Business Results for the Second Quarter of the Year Ending December 31, 2014
(Six Months Ended June 30, 2014)[Japan GAAP] (Consolidated)
August 7, 2014
Company:
The Pack Corporation
Listed on the TSE1
Stock code:
3950
URL: http://www.thepack.co.jp
Representative: Yoshikazu Nakao, President & CEO
Contact:
Keiji Kimori, Managing Director, General Manager of Administration HQ
TEL: +81-6-6972-1221
Expected date of filing of quarterly report:
August 12, 2014
Expected starting date of dividend payment:
September 10, 2014
Preparation of supplementary quarterly financial document:
Yes
Quarterly results briefing:
Yes (for institutional investors and securities analysts)(Rounded down to million yen)

1. Consolidated business results for the second quarter of the year ending December 31, 2014
(January 1, 2014 through June 30, 2014)(1) Consolidated results of operations(% change from the previous corresponding period)
Net sales
Million yen

Six months ended Jun. 30, 2014
Six months ended Jun. 30, 2013
(Note) Comprehensive income%

Operating income

Ordinary income

Million yen

Million yen%

Net income%

Million yen

%

2,397
1,282

86.9
14.0

39,311
2.3
2,120
6.6
2,234
9.6
38,445
(1.4)
1,988
4.4
2,039
1.0
Six months ended Jun. 30, 2014: 2,365 million yen (up 42.3%)
Six months ended Jun. 30, 2013: 1,662 million yen (up 27.9%)
Net income per share

Diluted net income per
share

Yen

Yen

120.5064.46-

Six months ended Jun. 30, 2014
Six months ended Jun. 30, 2013

(2) Consolidated financial position
Total assets
Million yen

As of Jun. 30, 2014
As of Dec. 31, 2013
(Reference) Shareholders’ equity

Shareholders’ equity
ratio

Net assets
Million yen

64,386
41,37565,091
39,507
As of Jun. 30, 2014: 41,353 million yen

%

64.2
60.7
As of Dec. 31, 2013: 39,483 million yen

2. Dividends
End of 1Q

End of 2Q

Annual dividend
End of 3Q

Year-end

Total

Yen

Yen

Yen

Yen

Yen

-

25.00
25.00

-

25.00

50.00

-

25.00

50.00

Year ended Dec. 31, 2013
Year ending Dec. 31, 2014
Year ending Dec. 31, 2014
(forecasts)

Note: Revisions to the most recently announced dividend forecast: None

3. Forecast of consolidated business results for the year ending December 31, 2014
(January 1, 2014 through December 31, 2014)(% change from the previous corresponding period)
Net sales
Million yen
86,000Operating income%
2.0

Million yen
5,700

%
8.5

Ordinary income
Million yen
5,800

Fiscal year
Note: Revisions to the most recently announced consolidated forecast: None%
7.6

Net income
Million yen
4,300

Net income per share
%
30.2

Yen
216.15

* Notes(1) Changes in significant subsidiaries during the period (changes in specified subsidiaries accompanying changes inthe scope of consolidation): None
(2) Application of special accounting methods in the preparation of quarterly consolidated financial statements: None
(3) Changes in accounting policies, accounting estimates and restatements
1) Changes in accounting policies associated with revision of accounting standards: None
2) Changes in accounting policies other than 1): None
3) Changes in accounting estimates: None
4) Restatements: None

(4) Shares outstanding (common stock)1) Number of shares outstanding at the end of period (treasury shares included)
As of Jun. 30, 2014:

19,900,000 shares

As of Dec. 31, 2013:

19,900,000 shares

As of Dec. 31, 2013:

6,602 shares

2) Number of treasury shares at the end of period
As of Jun. 30, 2014:

6,602 shares

3) Average number of stock during period
Six months ended Jun. 30, 2014:

19,892,598 shares

Six months ended Jun. 30, 2013:

19,893,438 shares*Implementation status of quarterly review procedure
This quarterly financial summary is not subject to the quarterly review procedure pursuant to the Financial Instruments andExchange Act. At the time of disclosure of this report, the review procedure of quarterly consolidated financial statements
pursuant to the Financial Instruments and Exchange Act has not been completed.
*Explanation regarding appropriate use of business forecasts and other special instructions
Forecasts regarding future performance in these materials are based on information that was available when this document was
released and incorporates a number of current assumptions about uncertainties that may affect future results of operations.
Therefore, actual results may differ significantly from the forecasts due to various factors. Please refer to "Explanation ofConsolidated Forecasts and Other Forward-looking Statements" on page 4 for forecast assumptions.
.

