2

DNP Annual Report 2015

CONTENTS

02

To Our Shareholders

56

How DNP Works to Achieve
Sustainable Development

08

DNP in Brief

58

Compliance with Laws and Social Ethics

10

Synopsis of Performance

59

Product and Service Safety and Quality Assurance

14

DNP at a Glance

60

Information Security

16

Our Products and Services

61

Business Continuity

18

Evolution of DNP’s Businesses

62

Research and Development

20

Major Events of this Fiscal Year

62

Intellectual Property Management

22

Investor Information

63

Environmental Conservation
and a Sustainable Future

Special Feature:“Today’s Innovation isTomorrow’s Basic”—Four Growth Areas—

65

Brand Management

66

Corporate Governance73

Board of Directors, Statutory Auditors
and Corporate Officers

26

Knowledge and Communication

74

Financial Section

28

Food and Healthcare

76

Management’s Discussion and Analysis

30

Environment and Energy

86

Selected Financial Data (unaudited)

32

Lifestyle and Mobility

88

Consolidated Financial Statements

110

Independent Auditors’ Report

24

34

Segment Information

36

Information Communication

112

Appendix

36

Business Strategies

112

Major Subsidiaries and Affiliates

38

Financial Results

114

40

Presentation of Growth Businesses
and Strategic Businesses

Business Expansion through Application andDevelopment of Printing Technologies

120

Glossary

123

Sources of Information about DNP		44

Lifestyle and Industrial Supplies

44

Business Strategies

46

Financial Results

48

Presentation of Growth Businesses
and Strategic Businesses		50Electronics

50

Business Strategies

52

Financial Results

54

Presentation of Growth Businesses
and Strategic Businesses		This annual report is aimed at providing information about DNP’s businesses, management
vision, and business results. Opinions and forecasts contained in the report were basedon the best judgment of management at the time the report was prepared, so we cannot
guarantee that all information contained in the report is completely infallible.
In this annual report, “DNP” refers to the entire DNP Group, and “we” refers to DNP or
the DNP management team.
(In the section on Corporate Governance (pp 66-72), “DNP” refers to Dai Nippon Printing
Co., Ltd.)DNP Annual Report 20151

To Our Shareholders
By consolidating the strengths of our entire corporate Groupto address four growth areas,

DNP will create “Tomorrow’s Basic” value.

Yoshitoshi Kitajima, President
2

To Our Shareholders

At DNP, we are expanding our business in order to create “Tomorrow’s Basic.” When
we say, “create ’Tomorrow’s Basic,’” we mean developing products and services thatsolve challenges for businesses, consumers, and society in ways that make people
always want to have those solutions close at hand. In order to realize this goal, eachmember of DNP needs to view situations from the consumer’s standpoint, be quick to

DNP in Brief

grasp challenges not only in Japan but all over the world, and do his or her utmost tofind solutions. This year we identified the following four growth areas in order to makemaximum use of the advanced printing and information technologies that are DNP’sstrengths to more effectively generate products, services and infrastructure that are

Special Featureindispensable to consumers and businesses.
In “knowledge and communication,” we aim to achieve safe and comfortablecommunication in the context of an advanced information society, and to foster
cultural development. With “food and healthcare,” we want to improve quality of life
for members of our “ultra-aging” society, and support lifelong health maintenance.
while at the same time protecting the Earth’s natural environment. And the aim of“lifestyle and mobility” is to provide a high degree of comfort in all of the various typesof spaces in which consumers spend their time.

Segment Information

Through “environment and energy,” we seek to enable society to grow economically

We intend to create value in all of these areas, including by starting up newvalue and accordingly, to increased value for our shareholders, investors and otherstakeholders. In addition to returning profits to shareholders and other stakeholders, wewill use the fruits of our efforts as a basis for creating even more new businesses.

How DNP Works to Achieve
Sustainable Development

businesses. The cumulative results of our efforts will lead to increased corporate

Furthermore, in order to make this growth sustainable, we will maintain our awarenessstakeholders. In addition to implementing internal controls even more thoroughly thanin the past, we will make use of active communication with stakeholders.

business activities and continue to build DNP’s corporate value so as to earn the trust of

AppendixWe, the management of DNP, will work hard to achieve sustainable growth through ourFinancial Sectionof the need to strengthen our corporate governance and enhance taiwa (dialogue) with

our shareholders and all stakeholders.

Yoshitoshi Kitajima
President

DNP Annual Report 20153

■ “Today’s Innovation is Tomorrow’s Basic” initiatives for the fiscal year through March 2015
Currently DNP’s focus is on creating “Tomorrow’s Basic”—solutions to challenges faced by businesses,
consumers and society—which we arrive at by giving priority to the consumer’s viewpoint. In the year
through March 2015, we faced a harsh business environment. Due to factors such as lackluster personal
consumption and a surge in import prices due to the weak yen, Japan’s economy failed to achieve a fullrecovery. Challenges to the printing industry included sluggish demand, lower unit prices, and higher
materials prices. Amid this environment, we took many steps to increase DNP’s corporate value.
First of all, in March 2014 we formed an operational and capital tie-up with MK Smart Joint Stock
Company, Vietnam’s largest smart card manufacturer, in order to boost our business’s competitive
position and accelerate expansion of our global smart card business with a focus on Southeast Asia. Thenin December 2014, we acquired Foto Fantasy, Inc., which operates photo printing systems in the U.S.,
thereby speeding up the global expansion of DNP’s photo printing media business. In April 2014, wetransferred our Optical Films business (which mainly makes surface films for liquid crystal displays) from
Lifestyle and Industrial Supplies to our Electronics segment as part of our effort to boost earning power
through measures including strengthening new product development, reviewing production lines, andreconfiguring production frameworks.
In order to develop businesses faster and more appropriately, we integrated organizations belonging toInformation Communication and Packaging nationwide so as to construct comprehensive frameworks forsales, planning, and manufacturing. We also focused on expanding our production bases in response toincreased demand overseas. We built new plants and/or expanded existing ones for photo printing media(ink ribbons, etc.) in the U.S. and Malaysia, and for film packaging products in Vietnam. In addition, we
are working on various structural reforms, such as boosting efficiency and mobilizing our overall strengths
in existing fields while preparing operating bases for cultivating and expanding businesses in new growthareas.
In order to improve capital efficiency, DNP also acquires and cancels treasury shares. For sevenconsecutive years, from 2003 to 2009, we repurchased DNP shares. From May to August 2015,
we plan to purchase up to 18 million shares from the market at a maximum cost of 20.0 billion yen. On
May 28, 2015 we retired 20 million treasury shares. In the future we intend to continue to implement
flexible capital policies in response to changes in the business environment.

4

Smart cards

Photo printing media

Optical films

DNP Kashiwa Data CenterTo Our Shareholders■ Focusing on four growth areas
DNP always stays close to consumers and provides new value in the form of “Tomorrow’s Basics” thatsolve consumers’ challenges. In order to continue to do so, we plan to invest a total of some 100 billion
yen over the next five years in the development of new businesses in the following four growth areas:

DNP in Brief

Today’s Innovation is Tomorrow’s Basic
By assessing challenges that need to be solved from consumers’ point of view, andby applying advanced printing and information technologies along with our other strengths,
DNP always stays close to consumers and offers new value in the form of“Tomorrow’s Basic” solutions for those challenges.

Creating business value in four growth areas
Special Feature

Knowledge andCommunication

Food and Healthcare

Over the next five years, invest some 100 billion yen in
new business development

Environment and EnergyLifestyle and Mobility

Accelerate global business development by finding solutions
that suit each region’s needs
Segment Information

Use management resources effectively; improve asset efficiency
Improve profitability through structural reform of businesses

FY through March 2016: Treasury share acquisition (18 mln
shares, ¥20 bln maximum) and cancellation (20 mln shares)

Strengthen corporate governance
How DNP Works to Achieve
Sustainable Development

Achieve sustainable growth and contribute to society
by increasing DNP’s corporate value

Financial Section○ In the area of “knowledge and communication,” we will promote initiatives that help people intheir daily lives and develop culture through safe and reliable exchange of information in advanced
information societies. Rather than simply producing information media and content, we will also takepart in the creation of mechanisms that support interactive communication, and provide information
platforms that will allow people to exchange the information they want, when they want, in the mostappropriate formats.
As a specific example, we will offer sales promotion services that make use of settlement
information in response to the diversification of payment services in our increasingly cashless society.
We are also working hard to expand business related to Japanese government planned introductionof the “My Number” citizen ID numbering system, to reinforce our “honto” hybrid paper ande-book sales service, and to develop educational information and communication technology (ICT)
services including digital textbooks. In addition, we will expand businesses that respond to the needsof the increasing number of foreign visitors to Japan and Japanese traveling overseas by providing
multilingual tourist information and shopping support solutions, etc.

Appendix

DNP Annual Report 20155

○ Concerning “food and healthcare,” we are developing products and services that support lifelong
health maintenance and safe, high-quality lifestyles to address the pronounced trend toward “ultraaging” in Japanese society. In addition to packaging for foods, beverages and pharmaceuticalproducts, we are providing components with diverse functionality and branching out into fields like
agriculture and life science, starting with regenerative medicine.
For example, we are developing technologies for analyzing MRI brain and eye scans and othermedical images in order to determine the causes of diseases and/or aid in early disease detection andtreatment. In April 2015, DNP formed an operational tie-up with PSP Corporation, a major developerof medical image management systems that make it possible for images taken at a hospital to beaccessed by any of the hospital’s departments. Together, DNP and PSP plan to develop diagnostic
support and other services based on image analysis.
In agriculture, DNP applied laminating and other technologies that we cultivated through our
packaging business in order to develop “DNP Agri Film (reflective, moisture preserving film),” which
increases the efficiency of light reflection and makes it possible to maintain optimal moisture levels.
The product’s moisture-retaining property makes it effective for crop cultivation and it is durable
enough to hold up over long-term use. We plan to market the film both in Japan and overseas.
○ In the arena of “environment and energy,” DNP is working to achieve an eco-friendly society thatcombines both economic growth and environmental preservation. We will continue to develop ecofriendly products that help conserve resources and energy and preserve biodiversity, as well as toprovide energy management solutions that make it easy to monitor energy consumption.
As an example from our packaging operations, in 2012 we developed “Biomatech” packaging film
containing plant-based materials. We went on to develop plant-derived aluminum vapor deposition
film and paper beverage containers consisting of 98% biomass, and we continue to work on
expanding our eco-friendly product lineup.
We are also focusing on developing more products and services to manage and reduce energy
consumption. We have already developed a film that, when applied to windows, shuts out the sun’slight and heat in summer but admits an appropriate amount of light and heat in winter, as well as
metal paneling for walls and ceilings of railroad cars and homes, which effectively reflects and diffuses
sunlight and artificial light to reduce the need for the latter. We also plan to offer marketing andconsulting services for the growing number of electric power retailers expected to be entering theJapanese power market.
○ Concerning “lifestyle and mobility,” as consumers’ values become more diverse, people seek a highdegree of comfort in all of the spaces they occupy including workplaces, public spaces, spaces sharedwith family and friends, and private spaces. DNP views homes, offices, medical and nursing carefacilities, automobiles, railroad passenger cars and anywhere else where people spend time as “living
spaces” for which we develop and provide many types of products and services.
Besides focusing on developing products that use DNP’s original electron beam (EB) coating
technology, we also sell, in Japan and overseas, aluminum panels and other decorative products forinterior and exterior use that provide a luxurious feel by expressing textures that resemble wood, stoneor other materials.
In addition, we plan to make use of our information technologies to provide smart sensing andother services that offer comfort control by exchanging data between various networked sensors anddevices, in order to bring about a smart society that exercises comprehensive control over various
types of infrastructure.

