes to Consolidated Financial Statements

16

Going Concern Assumption

16

Changes in Accounting Policies

16

Segment and Other Information

17

Per Share Information

19

Material Subsequent Events

19

-1-

The Pack Corporation (3950) Financial Report for Fiscal Year 2017

1. Analysis of Results of Operations and Financial Position(1) Analysis of Results of Operations
In 2017, companies in Japan reported higher earnings and unemployment declined amid the country’s labor
shortage. There was also a gradual recovery in consumer spending as personal income increased and stock prices
rebounded. The U.S. economy was healthy and the Chinese economy is showing s igns of an upturn as the
slowdown in the economic growth rate has ended. However, the outlook is uncertain because there are no
indications of a decline in geopolitical risk involving North Korea and other countries.
In Japan’s distribution and retail sectors, which are the primary markets for products of The Pack, sales at somedepartment stores and other retailers continue to be supported by the purchases of foreign tourists in Japan. But
the average purchase price is declining as customers shift from hig h-end merchandise to everyday household
items. Market conditions for general merchandise stores continued to be challenging. The convenience store
category, which has completed a major realignment, is about to become the primary component of Japan’s retailsector. Furthermore, the growth of e-commerce and other new trends are significantly altering how consumers
purchase goods.
During 2017, there were many activities to accomplish the goals of the medium-term management plan under theslogan of “Strong Growth through Group Solidarity.” All group companies were focused on entering new markets
and selling products at adequate prices. Group companies are also engaged in activities such as making
substantial capital expenditures, developing new products and improving quality management in order to increase
earnings.
Net sales increased 1.3% year-on-year to 90,313 million yen, operating profit increased 12.2% to 7,273 million
yen, ordinary profit increased 11.2% to 7,589 million yen, and profit attributable to owners of parent increased
14.7% to 5,209 million yen.
Business segment performance was as follows.
(Paper Products)
The paper products segment accounted for 61.5% of consolidated sales in 2017. Sales of paper bags, which
accounted for 31.9% of consolidated sales, increased 1.2% to 28,835 million yen. Sales were strong at The Pack,
NISHINIHON PRINTING CO., LTD. and subsidiaries in China.
Sales of paper folding cartons, which accounted for 16.3% of consolidated sales, increased 6.9% to 14,762
million yen. Sales of cartons for food products were higher in part because of measures to strengthen sales
activities in this product category. There were also extensive e-commerce sales activities.
Sales of corrugated boxes, which accounted for 10.9% of consolidated sales, increased 3.6% to 9,834 million yen.
This increase was attributable to higher sales of boxes to manufacturers and e-commerce companies.
Printing sales, which accounted for 2.4% of consolidated sales, decreased 3.6% to 2,144 million yen as sales
were weak at Keihin Tokushu Printing Corp.
Overall, sales in this segment increased 2.9% to 55,577 million yen. Operating profit was up 12.8% to 5,492
million yen.
(Film Packaging)
The film packaging segment accounted for 21.7% of consolidated sales in 2017. Sales to specialty retail stores inJapan were slow but there was an increase in orders for products for disposable diapers. As a result, sales
increased 1.3% to 19,557 million yen. Operating profit was up 13.6% to 1,202 million yen.
(Other Businesses)
Other businesses accounted for 16.8% of consolidated sales in 2017. There was a decline in sales of products
used in conjunction with the Pack Assortment Service system, which is a comprehensive outsourcing vendor
system that covers everything from manufacturing and procuring packaging materials and other products toinventory control and delivery. As a result, sales decreased 4.3% to 15,178 million yen. Operating profit
decreased 7.9% to 1,389 million yen.
-2-