The Pack Corporation (3950) Financial Report for the Second Quarter of 2014

Contents of Attachments
1. Qualitative Information on Quarterly Consolidated Financial Performance2(1) Explanation of Results of Operations

2(2) Explanation of Financial Position

3(3) Explanation of Consolidated Forecasts and Other Forward-looking Statements

4

2. Matters Related to Summary Information (Notes)

4(1) Changes in Significant Subsidiaries during the Period

4(2) Application of Special Accounting Methods for Presenting Quarterly Consolidated Financial Statements

4(3) Changes in Accounting Policies and Accounting-based Estimates, and Restatements

4

3. Quarterly Consolidated Financial Statements

5(1) Quarterly Consolidated Balance Sheet

5(2) Quarterly Consolidated Statement of Income and Quarterly Consolidated Statement of Comprehensive
Income7(3) Quarterly Consolidated Statement of Cash Flows

9(4) Notes to Consolidated Financial Statements

10

Going Concern Assumption

10

Significant Changes in Shareholders’ Equity

10

Business Combinations

10

Subsequent Events

11

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The Pack Corporation (3950) Financial Report for the Second Quarter of 2014

1. Qualitative Information on Quarterly Consolidated Financial Performance(1) Explanation of Results of Operations
In the first half of 2014, the Japanese economy continued to recover slowly. Corporate earnings are increasing
because the weaker yen has improved the environment for exports and government economic stimulus measure s areproducing various benefits. Higher earnings are contributing to steady improvements in capital expenditures andjobs. However, prospects for a full-scale economic recovery are still unclear. One reason is concerns about the
impact on consumer spending of the April 2014 consumption tax hike and the higher cost of imports due to theweaker yen.
In the packaging industry, to which The Pack Group belongs, costs increased because of higher prices of imported
products and raw materials, the higher cost of electricity, and other reasons. More time will be needed for packaging
companies to raise selling prices to reflect these higher costs. However, production and sales activities have been
generally solid as the drop in demand following the consumption tax hike was no larger than expected.
The Group acquired Nishinihon Printing Co., Ltd. in April 2014. Making this company a subsidiary will enlarge theGroup’s manufacturing and sales network and upgrade technologies. In addition, based on the slogan “ Let’s boldly
move forward- spiritedly, powerfully, relentlessly,” the Group continued to work on increasing solidarity amonggroup companies, including this new subsidiary, developing new markets, and selling products at suitable prices.
There were also actions aimed at improving earnings, such as reexamining and improving unprofitable operations.
In the first half of 2014, net sales increased 2.3% year-on-year to 39,311 million yen, operating income increased
6.6% to 2,120 million yen, and ordinary income increased 9.6% to 2,234 million yen. Net income increased 86.9%
to 2,397 million yen because of the posting of gain on bargain purchase of 1,064 million yen as an extraordinary
income following the completion of purchase in the second quarter of all shares of Nishinihon Printing to make it awholly owned subsidiary.
Business segment performance was as follows.
(Paper Products)
The paper products segment accounts for 59.2% of total sales in the first half of 2014. Sales of paper bags, which
account for 31.1% of total sales, increased 4.4% to 12,237 million yen. There was a big increase in sales of high-end
bags and the inclusion of sales of Nishinihon Printing, which became a subsidiary in April 2014, also contributed tosales growth.
Sales of paper folding cartons, which account for 14.5% of total sales, increased 5.0% to 5,702 million yen mainly
because of higher sales of cartons for food products.
Sales of corrugated boxes, which account for 11.0% of total sales, increased 4.0% to 4,314 million yen. This
increase was attributable to the recovery in sales in the consumer electronics industry, which is a major source ofdemand for the Group’s corrugated boxes, developing new customers and new markets, and demand created by therush to make purchases prior to the April 2014 consumption tax hike.
Printing sales, which account for 2.6% of total sales, increased 10.5% to 1,034 million yen mainly because of thereceipt of new orders and stronger ties with current customers.
Overall, sales in this segment increased 4.7% to 23,289 million yen. Operating income was up 18.0% to 1,611
million yen due mainly to a decline in depreciation at The Tokyo plant.
(Film Packaging)
The film packaging segment accounts for 21.3% of total sales in the first half of 2014. Sales increased 5.6% to
8,388 million yen as there was a recovery in demand in the manufacturing sector and sales to companies in the
distribution sector were generally strong, too. However, operating income was down 20.5% to 317 million yen
because of higher costs due to surging raw material prices.