6

To Our Shareholders■ Toward sustainable growth

DNP in Brief

Enhancing corporate governance and taiwa (dialogue) with stakeholders
DNP will strive to generate value in its four designated growth areas, including by starting new businesses.
As we increase DNP’s corporate value by building a portfolio of successes, it is important to strengthen
our corporate governance and enhance taiwa with stakeholders.
Exercising corporate governance is one of the DNP management’s important tasks, and we areworking on complying with the new corporate governance code that went into effect in June 2015. We
are also increasing our understanding of the Japanese Stewardship Code that has been adopted by many
institutional investors and we are working hard to enhance dialogue with all of our shareholders andinvestors.
Sustainable growth through reducing burdens on the environment
Linking business expansion to coexistence with nature is another important prerequisite to achieving
sustainable growth. DNP has built its own environmental management system and is actively working
to prevent global warming, to achieve zero emissions, to reduce water usage, to protect biodiversity, tothoroughly control use of volatile organic solvents (VOS) and other chemical substances, to develop ecofriendly products, and to pursue green purchasing among other efforts to preserve the environment.
For example, we estimated the volume of greenhouse gas emissions (Scope 3) from our entire supply
chain including in-house manufacturing, in Japan and worldwide. In addition to setting about to reduce
those emissions, we established a goal for the fiscal year through March 2031 with the aim of preventing
global warming. We are promoting various measures to preserve biodiversity. For example, because printing
paper is closely related to climate change and the destruction of forest resources, we established guidelines
for procuring this type of paper and have gained suppliers’ cooperation in following those guidelines. We
are also creating green belts around our corporate sites to provide living things with space to coexist. In
recognition of these types of initiatives, DNP was selected as a “Forests sector leader” by CDP (formerly, theCarbon Disclosure Project), an organization that is drawing attention from global institutional investors.
Diversity management
In order to build corporate value, it is also important to promote workplace reforms aimed at maximizing
employee participation. In the fiscal year through March 2015, the Ministry of Economy, Trade andIndustry (METI) selected DNP for its “Diversity Management Selection 100” list. The list honors companies
that have achieved outstanding results by promoting the use of abilities of various human resources
including women, people from overseas, the elderly, and people with disabilities.
DNP was recognized for implementing a number of training and other programs aimed at supporting
women’s active participation, and for other programs including a “Reform How We Work” activity toincrease the value added to work by using time resources more effectively. Among the examples of DNP“best practices” that were introduced in connection with the METI citation were the adoption of female
engineers’ ideas for developing packaging products that make foods and beverages easier to prepare
and/or use, and for producing packages made from eco-friendly materials.
Returns to shareholders and creation of new businesses
In addition to returning profits to shareholders, we will use the fruits of our efforts to give back to otherstakeholders and as a basis for creating even more new businesses.
Our basic policy toward shareholder returns is to pay stable dividends that are calculated withconsideration for such factors as business performance and dividend payout ratio. At the same time, we
support future business development by applying retained earnings to the enhancement of our financial
constitution and the strengthening of our management base. We allocate retained earnings primarily
for investment in research and development of new technologies and businesses, capital spending, andstrategic alliances and M&As.
In order to earn the trust of all of DNP’s stakeholders, we will do our best to achieve sustainablegrowth in the medium and long terms through the activities described above, and we will continue to
strive to build DNP’s corporate value.

Special Feature
Segment Information
How DNP Works to Achieve
Sustainable Development
Financial Section
Appendix

DNP Annual Report 2015

7

DNP in Brief

CONTENTS

8

10

Synopsis of Performance

14

DNP at a Glance

16

Our Products and Services

18

Evolution of DNP’s Businesses

20

Major Events of this Fiscal Year

22

Investor Information

DNP Annual Report 2015

9

Synopsis of Performance

Grand Summary of Financial Results

Dai Nippon Printing Co., Ltd. and Consolidated Subsidiaries

Years ended March 31

Dollars in thousands
except per share amounts

2015

2014

2013

2015

Statements of Operations (¥ million)
Net saleschange2015/2014($ thousand)¥Operating income

1,462,118¥ 1,448,550¥ 1,446,607

48,17450,09935,780$12,184,317

0.9%

401,450-3.8%

Ordinary income

53,75953,28540,318447,992

0.9%

Income before income taxes

51,062

48,60835,152425,5175.0%

Net income

26,92425,642

19,218224,367

5.0%

Balance Sheets (¥ million)
Total net assets($ thousand)¥Interest-bearing debt
Total assets

1,124,092¥

976,385¥

937,055$

15.1%

182,597

227,211

1,566,217

2.9%

1,809,462

1,574,754

1,578,976

15,078,850

14.9%

Cash Flow Statements (¥ million)
Cash flow from operating activities

9,367,434

187,946($ thousand)¥

85,731¥

120,109¥

100,498$

714,425-28.6%Cash flow from investing activities(50,540)(58,371)(72,588)(421,166)–

Cash flow from financing activities(23,865)(80,038)(36,236)(198,875)–

Free cash flow*

35,191

61,73827,910293,258-43.0%Per Share Data** (¥)

($)

$

0.35

5.0%

1,675.63

1,447.96

1,386.86

13.96

15.7%

32

32

32

0.27

–

Operating income margin

3.29

3.46

2.47

3.29

-0.17

EBITDA margin

8.24

8.63

8.21

8.24

-0.39

Net income to net sales

1.84

1.77

1.33

1.84

0.07

ROE (%)

2.67

2.81

2.18

2.67

-0.14

ROA (%)

1.59

1.63

1.21

1.59

-0.04

17

20

25

17

–

21.32

18.47

11.27

21.32

–

27.94

24.84

29.70

27.94

–

PBR (times)

0.70

0.68

0.64

0.70

–

EV/ EBITDA (times)

6.01

4.93

4.92

6.01

–

PCFR (times)

8.00

6.43

5.74

8.00

–

Dividend yield (%)

2.74

3.24

3.61

2.74

-0.50

Net income
Net assets
Cash dividend

¥

41.82

¥

39.82

¥

29.84

Profit Margins (%)

Financial Ratios

D/ E ratio (%)
Interest coverage ratio (times)
Valuations (against share price on March 31)
PER (times)

Return to Shareholders
–

–

–

–

–

76.50

80.4

107.2

76.50

–

Long-term credit rating (R& I)

AA–

AA

AA

AA–

–

Foreign ownership (%)

25.54

24.41

21.12

25.54

–

Value of shares repurchased (¥ million)
Dividend payout ratio (%)
OthersU.S. dollar amounts have been translated from yen, for convenience only, at the rate of ¥120 =U.S.$1, the approximate Tokyo foreign exchange market rate as of March 31, 2015.
* Free cash flow = net cash from operating activities - net cash from investing activities

10** No diluting securities outstandingTo Our Shareholders

Growth in products such as smart cards, thermal transfer media for printing
photographs, and optical films
Secured operating cash flow of ¥85.7 billion and free cash flow* of ¥35.2 billion

DNP in Brief* Free cash flow = net cash from operating activities – net cash from investing activities

Develop new businesses in four growth fields; aim for return on equity ratio(ROE) of 5.0% in the fiscal term through March 2018

Special Feature

Operating Income

Net Income (Loss)(¥ billion)(¥ billion)(¥ billion)

2,000

150

40

1,589.4

1,500

1,507.2

1,446.6

1,448.6

1,462.1

30

120

25.0

25.6

26.9

14

15

1.6

1.6

14

15

19.2

20
90
1,000

10

67.8

60

48.2

11

12

13

14

0

15

0

35.8

30

– 10

11

12

13

14

15

– 20

ROE

ROA

(¥)

(%)

(%)

7

60

40

39.82

38.86

41.82

29.84

4
3

5
2.8

2.7

2.2

2.7

2
0

1

–20

–1

11

12

13

14

15

1.2

0
–1

–2
–3

1.5

1

0

–40

2

Appendix3(25.39)

13

6

4

20

12

Financial Section

Net Income (Loss) per Share(16.4)

11

How DNP Works to Achieve
Sustainable Development

0

50.1
34.0

500

Segment Information

Net Sales

–1.0

– 1.8

11

12

13

14

15

–2

11

12

13

DNP Annual Report 201511

Income Before Income Taxes

EBITDA(¥ billion)(¥ billion)

120

250

100

200

80
150
60

52.7

48.6

40

153.4
118.8

51.1

125.0

120.5

14

15

101.9

100

35.2

50

20
2.7

0

11

12

13

14

Total Net Assets

11

12

13

Net Assets per Share(¥ billion)

(¥)

1,200
1,000

0

15

1,124.1
952.4

914.2

937.1

2,000

976.4

1,675.6

1,500

800
600

1,410.4

1,448.0

1,352.7

1,386.9

12

13

14

1,649.8

1,608.8

1,579.0

1,574.8

11

12

13

14

1,000

400
500

200
0

11

12

13

14

15

0

11

Interest-bearing Debt

Total Assets(¥ billion)(¥ billion)

250

229.1

229.7

2,000

227.2

200

182.6

187.9

15

1,809.5

1,500

150
1,000
100
500

50

0

11

12

13

14

15

0

PER (Price Earnings Ratio)*

PBR (Price Book-value Ratio)(times)(times)

40

1.5

30

29.70

15

27.94

26.07

1.0
24.84

0.72

20

0.63

0.64

12

13

0.68

0.70

14

15

0.5
10

0

11

12

13

14

15

* Figure for the fiscal year through March 2012 is
not shown because net loss was recorded for the year.

12

0

11

Capital Expenditures*

Research and Development Expenditures(¥ billion)(¥ billion)

140

40
33.1

120
102.2

31.7

30

98.2

30.8

30.8

13

14

31.7

To Our Shareholders

100

88.3

80
20

63.5
55.0

60
40

10

20
0

12

13

14

0

15

11

12

15

DNP in Brief

11*Figures include capital expenditures for intangible fixed assets.

Depreciation Expense

Free Cash Flow*(¥ billion)(¥ billion)

80

120
95.8

60

80.2

80

73.5

61.7

57.5

Special Feature

100

98.0

67.0

40

60

35.2
28.5

27.9

12

13

40
20
20

11

12

13

14

0

15

11

14

Segment Information

015* Free cash flow = net cash from operating activities– net cash from investing activities

Net Sales by Segment (Year ended March 31, 2015)

Operating Income by Segment (Year ended March 31, 2015)(¥ billion)(¥ billion)

699.0

Lifestyle &Industrial Supplies

479.5

Electronics

230.3

Beverages

7.5

Lifestyle &Industrial Supplies

24.0

Electronics

24.4

Beverages

59.6

200

400

600

1.1

800

0

10

20

30

Capital Expenditures by Segment (Year ended March 31, 2015)

Employees by Segment (Year ended March 31, 2015)(¥ billion)(persons)

17.8

Lifestyle &Industrial Supplies

18.5

Beverages
1,121Electronics
4,656

Corporate
1,419

Appendix

Information
Communication

40

Financial Section

0

Information
Communication

How DNP Works to Achieve
Sustainable Development

Information
Communication

Information
Communication
19,401

14.3

Electronics

Lifestyle &Industrial Supplies
12,854

3.6

Beverages

0

10

20

30

40

DNP Annual Report 2015

13

DNP at a Glance

ProfileBusiness Portfolio■ A comprehensive printing company that creates■■ A well-balanced business portfolio from

DNP is one of the largest comprehensive printing companies in
the world. We provide a variety of products and services in a wide
range of business fields to consumers and some 30,000 corporateclients in Japan and around the globe. DNP’s main strengths are theprinting and information technologies that it has cultivated since its
founding in 1876. The Company has branched out from publishingand commercial printing into other fields including packaging,decorative materials, display components, and electronic devices,and has developed many products for which it holds the world’s top
market share. Today, DNP focuses on creating “Tomorrow’s Basic,”i.e. new value that solves problems faced by consumers and society.
DNP has identified four growth areas in which we will continue totake up the challenge of developing new businesses: knowledge
and communication; food and healthcare; environment and energy;
and lifestyle and mobility.

DNP has two main businesses: Printing, which contributes about
96% of consolidated net sales, and Beverages, which generates
about 4% of the Group’s sales through Hokkaido Coca-Cola
Bottling Co., Ltd. Armed with this business portfolio, DNP aims to
expand its overall business and increase its corporate value by
striving to solve problems for corporate clients and consumers.
Printing consists of an assortment of businesses through which
DNP applies and develops printing and information technologies inorder to solve problems for consumers, and for client companies
who operate in all types of business fields and in diverse formats.
We divide our Printing business into three segments:(1) Information Communication, which includes the books andmagazines printing business where DNP got its start, along withother businesses including commercial printing, smart cards, andImaging Communication*, which focuses on photographs and otherimages, (2) Lifestyle and Industrial Supplies, which supplies a wide
range of products including packaging products, decorative
materials, and energy-related components, and (3) Electronics,
which supplies display components, optical films, and electronic
devices, among other products. These three segments cooperate witheach other and form a business portfolio that is well-balanced fromthe standpoints of stability, profitability, growth potential, and risk.
Our Beverages business takes advantage of the Coca-Cola brandstrength while also developing original DNP products. We areworking on bolstering our beverages business base, for example bypromoting production and procurement in liaison with bottlers inother parts of Japan.

“Tomorrow’s Basic” based on strengths resulting from■ the fusion of printing and information technologies

From early in its development, DNP set about boosting theefficiency of the overall Group’s management through measures
including overall optimization, increasing profitability, and making
effective use of management resources. We work hard to manage
the company efficiently, for example by concentrating functions
such as planning, sales, and research and development in our head
office while positioning manufacturing divisions and specifictechnology development divisions within Group companies.
As of March 31, 2015, the DNP Group employed 39,451 people.
The Group has 42 sales bases and 56 production plants in Japan,
24 sales ofﬁces in 15 countries and a region, and 15 overseas
production plants in eight countries and a region. Overseas sales
contributed 15.7% of the Group’s overall net sales in the ﬁscal year
ended March 2015.

Three Well-Balanced
Strategic Segments(Effective April 2015)■■

the standpoints of stability, profitability,
growth potential and risk

Communication, which handles all types of images, was transferred to the* Imaging
Information Communication segment in April 2015.

