Business Results for the Year Ended December 31, 2014
[Japan GAAP] (Consolidated)
February 12, 2015
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 annual shareholders’ meeting:March 27, 2015
Expected starting date of dividend payment:
March 30, 2015
Expected date of filing of annual securities report: March 27, 2015
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, 2014
(January 1, 2014 through December 31, 2014)(1) Consolidated results of operations(% change from the previous corresponding period)
Net sales

Operating income

Million yen

Year ended Dec. 31, 2014
Year ended Dec. 31, 2013
(Note) Comprehensive income%

Ordinary income

Million yen%

Million yen

Net income%

Million yen%

85,80984,315

1.8
5,478
4.3
5,703
5.8
4,322
30.9
(0.3)
5,253
4.3
5,391
2.5
3,301
9.7
Year ended Dec. 31, 2014: 4,632 million yen (up 17.8%)
Year ended Dec. 31, 2013: 3,932 million yen (up 13.5%)
Net income per
Diluted net
Return on
Ratio of ordinary
Ratio of operating
share
income per shareequityincome to total assets income to net sales
Yen

Yen

Year ended Dec. 31, 2014
217.26
Year ended Dec. 31, 2013165.98(Reference) Investment earnings/loss on equity-method

%

10.5
8.7
Year ended Dec. 31, 2014: - million yen
Year ended Dec. 31, 2013: - million yen

%

%

8.4
8.3

6.4
6.2

(2) Consolidated financial position
Total assets

Net assets

Million yen

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

Shareholders’ equity
ratio

Net assets per share%

Yen

Million yen

70,30442,92665,091
39,507
As of Dec. 31, 2014: 42,898 million yen

61.0
2,156.41
60.7
1,984.74
As of Dec. 31, 2013: 39,483 million yen(3) Consolidated cash flows
Cash flows fromoperating activities
Year ended Dec. 31, 2014
Year ended Dec. 31, 2013

Cash flows frominvesting activities

Cash flows fromfinancing activities

Cash and cash equivalents
at end of period

Million yen

Million yen

Million yen

Million yen

4,930
3,736

(2,599)39(1,797)(2,310)11,145
10,581

2. Dividends
Annual dividend
End of
1Q
Year ended Dec. 31, 2013
Year ended Dec. 31, 2014
Year ending Dec. 31, 2015
(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

994
994

30.1
23.0

2.6
2.4

-

25.00

-

25.00

50.00

Year-end

Total

3. Forecast of consolidated business results for the year ending December 31, 2015
(January 1, 2015 through December 31, 2015)(% change from the previous corresponding period)
Net salesFirst half
Fiscal year

Operating income

Ordinary income

Net income

Net income per share

Million yen%

Million yen%

Million yen%

Million yen%

Yen

40,80089,000

3.8
3.7

2,200
5,700

3.8
4.1

2,300
5,900

2.9
3.4

1,400
3,600

(41.6)(16.7)

70.37
180.96

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

(3) Shares outstanding (common stock)1) Number of shares outstanding at the end of period (treasury shares included)
As of Dec. 31, 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 Dec. 31, 2014:

6,672 shares

3) Average number of stock during period
Year ended Dec. 31, 2014:

19,892,954 sharesYear ended Dec. 31, 2013:

19,893,431 shares(Reference) Summary of non-consolidated business results
1. Non-consolidated business results for the year ended December 31, 2014
(January 1, 2014 through December 31, 2014)(1) Non-consolidated results of operations(% change from the previous corresponding period)

Net sales

Operating income

Ordinary income

Net income

Million yen%

Million yen%

Million yen%

78,784
77,236

2.0
(0.8)

5,003
4,798

4.3
1.2

5,375
5,103

5.3
(0.4)

2,701 (14.5)
3,159
5.3

Shareholders’ equity
ratio

Net assets per share%

Yen

Year ended Dec. 31, 2014
Year ended Dec. 31, 2013

Net income per share

Diluted net income per share

Yen

Yen

135.81158.80-Year ended Dec. 31, 2014
Year ended Dec. 31, 2013

Million yen%(2) Non-consolidated financial position
Total assets

Net assets

Million yen

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

Million yen

65,40940,907
63,57739,027
As of Dec. 31, 2014: 40,907 million yen

62.5
2,056.34
61.4
1,961.84
As of Dec. 31, 2013: 39,027 million yen

2. Forecast of non-consolidated business results for the year ending December 31, 2015
(January 1, 2015 through December 31, 2015)(% change from the previous corresponding period)
Net salesFirst half
Fiscal year

Ordinary income

Net income

Net income per share

Million yen%

Million yen%

Million yen%

Yen

36,80080,500

1.5
2.2

2,200
5,500

2.3
2.3

1,300
3,300

(13.9)
22.1

65.34
165.88*Implementation status of auditing procedure
This financial summary is not subject to auditing procedure pursuant to the Financial Instruments and Exchange Act. At the timeof disclosure of this report, the auditing procedure of financial statements pursuant to the Financial Instruments and Exchan ge Act
has not been completed.
*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 available
to 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. P leaserefer to "1. Analysis of Results of Operations and Financial Position, (1) Analysis of Results of Operations" on page 2 for forecast
assumptions and notes of caution for usage.
.

