ETIC to Provide Support to Fujisho Printing Inc.
February 3rd, 2011
Enterprise Turnaround Initiative Corporation of JapanThe Enterprise Turnaround Initiative Corporation of Japan (“ETIC”) has decided to provide
support to Fujisho Printing Inc. under Article 25, Clause 4 of the Enterprise Turnaround
Initiative Corporation of Japan Act (Act 63, of 2009, hereafter “the ETIC Act”).

1. Name(s) of persons or companies concerned
Fujisho Printing Inc. (hereafter, “Fujisho”)
2. Name(s) of financial institutions jointly applying for rehabilitation support with Fujisho
The Yamagata Bank, Ltd. (hereafter “Yamagata Bank”)
3. Outline of business revitalization plan
Please see appendix
4. Comments from State Ministers in charge of ETIC
Prime Minister, Minister of Internal Affairs and Communications, Minister of Finance,
Minister of Economy, Trade and Industry: No opinion expressed
Minister of Health, Labour and Welfare: “I have no objection to the decision to support
Fujisho. However, I ask that after reaching the decision to support, ETIC should
encourage Fujisho to discuss the situation with employees of the company as soon as
possible. I also ask that in advising on and guiding the implementation of the corporate
revitalization plan, ETIC should aim to ensure that Fujisho complies with related laws
and regulations, and that Fujisho also provides adequate opportunities for substantive
discussions with the workforce with due consideration of employment stability and othersuch factors.”
5. Comment from State Minister supervising business activities
Minister of Economy, Trade and Industry: No opinion expressed
6. Debt purchase application period
From Thursday, February 3rd, 2011 for receipt by ETIC no later than Wednesday, April 20th,2011
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7. Request for temporary suspension
Under Article 27, Clause 1 of the ETIC Act, financial institutions have been requested not
to recover loans or exercise any other rights they may have as creditors before the end of
the debt purchase period as per item 6 above.
8. Treatment of trade and general creditors
The decision by ETIC to provide support involves requesting financial support only fromfinancial institutions providing loans to Fujisho. No request for support will be made withregard to trade debt. Therefore there will be no impact on trade and general creditors.
9. Basis for decision to support
ETIC’s basis for deciding to provide support is as follows.
9.1 Rationale
Fujisho was established in 1946 in Yamagata Prefecture as a press printing
company. The company subsequently expanded beyond commercial printing, into
publication printing, business form printing, and art printing, and has madesignificant contributions to the region’s informational, cultural and lifestyleindustries as a comprehensive printing services company. (A major printing firmranked second in the Tohoku region and first in Yamagata Prefecture by sales).
Locally known as FUJISHO, the company maintains a trusting relationship withthe local community, and making use of Tohoku’s most advanced printing
equipment, the firm receives support from a wide range of customers, including
government agencies, schools, major distribution firms, and financial institutions,from both inside and outside Yamagata prefecture. If Fujisho were to collapse
there could be major ramifications not only to the company itself, but also to the
local economy.
Moreover, because logistics costs are high in the printing industry, it is vital for the
local economy to have a locally based printing services company.
Accordingly ETIC has determined that providing support to a company with suchspecial characteristics clearly represents the revitalization of a small-to-medium
sized local enterprise which possesses effective management businessresources yet lacks managerial capability, and at the same time would be a modelcase for the revitalization within a single region of a local company that is closely
connected with the regional economy.
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9.2 Role of ETIC
Under the terms of this plan, ETIC will: (1) Act as a coordinator among the financial
institutions and others that are involved with Fujisho, (2) Implement a capital
injection of ¥10 million, (3) Deploy management personnel and other such
resources.
With regard to (1) above, ETIC will reduce excessive interest-bearing debt andimprove the financial condition of Fujisho by requesting debt forgiveness fromfinancial institution creditors. With regard to (2), ETIC will provide funding forbusiness restructuring and related expenses by underwriting the issue of ¥10 millionof ordinary shares. With regard to (3), ETIC, subsequent to the capital injection
outlined in (2) above, will deploy management and other personnel into thecompany to support the implementation of the business revitalization plan.