Information Communication
Books and Magazines

Commercial Printing

Education and Publications Distribution

Business Forms

Imaging Communication

The Three
Segments of
DNP’s Printing
Business

Lifestyle and Industrial Supplies
Packaging

14

Lifestyle Materials

Industrial Supplies

Electronics
Display Components

Optical Films

Electronic Devices

Information Communication

Beverages
4.1%

Net Sales
Sales
Net
Net Sales

Electronics
15.7%

800
800
800

(Operating income)(Operating(Operating income)income)

700.3
700.3
700.3

120
120
120

699.0
699.0
699.0

100
100
100

600
600
600

80
80
80

400
400
400

Lifestyle andIndustrial Supplies
32.6%

60
60
60
40
40
40

200
200
200

Information
Communication
13.2%

Operating Income
Income (¥ billion)
OperatingOperating Income (¥(¥ billion)
billion)(Net sales)(Net(Net sales)
sales)(Operating income)(Operating(Operating income)income)

800
800
800

120
120
120

100
100
100

600
600
600

80
80
80

479.5
479.5
479.5

467.7
467.7
467.7

400
400
400

60
60
60

Lifestyle andIndustrial Supplies
42.1%(Net sales)(Operating income)

80

2

0
00

24.0
24.0
24.0

21.7
21.7
21.7

14
14

40
40
40
20
20
20
0
00

15
15

Net Sales
Sales
Net
Net Sales

Operating Income
Income (¥ billion)
OperatingOperating Income (¥(¥ billion)
billion)(Net sales)(Net(Net sales)
sales)(Operating income)(Operating(Operating income)income)

800
800
800

120
120
120

22.6
22.6
22.6

22.0
22.0
22.0

0
00

14
14

20
20
20
0
00

15
15

AssetsAssetsAssetsDepreciation (¥(¥ billion)
Depreciation
Depreciation (¥ billion)
billion)(Assets)(Assets)(Assets)(Depreciation)(Depreciation)(Depreciation)

800
800
800

600
600
600

120
120
120

100
100
100

554.7
554.7
554.7

527.1
527.1
527.1

80
80
80

400
400
400

60
60
60

200
200
200

40
40
40

22.4
22.4
22.4

0
00

14
14

20.9
20.9
20.9

20
20
20
0
00

15
15

1.1

40

1

400
400
400

0.7

200
200
200

20

0

15

0

80
80
80

0
00

60
60
60
232.0
232.0
232.0

14
14

25.1
25.1
25.1

230.3
230.3
230.3

15
15

24.4
24.4
24.4

40
40
40
20
20
20
0
00

AssetsAssetsAssetsDepreciation (¥(¥ billion)
Depreciation
Depreciation (¥ billion)
billion)(Assets)(Assets)(Assets)(Depreciation)(Depreciation)(Depreciation)

800
800
800

120
120
120

100
100
100

600
600
600
400
400
400

80
80
80

200
200
200
0
00

60
60
60

310.8
310.8
310.8

300.1
300.1
300.1

40
40
40

23.7
23.7
23.7

14
14

Appendix
Appendix

100
100
100

600
600
600

59.6

14

200
200
200

Electronics

Operating Income (¥ billion)

54.8

60
60
60
40
40
40

Financial
SectionFinancial
SectionBeverages

60

80
80
80

400
400
400

How
Works
to to
Achieve
HowDNP
DNP
Works
Achieve
Sustainable
SustainableDevelopment
Development

200
200
200

Net Sales

100
100
100

629.8
629.8
629.8

Special Information
FeatureSegment

Net Sales
Sales
Net
Net Sales

Electronics
42.8%

0
00

120
120
120

Lifestyle and Industrial Supplies

Operating Income
by Segment (Year ended March 31, 2015)
Beverages
1.9%

15
15

600
600
600

(Depreciation)(Depreciation)(Depreciation)

793.1
793.1
793.1

800
800
800

Special Feature:

14
14

7.5
7.5
7.5

20
20
20

Depreciation (¥(¥ billion)
Depreciation
Depreciation (¥ billion)
billion)Special
DNP’sFeature
Growth Strategies

0
00

11.9
11.9
11.9

AssetsAssetsAssets(Assets)(Assets)(Assets)

DNP
Brief
DNP
in in
Brief

Information
Communication
47.6%

Operating Income
Income (¥ billion)
OperatingOperating Income (¥(¥ billion)
billion)(Net sales)(Net(Net sales)
sales)

Our
Shareholders
ToTo
Our
Shareholders

Net Salesby Segment (Year ended March 31, 2015)

18.4
18.4
18.4

15
15

20
20
20
0
00

April 2014, DNP’s optical film business was transferred from Lifestyle and Industrial Supplies to the Electronics segment.
* InFigures
for the term ended March 2014 in the chart above have been adjusted to reflect the new configuration of theLifestyle and Industrial Supplies and Electronics segment.
DNP Annual Report 201515

Our Products and Services

Information Communication

［1］

［ 2］

［ 3］

［ 9］

［ 10］

［ 11］

［ 17］

［ 18 ］

Books and Magazines[1] Books and magazines [2] Dictionaries [3] E-book readers[4] Hybrid bookstore network “honto”●

Commercial Printing[5] Catalogs, calendars [6] E-flyer service[7] Household budget-tracking application[8] Energy-efficient digital signage●

Business Forms[9] Personalized mail [10] Smart cards[11] SIM card [12] Transparent hologram ribbon●

Education and Publications Distribution[13] Maruzen & Junkudo Bookstore in Shibuya (Tokyo)●

Imaging Communication*[14] Dye-sublimation thermal transfer printing media[15] Double-sided dye-sublimation printer[16] Barcode labels made using thermal resin-type transfer printing media●

Lifestyle and Industrial Supplies
Packaging[17] Packaging[18] Universal design products[19] Barrier film for packages[20] Biomass plastic packaging[21] PET plastic bottles and preform (left in the photo)[22] Aseptic filling systems for PET plastic bottle[23] Culture film for bacterial testing● Lifestyle Materials[24] Residential interior materials (floor coverings)[25] Residential interior materials (wall coverings)[26] Exterior materials for buildings[27] Automotive interior materials[28] Interior coverings for railway cars (Hokuriku Shinkansen)● Industrial Supplies[29] Photovoltaic module components[30] Bus line sheet used in photovoltaic cells[31] Soft pack for lithium-ion battery●

Electronics

［24］

［25］

［ 26］

［ 32 ］［ 33 ］［ 34 ］［ 40 ］［ 41］［ 42 ］

Display Components[32] Color filter for liquid crystal display[33] Large-scale photomasks [34] Touch panel sensors●

Optical Films[35] Optical films used for displays[36] Projection screen [37] Transparent screen[38] Moth-eye® anti-reflection film (left side of the glass)●Electronic Devices[39] Semiconductor photomask[40] Master template for nano-imprinting[41] Hard disk drive suspension[42] Lead frame for compact semiconductor packages[43] Metal substrate for LED light[44] Recorder for security camera[45] NFC (near field communication) module[46] Electronic paper display system[47] MEMS (micro electro mechanical systems) products●

Note: Numbers in square brackets correspond to photographs on pp. 16-17.
Effective April 2015, Imaging Communication was transferred into the Information Communication segment from the Lifestyle and Industrial Supplies segment.

*16

［5］ ［ 6］To Our Shareholders

［4］

［ 7］

書店

電子書籍
ストア

［ 8］
［ 14］

［ 15］

［ 16］

DNP in Brief

本の通販
サイト

Special Feature［ 12］ ［ 13］［ 20 ］

［ 21］

［ 22］

［ 23］

［ 27 ］

［28］

［29］

［ 30］

［ 31］

［ 35 ］［ 36 ］ ［ 37 ］

［ 38 ］［ 39 ］［ 43 ］［ 44 ］

Segment Information［ 19 ］How DNP Works to Achieve
Sustainable Development

DNP Annual Report 2015

Appendix［ 47 ］

Financial Section［ 45 ］ ［ 46 ］

17Evolution of DNP’s Businesses

1876 <Founding>

1950

1960

Printing▶1876 Founding of Shueisha, DNP’spredecessor; start of letterpress printing

Information Communication

1970

1980

Comprehensive Printing

Information Processing▶1935 Merger of Shueisha and Nisshin Printing to form Dai Nippon Printing▶1949 Listed shares on Tokyo Stock Exchange▶1963 Establishment of Hokkaido Coca-Cola Bottling Co., Ltd.
▶1951 Began promoting “expansion printing”▶1944 Launch of DNP’s Technical Research Laboratory (now called the Research and Development Center)

Books and Magazines▶1877 Produced first Western-style book in Japan, revised edition of “Self-Help” by Samuel Smiles▶1972 Began development of Computer Typesetting System (CTS)▶1912 Completion of DNP’s original Shueitai font▶1975 Began digital processing of image data
▶1925 Received order to print 740,000 copies of the inaugural edition of “King” magazine▶1882 Began sales of printing types▶1956 Printed the inaugural edition of “Shukan Shincho,” the first weekly magazine issued by a publishing company

Commercial Printing▶1885 Start of lithographic printing▶1971 Developmentof scented printing▶1981 Establishment of new video printing
system technology

Business Forms▶1973-74 Full-scale production of magnetic plastic cards and magnetic passbooks▶1898 Began printing of securities▶1954 Start of carbon-backed ledger printing▶1983 Development of smart cards▶1945 Began printing new Bank of Japan notes▶1965 Began mass production of OCR ledgers
after being designated to do so by Japanese Ministry of FinanceImaging Communication*▶1984-85
Development of thermal resin-typeand dye-sublimation thermaltransfer printing media

Lifestyle and Industrial Supplies
Packaging▶1951 Full-scale entry into
▶1961 Started production of▶1975 Began producing retort pouches
paper container businessblow-molded bottles▶1976 Development of▶1983 Development of▶1951 Began printing on vinyl and▶1962 Began producing paper cups
aseptic filling systemtechnology for drawing
other non-paper materials
on molded plastic goods▶1969 Began producing laminated tubes▶1984 Began producing PET
plastic beverage bottles

Lifestyle Materials▶1951 Began developing decorative paper for melamine resin plate▶1974 Introduction of Curlfit technology for printing on curved surfaces▶1961 Began printing directly onto steel plates▶1977 Development of stainless decorative sheet

Industrial Supplies

Electronics
Display Components▶1958 Successful prototyping of shadowmasks▶1973 Development of color filters▶1978 Development of new type of
shadowmasks (flat masks)

Electronic Devices▶1959 Successful prototyping of photomasks▶1964 Began lead frame production

Optical Films▶1983 Started producing
projection screens

18

1990

2000

2010

▶1987 Began shifting focus from “expansion printing” to“comprehensive information processing”

P&I Solutions▶2001 Announcement of DNP Group Vision for the 21st Century(125th anniversary of DNP’s founding)“Today’s Innovation isTomorrow’s Basic”— Growth Strategies —▶2008-10 Alliances with Maruzen Co., Ltd.
Junkudo Co., Ltd. andBunkyodo Group Holdings Co., Ltd., etc.
▶2010
Startup of “honto” e-book sales service

Hybrid publishing solutions
Hybrid bookstore network “honto”

DNP in Brief▶1985 Development of world’s first electronic dictionary on CD-ROM▶1992 Development of Shueitai True Type font
▶1997 Start of online publishing business

To Our Shareholders

Information Communication

2015

Businesses that make use of big data
▶1989 Construction of global network system▶2001 Began Orikomio! e-flyer service▶1995 Began Internet service “Media Galaxy”▶2008 Launch of digital signage project▶1997 Began e-commerce service

Settlement-linked marketing
Promotion of BPO business▶2005 Began development of “PrintRush” self-service printing system

Effective April 2015, Imaging* Communication
was transferred into
the Information Communication segment fromthe Lifestyle and Industrial Supplies segment.

▶1992 Development of preform method for PET plastic bottles

Expand eco-friendly products
Develop new products usingmaterials with more advanced
functionality▶1999 Commercialization of “soft packs” for lithium-ion batteries▶2003 Development of photovoltaic module components▶2005 Development of fuel cell components▶2007 Development of printed organic photovoltaic cells▶2001 Development of flexible organic EL displays▶2003 Development of full-color organic EL panels▶2006 Mass production of color filters using inkjet method▶2002 Completed production line for “B2it” high-density
build-up boards

Electronic devices:develop cutting-edge technologies
and expand overseas business
Optical films:
use basic technologies to expand
into new markets

Appendix▶1995 Launched multilayer wiring formation technology▶2011 Development of the world’s
thinnest (0.28mm) printed board▶1999 Entered semiconductor package substrate field▶2001 Began MEMS (micro electro mechanical systems)
processing under contract

Display products:
shift emphasis to growth areas
and expand new product lineup

Financial Section▶1985 Development of LCD color filter production technology

Expand safe, reliable packaging,a variety of living spacesolutions, and industrial materials
businesses worldwide

How DNP Works to Achieve
Sustainable Development▶1996 Began producing sheet with EB coating

Segment Information▶2007 Development of packaging forJapanese-style space food▶1998 Development of transparent “innovative barrier film (IB Film)”

Expansion of the imaging market

Special Feature

Expansion of total security solutions▶1993 Production of contactless smart cards▶2004 Began Card Data Management Service (CDMS)▶1999 Launch of IC tag project▶2005 Establishment of “SSFC” office security consortium▶1996 Establishment of anti-glare film technology for LCDs
▶2004 Development of “JETBLACK” front projection screens

New Businesses
Life Science (Regenerative Medicine, etc.)▶2004 Successful formation of capillary patterns▶2008 Development of cell patternculture substrates

Promote research and development
aimed at business creation▶2008 Development of cell sheet culture film
DNP Annual Report 201519

Major Events of this Fiscal Year

July 2014

Reorganization of Information Communication and Packaging’s sales
and manufacturing framework
In order to respond quickly and flexibly tochanges in consumer lifestyles, businesses’s
needs, and other conditions so as toefficiently provide optimal products andservices, we reorganized* the nationwide
framework for our Information
April 2014

Integration of Optical Films operations into Electronics
DNP’s optical films business was transferred fromthe Lifestyle and Industrial Supplies segment to theElectronics segment, which handles display products,
photomasks, and other electronic components.
Optical film is an important component of liquid
crystal displays (LCDs). The Optical Films unit
supplies products to some of the same electronicequipment manufacturers that are clients of theElectronics segment. Optical Films and Electronics
will combine their technologies and expertise in order
to work more quickly to develop new products and toboost DNP’s competitive position.