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The Pack Corporation (3950) Financial Report for the Second Quarter of 2014

(Other Businesses)
Other businesses account for 19.5% of total sales in the first half of 2014. Sales of gift products to companies in the
distribution sector were strong. However, in addition to the discontinuance of unprofitable operations relating toclothing products, 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 andprocuring packaging materials and other products to inventory control and delivery. As a result, sales decreased
7.6% to 7,633 million yen and operating income decreased 13.6% to 579 million yen.
(2) Explanation of Financial Position
1) Balance sheet position
Assets totaled 64,386 million yen at the end of the second quarter of 2014, down 705 million yen from the end of
2013. The main factors were increases of 2,834 million yen in cash and deposits, 1,080 million yen in land, anddecreases of 5,134 million yen in notes and accounts receivable-trade, and 399 million yen in securities.
Liabilities decreased 2,573 million yen to 23,010 million yen. The main factors were decreases of 3,345 million yen
in notes and accounts payable-trade, and 475 million yen in short-term loans payable.
Net assets increased 1,868 million yen to 41,375 million yen. The main factors were increases of 1,897 million yen
in retained earnings and 27 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 the second quarter of 2014 increased 2,556 million yen, or
24.2% from the end of 2013 to 13,137 million yen.
Cash flows from operating activities
Operating activities provided net cash of 4,343 million yen (up 60.0% from net cash provided of 2,715 million yen
in the first half of 2013). The principal factors were a decrease of 5,468 million yen in notes and accounts
receivable-trade, while there were an increase of 550 million yen in inventories, a decrease of 3,561 million yen innotes and accounts payable-trade.
Cash flows from investing activities
Investing activities used net cash of 824 million yen (net cash provided of 1,397 million yen in the first half of2013). The principal factors were 698 million yen in purchase of property, plant and equipment, 238 million yen inpurchase of shares of subsidiaries resulting in change in scope of consolidation, and 1,200 million yen in purchaseof securities, while there were proceeds from sales of securities of 1,400 million yen.
Cash flows from financing activities
Financing activities used net cash of 948 million yen (net cash used of 1,370 million yen in the first half of 2013).
This was mainly due to the repayment of long-term loans payable of 375 million yen and the cash dividends paid of
484 million yen.

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The Pack Corporation (3950) Financial Report for the Second Quarter of 2014

(3) Explanation of Consolidated Forecasts and Other Forward-looking Statements
The outlook is unclear for the effects of the consumption tax hike and rising prices on overall market sentiment andconsumer spending in Japan. In the packaging industry as well, the high cost of raw materials and imported products
and price-based competition are expected to continue. As a result, a full-scale recovery in the business climate isunlikely to occur soon.
To overcome these challenges, we will make substantial investments for the equipment that we require in order totarget markets in Japan and other countries and expand our operations. In addition, we will review our businessactivities and enact business reforms to streamline our operations with the goal of building a stronger profit
structure. Another goal is to reinforce our commitment to developing new products and services and improve thequality of our products and services. We also aim to set our prices at suitable levels. All of these initiatives are
aimed at improving our performance.
2. Matters Related to Summary Information (Notes)(1) Changes in Significant Subsidiaries during the Period
Not applicable.
(2) Application of Special Accounting Methods for Presenting Quarterly Consolidated Financial Statements
Not applicable.
(3) Changes in Accounting Policies and Accounting-based Estimates, and Restatements
Not applicable.

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The Pack Corporation (3950) Financial Report for the Second Quarter of 2014

3. Quarterly Consolidated Financial Statements(1) Quarterly Consolidated Balance Sheet(Million yen)
Second quarter ofthe current fiscal year
(As of June 30, 2014)

Previous fiscal year
(As of December 31, 2013)
AssetsCurrent assets
Cash and deposits

8,191

11,025

Notes and accounts receivable-trade21,452

16,317

Securities

3,699

3,299

Merchandise and finished goods

4,761

5,285

Work in process

605

739

Raw materials and supplies

606

648

Deferred tax assets

167

171

Other

592

544

Allowance for doubtful accounts

(16)

(14)

