Business Results for the Second Quarter of the Year Ending December 31, 2016
(Six Months Ended June 30, 2016)[Japan GAAP] (Consolidated)
August 5, 2016

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, Senior Managing Director, General Manager of Administration HQ
TEL: +81-6-6972-1221
Expected date of filing of quarterly report:
August 10, 2016
Expected starting date of dividend payment:
September 7, 2016
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, 2016
(January 1, 2016 through June 30, 2016)(1) Consolidated results of operations(% change from the previous corresponding period)
Net sales
Million yen

Six months ended Jun. 30, 2016
Six months ended Jun. 30, 2015
(Note) Comprehensive income%

Operating income

Ordinary income

Million yen

Million yen

Million yen%

41,320
2.7
2,524
11.9
2,726
14.8
1,666
40,239
2.4
2,257
6.5
2,375
6.3
1,418
Six months ended Jun. 30, 2016:
926 million yen (down 51.0%)
Six months ended Jun. 30, 2015: 1,890 million yen (down 20.1%)

17.5(40.8)

Basic earnings per
share
Six months ended Jun. 30, 2016
Six months ended Jun. 30, 2015%

Profit attributable toowners of parent%

Diluted earnings per
share

Yen

Yen

84.96
71.50

84.87
71.47

(2) Consolidated financial position
Total assets

Net assets

Million yen

Capital adequacy ratio

Million yen

69,38145,871
73,14245,412As of Jun. 30, 2016: 45,805 million yen

As of Jun. 30, 2016
As of Dec. 31, 2015
(Reference) Owner’s equity

%

66.0
62.0
As of Dec. 31, 2015: 45,365 million yen

2. Dividends
End of 1Q

End of 2Q

Dividend per share
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, 2015
Year ending Dec. 31, 2016
Year ending Dec. 31, 2016
(forecasts)(Note) Revisions to the most recently announced dividend forecast: None

3. Forecast of consolidated business results for the year ending December 31, 201 6(January 1, 2016 through December 31, 2016)(% change from the previous corresponding period)
Net sales
Million yen

Operating income%

Million yen%

Profit attributable toowners of parent

Ordinary income
Million yen

Basic earnings per
share

%

Million yen%

Yen

Fiscal year
90,500
2.8
6,400
2.7
6,600
2.0
(Note) Revisions to the most recently announced consolidated forecast: None

4,200

3.3

214.11

* Notes(1) Material changes in subsidiaries during this period (Changes in scope of consolidations resulting from change issubsidiaries): None
(2) Applying of specific accounting of the consolidated quarterly financial statements: None
(3) Changes in accounting policies, accounting estimates and retrospective restatement
1) Changes in accounting policies based on revisions of accounting standard: Yes
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

(4) Number of issued and outstanding shares (common stock)1) Number of issued and outstanding shares at the end of fiscal year (including treasury stock)
As of Jun. 30, 2016:

19,900,000 shares

As of Dec. 31, 2015:

19,900,000 shares

As of Dec. 31, 2015:

284,512 shares

2) Number of treasury stock at the end of fiscal year
As of Jun. 30, 2016:

284,522 shares

3) Average number of shares
Six months ended Jun. 30, 2016:

19,615,485 shares

Six months ended Jun. 30, 2015:

19,832,981 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 3 for forecast assumptions.

The Pack Corporation (3950) Financial Report for the Second Quarter of 2016

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

3

2. Matters Related to Summary Information (Notes)

4(1) Material Changes in Subsidiaries during this Period

4(2) Applying of Specific Accounting of the Consolidated Quarterly Financial Statements

4(3) Changes in Accounting Policies, Accounting Estimates and Retrospective Restatement

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 Quarterly Consolidated Financial Statements

10

Going Concern Assumption

10

Significant Changes in Shareholders’ Equity

10

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The Pack Corporation (3950) Financial Report for the Second Quarter of 2016