Communication and Packaging businesses.
Under the new system, which integrates theunits’ sales and some production functions,
we will pursue overall optimization as wework to improve customer service, enhancesolution proposals, and expand income andcapital efficiency by boosting production
efficiency.
We split each of the regional companies that* handle
production and sales for Information
Communication and Packaging (DNP Hokkaido
Co., Ltd., DNP Tohoku Co., Ltd., DNP Chubu Co.,
Ltd., and DNP Nishi Nippon Co., Ltd.) andintegrated their sales divisions into our Group
headquarters, Dai Nippon Printing Co., Ltd. The
manufacturing divisions of Group companies
related to commercial printing and business forms
were integrated into DNP Graphica Co., Ltd. and
DNP Data Techno Co., Ltd. respectively.

Optical film for electronic displays

Jul.
Apr.

October 2014

Establishment of“DNP Sumai Mirai Lab”
to explore comfortable living
for the future2014

April 2014

Reorganization ofsemiconductor photomask
business in Taiwan

A photomask factoryOct.

DNP subsidiary DNP Photomask Technology
Taiwan Co., Ltd., a manufacturer of logic
photomasks*, was merged into Photronics
Semiconductor Mask Corporation, which
specializes in the manufacture of memory
photomasks. The resulting new company,
Photronics DNP Mask Corporation, is a DNPequity-method affiliate in which DNP holds
49.99% of common shares. DNP aims tocontinue to improve its competitive positionin the rapidly changing international
semiconductor market, primarily inSoutheast Asia.

DNP has opened the “DNP Sumai Mirai Lab” as a venue
for teaming up with consumers in considering homes
and lifestyles for the future. Based on consumers’ andsociety’s viewpoints, we will seek ways to deliver
comfort and affluence in diverse spaces including
homes, offices and vehicles. By increasing cooperation
between industry, government and academia, we intend
to create new products and services.

ICs” or “logic LSIs” (large-scale integrated* “Logic
circuits) are integrated circuits with calculationand other data processing capabilities.
DNP Sumai Mirai Lab website: http://sumaimirai.dnp/index.html

20

October 2014

Opening of new cultural activities venues in Uzumasa, Kyoto Prefecture

To Our Shareholders

A “Denshoubi” high-definition digital image (right) and high-precision
replica of a cultural heritage piece (left)

Apr.
April 2015

New joint venture with Kinokuniya:
Publishing Marketing Innovation
Japan Co., Ltd.

December 2014

photos they take at a photo booth withdigital characters and other features madeavailable on-site.

How DNP Works to Achieve
Sustainable Development

Acquisition of leading U.S. photo booth maker Foto Fantasy

Financial Section

DNP and Kinokuniya Company Ltd. haveestablished a joint venture aimed at
stimulating the publications distribution
market and creating new business models.
The new company will engage in market
surveys and other research, devise market
stimulation measures, and propose new
business models. The two companies
already operate businesses that link
physical bookstores with online book sales.
By sharing their expertise in this field, they
will work to resolve problems affecting theoverall publications distribution market.

Segment Information

Dec.

Appendix

DNP Imagingcomm America Corporation(a U.S. subsidiary of DNP) acquired Foto
Fantasy, Inc., one of the largest players in
the U.S. market for self-service, automatedphoto print systems (photo booths). DNP
plans to blend its own strengths in
high-quality photo printing technologies
and dye-sublimation thermal transfer
printing media with Foto Fantasy’s
expertise in making and operating photobooths, and further build on thosesynergistic effects in order to expand its“fun photo” business. For example, DNP
will enable consumers to combine theSpecial Feature

2015

DNP in Brief

DNP has opened the “Kyoto ddd Gallery” and“DNP Kyoto Uzumasa Cultural Heritage Gallery”
as venues for original DNP cultural activities.
DNP opened the ddd Gallery in Osaka in 1991
as a gallery that specialized in displaying graphic
design, which is closely related to printing. Now
the gallery has moved to Kyoto and undergone amajor renewal. The DNP Kyoto Uzumasa Cultural
Heritage Gallery introduces the aims and results of
the Louvre-DNP Museum Lab, a joint project of
DNP and the Louvre art museum, and of the Kyoto
Cultural Heritage Archive Project, which has built ahigh-definition digital archive of 17 shrines,
temples and castles that have been registered as
UNESCO world heritage sites, including Kamigamo
Shrine and Kiyomizu-dera in Kyoto.

Self-service photo booth

Kinokuniya President Masashi Takai (left) and
DNP Managing Director Motoharu Kitajima (right)
announcing joint venture

DNP Annual Report 201521

Investor Information(as of March 31, 2015)

Dai Nippon Printing Co., Ltd.

Major Stock Indices in which DNP is a Constituent:Head Office:Nikkei Stock Average

1-1, Ichigaya-Kagacho 1-chome, Shinjuku-ku,

TOPIX Large70

Tokyo 162-8001, Japan

S&P/TOPIX 150
Dow Jones Sustainability Indexes

Established:

FTSE4Good1876

ETHIBEL PIONEER & EXCELLENCE
Morningstar Socially Responsible Investment Index

Number of Employees (consolidated):

Stock Code:39,451

7912
Administrator of Shareholder Register:Paid-in Capital:

Mizuho Trust & Banking Co., Ltd.

¥114,464 million

2-1, Yaesu 1-chome, Chuo-ku,
Tokyo 103-8670, Japan

Number of Common Stocks:
American Depositary Receipts:

Authorized: 1,490,000,000 shares
Issued:Ratio (ADR:ORD): 1:1

700,480,693 shares

Exchange: OTC (Over-the-Counter)
Symbol: DNPLY

Number of Trading Unit Shareholders (own 1,000 or more shares):

CUSIP: 233806306
Depositary:

25,208The Bank of New York Mellon
101 Barclay Street, 22 West,

Stock Exchange Listing:

New York, NY 10286, U.S.A.

Tokyo Stock Exchange
Major Shareholders:

Telephone: (201) 680-6825
Shares (thousands) Percentage (%)

U.S. toll free: 888-269-2377 (888-BNY-ADRS)URL: http://www.adrbnymellon.com/

The Master Trust Bank of Japan, Ltd. (Trust A/C)

43,540

6.76

The Dai-ichi Life Insurance Co., Ltd.

30,882

4.79

Japan Trustee Services Bank, Ltd. (Trust A/C)

29,752

4.62

Mizuho Bank, Ltd.

18,413

2.86

Employees’ Shareholding Association

15,924

2.47

Nippon Life Insurance Company

9,471

1.47

Dai Nippon Printing Co., Ltd.

The Bank of New York Mellon SA/NV 10

8,023

1.25

Corporate Communication Division

State Street Bank And Trust Company 505225

7,655

1.19

IR Group, Press and Public Relations

The Bank of New York Mellon as Depositary Bank for
Depositary Receipts Holders

7,304

1.13

Tokyo 162-8001, Japan

State Street Bank West Client - Treaty 505234

6,767

1.05

Tel: +81-3-6735-0101

Annual Meeting of Shareholders:
The annual meeting of shareholders of DNP is
normally held in June each year in Tokyo, Japan.
Investor Relations:

1-1, Ichigaya-Kagacho 1-chome, Shinjuku-ku,

Fax: +81-3-5225-8239
Notes: 1. The number of treasury shares (56,100,380) is excluded from the figures above.
2. The ownership stakes are based on the total number of shares outstanding lesstreasury shares (644,380,313).

22

Web Site:
http://www.dnp.co.jp/eng/(between April 1, 2012 and March 31, 2015)

DNP Stock Price (yen)Increase (%)*－ DNP

To Our Shareholders

Share Price Evolution (Tokyo Stock Exchange)

100－ Nikkei Average

80

1,500

DNP in Brief－ TOPIX

60

40

Special Feature

1,200

20
900

-20
600

Segment Information

0

-40

13

14

15

*Index 100 = March 31, 2012(as of March 31, 2015)

Number of Stocks (stocks)

Type

Number of Voting Rights (rights)––

Stocks with limited voting rights (treasury stocks, etc.)––

Stocks with limited voting rights (other)––

56,100,000
1,085,000––

Stocks with voting rights (other)

Common stocks 641,299,000

641,298

Stocks with less than trading units

Common stocks

Stocks with voting rights(treasury stocks, etc.)

Outstanding shares
Total voting rights of stockholders(Treasury held stocks) Common stocks(Mutually held stocks) Common stocks

1,996,693

Appendix

Stocks with no voting rights–

700,480,693––

641,298

Treasury Stocks
Holder(as of March 31, 2015)

No. of Stocks Held

Percentage of Holding to No. of Outstanding Shares

56,100,000

8.01

Kyoiku Shuppan Co., Ltd.

1,085,000

0.15

Total

57,185,000

8.16

Dai Nippon Printing Co., Ltd.

Financial Section

Voting Rights

How DNP Works to Achieve
Sustainable Development

300

DNP Annual Report 201523

Special Feature:“Today’sInnovation isTomorrow’s
Basic”— Four Growth Areas —24

DNP’s goal today is to create “Tomorrow’s Basic.” When we talk about creating “Tomorrow’s
Basic,” we mean developing products and services that solve challenges for corporate clients,
consumers and society whereby the solutions become such an intimate part of our lives that we
can’t imagine living without them. Our approach to this endeavor is not to wonder what kindof future will happen upon us, but rather to envision the kind of future we want to create.
We must identify issues that need to be resolved in order to build the future we want, and
DNP must continue to play a central role in the challenging work of resolving those issues alongwith our many partners.
For example, given that we are already becoming an “ultra-aging,” advanced information society,we need to create a sustainable society in which people accept each other’s differences.
If we could draw close to people who live in the kind of society we want, we would hear themsaying, “We want to deepen communication while protecting our valuable information,”“We want to continue eating foods whose safety and quality we can rely on,” “We want toimpose less of a burden on the environment,” “We want to cultivate the next generation
by enhancing education and passing on knowledge,” “We want to live healthy lives amid
advancing and more widely available medical care,” and “We want to live comfortably in safe
living spaces.” These are the kinds of things we mean by “Tomorrow’s Basics.”
At DNP, we want to combine our own strengths with those of our partners and offer effective
solutions even before people become aware of desires like these. Recently we establishedfour growth areas in which we intend to offer “Tomorrow’s Basic” value: knowledge andcommunication, food and healthcare, environment and energy, and lifestyle and mobility.
In addition to creating new businesses in these fields, we will also work on improving asset
efficiency, capital efficiency, and effective use of all management resources. Three years fromnow, in the fiscal term through March 2018, we plan to boost our return on equity ratio (ROE)
to 5.0% and operating income to 80.0 billion yen.
By continuing to create value that every consumer feels is so “basic” that he or she cannot
live without it, we aim to contribute to the society of the future as we grow as a company.

CONTENTS
26

Knowledge and Communication

28

Food and Healthcare

30

Environment and Energy

32

Lifestyle and Mobility

Information
Knowledge andCommunication
Communication

Food
Food and
and
Healthcare
Healthcare

Environment
Environment andandEnergyEnergyLifestyleLifestyle andandMobility
Mobility

Growth Area

Knowledge and Communication
DNP is moving forward with projects aimed at fostering culture and enhancing people’s lives through lively, safeand reliable communication in the context of an advanced information society. Rather than simply producing
information media and content, we also create frameworks for the interactive exchange of information and provide
consumers with the information they want, when they want it, in the optimal format for them.
Some of the ways that we do this include promoting DNP’s “honto” hybrid bookstore network, which broadensconsumers’ experience of reading paper and electronic books; developing our educational ICT service, which uses
digital textbooks as well as other teaching materials to strengthen ties between teachers and students; stimulating
multilingual communication as more people travel outside of their own country or region; and by enhancing services
that support the secure exchange of personal information, settlement information, and other sensitive information.
DNP expands its businesses by broadening pleasant communication between people and by addressing a variety ofthemes that cultivate knowledge.