Ends

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Appendix: Outline of the Business Revitalization Plan

Section 1: Overview of the companies receiving support
1.1

Name of company
Fujisho Printing Inc. (hereafter “Fujisho”)

1.2

Head office
1-3-1 Kitamachi, Yamagata-shi, Yamagata Prefecture

1.3

Date of establishment
December 10 th, 1953 (founded January 1946)

1.4

Capital¥100,000,000

1.5

1.6

SharesNumber of shares authorized:

900,000 shares

Number of shares issued and outstanding:

400,000 shares

Main shareholders (as of March 31, 2010)
Name of
Shareholder

Yuji Fujihara
1.7

Relationship

Number ofsharesheld

Percentage
of totalPresident of thecompany

115,767

28.9%

Main business
General printing and digital image processing services

1.8 Number of employees
374 (including domestic and overseas subsidiary employees and part-time
employees, as of March 31 st, 2010)
1.9 Main facility locations
Head office (Yamagata Prefecture), Tokyo office, Sendai office, Koriyama office,Saitama sales office, Akita sales office, Niigata sales office, Zaonomori plant,
Saitama plant
1.10 Main banks
The Yamagata Bank, Ltd., Saitama Resona Bank, Ltd., others
1.11 Affiliated companies“wing8” “WING BOX” “becip” “Fujisho Darian Digital Company” (Fujisho
Darian), Fujisho Vetnam Digital Co., Ltd (Fujisho Vietnam)
1.12 Financial overview (financial results for the year ended March 31 st, 2010)¥6,127,490,000

Net sales
4Gross profit¥684,730,000

Operating income¥4,170,0000

Net assets¥158,900,000

Total assets¥4,888,460,000

Section 2: Background and circumstances leading to request for ETIC support
Fujisho was established in 1946 in Yamagata Prefecture as a press printing company,
and subsequently became a regionally-focused printing company, making a significant
contribution to the local economy by providing services such as printing of fliers andpublications for local companies and printing of materials for government agencies. In
October 2006 the company established a new plant in Saitama, and actively
implemented sales activities to generate greater demand in the Kanto region. In thefiscal year to March 2008, the company had reached sales of ¥6.5 billion.
Nevertheless, in the face of the economic downturn, the company was hit withadvertising budget cuts from regular clients, a decline in plant capacity utilization, costs
related to the lease of rotary presses, and an increase in interest-bearing debt from theestablishment of the new Saitama plant, which pushed the company into a state offinancial crisis.
In October 2009, Fujisho made a request through the Yamagata Prefecture Committee
for the Revitalization of Small and Medium-size Enterprises, for the temporary
suspension of payments to financial institutions, and searched ways in which to
implement a comprehensive reform. Despite such efforts, and coupled with the ongoing
economic downturn, the company lost sight of revenue growth potential. With limited
results from efforts to cuts costs, Fujisho determined that it would be difficult toimplement business reform alone, and subsequently, in September 2010, concluded its
application for business revitalization, with the Yamagata Prefecture Committee for the
Revitalization of Small and Medium-size Enterprises.
In order to resolve this situation, Fujisho consulted with its principal financialorganization, Yamagata Bank, and agreed to apply to ETIC to undergo a drastic
reconstruction through a transparent and fair process with the support of ETIC, while
minimizing damage to Fujisho’s enterprise value.

Section 3: Outline of business revitalization plan
1. Business Plan
(1) Basic policy
5The main components of this business revitalization plan call for Fujisho to takedrastic measures to remedy the cause of problems with its managerial structure.
Further, the basic policy of the revitalization plan is to pursue further streamliningof operations and secure steady income, while working to build a production
system that provides high quality low cost printing.
(2) Essential measures.
(1) Reconstruction of production system
Closing the Saitama plant and concentrating plant functions into the Zaonomori
plant to optimize the production system and improve the profit structure.
(2) Shift sales order activities to a profit focus
Aiming to gain a greater comprehension of the level of profitability of a transaction
at the time of initial estimation and order by strengthening cost controls. Usingsuch cost controls to significantly reduce unprofitable transactions and secure
optimal profits.
(3) Rejuvenation of sales system
Improving relations with existing customers by dividing customers into segments
and developing specific sales activities for each segment.
(4) Optimization of personnel
Offering personnel an early retirement option in accordance with thereconstruction of the production system as stated in (1) above. Conducting areview of pay levels for remaining personnel.
(5) Cost reduction in production management
Reviewing subscription methods such as lowering order costs by raising paper
subscription lot prices. Reducing costs by improving the rates of paper loss.
(6) Reorganization of management structure
Reorganizing the current management structure, and improving transparency,
while strengthening the strategic planning and decision-making capacity of theboard of directors.
(7) Reorganization of personnel policies
Building a fair and appropriate wage structure that reflects performance reviews,
and adopting a performance rating system based on appropriate goal setting
and results for each function within the company framework.