The Pack Corporation (3950) Financial Report for Fiscal Year 2017

Outlook for 2018
Economies in Japan and other countries were stronger than initially expected in 2017. But prices did not riseeven though much of the world appeared to be enjoying a “Goldilocks economy.” No change in the economic
environment is anticipated in 2018. Reaching the 2% inflation target of the Ban k of Japan will not be easy. Also,
there will be risk associated with concerns about a bubble economy in the United States due to rising prices ofstocks and other assets.
Activities in 2018 are guided by the slogan “Adapt to Changes and Advance with Vigor—Become an Even MorePowerful Group—.” We will make substantial investments in equipment, use many initiatives to implement
work-style reforms, strengthen production capacity and efficiency, and expand businesses and enter new markets
in Japan and overseas for further growth. Furthermore, we are dedicated to improving customer satisfaction byfocusing on developing products and services and on quality management. The goal of all of these measures ismore growth in sales and earnings.
(2) Analysis of Financial Position
1) Balance sheet position
Assets totaled 81,928 million yen at the end of 2017, up 5,636 million yen from the end of 2016. The main
factors were increases of 3,613 million yen in cash and deposits, 665 million yen in notes and accounts
receivable-trade, 798 million yen in securities, and 661 million yen in investment securities.
Liabilities increased 782 million yen to 28,470 million yen. The main factors were increases of 152 million yen
in notes and accounts payable-trade and 746 million yen in electronically recorded obligations-operating.
Net assets increased 4,853 million yen to 53,457 million yen. The main factors were increases of 4,229 million
yen in retained earnings and 428 million yen in valuation difference on available-for-sale securities.
2) Cash flow position
The balance of cash and cash equivalents at the end of 2017 increased 6,328 million yen, or 49.1% from the endof 2016 to 19,228 million yen.
Cash flows from operating activities
Operating activities provided net cash of 6,873 million yen (up 4.2 % from net cash provided of 6,597 million
yen in 2016). The principal factors were profit before income taxes of 7,574 million yen and depreciation of
1,645 million yen.
Cash flows from investing activities
Investing activities provided net cash of 452 million yen (net cash used of 4,144 million yen in 2016). The
principal factor was proceeds from sales of securities of 8,002 million yen, while there were outlays of 1,368
million yen for the purchase of property, plant and equipment, and 6,101 million yen for the purchase of
securities.
Cash flows from financing activities
Financing activities used net cash of 992 million yen (net cash used of 995 million yen in 2016). This was mainly
due to outlays of 980 million yen for the cash dividends paid.
Reference: Cash flow indicators
Fiscal years ended

Dec. 31, 2013 Dec. 31, 2014 Dec. 31, 2015 Dec. 31, 2016 Dec. 31, 2017

Capital adequacy ratio

60.7

61.0

62.0

63.6

65.1

Capital adequacy ratio based on market prices

57.1

64.8

81.7

67.1

87.2

Interest-bearing debt to cash flow ratio

0.2

0.0

0.0

0.0

0.0

237.6

561.9

5,259.7

7,883.0

8,274.9

Interest coverage ratio(Notes): 1. Cash flow indices are calculated, using consolidated financial figures, as follows:-3-

The Pack Corporation (3950) Financial Report for Fiscal Year 2017

Capital adequacy ratio: Owner’s equity / Total assets
Capital adequacy ratio based on market prices: Market capitalization / Total assets
Interest-bearing debt to cash flow ratio: Interest-bearing debt / Operating cash flows
Interest coverage ratio: Operating cash flows / Interest payments
2. Market capitalization is calculated by multiplying the closing share price at the end of the period by the number
of issued and outstanding shares at the end of the fiscal year, net of treasury shares.
3. Interest-bearing debt includes all liabilities on the consolidated balance sheet that incur interest.
4. Operating cash flows and interest payments are taken from “Net cash provided by (used in) operating activities”
and “Interest expenses paid” on the consolidated statement of cash flows, respect ively.