Major themes connected to markets in which
DNP can make the most of its strengths

Development of advanced
information society

Pleasant communication

Using smart cards to increase convenience

Reliable settlement solutions

Locally rooted cultural development

Inbound and outbound services
for travelers

Services that foster curiosity and generate value

Paper and electronic books and magazines

Safe and reliable information platforms■ Settlement-linked services in a cashless society
Compared to Europe and North America, cash settlement is morecommonly used in Japan. In preparation for hosting the 2020
Olympic and Paralympic games in Tokyo, one of the growthstrategies endorsed by the Japanese government is to improve theconvenience and efficiency of transaction settlements by promoting
cashless payment. We expect to see increasingly rapid developmentof Japan’s settlement infrastructure so that visitors from abroad will
be able to make cashless purchases.
DNP views this movement as an opportunity, and we are taking
advantage of it to promote our cashless solutions, for example byenhancing related infrastructure. By making the most of thestrengths that enable us to maintain the top share of the Japanesesmart card business, we will continue to support the use of “omnichannels” that allow consumers to purchase products throughdiverse sales channels including physical stores and online shopping,
the introduction of prepaid cards that are expected to be used by abroad sector of the population, and debit cards being promoted byregional banks in order to stimulate local economies.
In the fall of 2015, we plan to launch a settlement-related
marketing business that will organically tie together settlement,
sales promotions, business traffic generation and customer
relationship management. We will combine and analyze data fromcredit card, prepaid card or other settlement services with all typesof purchasing data and other customer information, and offer
services like planning sales promotions tailored to individual
customers and guiding customers to physical stores.
DNP will also focus on handling international brand prepaid cards
that can be used with payment terminals that accept VISA,
26

Shopping support solutions

Transgenerational knowledge exchange

Infrastructure for advanced
information security

Multilingual support

Educational ICT that supports
raising the next generation of children

MasterCard, JCB and other international brand credit cards. For
example, DNP provides a variety of solutions that support KDDI’s“au WALLET” international brand prepaid card. Within two monthsof the card’s launch in May 2014, more than three million
applications were received.
We are considering using historical data accumulated throughthese types of settlement services as a basis for analyzing
consumers’ purchasing habits and providing card-linked offer (CLO)
services that assist clients in making offers that are appropriate for
specific card members and optimally timed. By linking settlement
data with data from members stores’ cash registers (sales receipt
details), we can even make offers related to specific products,
allowing us to develop a range of marketing measures.
Furthermore, we propose and provide comprehensive support for
all types of sales promotions. For example, in addition to directing
business traffic to physical stores and e-commerce websites, it will
design stores, websites, and POP promotions to encouragecustomers to actually buy products.
Store visits

Consumers

Sales
promotionandbusinesstraffic
generation

Sales promotion
content

Optimization of sales promotion
content for each customer

DNP
settlementlinked
marketingAccount
settlement
infrastructure

Customer
relationshipmanagement

Corporate marketing managers

Online andbricks–and–mortar stores

Loyalty point, settlement
and other customer data

Data compilation and analysis

To Our Shareholders
DNP in Brief
Special Feature

From settlement information we can see “At which store?”but it is impossible to tell “What was purchased?”

Payment-related
決済情報
information

■

Which
products?
どの商品をAppendix

Who,
誰が、
when,
いつ、
at what
どのお店で、
store, for how
いくら
much?

Point of
（POS）
sale購入照明
verification(POS)

Financial Section

How to determine which products to focus on

At DNP, we believe that books will continue to play an importantrole in fostering knowledge into the future. Paper books andelectronic books both have their merits. We are developing avariety of projects that combine the advantages of both media as
well as technologies that will enable new forms of expression. We
are developing this business primarily through DNP’s “honto”
hybrid bookstore network that links physical stores operated by
Maruzen Co., Ltd., Junkudo Co., Ltd. and Bunkyodo Group
Holdings Co., Ltd. with online mail-order sales and our honto.jp
e-book store, in order to provide consumers with “the books theywant, when they want them, in the formats they want."
In April 2015, DNP and Kinokuniya Company Ltd. establishedPublishing Marketing Innovation Japan Co., Ltd., a joint venture
aimed at stimulating the publications distribution market andcreating new business models. DNP and Kinokuniya are both
pursuing “hybrid strategies” that combine physical bookstoreswith online bookstores. The two companies will share theirexpertise as they implement a variety of measures including
identifying issues related to the publications distribution market,
establishing new business models, and performing surveys andother research aimed at revitalizing the market.

How DNP Works to Achieve
Sustainable Development■■ Revitalizing the publications distribution market

Segment Information

We believe it is important to link smart cards with a variety ofother services in order to establish the safe and reliable social
infrastructure that consumers seek. As part of this effort, we aredeveloping a “total shopping support” business that includes
developing a platform for enabling a smartphone application orother software to perform uniform management of multiple
settlement services, as well as creating mechanisms for helping
stores distribute useful information to customers in a timely way.
DNP continues to take up challenges related to building the cashlesssociety of the future.

Examples of international brand prepaid cards using DNP’s services

Kinokuniya President Masashi Takai(left) and DNP Managing Director
Motoharu Kitajima (right) announcing
joint venture

DNP Annual Report 201527

Knowledge andCommunication

Food and
Healthcare

Environment andEnergyLifestyle andMobility

Growth Area

Food and Healthcare
Population dynamics are changing dramatically all over the world, and Japan is already becoming an “ultra-aging
society.” DNP is responding first of all by taking on the development of products and services that support safeand high-quality lifestyles and lifelong health maintenance. Going forward, we foresee demand for resolving similartypes of challenges on a global scale. We will work to expand our businesses as we respond to that demand while
paying careful attention to the needs of each country and region.
For example, we support people’s food supply and health by providing safe, hygienic packages for foods andbeverages, household items and pharmaceutical products. We are actively developing advanced products, image
processing systems, and other endeavors that make use of printing and information technologies in new fields suchas regenerative medicine and other areas of life science, and agriculture.

Major themes connected to markets in which
DNP can make the most of its strengths

Advent of low-birthrate,
rapidly aging society

Various solutions that support regenerative medicine

Changes in population dynamics
worldwide

Products and services that lead to optimal cell culturing

Medical image diagnostic systems
Remote nursing and medical care
Extension of healthy lifespanJapanese-stylemeals
Japanese-style
meals
outer
space
for for
outer
space

Advanced products that improve fruitand vegetable productivity

Safe and reliable information platforms■ Developing life science businesses
DNP aims to develop full-fledged businesses related to life scienceby grasping the requirements of cutting-edge medical research
institutes and companies and building cooperative relationships. By
combining biotechnologies and other new technologies with
proprietary core technologies that DNP has cultivated through ourprinting business, we aim to help improve people’s quality of life bydeveloping five new life science-related businesses.
The five life science businesses that DNP is developing
Medical supplies

Medical image processing

Active pharmaceuticalingredients

Packaging materials for medical
supplies and medical equipment
Supplies for cutting-edge andspecialized medicine

Picture archiving andcommunication systems (PACS)
Diagnostic support throughimage analysis

Generic active
pharmaceutical ingredients
Pharmaceutical intermediates

Preventative medicine

Regenerative medicine

Health self-management services
Consumer health support

Joint research with universities andmedical institutions
Cell quality control

In the regenerative medicine field, there is demand for specialized
Petri dishes that make it possible to cultivate cells uniformly or in
specific patterns, and to peel off the cultivated cells in sheets. Tokyo
Women’s Medical University had developed cell sheets that showedpromise for stimulating regeneration when applied to the surface ofan injured cornea, esophagus, periodontal membrane or heart
muscle, etc. However, it was difficult to maintain their sheet form
when peeling the sheets off of the dishes in which they were
cultivated. While participating in a university-led project, DNP founda way to use microfabrication and other techniques that it had
cultivated through its printing business to treat the surface of the
Petri dishes in such a way that they meet the needs of university
hospitals and other research facilities. Regenerative medicine is28

Bequeathing food culture, health maintenance secrets, andother valuable information to future generations
Safe and reliable packages capable of long-term,hygienic preservation

Traceability systems that connect producers and consumers
Universal design-based products that are easy for anyone
to understand and to use

High-quality, high-performanceadvanced materials

currently moving from the research phase towardcommercialization. In addition to providing medical supplies, DNP
uses information technologies like color management and 3D image
processing to establish cell cultivation processes that do not dependon the human eye.
In recent years, there has been growing awareness in Japan of
the idea of a “healthy lifespan,” referring to the length of time thata person can live independently and enjoy good health. Since
preventative medicine is important for extending healthy lifespans,
DNP has teamed up with university hospitals and businesses tocommercialize mechanisms that support health self-management,
and to develop other related businesses.
Regarding medical image processing, we formed an operationaltie up with PSP Corporation, a major developer of picture archiving
and communication systems (PACS). PACS performs uniform
management of all of the digital images recorded in a hospital,
whether by x-ray, CT, MRI or other equipment, and makes theimages available to all of the hospital’s departments. To date,technologies that DNP has developed by using the image processing
technologies that are among its strong suits include an original
tablet PC that excels at reproducing natural colors, a fish-eye
monitoring camera that self-corrects image distortion, and image
analysis technology that can help determine the cause ofpathologies by analyzing MRI images of eye globes. We plan tofurther develop these technologies and add to PACS an image
analysis support function that facilitates diagnosis of breast cancer
and other conditions. In addition, DNP and PSP are jointly promoting
a service that will link local hospitals and clinics to a computer
network in order to allow specialized physicians to perform remotediagnostic imaging.

To Our Shareholders
DNP in Brief
Special Feature

MRI

Mammography

PACS

X-ray equipment

Viewers
Database

Endoscopy

Image
files

Remote diagnostic
imaging server

Radiation diagnosticians■ Printing expands into agriculture

Characteristics of DNP Agri Film(reflective, moisture preserving film)

High light reflectivity

Appendix

DNP branched out into the packaging business the early 1950s.
Among the products that we have developed since then are
universal design-based packages that are easy for anyone to use,packages made of functional films that block the passage ofoxygen and moisture, and eco-friendly packages made of plantderived materials.
In 2015, we applied technologies and expertise that we gained
through our packaging business to develop “DNP Agri Film(reflective, moisture preserving film)” for fruit and vegetable
cultivation. In order to increase crop yields, boost sugar content,
and otherwise improve results, farmers have come to use a variety
of agricultural films that prevent weed growth, hold down soil
temperature and reflect light. DNP Agri Film is highly reflective—it

Financial Section

Diagnostic
reports

How DNP Works to Achieve
Sustainable Development(Picture Archiving andCommunication Systems)

can reflect 95% of visible light. The film helps make up for
insufficient light in open culture, greenhouses and vegetablefactories, thereby efficiently promoting photosynthesis. The film isdurable enough to be used for a long time. In addition to keeping
soil from heating up by insulating against light-generated heat,
due to its appropriate moisture retention qualities the film not
only preserves the moisture level needed for crop growth but canalso prevent evaporation of sprayed fertilizers.
In experimental cultivation of tomatoes in 2014, tomatoes
grown with the new DNP film produced about twice as muchfruit as vines grown with conventional films.
DNP plans to actively expand into the agricultural sector inJapan and overseas. One product that it intends to add to its
lineup is a highly water-permeable, soil-resistant version called“DNP Agri Film (reflective, moisture preserving film), waterpermeable,” which can be used on pathways between crops toprevent puddle formation.

Segment Information

CT

Highly waterproof

Appropriate degree ofmoisture permeability

DNP Annual Report 201529

Knowledge andCommunication

Food and
Healthcare

Environment andEnergyLifestyle andMobility

Growth Area

Environment and Energy
Does it seem to you that the economic growth of past years has destroyed much of our natural world and has
negatively affected the Earth’s environment in many ways? At DNP, we believe it is essential to pursue both
economic growth and environmental preservation at the same time. Toward that end, we are working to realize
a society that minimizes the burdens that it places on the environment.
DNP works in many ways to coexist with the Earth’s natural environment and to preserve biodiversity. For
example, rather than simply reducing power consumption, we work to generate, store and conserve energy, toparticipate in efforts to create smart cities that conserve resources partly through effective use of electric power, andto help create “compact cities.” We develop products that place less burden on the environment throughout theirlife cycle, from raw material procurement and manufacturing through use, disposal and recycling. We provide films
that take in and/or control light in order to make the most effective use of natural light.