The Pack Corporation (3950) Financial Report for Fiscal Year 2014

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 Corporation 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

4. Consolidated Financial Statements

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

Significant Changes in Shareholders’ Equity

16

Changes in Accounting Policies

16

Segment and Other Information

17

Per Share Information

20

Material Subsequent Events20

5. Other21(1) Changes in Executives

21

-1-

The Pack Corporation (3950) Financial Report for Fiscal Year 2014

1. Analysis of Results of Operations and Financial Position(1) Analysis of Results of Operations
In 2014, lackluster consumer spending following the April 2014 consumption tax hike and the drop in demand after
this tax increase impacted for Japanese economy for a long time. However, the economy continued to recoverslowly during the year because of growth in earnings and jobs.
There are still concerns about an economic downturn in Japan due to the rising cost of imported products and raw
materials caused by the weaker yen, the trends in overseas economies and other reasons. As a result, prospects for afull-scale economic recovery are still unclear.
Under these circumstances, The Pack Group aimed at enlarging its manufacturing and sales network, strengthening
quality control and upgrading technologies. In addition, based on the slogan “Let’s boldly move forward- spiritedly,
powerfully, relentlessly,” the Group continued to work on increasing solidarity among group companies, 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 2014, net sales increased 1.8% year-on-year to 85,809 million yen, operating income increased 4.3% to 5,478
million yen, and ordinary income increased 5.8% to 5,703 million yen. Net income increased 30.9% to 4,322 million
yen because of the posting of gain on bargain purchase of 1,064 million yen as an extraordinary income following
the acquisition of Nishinihon Printing Co., Ltd. making it a wholly owned subsidiary in the second quarter.
Business segment performance was as follows.
(Paper Products)
The paper products segment accounts for 59.2% of total sales. Sales of paper bags, which account for 31.7% of total
sales, increased 5.2% to 27,199 million yen. The main reasons were strong sales of high-end bags, the inclusion ofsales of Nishinihon Printing, which became a subsidiary in April 2014, and higher sales at The Pack (Shanghai)
Corporation due to a large volume of new orders.
Sales of paper folding cartons, which account for 14.7% of total sales, increased 2.1% to 12,631 million yen mainly
because of higher sales of cartons for food products used in fast food restaurants and convenience stores.
Sales of corrugated boxes, which account for 10.2% of total sales, increased 2.5% to 8,789 million yen. This
increase was attributable to the recovery in sales in the major customers and an increase in new orders mainly fromthe manufacturing sector.
Printing sales, which account for 2.6% of total sales, increased 9.4% to 2,191 million yen as both Keihin Tokushu
Printing Corp. and NIKKO PRINT CORPORATION received strong orders.
Overall, sales in this segment increased 4.1% to 50,811 million yen. Operating income was up 7.0% to 3,922 million
yen due mainly to a decline in depreciation at The Tokyo plant.
(Film Packaging)
The film packaging segment accounts for 21.5% of total sales. Sales benefited from a high volume of plastic bag
orders for disposable diapers throughout the year. In addition, sales were generally strong for products used in the
distribution sector, with an increase in sales of flexible packaging used for food. As a result, sales increased 5.9% to
18,486 million yen. However, operating income was down 14.0% to 785 million yen due to the rising raw material
prices.
(Other Businesses)
Other businesses account for 19.3% of total sales. Sales of gift products used in the distribution sector were strong.
However, in addition to the discontinuance of unprofitable operations relating to clothing products in 2013, there
was a decline in sales of products used in conjunction with the Pack Assortment Service system, which is acomprehensive outsourcing vendor system that covers everything from manufacturing and procuring packaging-2-