2. Business restructuring(1) Liquidation of subsidiaries
Fujisho is scheduled to absorb its subsidiary “becip” and will withdraw from andliquidate its business in Vietnam, which is one of its overseas subsidiaries (overseas
6subsidiaries consist of “Fujisho Darian Digital Company” and Fujisho Vetnam DigitalCo., Ltd.).
Moreover, the decision on whether to retain or liquidate “wing8” and “WING BOX” will
be made hereafter.
(2) Company Separation
Fujisho will establish a new wholly owned subsidiary (hereafter, the “New Company”),
after which all the assets and liabilities pertaining to Zaonomori plant will betransferred through company separation (absorption separation) to the New Company(second company method). After the company separation, Fujisho (hereafter, the“Former Company”) will be liquidated through special liquidation proceedings(effective debt forgiveness).
Further, the New Company will issue ¥10 million of ordinary shares to financerestructuring costs, capital expenditure and other such items, and ETIC will purchasethose shares.
(3) Request for financial support
Of the ¥3,631 million owed to financial institutions by Fujisho, financial support ofapproximately ¥2,043 million will be requested from financial institutions (Note: The
amount of financial support is based on a calculation of the current disposal value of
non-operations-related real estate held by the companies. The final amount offinancial support will change, as the amount of loan repayment is linked to theachieved real estate disposal values.)(4) Financing
ETIC believes that the capital injection from ETIC and the facility to procure working
capital from Yamagata Bank, will ensure that there will be no risk of Fujisho becoming
short of funds.
(5) Numerical Targets (Summary)Although Fujisho anticipates sales decreasing significantly from current levels due tothe closure of the Saitama plant, it anticipates net sales of ¥3,265 million, operating
income of ¥45 million and EBITDA of ¥138 million for the fiscal year ending March2014.
Section 4. Conformance with standards for support
1. Possession of effective management resources
Fujisho uses Tohoku’s most advanced printing equipment, and is a general printing firm
which is proudly ranked second in the Tohoku region and first in Yamagata Prefecture in
its industry by sales.
Known locally as FUJISHO, the company receives support from over 2,000 clientele,
who range from government agencies, schools, major distribution firms, and financial
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institutions from both inside and outside Yamagata prefecture. Further, Fujisho
possesses a system that is capable of providing a one-stop shop for all printing services,
including commercial printing, publication printing, business form printing, and art printing,and accordingly possesses effective management resources.
2. Excessive indebtedness
Fujisho carries ¥3.6 billion of interest-bearing debt, an excessive amount compared torevenues. Debt forgiveness and financial support are essential to the revitalization of
Fujisho.
3. Factors confirming potential for business revitalization
3.1 Agreement of main creditors
The application by Fujisho was made jointly with Yamagata Bank.
3.2 Standards for productivity improvement
Successful implementation of this business revitalization plan is expected to increase
ROE by at least two percentage points, and increase the tangible fixed asset turnoverratio by at least five percentage points.
3.3 Standards for financial soundness
Through implementation of this business revitalization plan, the ratio ofinterest-bearing debt to cash flow will be within ten times, and current revenues will begreater than current expenses.
4. Comparison with liquidation value
The value of Fujisho’s debt on liquidation is estimated to be less than the value available
through implementation of the business revitalization plan.
5. Potential to refinance within three years
Implementation of the business revitalization plan is expected to significantly improve
the financial condition of Fujisho, enabling it to reach steady a level of cash flow, andmaking refinancing highly possible.
6. Connection with structural oversupply
Implementation of the business revitalization plan will not increase the supply capacity of
Fujisho. Accordingly, the plan has been judged as ‘not hindering the resolution of
structural oversupply’ with reference to Article 19 of the Act on Special Measures for
Industrial Revitalization and Industrial Innovation.
7. Status of consultations with workforce
8There are no labor unions connected with Fujisho. Employee briefings on the situation
are planned.

Section 5: Responsibility of management
The responsibility of the former management team for the current predicament of Fujisho
will be reflected through the resignation of all directors, without directors’ retirement benefits.

Section 6: Responsibility of shareholders
Shareholders of Fujisho, during the special liquidation process of the former company after
company separation, will not receive any distribution of remaining assets, and will effectively
have all their shares cancelled.

Ends9