Major themes connected to markets in which
DNP can make the most of its strengths

Pursuing both economic growth andenvironmental preservation
Promoting eco-businesses andenvironmental preservation activities
Generate energy, store energy, conserve energy

Reuse, reduce, recycle

Energy management solutions

Zero emissions
Resource
conservation

Efficient useof electricity

Technologies and expertise for controlling natural and artificial light■

Smart cities, compact cities
High-quality, high-performanceadvanced materials

Reducing environmental impact
throughout product life cycles
Promoting use ofplant-derived raw materials

Town management
Preserving biodiversity

Safe and reliable information platforms

Developing businesses that support generation,
storage, and conservation of energy

To support energy generation, DNP has developed componentsthat increase the conversion efficiency of photovoltaic cells. Forenergy storage, we developed soft packs for lithium-ion
rechargeable batteries, among other products. Compared to themetal cases that were commonly used before DNP developed its
soft packs, our soft packs are easier to form into a desired shapeand size, and help reduce product weight and cost. DNP has
captured a large share of the market for these products.
We have also worked hard to develop products that help
conserve energy. For example, our light-control window film
blocks the heat and light of the sun in summer but lets in an
appropriate amount in winter, thereby reducing the amount ofenergy required for heating and cooling. We also developed
digital signage powered by a natural energy system thatcombines solar power, wind power and storage batteries. This
product can be used to transmit information in emergency
conditions when the normal power supply has been disrupted.
DNP is also actively developing energy management solutions
for overall management of energy generation, storage andconservation. For example, we developed an in-house energy
monitoring system that links production equipment operation
data and energy consumption data in real time and displays theinformation on a computer screen. We began using this system
in 2009. In addition to displaying the quantities of electric
power, cooling water and steam being consumed, the system
converts the data so that users can see at a glance energy costs
and CO2 emissions. DNP will continue to use the experience we30

Development of eco-friendly products

Making it easy to monitor energy usage

have gained from our own company’s operations in order tohelp government bodies, companies involved in smart houses or
smart cities and other interested parties to appropriately
manage their energy usage.
In addition, in response to a Japanese legal reform that allows
new players to enter the electric power market, in August 2014
we began providing marketing and business consulting services
to help new power supply companies based on research andanalysis of consumer needs.

Energy-efficient digital signage
using natural energy

To Our Shareholders
DNP in Brief
Special Feature

Expanding our line up of
eco-friendly products

Segment Information■

Net Sales of
Eco-Friendly Products and Services
in the Fiscal Year through March 2015

¥478.8®

t u r in g

s
ial
er t
at en
m rem
cu

an ufac

Pm

y cl

DN

rec

in

f
uc
ts

g

Financial Section

D is p o sa l a n d

Appendix

DNP Annual Report 2015

How DNP Works to Achieve
Sustainable Development

In addition to working to reduce emissions ofVolume reduction
Sustainable raw materials
CO2 and volatile organic compounds (VOCs) in● Biomass plastics ● Recycled paper● Paper certified by
Producbilliont
our manufacturing processes, we strive todesignthe Forest Stewardship Council (FSC)(representing the early achievement ofRaminimize the burden that our products place on
our goal for the year through March 2016)pr wothe environment throughout their life cycles,
including during usage and disposal. In 2000 we
Reduce greenhousegas (GHG) emissions
Recyclability compliance
Reducing
established Guidelines for Developing Eco● Green electric power
environmental impact
friendly Products and Services and we havethroughout the life cycle ofcontinued to work at protecting biodiversity andReduce use of
Easy-to-recycle single materials,
our products and services
harmful substances in(reducing usage of aluminum)
making it easy to monitor environmental impact.
manufacturing processes● L-barrier beverage cartons● Color filters
One example of our eco-friendly products is● Dye-sublimation“Biomatech PET” plastic film containing planto
thermal transfer printersg dsin prosecederived materials, which we developed in 2012.
Pro diat
e
U se
m
inter
Since then, we have been working to expand our
Reduce water usage
Reuse
Reduce GHG emissions● Pouches for refill
product lineup by developing products like
● Beverage containers
plant-derived (biomass) aluminum vapor
using aseptic filling system
Energy conservation● High-reflective, Light-diffusing Ellio
deposition film and paper beverage containers
made of paper combined with biomass plastic.
In May 2015, DNP became the first packaging company todevelop microwavable packaging made from plant-derived
manufacturers of foods, beverages, household items and othermaterials. By using plant-derived material in every film layer, we
products. Overseas manufacturers have also expressed strong
achieved a maximum biomass plastics ratio* of about 60% forinterest in packaging materials made from biomass plastics, andthe entire container. We succeeded in reducing CO2 emissions
we intend to link that interest to expansion of this business inover the product’s entire life cycle by a maximum of about 14%
overseas markets.
compared to conventional petroleum-derived products.
Going forward, DNP’s policy is to switch to using biomass asplastic ratio: the percentage (by weight) of biomass-derived content relative to* Biomass
the total weight of biomass plastic contained in a raw material or finished product.
the raw material for packaging materials that we supply to31Knowledge andCommunication

Food and
Healthcare

Lifestyle andMobility

Environment andEnergyGrowth Area

Lifestyle and Mobility
As consumers’ values become increasingly diverse, we are seeing demand for a high degree of comfort in spaces
shared with family and friends, in workplaces and public spaces, in personal spaces and elsewhere. At DNP, webelieve it is important to be able to provide optimal responses to these demands so that everyone can always be
comfortable everywhere.
DNP views homes, offices, medical and nursing care facilities, automobiles, railroad passenger cars and anywhere
else where people spend time as “living spaces” for which we develop and provide many types of products andservices. In our daily lives, we enter and leave these spaces and exchange various types of information. We arepromoting business activities aimed at achieving a “smart society” in which various types of lifestyle infrastructure
are managed so as to promote safety and reliability. We expect to see increasing use of portable information
terminals and wearable devices, and further development of machine to machine (M2M) communication based on
the use of an assortment of sensors as well as further development of the “Internet of things (IoT)."

Major themes connected to markets in which
DNP can make the most of its strengths

Making all living spaces
comfortable and pleasantPleasant spaces forfamilies, friends, and private timeHigh-quality, high-performanceadvanced materials
Advanced lifestyle materials
and detailed solutions

Barrier-free, accessible to elderly, etc.

Universal design makes products and services
easy to understand and to use

Safe and reliable information platforms

Convenient and safe information equipment and networks

Sensor-based machine-to-machine communication; smart sensing“Internet of things (IoT)” connecting
everything to the Internet
Comfort in automobiles, railroad carsand other moving spaces“Functional value” mainly from EB technology;“emotional value” mainly from aesthetic design■ Thinking about the future of homes

values and preferences and analyzes them from DNP’s uniquestandpoint. We then work with manufacturers, designers,
construction companies and other partners to promote thedevelopment of the kind of products and services that will beneeded in the homes of the future.

Consumers

Jointdevelopment

nd
sa
on ct
oti rodu sml
Pro ew p posa
n pro

DNP
Sumai
Mirai
Lab
The DNP Group

Returns in
the form of
new designs andmechanisms

PromotionC
inf onsu
orm meati ron

Design andconstruction
companies

Manufacturers

Government

32

Image offuturelifestyles

Awareness

Returns in
the form of
new products

Sensitivity

In the course of our daily lives, we place ourselves in multiple
spaces. In our living room and in our own bedroom, in vehicles
on the way to work or school, public spaces like workplaces andschools, places to relax like shopping malls and tourist
attractions... By making these spaces comfortable and pleasant,and by organically linking them with consumers’ movements,
they become more convenient and gain added value.
Looking first at the homes we live in, in addition to homes
becoming outdated, in modern Japan family structures andlifestyles are changing so that in the future we expect the homerenovation market to grow faster than the new homeconstruction market. Given this situation, DNP is focusing on
using its special proprietary electron beam (EB) technology todevelop interior and exterior materials that have outstanding
durability and functionality as well as pleasant designs andaesthetic appeal. Based on consideration for the consumer’s
standpoint, rather than just developing products, DNP offers
total solutions encompassing everything from the developmentof pleasant materials to space design, consulting, andconstruction method development.
In October 2014, we reinforced these activities by opening
the DNP Sumai Mirai Lab. The lab uses databases and othertools that compile information about changes in consumers’

Actualization of smart society
Information services that can be used anytime, anywhere

Joint
research

University
research

To Our Shareholders
DNP in Brief
Special Feature

Actualizing a smart society that
comfortably connects all kinds of spaces

Appendix

Security devices
Medical devices

Workplaces
Various types of services

Data center-based
cloud services

Settlement-related equipment

Settlement services
Health care services

NetworkHomes

Hospitals

Security

Facility equipment, etc.

StoresFinancial Section

Schools
Various types of information devices

How DNP Works to Achieve
Sustainable Development

As people share information both at home and outside thehome, they increasingly want to receive individually tailoredservices that they expect to be available any time, anywhere. In
order to link a variety of spaces and increase the added value of
its services, DNP uses its data center as a basis for advanced
information security and provides products like smart tag-based
automatic authentication and wireless technology-based
biosensors as well as security modules that safely and reliably
connect “smart sensing” devices which measure and share avariety of types of data.
We are also working on a big data service that compiles dataacquired from smart sensors and other devices, combines it with
consumer information and other information and analyzes it togenerate new value. By taking advantage of the strengths thathave allowed us to secure the largest share of the Japanesesmart card market, information security-related technologies
and expertise, and the comprehensive business framework thatenables us to offer a full range of services, we will continue tosucceed in transmitting and processing huge amounts of
information in real time. In partnership with Nihon Unisys, Ltd.
and IBM Japan, Ltd., we will also develop marketing support
services that make use of the customer information thatbusinesses hold as well as other forms of big data.
In recent years, amid progress in machine to machine (M2M)
communication and the “Internet of things (IoT) ” in Japan andoverseas, DNP will contribute to the realization of a “smart
society” that implements comprehensive management andoptimal control of social infrastructure including electric power,
gas and water supply, and transportation and medical care.

Segment Information■

Security services
Maintenance services, etc.

Leisure facilities

DNP Annual Report 201533

Segment Information

CONTENTS
36

44

50

34

Information Communication

36

Business Strategies

38

Financial Results

40

Presentation of Growth Businesses and Strategic Businesses

Lifestyle and Industrial Supplies

44

Business Strategies

46

Financial Results

48

Presentation of Growth Businesses and Strategic Businesses

Electronics

50

Business Strategies

52

Financial Results

54

Presentation of Growth Businesses and Strategic BusinessesTo Our Shareholders

DNP in Brief

Special Feature

Segment Information

How DNP Works to Achieve
Sustainable Development
Financial Section

Appendix

35

DNP Annual Report 2015

Information
Communication

Top right: Photo books
Above, from left: E-book reader, Maruzen’s main store in Tokyo’s Marunouchi district,
Opening an account using DNP’s smartphone app

Business Strategies
As information becomes increasingly digitized and networked,
and information media become increasingly diverse, majorchanges are occurring in consumers’ values and lifestyles.
Against this backdrop, DNP makes use of its strengths in printing
and information technologies to develop a wide range ofbusinesses that “deliver the information that consumers want, atthe time they want it and in the media format they want.”
In addition to its existing businesses—books and magazines,
commercial printing, business forms, and education andpublications distribution—as of April 2015 the Information
Communication segment also includes the Imaging
Communication business that was transferred from DNP’s
Lifestyle and Industrial Supplies segment. The Imaging
Communication unit addresses the entire “imaging market” as
its business field. Information Communication will work moreclosely with Imaging Communication and combine text, images,
video, audio and other content with various forms of
information media in order to develop and provide services thatlead to more dynamic communication for consumers andbusinesses.

36

DNP will continue to offer products and services that solve
problems in today’s advanced information society, including
marketing consulting, the “honto” hybrid bookstore networkand publishing solutions that handle both paper and electronic
media, electronic flyers, smartphone applications, e-commerce
websites, and shopping support services. DNP is also one of thelargest manufacturers/issuers of smart cards in Japan. In
December 2013, DNP began operating its Kashiwa Data Centeras a base from which to provide advanced information security.
In addition to utilizing its various strengths to offer total security
solutions that allow consumers and businesses to enjoy safety
and reliability in the management of their vital information, DNP
will endeavor to expand its Business Process Outsourcing (BPO)
operations.
In July 2014, we merged our Commercial Printing andBusiness Forms organizations, placing their nationwide sales,planning and manufacturing functions under a unified control
framework. We aim to increase revenues and capital efficiency
by improving customer service, enhancing solutions proposals,
and boosting production efficiency, etc.

■■Imaging Communication:
everything to do with images● Reinforce global manufacturing, sales and service systems;
expand field of business beyond printing media to include theentire “imaging market.”● Develop and provide—to photo imaging markets in Japanand overseas—solutions that offer more enjoyment,
convenience or other added value.

■

How DNP Works to Achieve
Sustainable Development

Total security solutions that protect
information, people, and organizations● Establish secure infrastructure for reliably protecting sensitive
corporate information and consumers’ personal information.
● Collaborate with business partners to offer total security
solutions that guard both physical locations and online, virtual
spaces.

Segment Information

Promoting DNP’s business process
outsourcing (BPO) business● Expand BPO operations to provide comprehensive support forcorporate clients’ overall business processes.
● Offer a variety of solutions, including market research,
analysis of operational problems, business process design,operation of data centers and customer service centers, andproduction and shipment of sales promotion tools.

Expanding business that makes use of
big data and consumers’ point of view
● Focus on developing communication channels that connect
corporations and consumers.
● Expand various types of service businesses targeting thegrowing number of foreign visitors to Japan and Japanese
traveling overseas.
● Develop O2O (Online to Offline) services for encouraging
online users (of a mobile application, for example) to go tophysical stores and buy merchandise.

Special Feature■■

DNP in Brief

Expanding “honto” hybrid bookstore network andpaper/digital publishing solutions● Rather than serving solely as a manufacturer of printed
materials, provide total support for stimulation of the
publications market, for example through marketing andcustomer service.
● Provide a full range of publishing services including
production of paper and electronic books, and print on
demand services.
● Promote DNP’s “honto” hybrid bookstore network, whichlinks physical bookstores, online mail-order sales, and an
e-book sales website.