The Pack Corporation (3950) Financial Report for Fiscal Year 2014

materials and other products to inventory control and delivery. As a result, sales decreased 8.6% to 16,511 million
yen and operating income increased 1.2% to 1,682 million yen.
Outlook for 2015
In 2015, a slow recovery is anticipated in consumer spending and the economy following the weakness caused by
the April 2014 consumption tax hike. But the outlook for earnings at companies in the distribution andmanufacturing sectors, which are the main sources of sales for The Pack and its group companies, is unclear.
Furthermore, in the packaging industry, the operating environment will probably remain challenging because ofhigher prices of raw materials and imported products due to the effects of the weaker yen in Japan.
Activities in 2015 are guided by the slogan “We achieve the medium-term goals through group power –With apositive attitude, speed and accuracy.” We aim to continue developing markets and expanding our operation in Japanand other countries by strengthening and utilizing facilities and production capability, the sources of the group
power. Furthermore, we are dedicated to improving customer satisfaction by focusing on developing products andservices and on quality management. At the same time, we will further streamline our operations. The go al of all ofthese measures is more growth in sales and earnings.
As we take these actions, we ask for the continued support and understanding of our shareholders.
(2) Analysis of Financial Position
1) Balance sheet position
Assets totaled 70,304 million yen at the end of the current fiscal year, up 5,212 million yen from the end of theprevious fiscal year. The main factors were increases of 1,462 million yen in notes and accounts receivable-trade,and 2,499 million yen in securities, and a decrease of 943 million yen in cash and deposits.
Liabilities increased 1,793 million yen to 27,377 million yen. The main factors were increases of 237 million yen innotes and accounts payable-trade, and 458 million yen in net defined benefit liability (provision for retirement
benefits in the previous fiscal year).
Net assets increased 3,419 million yen to 42,926 million yen. The main factors were increases of 3,327 million yen
in retained earnings and 141 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 current fiscal year increased 5 64 million yen, or 5.3%
from the end of the previous fiscal year to 11,145 million yen.
Cash flows from operating activities
Operating activities provided net cash of 4,930 million yen (up 32.0% from net cash provided of 3,736 million yen
in the previous fiscal year). The principal factor was a depreciation of 1,852 million yen, while there were an
increase of 965 million yen in notes and accounts receivable-trade and income taxes paid of 1,580 million yen.
Cash flows from investing activities
Investing activities used net cash of 2,599 million yen (net cash provided of 39 million yen in the previous fiscal
year). The principal factors were 1,331 million yen in purchase of property, plant and equipment, 3,300 million yen
in purchase of securities, while there were proceeds from sales of securities of 2, 400 million yen.
Cash flows from financing activities
Financing activities used net cash of 1,797 million yen (net cash used of 2,310 million yen in the previous fiscal
year). This was mainly due to the cash dividends paid of 994 million yen and the repayment of long -term loans
payable of 562 million yen.
Reference: Cash flow indicators-3-

The Pack Corporation (3950) Financial Report for Fiscal Year 2014

Fiscal years ended

Dec. 31, 2010 Dec. 31, 2011 Dec. 31, 2012 Dec. 31, 2013 Dec. 31, 2014

Shareholders’ equity ratio

49.5

53.8

55.8

60.7

61.0

Shareholders’ equity ratio based on market prices

44.4

35.2

44.0

57.1

64.8

Interest-bearing debt to cash flow ratio

1.1

1.1

0.3

0.2

0.0

282.6

157.5

340.1

237.6

561.9

Interest coverage ratio

Notes: 1. Cash flow indices are calculated, using consolidated financial figures, as follows:
Shareholders’ equity ratio: Shareholders’ equity / Total assets
Shareholders’ equity 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 ofshares issued and outstanding at the end of the period, net of treasury shares.
3. Interest-bearing debt includes all liabilities on the consolidated balance sheet that in cur 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, respectively.

(3) Basic Policy Concerning the Distribution of Profits a nd Dividend Distributions f or the Fiscal Year
Under Review and the Subsequent Fiscal YearThe fundamental policy on dividend payments is to pay a stable dividend while taking into consideration each year's
performance as well as the need to retain earnings to expand businesses and build a sound base for growth.
Retained earnings are used to sustain and increase the dividend 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 Fiscal Year 2014. This will make thecompany’s total dividend distributions for Fiscal Year 2014 50 yen per share, as planned.
In Fiscal Year 2015, we plan to pay an interim dividend of 25 yen per share and a year-end dividend of 25 yen per
share, resulting in an annual dividend of 50 yen.
(4) Business Risks
The following risk factors could have a material effect on decisions by investors. Forward-looking statements in thissection are based on the judgments of management as of the end of 2014. 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 the Japanese
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 adisaster can be prevented or minimized. If the Group is unable to prevent or minimize the effects of a disaster, there
could be an adverse impact on the financial position or performance of the Group caused by a reduction in theGroup'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 law, and there could be a risk of litigation in connection with these legal andregulatory requirements.
There could be an adverse impact on the financial position or performance of the Group based on the outcome of-4-

The Pack Corporation (3950) Financial Report for Fiscal Year 2014

such 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.
The Group has product liability insurance, but it is conceivable that this insurance could be insufficient to a liability
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 the raw materials and merchandise that we
procures by using a variety of Japanese and foreign manufacturers. Nevertheless, if a surge in the price of oil upset
the balance 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 commer cial credit
insurance and other measures to manage credit risk. However, if the financial soundness of a major 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 2014

2. The Pack Corporation Group
There are eight companies in The Pack Group: the parent company and seven consolidated subsidiaries. The primarybusiness activities are the manufacturing and marketing of paper products, film packaging and other products, aswell as research, distribution and services associated with these businesses.
The activities of the Group and information about each business segment are shown in the following table.