40,05938,018

Buildings and structures, net

7,704

7,612

Machinery, equipment and vehicles, net

5,281

5,168

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

Tools, furniture and fixtures, net
LandConstruction in progress
Leased assets

253

245

7,146

8,227

59

227

-

130

20,445

21,610187

190

Investment securities

3,365

3,433

Deferred tax assets

456

450

Other

638

746

Total property, plant and equipment
Intangible assets
Investments and other assets

Allowance for doubtful accounts

(62)

(63)

Total investments and other assets

4,398

4,566

Total non-current assets

25,031

26,368

Total assets

65,09164,386-5-

The Pack Corporation (3950) Financial Report for the Second Quarter of 2014

(Million yen)
Second quarter ofthe current fiscal year
(As of June 30, 2014)

Previous fiscal year
(As of December 31, 2013)
Liabilities
Current liabilities
Notes and accounts payable-trade

19,161

15,816

Short-term loans payable

792

317

Income taxes payable

703

914

Provision for bonuses

166

181

Provision for directors' bonuses

30

15

Other

2,069

2,505

Total current liabilities

22,92319,750

2,576

2,703

84

556

Non-current liabilities
Provision for retirement benefits
Other
Total non-current liabilities
Total liabilities

2,661

3,260

25,58423,010

2,553

2,553

Net assets
Shareholders' equity
Capital stock
Capital surplus

3,165

3,167

Retained earnings

33,00334,901

Treasury shares

(6)

(6)

38,716

40,616

967

994

7

0

Foreign currency translation adjustment

(207)

(258)

Total accumulated other comprehensive income

766

736

23

22

39,507

41,37565,09164,386

Total shareholders' equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges

Minority interests
Total net assets
Total liabilities and net assets-6-

The Pack Corporation (3950) Financial Report for the Second Quarter of 2014

(2) Quarterly Consolidated Statement of Income and Quarterly Consolidated Statement of Comprehensive Income
Quarterly Consolidated Statement of Income(For the Six-month Period)First six months ofthe previous fiscal year
(from January 1, 2013
to June 30, 2013)
38,445(Million yen)First six months ofthe current fiscal year
(from January 1, 2014
to June 30, 2014)
39,311

Cost of sales

29,81430,467Gross profit

8,630

8,844

Freightage and packing expenses

1,752

1,813

Salaries and allowances

1,816

1,853

Directors' compensations

194

191

Provision of allowance for doubtful accounts

(7)

(2)

Provision for bonuses

89

90

Net sales

Selling, general and administrative expenses

Provision for directors' bonuses

13

14

Retirement benefit expenses

199

205

Depreciation

347

323

Rent expenses

1,043

1,082

Other

1,192

1,152

Total selling, general and administrative expenses

6,642

6,724

1,988

2,120

Interest income

39

41

Dividend income

34

37

Other

27

47

Total non-operating income

101

126

Interest expenses

7

4

Loss on sales of accounts receivable2

1

Foreign exchange losses

33-

Operating income
Non-operating income

Non-operating expenses

Other

7

5

Total non-operating expenses

50

11

2,039

2,234

Ordinary income
Extraordinary income
Gain on sales of investment securities

97-

Gain on sales of non-current assets-

0Gain on bargain purchase

-

1,064

Total extraordinary income

97

1,065

Loss on retirement of non-current assets-

12

Loss on valuation of investment securities-

0

Total extraordinary losses-

13

Extraordinary losses

Income before income taxes and minority interests

2,136

3,286

Income taxes-current

560

897

Income taxes-deferred

294

(8)

Total income taxes

854

888

Income before minority interests

1,282

2,397

Minority interests in income (loss)

(0)

0

1,282

2,397

Net income-7-

The Pack Corporation (3950) Financial Report for the Second Quarter of 2014

Quarterly Consolidated Statement of Comprehensive Income(For the Six-month Period)(Million yen)First six months ofthe current fiscal year
(from January 1, 2014
to June 30, 2014)

First six months ofthe previous fiscal year
(from January 1, 2013
to June 30, 2013)
Income before minority interests

1,282

2,397

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

258

27

1

(7)

Foreign currency translation adjustment

119

(51)

Total other comprehensive income

379

(31)

1,662

2,365

Comprehensive income attributable to owners of parent

1,662

2,366

Comprehensive income attributable to minority interests

(0)

(1)

Deferred gains or losses on hedges

Comprehensive income
Comprehensive income attributable to-8-

The Pack Corporation (3950) Financial Report for the Second Quarter of 2014(3) Quarterly Consolidated Statement of Cash Flows(Million yen)First six months ofthe current fiscal year
(from January 1, 2014
to June 30, 2014)