1. Qualitative Information on Quarterly Consolidated Financial Performance(1) Explanation of Results of Operations
In the first half of 2016, the yen appreciated against foreign currencies, consumer spending lacked vigor andcorporate earnings continued to stagnate, factors that led to suppressed capital expenditures and wage growth.
Meanwhile, the cycle of government-targeted growth and distribution remained a work in progress, and new
problems arose from factors such as Britain’s exit from the EU. Overall, the economy was manifestly unstable.
Nevertheless, America’s economic indicators were robust, China has begun to recover from its slowdown, andcrude oil prices have rallied, leading to a sense of anticipation that these will become elements in astrong-performing global economy.
During the first half, there were many activities to accomplish the goals of the medium-term management planunder the slogan of “Growth and Innovation.” All group companies were focused on entering new markets andengaged in activities such as proactive capital expenditures, developing new products and improving productquality in order to grow earnings.
Net sales increased 2.7% year-on-year to 41,320 million yen, operating income increased 11.9% to 2,524 million
yen, ordinary income increased 14.8% to 2,726 million yen, and profit attributable to owners of parent increased
17.5% to 1,666 million yen.
Business segment performance was as follows.
(Paper Products)
The paper products segment accounted for 60.5% of consolidated sales in the first half of 2016. Sales of paperbags, which accounted for 31.9% of consolidated sales, increased 2.4% to 13,174 million yen. The main reasons
were higher sales of mass-produced paper bags and high-end bags.
Sales of paper folding cartons, which accounted for 15.0% of consolidated sales, increased 7.8% to 6,207 million
yen mainly due to the success of positive efforts in sales expansion.
Sales of corrugated boxes, which accounted for 11.1% of consolidated sales, increased 6.2% to 4,587 million yen.
This increase was attributable to sales to new customers and strong cultivation of major clients.
Printing sales, which accounted for 2.5% of consolidated sales, increased 7.8% to 1,046 million yen as orders
were strong at both Keihin Tokushu Printing Corp. and NIKKO PRINT CORPORATION.
Overall, sales in this segment increased 4.6% to 25,015 million yen. Operating income was up 15.1% to 1,918
million yen.
(Film Packaging)
The film packaging segment accounted for 21.6% of consolidated sales in the first ha lf of 2016. Distribution
segment sales were strong despite weak orders for disposable diaper products. As a result, sales increased 0.3%
to 8,913 million yen. Operating income was up 5.8% to 384 million yen.
(Other Businesses)
Other businesses accounted for 17.9% of consolidated sales in the first half of 2016. There was a decline in salesof 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
to inventory control and delivery. As a result, sales decreased 0.7% to 7,390 million yen and operating income
increased 3.0% to 633 million yen due to cost reductions and other factors.

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The Pack Corporation (3950) Financial Report for the Second Quarter of 2016

(2) Explanation of Financial Position
1) Balance sheet position
Assets totaled 69,381 million yen at the end of the second quarter of 2016, down 3,760 million yen from the endof 2015. The main factors were an increase of 4,884 million yen in cash and deposits, and decreases of 6,293
million yen in notes and accounts receivable-trade, 1,599 million yen in securities and 814 million yen in
investment securities.
Liabilities decreased 4,219 million yen to 23,510 million yen. The main factors were decreases of 3,480 million
yen in notes and accounts payable-trade, and 196 million yen in income taxes payable.
Net assets increased 459 million yen to 45,871 million yen. The main factors were an increase of 1,175 million
yen in retained earnings and a decrease of 535 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 201 6 increased 1,667 million yen, or
13.5% from the end of the second quarter of 2015 to 13,986 million yen.
Cash flows from operating activities
Operating activities provided net cash of 4,884 million yen (net cash provided of 3,198 million yen in the firsthalf of 2015). The principal factors were profit before income taxes of 2,725 million yen and a decrease of 3,535
million yen in notes and accounts payable-trade, while there was a decrease of 6,124 million yen in notes andaccounts receivable-trade.
Cash flows from investing activities
Investing activities used net cash of 1,776 million yen (net cash used of 965 million yen in the first half of 2015).
The principal factors were outlays of 1,129 million yen for the purchase of property, plant and equipment and
4,200 million yen for the purchase of securities, while there were proceeds from sales of se curities of 3,400
million yen.
Cash flows from financing activities
Financing activities used net cash of 490 million yen (net cash used of 1,064 million yen in the first half of 2015).
This was mainly due to outlays of 482 million yen for the cash dividends paid.
(3) Explanation of Consolidated Forecasts and Other Forward-looking Statements
The consolidated forecasts announced on February 10, 2016 remain unchanged.

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The Pack Corporation (3950) Financial Report for the Second Quarter of 2016