(3) Basic Policy Concerning the Distribution of Profits and Dividend Distributions for the Fiscal Year
Under Review and the Subsequent Fiscal YearThe fundamental policy on dividend payments is to pay a stable dividend continuously while taking int oconsideration each year’s performance as well as the need to retain earnings to expand businesses and build asound base for growth.
Retained earnings are used to sustain and increase the dividend payments to shareholders by funding initiatives
that are expected to increase earnings in the future, such as strengthening the financial position and paying for
production facilities, R&D programs and other activities.
The Pack Group intends to pay a year-end dividend of 25 yen per share for the fiscal year ended December 31,
2017. This will make the total dividend distributions 50 yen per share for the fis cal year ended December 31,
2017, as planned.
In the fiscal year ending December 31, 2018, we plan to pay an interim dividend of 25 yen per share and a
year-end dividend of 25 yen per share, resulting in a dividend per share of 50 yen.
(4) Business Risks
The following risk factors could have a material effect on decisions by investors. Forward-looking statements inthis section are based on the judgments of management as of the end of 2017. The Pack Group is aware that thefollowing events may occur and has taken actions to avoid these problems or respond properly.
1) Decline in domestic demand or lower market prices
Since our operations rely mainly on demand within Japan, sales are greatly influenced by the health of theJapanese economy. If domestic demand shrinks or market prices fall due to a major recession in Japan, there
could be an adverse impact on the financial position or performance of the Group.
2) Impact of a disasterWe have done everything possible to minimize the impact of a disaster, but there is no guarantee that the effects
of a disaster can be prevented or minimized. If the Group is unable to prevent or minimize the effects of adisaster, there could be an adverse impact on the financial position or performance of the Group caused by areduction in the Group’s production capacity or an increase in manufacturing costs.
3) Risks involving legal and regulatory requirements or litigation
Our business activities are subject to a variety of legal and regulatory requirements, including environmental
regulations and intellectual property laws, and there could be a risk of litigation in connection with these legal
and regulatory requirements.
There could be an adverse impact on the financial position or performance of the Group based on the outcome ofsuch litigation.
4) Product liability
In connection with its products, the Group is subject to claims for damages based on product liability.
At present the Group has not received any major claim for damages, but there could be a claim in the future.

-4-

The Pack Corporation (3950) Financial Report for Fiscal Year 2017

The Group has product liability insurance, but it is conceivable that this insurance could be insufficient to aliability payment that the Group may be required to make.
5) Procuring raw materials and merchandise
We constantly work on maintaining stable supplies and prices for raw materials and merchandise that we procure
by using a variety of Japanese and foreign manufacturers. Nevertheless, if a surge i n the price of oil upset thebalance of supply and demand, there could be an adverse impact on the financial position or performance of theGroup.
6) Impairment accounting
There may be asset impairment losses that result from how the Group uses non -current assets.
7) Counterparty credit risk
There are risks associated with the payments received by the Group from counterparties. We use commercial
credit insurance and other measures to manage credit risk. However, if the financial soundness of a large
customer deteriorated, there could be an adverse impact on the financial position or performance of the Group.

-5-The Pack Corporation (3950) Financial Report for Fiscal Year 2017

2. The Pack Group
There are eight companies in the Pack Group: the parent company and seven consolidated subsidiaries. The
primary business activities are the manufacturing and selling of paper products, film packaging and otherproducts, as well as research, distribution and services associated with these businesses.
The activities of the Group and information about each business segment are shown i n the following table.

Name of businesssegment
Paper products

Film packaging

Other businesses

Businesses

Company name

Manufacturing, purchasing and selling paperbags, printed paper folding cartons, corrugatedboxes and other products

The Pack Corporation
Keihin Tokushu Printing Corp.
NIKKO PRINT CORPORATIONPACK TAKEYAMA CO., LTDNISHINIHON PRINTING CO., LTD.
THE PACK AMERICA CORP.
The Pack (Shanghai) Corporation
The Pack (Changshu) Corporation
Manufacturing, purchasing and selling plastic
The Pack Corporation
bags, garment bags and other products
PACK TAKEYAMA CO., LTD
THE PACK AMERICA CORP.
The Pack (Shanghai) Corporation
Manufacturing, purchasing and selling gifts,
The Pack Corporation
clothing, supplies, price tags, calendars,
PACK TAKEYAMA CO., LTD
designer creations, promotional goods and other NISHINIHON PRINTING CO., LTD.
products
THE PACK AMERICA CORP.

THE PACK AMERICA CORP. is incorporated in the United States. Sales are mainly within the United States andCanada.
The Pack (Shanghai) Corporation mainly sells products to customers in China and the parent company in Japan.
The Pack (Changshu) Corporation manufactures paper bags for sale in China. Both companies are incorporated
in China.

-6-

The Pack Corporation (3950) Financial Report for Fiscal Year 2017

(Purchasing and selling paper
products, film packaging, gifts andother products)* THE PACK AMERICA CORP.

* NISHINIHON PRINTING CO.,LTD.