Name of businesssegment

Businesses

Company name

Paper products

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., LTD
Nishinihon Printing Co., Ltd.
The Pack America Corp.
The Pack (Shanghai) Corporation
The Pack (Changshu) Co., Ltd.

Film packaging

Manufacturing, purchasing, and selling plastic
bags, garment bags and other products

Other businesses

Manufacturing, purchasing, and selling gifts,
clothing, supplies, price tags, calendars, designer
creations, promotional goods and other products

The Pack Corporation
PACK TAKEYAMA CO., LTD
The Pack America Corp.
The Pack (Shanghai) Corporation
The Pack Corporation
PACK TAKEYAMA CO., LTD
Nishinihon Printing Co., Ltd.
The Pack America Corp.

The Pack America Corp. is incorporated in the United States. Sales are mainly within the United States and Canada.
The Pack (Shanghai) Corporation mainly sells products to customers in China and the parent company in Japan. The
Pack (Changshu) Co., Ltd. manufactures paper bags for sale in China. Both companies are incorporated in China.
THE NICOLS CORP. was absorbed by the Company, which is the surviving company, on January 1, 2014.
In the second quarter of 2014, the Company acquired shares of Nishinihon Printing Co., Ltd. and made thiscompany a wholly owned subsidiary.

-6-

The Pack Corporation (3950) Financial Report for Fiscal Year 2014

(Purchasing and selling paper
products, film packaging, gifts andother products)* The Pack America Corp.

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

Outsourced production* Nishinihon Printing Co., Ltd.

Finished products

Purchase of finished andsemi-finished products
Outsourced
production
Outsourced production(Manufacturing, purchasing, andselling paper products, film
packaging, gifts and other products)

Purchase of finished andsemi-finished products

Finished products* PACK TAKEYAMA CO., LTD
Outsourced
production

Outsourced production

Purchase of
semi-finished products(Printing of paper products)
Finished products* Keihin Tokushu Printing Corp.
* NIKKO PRINT CORPORATION

Purchase of
semi-finished products(Selling paper products and film
packaging)

Finished products

Finished products* The Pack (Shanghai) Corporation

Outsourced
production

Purchase of finishedproducts(Manufacturing paper products)* The Pack (Changshu) Co., Ltd.

(Note) * Consolidated subsidiaries-7-

Customers

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 2014

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, while keeping in mind our
responsibilities to society, such as addressing global environment issues, as an integrated packaging company wewill strive to achieve 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 each business and maintainstable relationships with all of our stakeholders, including business partners, employees and, foremost, shareholders.
For this reason, our current goal is to increase our shareholders' equity ratio and return on equity. We also placeemphasis on the dividend yield and dividend payout ratio.
(3) Medium-term Business Strategy
The Pack Group has established a medium-term management plan with the goals of raising sales to 100 billion yen,ordinary income to 10 billion yen and the shareholders’ equity ratio to 70%. To accomplish these goals, we are
pursuing the 3S Vision, which consists of Scale, Speed and Saving. All employees have established their own targets
in order to contribute to reaching the overall goals of the medium-term management plan.
(4) Important Issues
The packaging industry is viewed as a mature industry that has no prospects for major growth in sales and earnings
just by relying 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 new markets andadded more products. Examples include rice bags, products for disposable diapers and cartons for food products. We
will continue to target new markets and develop products where there is a potential for solid demand and will makesubstantial investments in the equipment required to achieve this growth.
Prices of raw materials and imported materials have continued to rise during the past few years in Japan due to theweaker yen and other reasons. In response, we have been working on selling products at adequate prices byimproving customer satisfaction. This involves using sales activities that include offering ideas to customers andmaking quality management even more rigorous. At the same time, we plan to build a more powerful profit structureby using reforms to further streamline operations. By taking these actions, we are determined to make steadyprogress in line with our medium-term management goals and to continue increasing sales and earnings.