2. Matters Related to Summary Information (Notes)(1) Material Changes in Subsidiaries during this Period
Not applicable.
(2) Applying of Specific Accounting of the Consolidated Quarterly Financial Statements
Not applicable.
(3) Changes in Accounting Policies, Accounting Estimates and Retrospective Restatement
Changes in Accounting Policies
Application of the Accounting Standard for Business Combinations, etc.
The Company has applied the “Accounting Standard for Business Combinations” (Accounting Standards Boardof Japan (ASBJ) Statement No. 21, September 13, 2013), “Accounting Standard for C onsolidated Financial
Statements” (ASBJ Statement No. 22, September 13, 2013), “Accounting Standard for Business Divestitures”(ASBJ Statement No. 7, September 13, 2013), etc. from the first quarter of 2016. Accordingly, difference arisingfrom changes in the Company’s ownership interests in subsidiaries in cases where control is retained isrecognized in capital surplus, and the costs associated with the acquisition of shares are recognized as expenses
in the fiscal year in which they arise. Regarding business combinations that take place on or after the beginningof the first quarter of 2016, the Company has revised the method to reflect reviewed allocation of the acquisition
costs arising from determination of the provisional accounting treatment on the c onsolidated financial statements
to which the date of the business combination belongs. In addition, the presentation of net income and otheritems has been revised, and the minority interests item has been renamed non -controlling interests. For
consistency with these changes, the consolidated financial statements for the first half and full year of 2015 havebeen revised.
In the quarterly consolidated statement of cash flows of the first half of 2016, cash flows associated withpurchase or sales of shares of subsidiary not resulting in changes in the scope of consolidation are included in
cash flows from financing activities. On the other hand, cash flows associated with acquisition costs of shares ofsubsidiary resulting in changes in the scope of consolidation or expenses arisen from purchase or sales of sharesof subsidiary not resulting in changes in the scope of consolidation are included in cash flows from operating
activities.
The Company has adopted these accounting standards, etc. from the beginning of the first quarter of 2016 fiscal
year, in accordance with the transitional accounting treatments set forth in Article 58 -2 (4) of the AccountingStandard for Business Combinations, Article 44-5 (4) of the Accounting Standard for Consolidated Financial
Statements, and Article 57-4 (4) of the Accounting Standard for Business Divestitures.
There is no impact on the quarterly consolidated financial statements for the first half of 2016.

Application of Practical Solution on a Change in Depreciation Method d ue to Tax Reform 2016
Following the revision of the Corporation Tax Act, the Company has applied the “Practical Solution on a Change
in Depreciation Method due to Tax Reform 2016” (ASBJ Practical Issues Task Force (PITF) No. 32, June 17,2016) from the second quarter of 2016, and changed the depreciation method for facilities attached to buildings
and structures acquired on or after April 1, 2016, from the declining -balance method to the straight-line method.
This change has no effect on the results of operations in the first half of 2016.

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The Pack Corporation (3950) Financial Report for the Second Quarter of 2016

3. Quarterly Consolidated Financial Statements(1) Quarterly Consolidated Balance Sheet
Previous fiscal year
(As of December 31, 2015)(Million yen)
Second quarter ofthe current fiscal year
(As of June 30, 2016)

AssetsCurrent assets
Cash and deposits

8,589

13,474

Notes and accounts receivable-trade

23,506

17,213

Securities

6,399

4,799

Merchandise and finished goods

5,145

5,445

Work in process

713

789

Raw materials and supplies

748

663

Deferred tax assets

205

189

Other

639

675

Allowance for doubtful accounts

(11)

(8)

45,93643,242

Buildings and structures, net

7,709

7,487

Machinery, equipment and vehicles, net

5,261

5,320

185

170

8,066

8,066

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

Tools, furniture and fixtures, net
LandConstruction in progress

231

15

21,45321,060143

116

Investment securities

4,561

3,746

Deferred tax assets

419

690

Other

688

650

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

Allowance for doubtful accounts

(60)

(123)

Total investments and other assets

5,608

4,963

27,205

26,13973,142

69,381

Total non-current assets
Total assets-5-

The Pack Corporation (3950) Financial Report for the Second Quarter of 2016

Previous fiscal year
(As of December 31, 2015)(Million yen)
Second quarter ofthe current fiscal year
(As of June 30, 2016)

Liabilities
Current liabilities
Notes and accounts payable-trade

14,94011,460Electronically recorded obligations-operating

4,115

3,966

Income taxes payable

1,305

1,109

Provision for bonuses

186

194

Provision for directors’ bonuses

43

21

Other

2,879

2,547

Total current liabilities

23,471

19,298Non-current liabilities
Deferred tax liabilities
Net defined benefit liability
Other
Total non-current liabilities
Total liabilities

348

292

3,727

3,733

182

185

4,258

4,211

27,72923,510

2,553

2,553

Net assets
Shareholders’ equity
Capital stock
Capital surplus

3,167

3,167

Retained earnings

39,09540,270Treasury shares

(739)

(739)

Total shareholders’ equity

44,07745,253

1,763

1,227

(5)

(33)

Foreign currency translation adjustment

(114)

(310)

Remeasurements of defined benefit plans

(355)

(331)

Total accumulated other comprehensive income

1,287

552

Subscription rights to shares

20

43

Non-controlling interests

27

23

45,41245,871

73,142

69,381

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

Total net assets
Total liabilities and net assets-6-

The Pack Corporation (3950) Financial Report for the Second Quarter of 2016

(2) Quarterly Consolidated Statement of Income and Quarterly Consolidated Statement of Comprehensive
IncomeQuarterly Consolidated Statement of Income(For the Six-month Period)