Purchase of finishedand semi-finishedproducts

Finished products

Outsourced
production(Manufacturing, purchasing, andselling paper products, film
packaging, gifts and other products)

Finished products* PACK TAKEYAMA CO., LTD
Purchase of
semi-finishedproducts

Outsourced
production

Outsourced production(Printing and selling paper products)
Finished products* Keihin Tokushu Printing Corp.
* NIKKO PRINT CORPORATION

Purchase of
semi-finished products(Selling paper products andfilm packaging)

Finished products

Finished products* The Pack (Shanghai) Corporation

Outsourced
production

Purchase of finishedproducts(Manufacturing paper products)* The Pack (Changshu) Corporation(Note) * Consolidated subsidiaries-7-

Customers

Outsourced production

Purchase of finishedand semi-finishedproducts

Finished products(Manufacturing, purchasing andselling paper products, gifts andother products)

Outsourced production

The Pack Corporation(Manufacturing, purchasing and selling paper products, film packaging, gifts and other products)

Finished products

The Pack Corporation (3950) Financial Report for Fiscal Year 2017

3. Management Principles(1) Fundamental Management Principles
With “management that values and nurtures people” as our guiding principle, we aim to create “a management
culture that is capable of adapting to any type of change in our markets.” Furthermore, we will implement
work-style reforms while keeping in mind our responsibilities to society, such as addressing global environment
issues. In addition, as an integrated packaging company we will aim for even better performance and meet the
expectations of our shareholders while contributing to the development and prosperity of society.
(2) Goals and Performance Indicators
We are committed to building a sound financial base in order to increase profitability in all our businesses andmaintain stable relationships with all of our stakeholders, including business partners, employees and, foremost,shareholders. For this reason, our current goal is to increase our capital adequacy ratio and return on equity. We
also place emphasis on the stability of dividend payments.
(3) Medium-term Business Strategy
We have established a medium-term management plan with the goals of raising consolidated sales (before
eliminations for consolidation) to 100 billion yen, ordinary profit to 10 billion yen and the capital adequacy ratio
to 70%. To accomplish these goals, we are pursuing the 3S Vision, which consists of Scale, Speed and Sav e. All
employees have established their own targets in order to contribute to reaching the overall goals of themedium-term management plan.
(4) Important Issues
The packaging industry is viewed as a mature industry that has no prospects for significant growth in sales andearnings by relying only on the current customer base and product lineup. Due to this situation, we have been
taking numerous actions to expand operations beyond our traditional core products. We have entered newmarkets and added more products. Examples include rice bags, products for disposable diapers and cartons forfood products. We will continue to target new markets a nd develop products where there is a potential for solid
demand and will make substantial investments in the equipment r equired to achieve this growth.
Another important issue is the outlook for higher operating expenses caused by the rising cost of raw ma terials
and imported products as well as the higher cost of distribution and other logistics activities. In response, wehave been working on selling products at adequate prices by improving customer satisfaction. This involves
using sales activities that include offering ideas to customers and making quality management even more
rigorous. At the same time, we plan to build a more powerful profit structure by using reforms to further
streamline operations. By taking these actions, we are determined to make steady progress in line with our
medium to long-term management principles and to continue increasing sales and earnings.
(5) Other Important Business Matters
The Board of Directors of The Pack approved a resolution on December 18, 2017 to purchase the st ock ofKannaru Printing Co., Ltd. (3-4-23, Jyusohonmachi, Yodogawa-ku, Osaka). A contract to purchase this stock wassigned on the same day. Kannaru Printing specializes in the production and sale of packaging for drugs.
Due to the purchase of this stock, Kannaru Printing is expected to become a consolidated subsidiary of The Packon April 2, 2018.
4. Basic Approach for the Selection of Accounting Standards
The Pack Group will continue to prepare consolidated financial statements using Japanese accounting standards
for the time being to permit comparisons with prior years and with the financial data of other companies. We willtake suitable actions with regard to the application of International Financial Reporting Standards (IFRS) by
taking into account associated factors in Japan and other countries.