-8-

The Pack Corporation (3950) Financial Report for Fiscal Year 2014

4. Consolidated Financial Statements(1) Consolidated Balance Sheet
Previous fiscal year
(As of December 31, 2013)(Million yen)
Current fiscal year
(As of December 31, 2014)

AssetsCurrent assets
Cash and deposits

8,191

7,248

Notes and accounts receivable-trade21,452

22,914

Securities

3,699

6,199

Merchandise and finished goods

4,761

5,232

Work in process

605

688

Raw materials and supplies

606

749

Deferred tax assets

167

192

Other

592

453

Allowance for doubtful accounts

(16)

(11)

40,05943,667

Buildings and structures, net

7,704

7,699

Machinery, equipment and vehicles, net

5,281

5,109

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

Tools, furniture and fixtures, net

253

231

7,146

8,066

59

525

20,445

21,632187

178

Investment securities

3,365

3,637

Deferred tax assets

456

521

Land
Construction in progress
Total property, plant and equipment
Intangible assets
Investments and other assets

Other

638

732

Allowance for doubtful accounts

(62)

(66)

Total investments and other assets
Total non-current assets
Total assets

-9-

4,398

4,825

25,031

26,63665,09170,304

The Pack Corporation (3950) Financial Report for Fiscal Year 2014

Previous fiscal year
(As of December 31, 2013)(Million yen)
Current fiscal year
(As of December 31, 2014)

Liabilities
Current liabilities
Notes and accounts payable-trade

19,161

19,398

Short-term loans payable792-

Income taxes payable

703

1,408

Provision for bonuses

166

181

Provision for directors' bonuses

30

35

Other

2,069

2,794

Total current liabilities

22,923

23,8182,576-

Net defined benefit liability

-

3,034

Other

84

524

2,661

3,559

25,58427,377

Capital stock

2,553

2,553

Capital surplus

3,165

3,167

Retained earnings

33,00336,330(6)(6)

38,71642,045967

1,108

Non-current liabilities
Provision for retirement benefits

Total non-current liabilities
Total liabilities
Net assets
Shareholders' equity

Treasury shares
Total shareholders' equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Minority interests
Total net assets
Total liabilities and net assets- 10 -

7

39

(207)

(74)

-

(220)

766

852

23

27

39,50742,92665,09170,304

The Pack Corporation (3950) Financial Report for Fiscal Year 2014

(2) Consolidated Statement of Income and Consolidated Statement of Comprehensive Income(Consolidated Statement of Income)(Million yen)
Current fiscal year
(from January 1, 2014 toDecember 31, 2014)

Previous fiscal year
(from January 1, 2013 to
December 31, 2013)
Net sales

84,31585,809

Cost of sales

65,27066,442Gross profit

19,045

19,367

Selling, general and administrative expenses

13,792

13,889Operating income

5,253

5,478

Interest income

7995

Dividend income

72

77

Rent income2149

Foreign exchange gains-

12

Non-operating income

Other

34

43

Total non-operating income

208

278

Interest expenses

15

8

Loss on sales of accounts receivable

43Compensation expenses

2

11Foreign exchange losses

30

-

Other

17

29

Non-operating expenses

Total non-operating expenses

70

52

5,391

5,703

Gain on sales of non-current assets

1

2Gain on sales of investment securities

110-

Gain on bargain purchase

-

1,064

Total extraordinary income

112

1,067

Loss on sales of non-current assets

0-Loss on retirement of non-current assets

4

57

Loss on valuation of investment securities

22

Impairment loss-

175

Ordinary income
Extraordinary income

Extraordinary losses

7

235

Income before income taxes and minority interests

Total extraordinary losses

5,496

6,536

Income taxes-current

1,908

2,275

Income taxes-deferred

285

(63)

Total income taxes

2,193

2,212

Income before minority interests

3,302

4,323

Minority interests in income (loss)
Net income- 11 -

0

1

3,301

4,322

The Pack Corporation (3950) Financial Report for Fiscal Year 2014

Consolidated Statement of Comprehensive Income(Million yen)
Current fiscal year
(from January 1, 2014 toDecember 31, 2014)

Previous fiscal year
(from January 1, 2013 to
December 31, 2013)
Income before minority interests

3,302

4,323

435

141

Other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges

731

Foreign currency translation adjustment

186

136

Total other comprehensive income

629

309

3,932

4,632

Comprehensive income attributable to owners of parent

3,927

4,628

Comprehensive income attributable to minority interests

44Comprehensive income
Comprehensive income attributable to- 12 -

The Pack Corporation (3950) Financial Report for Fiscal Year 2014

(3) Consolidated Statement of Changes in Equity
Previous fiscal year (from January 1, 2013 to December 31, 2013)(Million yen)
Shareholders’ equity
Capital stock
Balance at beginning ofcurrent period
Changes of items during
periodCapital surplus

2,553

Retained earnings

3,165

30,696

Treasury shares

Total shareholders’equity(6)36,409Dividends of surplus

(994)

(994)