To Our Shareholders

Main Policies■ Settlement-linked marketing
As a leader in the Japanese smart card market since the1980s, express our strength in smart cards at the global level.
● Expand card-linked offers (CLO: payment history-based sales
promotion) and other types of settlement-linked marketing
methods based on verification of their effectiveness.
●

Financial Section
Appendix

DNP Annual Report 201537

Financial Results

Financial Highlights(¥ billion, %)2014.32015.3

Net sales 			¥

700.3

¥

Operating income 			11.9		

Fiscal Term through March 2015:
Business Environment andSummary of Financial Results■ Books and Magazines

699.0

The Japanese publications market has continued to shrink since1997. In the year through March 2015, an increase in theJapanese consumption tax rate applied further pressure, and1.7%		
1.1%
Operating income margin		
demand remained sluggish. Publishing industry sales declined by
3.9% from the previous fiscal year to 1,594.6 billion yen
according to Japan’s Research Institute for Publications. The
number of magazines sold declined while the number of
Net Sales
Operating Income (¥ billion)
AssetsDepreciation (¥ billion)
magazines that suspended publication increased, resulting in a
(Net sales)(Assets)(Operating income)(Depreciation)
3.9% year-on-year
decline in magazine sales to 849.0 billion
793.1
800
800
120
120
yen. Amid a dearth of big-selling books, book sales also
700.3
699.0
100
100
629.8
declined by 3.9%, to745.5 billion yen. Meanwhile, according to600
600
Impress Research Institute,Ltd., Japan’s e-book market grew
80
80
sharply, by 35.3% in the fiscal term through March 2015, to
400
400
60
60
126.6 billion yen. Combined with electronic magazines, the4040
overall market for electronic
publications amounted to 141.1
200
200
22.6
22.0
billion
yen.
20
20
11.9
7.5
Although DNP actively developed publishing-related proposals
0000lackluster demand in the publishing market
1415
14 and sales activities,
15
caused sales of both books and magazines to end below theprevious-year level.
Net sales
As the Japanese publishing industry’s “No.1 partner,” DNPBusiness related to smart cards and settlement services grewintends to stimulate the publishing market by offering
nicely. However, due to factors like stagnation in thecomprehensive support not only as a manufacturer of printed
publications market and decreased demand for flyers, catalogs,
materials but as a provider of publishing-related marketing, sales
Net Sales
Operating
Income(¥ billion)environment
AssetsDepreciation(¥ billion)
and other commercial
printedmatter, thebusiness
promotion planning,
distribution and sales services.
(Assets)(Operating
income)(Depreciation)
surrounding (Netthesales)segment remained harsh.
Partlybecause
of
800
800
120
120
comparison withthe previous year, when we experiencedaCommercial
Printing■
surge in information processing demand related
100 to the
100
600
600
554.7 Japanese corporate advertising expenses in the fiscal
introduction of
the Nippon (Japan) Individual Savings Account
Although
527.1
80
80
479.5
467.7
(NISA) system, net sales
declined by 0.2% or 1.35 billion yen
year ended March 2015 grew by 2.3% from the previous year
400
400
60
from a year earlier.
(according to Japan’s60Ministry of Economy, Trade and Industry),
the growth occurred40in television and Internet-related
40
200
200
24.0
22.4
21.7
20.9
Operating income
advertising, while
printedsales promotions declined by 2.3%.
20
20The segment enjoyed increased sales related to electronic
Sales were affected by such trends as a decrease in printed flyers
000money and othersmart cards for financial institutions
as wellas
and direct mail along0with a shift toward online distribution of
14
15
14
15
international brand prepaid systems and other settlement
product catalogs and instruction manuals.
services, which helped boost net sales and income. In addition,
On the other hand, DNP has been increasing collaboration
we worked on cutting costs in manufacturing units, for example
between its Commercial Printing sector and other business units
by increasing our in-house production rate. However, due toand working to expand new businesses. In addition to teaming
factors like intensified competition pushing down unit prices,
up with Packaging operations to develop promotional planninghigher raw material costs and increased expenses related tofor food manufacturers, we began providing a digital signagedevelopment ofNete-booksother businesses,
based information
Sales andOperating
Income (¥operating
billion)AssetsDepreciation(¥ billion) distribution service for transportation,
income declined
by 4.37 billion yen or 36.7%
year on year.
tourism and distribution-related
businesses. Nevertheless,(Net sales)(Assets) The(Operating income)(Depreciation)
800
120 of flyers, catalogs and other printed
segment’s operating
income margin decreased120by 0.6 800
because of slow sales
percentage point, from 1.7% a year earlier to 1.1%.
matter throughout 100
the fiscal term, overall sales declined year on
100
600
600
year.
7.5

80
400

60

80
400

60
310.8

300.1

38

232.0

200

40

230.3
25.1

40
200

24.4

20

23.7

18.4

20

How DNP Works to Achieve
Sustainable Development
Financial Section

In all four subsegments, we will make use of DNP’s earthquakeresistant, fire-resistant, highly secure Kashiwa Data Center andincrease cooperation with partners including Nihon Unisys, Ltd.,Intelligent Wave Inc. and the largest Vietnamese card
manufacturer MK Smart Joint Stock Company as we develop
new businesses.

Segment Information

Primarily through our “honto” hybrid bookstore network thatcombines physical bookstores with online mail-order sales ande-book sales, DNP strives to provide consumers with “the books
they want, when they want them, in the formats they want.”
In December 2014, we launched the “honto pocket” e-reader,which comes preloaded with one or more e-books. We also
introduced the “honto with” smartphone application that has
proved very popular among book-loving consumers by enablingthem to check which bookstores currently stock a book theywant, and even to locate it on the bookstore shelf.
Maruzen CHI Holdings Co., Ltd., a DNP Group company, isdoing well in multiple businesses including library support andsales of books to universities and libraries. Overall, Education
and Publications Distribution sales increased year on year,
thanks in part to increased online mail-order and e-book sales,
and to the acquisition of Shufunotomo Co., Ltd. as aconsolidated subsidiary.
The publications distribution market is expected to continue
to face harsh conditions, but DNP intends to expand its businessby enhancing marketing and promotional measures, primarily
through our “honto” hybrid bookstore network. We will focus
on measures such as reducing expenses, consolidating existing
stores and rebuilding outdated ones, and otherwise constructing
an efficient distribution network in order to boost profitability.

Special Feature
Appendix

As part of corporations’ efforts to streamline and trim expenses,
they are increasingly using their websites to publish various
types of notices and to handle applications and inquiries.
Because this entails the online exchange of sensitive corporate
information and consumers’ personal information, ensuringhigh-level information security has become more important thanever. We are working on leveraging our strengths—including
DNP’s solid security infrastructure and our track record in
manufacturing, issuing and developing software for smart
cards—in order to expand our original security solutions
businesses.
In the fiscal term ended March 2015, Business Forms saw
increased sales of smart cards used by financial institutions andelectronic money applications, while settlement services forinternational brand prepaid systems, etc., also expanded nicely.
However, demand for paper products such as ledger books andcontinuous forms decreased. Sales also declined in Information
Processing Services (IPS), which handles personalized mailproduction, from data input to printing and mailing, partly
because of a drop in business related to the Nippon (Japan)
Individual Savings Account (NISA) system that was newly
introduced in the previous year. Overall Business Forms sales
declined relative to a year earlier.
Going forward, we will actively work to win business related
to the January 2016 launch of Japan’s “My Number” citizen
numbering system for tracking social insurance and taxation,
including number notifications and card issuance. Since thenumbers are also expected to be used for nongovernmental
purposes, DNP is gearing up to help clients link them to all kindsof settlement services and medical applications including
electronic charts, etc.

Education and Publications
Distribution Business

DNP in Brief■ Business Forms■

To Our Shareholders

DNP’s Commercial Printing business handles companies’ sales
promotion, and is developing comprehensive shopping support
services based on consumers’ standpoint. In addition to
information media and content production, we will also handle
interactive communication systems and provide value-added
services that make use of consumer information.

DNP Annual Report 201539

Presentation of Growth Businesses and Strategic Businesses

The Japanese publishing industry’s “No.1 partner”
for both paper and electronic media
As the Japanese publishing industry’s “No.1 partner,” DNP does
not just manufacture printed materials. Rather, we provide
comprehensive support including publishing-related marketingand sales promotion planning, and distribution and sales
services. We handle both paper and electronic books, and work
to increase added value both through manufacturing-related
activities like printing and bookbinding, and through services
like content and application development.
DNP was quick to engage in the digitizing of printing

processes. We built an electronic composition system in theearly 1970s, which has led to our ability to provide optimal
solutions for both paper and electronic publications today.
Besides printing large lots, we also offer “print on demand”
small-lot printing services. We continue to develop new
businesses by increasing cooperation with publishers. For
example, we help publishers make long-term use of magazine
content by combining diverse information media in a variety ofways.
・ Product development
・ Events
・ Promotions, etc.

・ Editing support
・ Magazine and other brands
・ Content

Corporateclients

Consumers
Marketinginformation

DNP

Printing and binding“honto”
hybridbookstore
network

Printing on demand

Physicalbookstores

Hybrid Production Solutions

Authors

Publishers
Digital data
production

Editing andproduction ofdata for printing

Readers

Electronicallypublished content

Data production
for electronic
publishing(shared basis for
distribution and sales)

Online mailorder bookstores
E-booksales services

・ Books
・ Magazines

Readers
・ Smartphones
・ PCs
・ E-book readers・ Multifunctional

information
terminals

Marketing information■

Expanding hybrid publishing solutions and DNP’s “honto” hybrid bookstore network: providing “the books readers want,when they want them, in the formats they want"

In order to provide consumers with “the books they want, when
they want them, in the formats they want” even as consumers’
reading styles are diversifying, we linked our honto.jp website(which offers both electronic and paper books) with DNPaffiliated physical bookstores (operated by Maruzen Co., Ltd.,
Junkudo Co., Ltd., and Bunkyodo Group Holdings Co., Ltd.) toform the “honto” hybrid bookstore network. Among thebenefits that customers receive by belonging to the “honto”
network are loyalty points that accumulate whether they buy
from a physical bookstore, online mail-order or electronic
bookstores, a single customer ID that works throughout thesystem, a dedicated smartphone application that allows them tocheck network-wide inventories and even shelf locations of
items they want, and recommendations based on purchasing
history in all formats.
As of June 2015, “honto” had more than 2.8 million members,
and some 150 bookstores were offering loyalty points that canalso be used on the honto.jp website. The site offers more than
one million paper books and other items by mail order, alongwith Japan’s largest e-book sales service, handling about40

450,000 titles in the fields of literature, comics and business.
Through these publications distribution businesses, DNP tracks
and analyzes consumer needs and purchasing trends. We provide
this highly reliable marketing information to publishers and otherbusinesses in order to help stimulate the publishing market.
"honto with” smartphone app
helps readers buy books frombricks-and-mortar bookstores

The “honto pocket” e-book reader, pre-loaded withe-book content. Nine versions were offered for sale asof June 2015, including “Agatha Christie Complete
Collected Works” and “Masterpieces of Mystery:
Selected by Ellery Queen.”Promoting DNP’s Business Process Outsourcing (BPO) services

Segment Information
How DNP Works to Achieve
Sustainable Development

Improving business performance

Financial Section

Reducing operating risks
Printing services

Networking services

Marketing services

Process personal information absolutely
correctly and provide it in printed form.

Offer online distribution of information
connecting businesses and consumers.

Support marketing through activities
like research and consulting.

Supply services

Card services

Documentation services

Store printed material;
select and send specific items
as needed.

Manufacture and ship smart cards andother cards within a highly secureenvironment.

Compile information from application
forms or other documents into electronic
form and provide to businesses.

Why DNP? 2
Execution of processes using
the latest and best
information technologies

Why DNP? 3
Nationwide business
continuity plan (BCP)
framework

Why DNP? 4
A highly secure operating
environment for handlingsensitive information

Appendix

Sales promotion services
Provide total support from drafting ofsales promotion measures to helping
with sales operations.

Capacity and track record for comprehensive handlingof business processes,
from generating information to collecting it

Special Feature

Pursuing the best andmost appropriate results

Why DNP? 1

DNP in Brief

In the fiscal year ended March 2015, we took on a series oflarge-scale, challenging BPO projects. For example, in a project
related to applications for group insurance policies, we offeredcomprehensive support including computerized design of forms
used by insurance company sales representatives, printing of
personalized applications with customer information filled in,
and input of data taken from submitted applications. DNP’scomprehensive photography-related services are popular among
distribution businesses: we operate a photography studio,
process, organize and store photo data according to how it is to
be used, and manage projects that make use of various types of
information media. Each year we are doing more “full printing
outsourcing” whereby when printers owned by banks, insurancecompanies and other financial institutions are due forreplacement, we take over all of the printing operations thatthey previously handled in-house using their own equipment.
We will continue to expand our BPO business by meeting
demand related to public projects such as the introduction ofJapan’s “My Number” citizen ID numbering system,
implementation of economic stimulus measures, and regional
development.