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The Pack Corporation (3950) Financial Report for Fiscal Year 2017

5. Consolidated Financial Statements and Notes(1) Consolidated Balance Sheet
Previous fiscal year
(As of December 31, 2016)(Million yen)
Current fiscal year
(As of December 31, 2017)

AssetsCurrent assets
Cash and deposits

9,695

13,308Notes and accounts receivable-trade23,562

24,227

Securities

9,300

10,099Merchandise and finished goods

5,149

5,232

Work in process

787

761

Raw materials and supplies

660

759

Deferred tax assets

263

260

Other

474

759

Allowance for doubtful accounts

(27)

(28)

49,86855,381

Buildings and structures, net

7,262

6,878

Machinery, equipment and vehicles, net

5,044

5,132

163

199

8,066

8,122

267

126

20,804

20,460124

186

Investment securities

4,283

4,944

Deferred tax assets

647

423

Total current assets
Non-current assets
Property, plant and equipment

Tools, furniture and fixtures, net
LandConstruction in progress
Total property, plant and equipment
Intangible assets
Investments and other assets

Other

684

637

Allowance for doubtful accounts

(120)

(106)

Total investments and other assets

5,494

5,899

26,423

26,54676,291

81,928

Total non-current assets
Total assets-9-

The Pack Corporation (3950) Financial Report for Fiscal Year 2017

Previous fiscal year
(As of December 31, 2016)(Million yen)
Current fiscal year
(As of December 31, 2017)

Liabilities
Current liabilities
Notes and accounts payable-trade

14,334

14,486

Electronically recorded obligations-operating

4,499

5,246

Income taxes payable

1,303

1,353

Provision for bonuses

269

289

Provision for directors’ bonuses

47

44

Other

2,664

2,567

Total current liabilities

23,11923,987

314

326

4,077

4,009

177

146

4,568

4,483

27,68828,470Capital stock

2,553

2,553

Capital surplus

3,167

3,166

Retained earnings

42,65446,883

Treasury shares

(739)

(728)

Total shareholders’ equity

47,63651,875

1,595

2,023

Non-current liabilities
Deferred tax liabilities
Net defined benefit liability
Other
Total non-current liabilities
Total liabilities
Net assets
Shareholders’ equity

Accumulated other comprehensive income
Valuation difference on available-for-sale securities

33

7

Foreign currency translation adjustment

(190)

(181)

Remeasurements of defined benefit plans

(541)

(353)

896

1,496

43

56

Deferred gains or losses on hedges

Total accumulated other comprehensive income
Subscription rights to shares
Non-controlling interests
Total net assets
Total liabilities and net assets- 10 -

26

28

48,60353,45776,291

81,928

The Pack Corporation (3950) Financial Report for Fiscal Year 2017(2) Consolidated Statement of Income and Consolidated Statement of Comprehensive Income
Consolidated Statement of Income

Net sales
Cost of sales

Previous fiscal year
(from January 1, 2016
to December 31, 2016)
89,174
68,158(Million yen)
Current fiscal year
(from January 1, 2017
to December 31, 2017)
90,31368,368Gross profit

21,01521,944

Selling, general and administrative expenses

14,531

14,671

Operating profit

6,484

7,273

109
88
62
72
46

93
94
59
54
41

379

342

0
15
4
17

0
13
5
8

Non-operating income
Interest income
Dividend income
Rent income
Foreign exchange gains
Other
Total non-operating income
Non-operating expenses
Interest expenses
Cost of lease revenue
Loss on sales of accounts receivable
Other
Total non-operating expenses
Ordinary profit
Extraordinary income
Gain on sales of investment securities
Gain on sales of non-current assets
Total extraordinary income
Extraordinary losses
Loss on sales of non-current assets
Loss on retirement of non-current assets
Loss on valuation of investment securities
Loss on valuation of membership

38

27

6,825

7,589

0
0

0
0

0

1

0
12
0
12

16
0
-

Total extraordinary losses

25

16

Profit before income taxes

6,800

7,574

Income taxes-current
Income taxes-deferred

2,392
(134)

2,394
(31)

Total income taxes

2,257

2,363

Profit

4,542

5,210

Profit attributable to non-controlling interests
Profit attributable to owners of parent- 11 -

1

0

4,540

5,209

The Pack Corporation (3950) Financial Report for Fiscal Year 2017

Consolidated Statement of Comprehensive Income

ProfitPrevious fiscal year
(from January 1, 2016
to December 31, 2016)
4,542(Million yen)
Current fiscal year
(from January 1, 2017
to December 31, 2017)
5,210

(167)

428

Other comprehensive income
Valuation difference on available-for-sale securities

38

(25)

Foreign currency translation adjustment

(78)

10

Remeasurements of defined benefit plans, net of tax

(186)