Net income

3,301

3,301

Change of scope of
consolidation
Purchase of treasury
shares
Disposal of treasury
sharesNet changes of items
other than shareholders’equityTotal changes of items
during period
Balance at end of current
period

(0)

(0)

-

-

2,307

(0)

2,307

2,553

3,165

33,003(6)

38,716(Million yen)
Accumulated other comprehensive income
Valuationdifference on
available-forsale securities
Balance at beginning ofcurrent period
Changes of items during
period531

Total
Foreign
Remeasurements accumulated Minority
currencyinterestsof defined benefit
othertranslationplanscomprehensive
adjustment
incomeDeferred
gains orlosses onhedges
-

(390)

-

141

18

Total net
assets36,569Dividends of surplus(994)

Net income

3,301

Change of scope of
consolidation
Purchase of treasury
shares
Disposal of treasury
sharesNet changes of items
other than shareholders’equityTotal changes of items
during period
Balance at end of current
period

(0)
435

7

182

435

7

182

967

7

(207)

- 13 -

625

4

630

-

625

4

2,937

-

766

23

39,507

The Pack Corporation (3950) Financial Report for Fiscal Year 2014

Current fiscal year (from January 1, 2014 to December 31, 2014)(Million yen)
Shareholders’ equity
Capital stock
Balance at beginning ofcurrent period
Changes of items during
periodCapital surplus

2,553

Retained earnings

3,165

33,003

Total shareholders’equityTreasury shares(6)

38,716

Dividends of surplus

(994)

(994)

Net income

4,322

4,322

Change of scope of
consolidation
Purchase of treasury
shares
Disposal of treasury
sharesNet changes of items
other than shareholders’equityTotal changes of items
during period
Balance at end of current
period

(8)

(8)

(0)

(0)

8

10

2

-

2

3,327

(0)

3,329

2,553

3,167

36,330(6)

42,045(Million yen)

Accumulated other comprehensive income
Valuationdifference on
available-forsale securities
Balance at beginning ofcurrent period
Changes of items during
period967

Total
Foreign
Minority
accumulated
currency Remeasurementsinterests
othertranslation of defined benefit
comprehensive
adjustment
plansincomeDeferred
gains orlosses onhedges
7

(207)

-

766

23

Total net
assets39,507

Dividends of surplus(994)

Net income

4,322

Change of scope of
consolidation
Purchase of treasury
shares
Disposal of treasury
sharesNet changes of items
other than shareholders’equityTotal changes of items
during period
Balance at end of current
period

(8)
(0)
10
141

31

133

(220)

85

4

89

141

31

133

(220)

85

4

3,419

1,108

39

(74)

(220)

852

27

42,926- 14 -

The Pack Corporation (3950) Financial Report for Fiscal Year 2014

(4) Consolidated Statement of Cash Flows(Million yen)
Current fiscal year
(from January 1, 2014 toDecember 31, 2014)

Previous fiscal year
(from January 1, 2013 to
December 31, 2013)
Cash flows from operating activities
Income before income taxes and minority interests
Depreciation
Impairment loss
Amortization 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
Increase (decrease) in net defined benefit liability
Interest and dividend income
Interest expenses
Loss (gain) on sales of non-current assets
Loss on retirement of non-current assets
Gain on bargain purchase
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

5,496
2,012
8
(13)
(1)
2
44
(152)
15
(0)
4
(110)
2
83
(27)
(1,108)
121

6,536
1,852
175
0
(5)
3
5
39
(173)
8
(2)
57
(1,064)
2
(965)
(527)
(58)
466

Subtotal

6,377

6,349

Interest and dividend income received
Interest expenses paid
Income taxes paid

148
(15)
(2,774)170(8)(1,580)Net cash provided by (used in) operating activities

3,736

4,930

(2)
(1,201)
2,200(1,116)
140
(31)
(67)
208

(27)
(3,300)2,400(1,331)
4
(38)
(55)
-

-

(238)

Cash flows from investing activities
Payments into time deposits
Purchase of securities
Proceeds from sales of securities
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
Cash flows from financing activities
Increase (decrease) in short-term loans payable
Repayments of long-term loans payable
Cash dividends paid
Other, net
Net cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalents

(90)

(13)

39

(2,599)(70)(1,245)
(994)
(0)

(230)
(562)
(994)
(10)

(2,310)(1,797)