Net sales
Cost of sales

First six months ofthe previous fiscal year
(from January 1, 2015
to June 30, 2015)
40,23931,231(Million yen)First six months ofthe current fiscal year
(from January 1, 2016
to June 30, 2016)
41,32031,768Gross profit

9,007

9,551

Selling, general and administrative expenses
Freightage and packing expenses
Salaries and allowances
Directors’ compensations
Provision of allowance for doubtful accounts
Provision for bonuses
Provision for directors’ bonuses
Retirement benefit expenses
Depreciation
Rent expenses
Other

1,818
1,825
234
(0)
86
17
214
290
1,102
1,161

1,867
1,910
257
60
105
20
225
240
1,094
1,243

6,750

7,026

2,257

2,524

47
45
63

61
48
47
65

156

222

0
17
20

0
20

37

21

2,375

2,726

20
6

0

26

0

1
3
44

0
0
0
-

Total selling, general and administrative expenses
Operating income
Non-operating income
Interest income
Dividend income
Foreign exchange gains
Other
Total non-operating income
Non-operating expenses
Interest expenses
Foreign exchange losses
Other
Total non-operating expenses
Ordinary income
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
Compensation expenses
Total extraordinary losses

490Profit before income taxes

2,353

2,725

Income taxes-current
Income taxes-deferred

807
127

1,088
(29)

Total income taxes

935

1,058

1,418

1,666

(0)

(0)

1,418

1,666

ProfitLoss attributable to non-controlling interests
Profit attributable to owners of parent-7-

The Pack Corporation (3950) Financial Report for the Second Quarter of 2016

Quarterly Consolidated Statement of Comprehensive Income(For the Six-month Period)(Million yen)First six months ofthe current fiscal year
(from January 1, 2016
to June 30, 2016)

First six months ofthe previous fiscal year
(from January 1, 2015
to June 30, 2015)
Profit

1,418

1,666

Valuation difference on available-for-sale securities

465

(535)

Deferred gains or losses on hedges

(24)

(28)

20

(200)

Other comprehensive income

Foreign currency translation adjustment
Remeasurements of defined benefit plans, net of tax

10

23

Total other comprehensive income

471

(740)

1,890

926

1,889

930

0

(4)

Comprehensive income
Comprehensive income attributable toComprehensive income attributable to owners of parent
Comprehensive income attributable to non-controllinginterests-8-

The Pack Corporation (3950) Financial Report for the Second Quarter of 2016(3) Quarterly Consolidated Statement of Cash Flows(Million yen)First six months ofthe current fiscal year
(from January 1, 2016
to June 30, 2016)

First six months ofthe previous fiscal year
(from January 1, 2015
to June 30, 2015)
Cash flows from operating activities
Profit before income taxes

2,353

2,725

838

881

Increase (decrease) in allowance for doubtful accounts

(2)

59

Increase (decrease) in provision for bonuses

(19)

7

Increase (decrease) in provision for directors’ bonuses

(17)

(22)

Increase (decrease) in net defined benefit liability

(4)

55

Interest and dividend income

(93)

(110)

0

0

(4)

(0)

3

0

(20)

-

Depreciation

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

-

0

5,787

6,124

(41)

(312)

(4,113)(3,535)

Other, net

(182)

210

Subtotal

4,482

6,083

89

108

Interest and dividend income received
Interest expenses paid
Income taxes paid
Net cash provided by (used in) operating activities

(0)

(0)

(1,373)(1,306)

3,198

4,884

58

33

(2,000)(4,200)

1,600

3,400

Cash flows from investing activities
Proceeds from withdrawal of time deposits
Purchase of securities
Proceeds from sales of securities
Payments of loans receivable(6)-

Collection of loans receivable

11

113

(681)

(1,129)8

4Purchase of property, plant and equipment
Proceeds from sales of property, plant and equipment
Purchase of intangible assets

(6)

(0)

Purchase of investment securities

(22)

(13)

Proceeds from sales of investment securities

42-

Other, net

31

16

(965)

(1,776)

Cash dividends paid

(497)

(482)

Purchase of treasury shares

(556)

(0)

Other, net

(11)

(7)

(1,064)(490)

Net cash provided by (used in) investing activities
Cash flows from financing activities

Net cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalents

4

(82)

Net increase (decrease) in cash and cash equivalents

1,173

2,535

Cash and cash equivalents at beginning of period

11,145

11,451

Cash and cash equivalents at end of period

12,31913,986-9-

The Pack Corporation (3950) Financial Report for the Second Quarter of 2016(4) Notes to Quarterly Consolidated Financial Statements
Going Concern Assumption
Not applicable.
Significant Changes in Shareholders’ Equity
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 theconvenience of readers who prefer an English translation.

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