187

Deferred gains or losses on hedges

Total other comprehensive income
Comprehensive income

(393)

600

4,148

5,811

4,149

5,810

(0)

1

Comprehensive income attributable toComprehensive income attributable to owners of parent
Comprehensive income attributable to non-controllinginterests- 12 -

The Pack Corporation (3950) Financial Report for Fiscal Year 2017(3) Consolidated Statement of Changes in Equity
Previous fiscal year (from January 1, 2016 to December 31, 2016)(Million yen)
Shareholders’ equity
Capital stock
Balance at beginning ofcurrent period
Changes of items during
periodRetainedearnings

Capital surplus

2,553

3,167

Total shareholders’equity(739)

44,07739,095

Dividends of surplus
Profit attributable toowners of parent
Purchase of treasury
shares
Disposal of treasury
sharesNet changes of items otherthan shareholders’ equity
Total changes of items
during period
Balance at end of current
periodTreasury shares

(980)

(980)

4,540

4,540
(0)

(0)
-

-

-

3,559

(0)

3,559

2,553

3,167

42,654(739)

47,636(Million yen)
Accumulated other comprehensive income
Valuation
RemeasureTotal
SubscripNonDeferred Foreign
Total netdifference
ments ofaccumulatedtion rights controlling
gains or currency
assetson availabledefinedotherto shares interests
losses on translation
for-salebenefit comprehensive
hedges adjustment
securities
plans
incomeBalance at beginning ofcurrent period
Changes of items during
period

1,763

(5)

(114)

(355)

Dividends of surplus
Profit attributable toowners of parent
Purchase of treasury
shares
Disposal of treasury
sharesNet changes of items otherthan shareholders’ equity
Total changes of items
during period
Balance at end of current
period

1,287

20

27

45,412

-

(980)

-

4,540

-

(0)

-

-

(167)

38

(76)

(186)

(391)

23

(0)

(368)

(167)

38

(76)

(186)

(391)

23

(0)

3,190

1,595

33

(190)

(541)

896

43

26

48,603- 13 -

The Pack Corporation (3950) Financial Report for Fiscal Year 2017

Current fiscal year (from January 1, 2017 to December 31, 2017)(Million yen)
Shareholders’ equity
Capital stock
Balance at beginning ofcurrent period
Changes of items during
periodCapital surplus

2,553

Retainedearnings

3,167

Total shareholders’equity(739)

47,63642,654

Dividends of surplus
Profit attributable toowners of parent
Purchase of treasury
shares
Disposal of treasury
sharesNet changes of items otherthan shareholders’ equity
Total changes of items
during period
Balance at end of current
periodTreasury shares

(980)

(980)

5,209

5,209

(1)

(0)

(0)

11

10

-

(1)

4,229

11

4,238

2,553

3,166

46,883(728)

51,875(Million yen)
Accumulated other comprehensive income
Valuation
RemeasureTotal
SubscripNonDeferred Foreign
Total netdifference
ments ofaccumulatedtion rights controlling
gains or currency
assetson availabledefinedotherto shares interests
losses on translation
for-salebenefit comprehensive
hedges adjustment
securities
plans
incomeBalance at beginning ofcurrent period
Changes of items during
period

1,595

33

(190)

(541)

Dividends of surplus
Profit attributable toowners of parent
Purchase of treasury
shares
Disposal of treasury
sharesNet changes of items otherthan shareholders’ equity
Total changes of items
during period
Balance at end of current
period

896

43

26

48,603

-

(980)

-

5,209

-

(0)

-

10

428

(25)

9

187

600

13

1

614

428

(25)

9

187

600

13

1

4,853

2,023

7

(181)

(353)

1,496

56

28

53,457- 14 -

The Pack Corporation (3950) Financial Report for Fiscal Year 2017(4) Consolidated Statement of Cash Flows(Million yen)
Current fiscal year
(from January 1, 2017
to December 31, 2017)

Previous fiscal year
(from January 1, 2016
to December 31, 2016)
Cash flows from operating activities
Profit before income taxes

6,800

7,574

Depreciation

1,784

1,645

Increase (decrease) in allowance for doubtful accounts

75

(13)

Increase (decrease) in provision for bonuses

82

19

Increase (decrease) in provision for directors’ bonuses

3

(2)