63

31

1,529

564

Cash and cash equivalents at beginning of period

9,051

10,581

Cash and cash equivalents at end of period

10,581

11,145

Net increase (decrease) in cash and cash equivalents- 15 -

The Pack Corporation (3950) Financial Report for Fiscal Year 2014

(5) Notes to Consolidated Financial Statements
Going Concern Assumption
Not applicable.
Significant Changes in Shareholders’ Equity
Not applicable.
Changes in Accounting Policies
Application of the accounting standard for retirement benefits
Following the application of the “Accounting Standard for Retirement Benefits (Accounting Standards Board ofJapan (ASBJ) Statement No. 26, May 17, 2012; excluding the provisions set forth in Clause 35)” and “Guidance on
Accounting Standard for Retirement Benefits (ASBJ Guidance No. 25, May 17, 2012; excluding the provisions set
forth in Clause 67),” the Company has changed its accounting treatment to record the r etirement benefit obligations
as a net defined benefit liability after deducting plan assets, and recorded the unrecognized actuarial differences andthe unrecognized past service costs as a net defined benefit liability from the end of the current fiscal year.
For the application of these accounting standards, etc. in accordance with the transitional accounting treatments set
forth in Clause 37 of the Accounting Standard for Retirement Benefits, the monetary effect of these changes has
been included in the remeasurements of defined benefit plans of accumulated other comprehensive income at theend of the current fiscal year.
The result was a net defined benefit liability of 3,034 million yen, and a decrease of 220 million yen in accumulated
other comprehensive income at the end of the current fiscal year.
The effect of these changes on per share information is shown in the corresponding section.

- 16 -

The Pack Corporation (3950) Financial Report for Fiscal Year 2014

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 allocate resourcesand evaluate results of operations.
The Group is engaged primarily in the manufacture and sale of paper bags, paper folding cartons, corrugated boxes
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, income or loss, assets, liabilities and other items by reportable s egment
Accounting methods used for the reportable segments are generally the same as the methods used for the preparationof the consolidated financial statements with the exception of the standard for the valuation of inventories.
Profit for reportable segments is stated on an operating income basis.
3. Information concerning net sales, income or loss, assets, liabilities and other items by reportable segment
Previous fiscal year (from January 1, 2013 to December 31, 2013)(Million yen)

Reportable segment
Paper
products
Net sales
Sales to externalcustomerInter-segment sales andtransfers
Total

Film
packaging

Other
businesses(Note) 1

Subtotal

Amount posted in
Adjustment the consolidated(Note) 2 financial statements(Note) 3

Total

48,794

17,46566,25918,05684,315-84,315

-

-

-

-

-

-

-

48,794

17,46566,25918,05684,315-84,315

Segment income

3,664

913

4,577

1,662

6,240

(986)

5,253

Segment assets

33,981

9,062

43,0447,150

50,195

14,89665,091Other items
Depreciation
1,728
236
1,964
27
1,992
28
2,020
Increases in property,
plant and equipment and
1,101
222
1,323
92
1,416
19
1,435
intangible assets(Notes) 1. “Other businesses” includes clothing, supplies and other goods.
2. The adjustments are as follows.
(1) The -986 million yen adjustment of segment income includes elimination of inter-segment transactions of 28 million yenthat are not allocated to reportable segments and -1,015 million yen in corporate expenses. Corporate expenses aremainly related to the parent company’s Administrative Department.
(2) The 14,896 million yen adjustment of 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 7,288
million yen and securities of 3,699 million yen), long-term investments (investment securities of 3,365 million yen) andthe parent company’s land of 543 million yen.
(3) The adjustment of depreciation and adjustment of increases in property, plant and equipment and intangible assets are
related to the parent company’s head office assets.
3. Segment income is adjusted for consistency with operating income in the consolidated statement of income.

- 17 -

The Pack Corporation (3950) Financial Report for Fiscal Year 2014

Current fiscal year (from January 1, 2014 to December 31, 2014)(Million yen)

Reportable segment
Paper
products
Net sales
Sales to externalcustomerInter-segment sales andtransfers

Filmpackaging

Other
businesses(Note) 1

Subtotal

Amount posted in
Adjustment the consolidated(Note) 2 financial statements(Note) 3

Total

50,811

18,486

69,29816,51185,809-85,809

-

-

-

-

-

-

-

Total

50,811

18,486

69,29816,51185,809-85,809Segment income

3,922

785

4,707

1,682

6,390

(912)

5,478

Segment assets

36,5579,700

46,258

7,628

53,886

16,41770,304

Other items
Depreciation
1,565
222
1,788
43
1,832
21
1,853
Increases in property,
plant and equipment and
1,341
176
1,518
98
1,616
2
1,618
intangible assets(Notes) 1. “Other businesses” includes clothing, supplies and other goods.
2. The adjustments are as follows.
(1) The -912 million yen adjustment of segment income includes elimination of inter-segment transactions of 12 million yenthat are not allocated to reportable segments and -924 million yen in corporate expenses. Corporate expenses are mainly
related to the parent company’s Administrative Department.
(2) The 16,417 million yen adjustment of 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 5,813
million yen and securities of 6,199 million yen), long-term investments (investment securities of 3,637 million yen) andthe parent company’s land of 766 million yen.
(3) The adjustment of depreciation and adjustment of increases in property, plant and equipment and intangible assets are
related to the parent company’s head office assets.
3. Segment income is adjusted for consistency with operating income in the consolidated statement of income.
4. Increases in property, plant and equipment and intangible assets do not include the amount increased from the newconsolidation.