First six months ofthe previous fiscal year
(from January 1, 2013
to June 30, 2013)
Cash flows from operating activities
Income before income taxes and minority interests
Depreciation
Gain on bargain purchaseAmortization of goodwill
Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in provision for bonuses
Increase (decrease) in provision for directors' bonuses
Increase (decrease) in provision for retirement benefits
Interest and dividend income
Interest expenses
Loss (gain) on sales of non-current assets
Loss on retirement of non-current assets
Loss (gain) on sales of investment securities
Loss (gain) on valuation of investment securities
Decrease (increase) in notes and accounts receivable-trade
Decrease (increase) in inventories
Increase (decrease) in notes and accounts payable-trade
Other, net

2,136
972
4
(9)
(5)
(13)
20
(74)
7
(97)
5,317
(311)
(4,483)
578

3,286
901
(1,064)
0
(3)
3
(15)
50
(78)
4
(0)
12
0
5,468
(550)
(3,561)
512

Subtotal

4,043

4,967

Interest and dividend income received
Interest expenses paid
Income taxes paid

68
(7)
(1,389)

72
(4)
(691)

Net cash provided by (used in) operating activities

2,715

4,343

(1)
1,700
(10)
19
(610)
138
(10)
(29)
169

(1,200)
1,400
(37)
14
(698)
0
(16)
(26)
-

-

(238)

32

(20)

Cash flows from investing activities
Purchase of securities
Proceeds from sales of securities
Payments of loans receivableCollection of loans receivable
Purchase of property, plant and equipment
Proceeds from sales of property, plant and equipment
Purchase of intangible assets
Purchase of investment securities
Proceeds from sales of investment securities
Purchase of shares of subsidiaries resulting in change inscope of consolidation
Other, net
Net cash provided by (used in) investing activities

1,397

(824)

Cash flows from financing activities
Net increase (decrease) in short-term loans payable
Repayments of long-term loans payable
Cash dividends paid
Proceeds from sales of treasury shares

(870)
(500)
-

(100)
(375)
(484)
11

Net cash provided by (used in) financing activities(1,370)(948)

Effect of exchange rate change on cash and cash equivalents

43

(14)

Net increase (decrease) in cash and cash equivalents

2,786

2,556

Cash and cash equivalents at beginning of period

9,051

10,581

Cash and cash equivalents at end of period

11,837

13,137-9-

The Pack Corporation (3950) Financial Report for the Second Quarter of 2014

(4) Notes to Consolidated Financial Statements
Going Concern Assumption
Not applicable.
Significant Changes in Shareholders’ Equity
Not applicable.
Business Combinations
Business combination through acquisition
1. Summary of business combination(1) Name of company acquired and its business activity
Name of company acquired:
Nishinihon Printing Co., Ltd.
Business activity:
Printing business, and manufacture and sales of paper products(2) Reason for business combination
The Pack Group provides manufacturing, sales and other comprehensive services involving packaging products.
In Japan, the Group has factories in Ibaraki, Saitama, Kanagawa, Aichi, Osaka and Nara prefectures.
Acquiring Nishinihon Printing gives the Group’s manufacturing bases in Kyushu and adds the outstanding
technologies and other expertise of this company to the Group. We believe these resources are necessary to
expand and strengthen our business operations and supply network. The decision to acquire Nishinihon Printing
was made for these reasons.
(3) Date of business combination
May 7, 2014 (assumed date of business combination was April 1, 2014)(4) Method of business combination
Acquisition of stock with cash(5) Name of the company after business combination
There is no change.
(6) Ratio of ownership
100%(7) Main reason for choosing the company to acquire
Because the Company purchased the stock of Nishinihon Printing with cash, and acquired 100% of its voting
rights.
2. Period of business results of the acquired company included in the quarterly consolidated financial statements
From April 1, 2014 to June 30, 2014
3. Acquisition cost and other particulars
Purchase price(Million yen)
Cash

554

Acquisition cost554

4. Negative goodwill resulting from the acquisition(1) Value of negative goodwill
1,064 million yen(2) Source of goodwill
Since the market value of net assets exceeded the acquisition cost at the time of the business combination, thedifference was recognized as negative goodwill.

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The Pack Corporation (3950) Financial Report for the Second Quarter of 2014

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 generally accepted in Japan, for the convenience ofreaders who prefer an English translation.

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