98

198

(198)

(187)

0

0

Loss (gain) on sales of non-current assets

0(0)Loss on retirement of non-current assets

12

16

Loss (gain) on sales of investment securities

(0)

(0)

0

0

(143)

(645)

3

(151)

Increase (decrease) in net defined benefit liability
Interest and dividend income
Interest expenses

Loss (gain) on valuation of investment securities
Decrease (increase) in notes and accounts receivable-trade
Decrease (increase) in inventories

(169)

884

Other, net

505

(247)

Subtotal

8,855

9,089

Interest and dividend income received

188

184

Interest expenses paid

(0)

(0)

(2,445)(2,399)

6,597

6,873

Payments into time deposits

(83)

(67)

Proceeds from withdrawal of time deposits

114

84

(10,202)(6,101)

7,601

8,002

Increase (decrease) in notes and accounts payable-trade

Income taxes paid
Net cash provided by (used in) operating activities
Cash flows from investing activities

Purchase of securities
Proceeds from sales of securities
Collection of loans receivable
Purchase of property, plant and equipment

126

21

(1,624)(1,368)6

15

Purchase of intangible assets

(30)

(99)

Purchase of investment securities

(28)

(30)

0

1

(23)

(6)

(4,144)452

Cash dividends paid

(980)

(980)

Other, net

(14)

(12)

Net cash provided by (used in) financing activities

(995)

(992)

Proceeds from sales of property, plant and equipment

Proceeds from sales of investment securities
Other, net
Net cash provided by (used in) investing activities
Cash flows from financing activities

(8)

(5)

Net increase (decrease) in cash and cash equivalents

1,448

6,328

Cash and cash equivalents at beginning of period

11,451

12,900Cash and cash equivalents at end of period

12,90019,228

Effect of exchange rate change on cash and cash equivalents- 15 -

The Pack Corporation (3950) Financial Report for Fiscal Year 2017(5) Notes to Consolidated Financial Statements
Going Concern Assumption
Not applicable.
Changes in Accounting Policies
Not applicable.

- 16 -

The Pack Corporation (3950) Financial Report for Fiscal Year 2017

Segment and Other Information
Segment Information
1. Segment overview
The reportable segments of the Pack Group are the smallest units for which separate financial information can beobtained and for which regular examinations are performed by the Board of Directors in order to determine
resource allocation and evaluate results of operations.
The Group is engaged primarily in the manufacture and sale of paper bags, paper folding cartons, corrugatedboxes and plastic bags.
Therefore, based on the nature of products, there are two reportable segments: “Paper products” and “Filmpackaging.”
The Group’s major products are paper bags, paper folding cartons, corrugated boxes and printing in the “Paper
products” segment and plastic bags and garment bags in the “Film packaging” segment.
2. Method to determine net sales, profit or loss, assets, liabilities and other items by r eportable segment
Accounting methods used for the reportable segments are generally the same as the methods used for the
preparation of the consolidated financial statements with the exception of the standard for the valuation of
inventories.
Profit for reportable segments is stated on an operating profit basis.
3. Information concerning net sales, profit or loss, assets, liabilities and other items by reportable segment
Previous fiscal year (from January 1, 2016 to December 31, 2016)
Reportable segment

Net sales
Sales to externalcustomerInter-segment sales andtransfers
Total(Million yen)Amount posted in
Adjustment the consolidated(Note) 2 financial statements(Note) 3

Subtotal

Otherbusinesses(Note) 1

Total

19,301

73,31615,857

89,174-

89,174

-

-

-

-

-

-

-

54,015

19,301

73,31615,857

89,174-

89,174Paper
products

Film
packaging

54,015

Segment profit

4,869

1,058

5,927

1,508

7,435

(951)

6,484

Segment assets

37,347

10,002

47,3496,797

54,147

22,14476,291Other items
Depreciation
1,549
200
1,749
29
1,779
5
1,784
Increases in property,
plant and equipment and
807
307
1,115
9
1,124
0
1,124
intangible assets(Notes) 1. “Other businesses” includes supplies and other goods.
2. The adjustments are as follows.
(1) The -951 million yen adjustment to segment profit includes elimination of inter-segment transactions of 12 million
yen that are not allocated to reportable segments and corporate expenses of -964 million yen. Corporate expenses aremainly related to the parent company’s Administrative Department.
(2) The 22,144 million yen adjustment to segment assets is corporate assets that are not allocated to reportable segments.
Corporate assets mainly include the parent company’s surplus assets under management (cash and deposits of 7,999
million yen and securities of 9,300 million yen), long-term investments (investment securities of 4,283 million yen)and the parent company’s land of 560 million yen.
(3) The adjustments to depreciation and increases in property, plant and equipme nt and intangible assets are related tothe parent company’s head office assets.
3. Segment profit is adjusted for consistency with operating profit in the consolidated statement of income.