Information related to impairment losses on non-current assets for each reportable segment
Previous fiscal year (from January 1, 2013 to December 31, 2013)
Not applicable.
Current fiscal year (from January 1, 2014 to December 31, 2014)(Million yen)

Reportable segment
Impairment loss

Paper products

Film packaging

13-

Subtotal
13(Note) “Other businesses” includes clothing, supplies and other goods.

- 18 -

Other businesses(Note)

Elimination or
corporate

-

162

Total
175

The Pack Corporation (3950) Financial Report for Fiscal Year 2014

Information related to goodwill amortization and the unamortized balance for each reportable segment
Previous fiscal year (from January 1, 2013 to December 31, 2013)(Million yen)

Reportable segment
Amortization forthe period
Balance at end of
periodPaper products

Film packaging

8

-

0

-

Other businesses

Elimination or
corporate

8

-

-

8

0

-

-

0

Subtotal

Current fiscal year (from January 1, 2014 to December 31, 2014)(Million yen)

Reportable segment
Paper products Film packaging
Amortization forthe period
Balance at end of
periodTotal

Other businesses

Subtotal

Elimination or
corporate

Total

0

-

0

-

-

0

-

-

-

-

-

-

Information related to gain on bargain purchase for each reportable segment
Previous fiscal year (from January 1, 2013 to December 31, 2013)
Not applicable.
Current fiscal year (from January 1, 2014 to December 31, 2014)
In the segment of Paper products, the Company acquired shares of Nishinihon Printing Co., Ltd., making it a wholly owned
subsidiary in the second quarter. We have posted the resulting gain on bargain purchase of 1,064 million yen, but not allocat ed to
the reportable segment as it is an extraordinary income.

- 19 -

The Pack Corporation (3950) Financial Report for Fiscal Year 2014

Per Share Information(Yen)
Previous fiscal year
(from January 1, 2013 to
December 31, 2013)

Current fiscal year
(from January 1, 2014 toDecember 31, 2014)

Net assets per share

1,984.74

2,156.41

Net income per share

165.98217.26(Notes) 1. Diluted net income per share is not presented since the Company has no outstanding residual securities.
2. As noted in the section “Changes in Accounting Policies,” the Company has started to apply the Accounting Standard
for Retirement Benefits, etc. based on the transitional accounting treatments set forth in Clause 37 of the AccountingStandard for Retirement Benefits.
The result was a decrease of 11.1 yen in net assets per share in the current fiscal year.
3. The basis of calculating the net income per share is as follows(Million yen)Previous fiscal year
Current fiscal year
Item(from January 1, 2013 to(from January 1, 2014 toDecember 31, 2013)
December 31, 2014)
Net income per share
Net income

3,301

4,322

-

-

Net income related to common shares

3,301

4,322

Average number of shares outstanding during theperiod (thousand shares)

19,89319,892

Amounts unavailable to common shareholders

4. The basis of calculating the net assets per share is as follows
Item(Million yen)
Current fiscal year
(As of December 31, 2014)

Previous fiscal year
(As of December 31, 2013)

Total net assets

39,50742,926

Deduction on total net assets

23

27[of which minority interests]

(23)

(27)

Net assets applicable to common shares

39,48342,898

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

19,89319,893

Material Subsequent Events
Not applicable.

- 20 -

The Pack Corporation (3950) Financial Report for Fiscal Year 2014

5. Other(1) Changes in Executives
1) Change in representative
Not applicable.
2) Change in other executives (effective March 27, 2015)
1. Candidate for director
External Director

Hirofumi Hayashi (currently External Corporate Auditor)

2. Candidates for corporate auditors
Standing Corporate Auditor

Seiji Sato
(currently Corporate Officer, General Manager of General Affairs and Legal
Dept.)

External Corporate Auditor

Uichiro Nishio(currently Professor of Institute of Business and Accounting, Professional
Graduate School, Kwansei Gakuin University, Certified Public Accountant,
Tax Accountant)External Corporate Auditor

Hisayoshi Tamakoshi(currently President of Tamakoshi Law Office, Attorney)

3. Retiring corporate auditor
Standing Corporate Auditor

Kiyoichi Yamamoto

External Corporate Auditor

Yutaka Maeda

External Corporate Auditor

Hirofumi Hayashi(to be appointed as External Director of The Pack Corporation)* 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.

- 21 -