- 17 -

The Pack Corporation (3950) Financial Report for Fiscal Year 2017

Current fiscal year (from January 1, 2017 to December 31, 2017)
Reportable segment(Million yen)Amount posted in
Adjustment the consolidated(Note) 2 financial statements(Note) 3

Subtotal

Otherbusinesses(Note) 1

Total

19,55775,135

15,17890,313-90,313

-

-

-

-

-

-

-

55,577

19,55775,135

15,17890,313-90,313

Segment profit

5,492

1,202

6,694

1,389

8,083

(810)

7,273

Segment assets

37,93910,61348,553

6,848

55,402

26,526

81,928Net sales
Sales to externalcustomerInter-segment sales andtransfers
Total

Paper
products

Film
packaging

55,577

Other items
Depreciation
1,405
207
1,613
23
1,636
8
1,645
Increases in property,
plant and equipment and
743
616
1,359
32
1,392
8
1,400
intangible assets(Notes) 1. “Other businesses” includes supplies and other goods.
2. The adjustments are as follows.
(1) The -810 million yen adjustment to segment profit includes elimination of inter-segment transactions of 12 million
yen that are not allocated to reportable segments and corporate exp enses of -822 million yen. Corporate expenses aremainly related to the parent company’s Administrative Department.
(2) The 26,526 million yen adjustment to segment assets is corporate assets that are not allocated to reportable segments.
Corporate assets mainly include the parent company’s surplus assets under managemen t (cash and deposits of 10,917
million yen and securities of 10,099 million yen), long-term investments (investment securities of 4,944 million yen)and the parent company’s land of 563 million yen.
(3) The adjustments to depreciation and increases in property, plant and equipment and intangible assets are related tothe parent company’s head office assets.
3. Segment profit is adjusted for consistency with operating profit in the consolidated statement of income.

- 18 -

The Pack Corporation (3950) Financial Report for Fiscal Year 2017

Per Share Information
Previous fiscal year
(from January 1, 2016 to
December 31, 2016)
2,474.25(Yen)
Current fiscal year
(from January 1, 2017 to
December 31, 2017)
2,720.34

Basic earnings per share

231.47265.56

Diluted earnings per share

231.25265.29Net assets per share(Notes) 1. The basis of calculating the basic earnings per share and diluted earnings per share is as follows.

Item(Million yen)
Current fiscal year
(from January 1, 2017 to
December 31, 2017)

Previous fiscal year
(from January 1, 2016 to
December 31, 2016)

Basic earnings per share
Profit attributable to owners of parent

4,540

5,209

-

-

4,540

5,209

19,615

19,618

-

-

18

20

( 18)

( 20)

Amounts unavailable to common shareholders
Profit attributable to owners of parent related tocommon shares
Average number of shares outstanding during
the period (thousand shares)
Diluted earnings per share
Adjustment to profit attributable to owners ofparentIncrease in the number of common shares(thousand shares)(of which subscription rights to shares(thousand shares))
2. The basis of calculating the net assets per share is as follows.

48,603(Million yen)
Current fiscal year
(As of December 31, 2017)
53,45770

84(of which subscription rights to shares)

( 43)

( 56)

(of which non-controlling interests)

( 26)

( 28)

Net assets applicable to common shares

48,53353,372

Number of common shares used in calculation of
net assets per share (thousand shares)

19,615

19,619Item

Previous fiscal year
(As of December 31, 2016)

Total net assets
Deduction on total net assets

Material Subsequent Events
Not applicable.

* This financial report is solely a translation of summary of “Kessan Tanshin” (in Japanese, including attachments), which
has been prepared in accordance with accounting principles and practices gene rally accepted in Japan, for theconvenience of readers who prefer an English translation.

- 19 -