To Our Shareholders

DNP is focusing on expanding its business process outsourcing(BPO), which provides comprehensive support for clients’business processes. We offer much more than simple
outsourced operations. Rather, we take a broad view of the fieldof business process outsourcing and offer a variety of solutions
ranging from analysis of operational challenges and constructionof necessary frameworks and systems to planning, design, andactual execution of business processes. In this way, as a business
partner who is aligned with client companies’ management
strategies in the medium- to long-term, we will continue tosupport effective and strategic operational reforms aimed atstrengthening clients’ business structures and helping themachieve expansion of their businesses.
Today, DNP offers more than just manufacturing processes formaking products like printed matter. We are highly regarded as
a comprehensive business process outsourcing (BPO) provider
involved in all kinds of ways in organically linking consumers,companies, and society. Examples include marketing planning
based on our own market research and analysis, analysis ofoperational challenges and design of overall business processes,
construction of secure information environments and data
center operations, handling of all types of applications andinquiries from consumers, and operation of customer service
centers.

Why DNP? 5
High degree of credibility in ourability to hold up over many yearsof business execution

DNP Annual Report 2015

41

DNP security solutions: protecting information, people and organizations
In recent years, there have been many incidents of information
leakage as a result of cyber attacks from outside an organization
or criminal acts perpetrated from the inside. In many cases,
these incidents occur because of weaknesses in theorganization’s information security, and there are a variety ofmeasures that should be taken to prevent such incidents. It
would be difficult for every company to undertake on its own
the introduction and operation of network security equipment,room entry and exit control, document control, PC and server
endpoint control, review of various types of logs and operational
flow, employee education, and the drafting and promulgationof various in-house regulations, etc.
DNP serves as a one-stop source for information securityrelated needs, including consulting, identifying corporate clients’vulnerabilities, and providing products and services that address
those vulnerabilities. Perpetrators of cyber attacks often gain

entrance to the network of the targeted corporation or publicagency by sending to someone inside the organization e-mailthat is designed to trick the recipient into opening an attachedfile containing malware. Because this type of malware iscustomized for each targeted organization, it usually cannot be
detected by off-the-shelf antivirus software. To counter thisproblem, in May 2015 DNP concluded a sales agency agreementwith Palo Alto Networks and began providing its targeted attack
protection program, Traps Advanced Endpoint Protection. Once
Traps is installed on a computer, it “lies in wait” until it detects
one of several particular programming methods used in cyberattack malware, then forcibly stops the attack program as soon
as it starts operating.
DNP combines the latest solutions to help businesses andother organizations bolster their information security functions.

Examples of DNP’s Comprehensive Security Solutions for Businesses and Other Organizations
Physical security

Endpoint security

Cyber security

Mobile security

Entry/exit control

Malware detection

Malware detection

Malware detection

Surveillance cameras

PC operation control and monitoring

Illicit money transfers andphishing countermeasures

Illicit money transfers andphishing countermeasures

Vehicle gates

IT asset control

Website and network vulnerability
diagnosis

Application tampering prevention

Document control

Personal information detection

Web tampering detection

Application tampering detection

Secure printing

Authentication reinforcement

Damage control following
information leakage

Application vulnerability diagnosis

Control of keys and valuables

Prevention of erroneous mailtransmission

Targeted attack mail-handling drills

Remote control and monitoring ofterminals

Other
Information security consulting

Information security education

Various types of security
authorization acquisition support

Zoning and consulting

Emergency shelter systems■ Overseas security businesses based on holograms and other anti-counterfeiting technologies
In June 2015, DNP agreed on a security solutions business tie-up
with De La Rue Plc., one of the world’s top secure printing
companies and a leader in many security-related fields. Based in
Britain, De La Rue is the world’s number one manufacturer of
paper currency. The firm’s global businesses include secure
printing of passports, driver licenses and other official
documents, and provision of paper money numbering
equipment and ATM machines, etc.
Amid demand for more sophisticated information security tokeep pace with progress in telecommunications technology, thetwo companies aim to generate new solutions and lead theglobal security business by combining DNP’s advanced anticounterfeiting technologies with De La Rue’s secure printing

42

technologies. As a first step, DNP will provide its Lippmann
holograms, embossed holograms and other security products to
De La Rue in order to participate in overseas security markets.

De La Rue CEO Martin Sutherland(left) and DNP Managing Director
Sakae Hikita (right)

Expanding our imaging solutions business,starting with manufacturing and sales of printing media■ Reinforcing global deployment of printing systems

Special Feature
Segment Information
How DNP Works to Achieve
Sustainable Development

PrintRush self-service
photo printing system

Financial Section

Our subsidiary DNP Photo Imaging Japan Co., Ltd. operates
about 3,000 PrintRush self-service printing systems with built-in
dye-sublimation type printers as well as about 7,000 Ki-Re-i ID
photo kiosks throughout Japan. These systems are highly
regarded by consumers, mainly because they are easy to use
and deliver high-quality images. Both systems are among the
top players in their respective markets in Japan. In addition to
responding to consumers’ needs, we develop and provide
products and services that arouse new demand. For example,
we made it possible to use PrintRush to print photos taken witha smartphone, and we developed a feature that allows ID
photos taken using our Ki-Re-i system to be sent to and saved
on a smartphone.
In December 2014, DNP Imagingcomm America Corporation(a U.S. subsidiary of DNP) acquired Foto Fantasy, Inc., which
operates self-service, automated photo print systems (photobooths) mainly in North America, and is one of the largest
players in the U.S. market. Foto Fantasy’s booths, found in
shopping malls, zoos, and amusement facilities, etc., allow users
to purchase “fun photo” prints that synthesize images recordedin the booth with characters, logos, and other images tailoredto each booth’s location. DNP intends to expand this businessworldwide.

Ki-Re-i ID photo kiosk

DNP in Brief

market,” from taking photographs and processing and printing
photo data, to using images to stimulate communication
between consumers and between consumers and companies.
Based on the idea of “building a future that links people to theworld through imaging,” we will increase collaboration withother DNP business units and with outside partners in order todevelop new IT solutions in addition to developing andmanufacturing conventional printing media and developing
printing systems and software. The end goal is to provide
convenient products and high-added value services that
consumers can enjoy.

To Our Shareholders

In the 1980s, DNP developed two types of printing media—dyesublimation and thermal resin—by applying the coating
technologies that it had cultivated through its printing business.
Today, we make use of our global manufacturing and sales
frameworks to expand sales of dye-sublimation media, which isused in photo and card printers that produce high resolution,
full-color images, and of thermal resin media used for printing
barcodes.
Due to increasing use of smartphones, consumers have far
more opportunities to take photographs, and photo-related
demand is becoming more diverse. In response, we havebroadened our business to address all aspects of the “imaging

Foto Fantasy, Inc. selfservice photo boothAppendix■ DNP leads the growing market for photo books
DNP’s DreamPages service enables customers to casually createa personalized photo book or album by using DNP’s website ora free, dedicated application. After arranging photographs oneach page and inserting comments, users can print out ahigh-quality original photo book from our six-color digitalprinter. In order to create new demand, we will continue toexpand our lineup of products like these.
A photo book made with
“DreamPages"

DNP Annual Report 201543

Lifestyle and Industrial
Supplies

Top right: Photovoltaic panels
Above, from left: Interior materials for hospital use, Biomass plastic packaging

Business Strategies
The Lifestyle and Industrial Supplies segment is composed ofthree business divisions: Packaging, Lifestyle Materials, andIndustrial Supplies. The segment plays a vital part in our
corporate clients’ manufacturing processes and provides many
products that are important in the daily life of consumers. DNP’s
Packaging business creates many of the packages that
consumers pick up and use, including packaging for foods andbeverages and for pharmaceutical products. Lifestyle Materials is
involved in a wide variety of products that form the spaces inwhich consumers live, such as floor and wall coverings,
residential exterior products, and automotive interior products.
Products provided by Industrial Supplies include components
used in photovoltaic cells and lithium-ion rechargeable batteries.
Products and services that are indispensable to comfortableliving must also contribute to people’s safety and sense of
security. They must be designed with consideration of universal
design principles that make products and services easy to use
for most consumers. In our development and production
activities, we must consider energy conservation and cleaner
energy sources, minimize stress on the environment caused by
the use and disposal of our products, and work to preserve
biodiversity. Our strategy for the Lifestyle and Industrial Supplies
segment is to anticipate the diverse needs of businesses andconsumers in Japan and overseas and develop a large number of
products and services that enrich people’s lives while fulfilling allof the above conditions.

44

DNP has identified four growth areas that present themes forthe development of new businesses across our existing business
unit boundaries: knowledge and communication; food andhealthcare; environment and energy; lifestyle and mobility.
Naturally we will encourage in-house cooperation to make themost of the technologies and expertise that our segment has
cultivated. In addition, we will work to speed business creationby actively collaborating with research institutes and companies
that have particular strengths.
In April 2015, our Imaging Communication business, whichhandles materials used in photo printing, was transferred to
DNP’s Information Communication segment. The segmentprovides many consumer services that make use of information
technologies. Going forward, we intend to continue our courseof developing high-added value services that meet consumers’
needs in areas such as photo printing and photo album creation.

Packaging

Reduce energy consumption by providing
diverse products

Advanced Materials● Supply customers in Japan and overseas with advanced
products that solve environment and energy-related
problems by making use of DNP’s original converting(materials processing) technologies.
● Photovoltaic cells: Reduce costs and increase functionality ofback sheets and encapsulants; develop new products that
help improve the conversion efficiency and reliability ofphotovoltaic cells.
● "Soft packs” for lithium-ion batteries: Take advantage of ourstrength as the world’s number one supplier to expand
applications beyond mobile devices to include, for example,
electric vehicles and household-use storage batteries.
● Focus on developing new products, including products thatmaintain comfortable light and heat levels, and advanced
barrier films for medical or agricultural applications.

Communication can be found on page 37.

■

Financial Section

Provide solutions for the spaces in whichpeople live their lives● Enhance lineup of products using DNP’s original electron
beam (EB) coating technology.

How DNP Works to Achieve
Sustainable Development

2015, DNP’s Imaging Communication business was transferred from Lifestyle* InandApril
Industrial Supplies to Information Communication. Main policies for Imaging

Segment Information

Lifestyle Materials■

Special Feature

Reduce the burden that our products place on theenvironment; actively develop products that are both ecofriendly and biodiversity-friendly.
● Enhance lineup of advanced products with outstanding
functionality including preservation of package contents.
・ Transparent films that are exceptionally impermeable tooxygen and water vapor
・ Packaging made from plant-derived materials or otherrecyclable resources, etc.
● Make use of overseas production bases to promote global
packaging business.
● Analyze consumers’ packaging usage patterns andawareness of packaging-related issues.
● Develop packages that are easy for anyone to use, in
accordance with universal design principles.
●

Industrial Supplies

DNP in Brief■ Develop eco-friendly, advanced products worldwide

To Our Shareholders

Main Policies

・ Scratch and soil-resistant wall and floor coverings; exterior
products with outstanding weatherability, etc.

Develop businesses that address the entire living space
supply chain: examples include living environment
assessment, living space design, proposals based on special
considerations such as Kansei (affective) engineering, anddevelopment of easier construction methods.
● Develop new products needed for the realization of smart
cities and smart houses.
●

Appendix

・ Metal panels and other materials that save energy byeffectively reflecting and diffusing light●

Expand market share in Europe, the Americas and emerging
countries by making use of DNP’s global business networks.

DNP Annual Report 201545

Financial Results
Net Sales

Operating Income (¥ billion)(Net sales)(Operating income)

800

Assets(Depreciation)

793.1

800

120
700.3

Depreciation (¥ billion)(Assets)

120

699.0

100

100

629.8

600

600
80

Financial400Highlights

80
400

60
40

(¥
billion, %)
200

200

2014.311.9

0

Net sales 			¥14 467.7

20

2015.3

7.5

¥

15

0

21.7		 24.0

Operating income margin		

4.6%		Net Sales(Operating income)

800

120

Assets(Assets)

800

100
600

600
80

479.5

467.7

400

60

400

40
200

15

0

20
0

527.1

products declined, but sales of large-scale aseptic PET plastic
bottle filling systems increased, and Packaging enjoyed strong
sales overseas, especially in Indonesia. Overall packaging sales
increased relative to the previous term.
Worldwide, DNP’s sales of plastic film packaging and paper
cups increased. Overseas, we responded to robust demand from
Depreciation (¥ billion)
the still-growing markets of Southeast Asia by providing high(Depreciation)
added value products
and services to Japanese and other global
120
companies operating in the region. At home, in July 2014 we100
consolidated our salesorganizations throughout Japan and554.7
introduced a new, unified
system in order to boost
80
competitiveness and achieve overall optimization. We will work60
on increasing customer satisfaction and new orders, which we
40
hope will enable us toexpand our business.
22.4

20

0

14

200

24.0

21.7

22.6

14 In the year15
through March 2015, sales of paper packaging

5.0%

Operating Income (¥ billion)

22.0■ Packaging

0

479.5

Operating income 			(Net sales)

Fiscal Term throughMarch 2015:
60
Business Environment and40
Summary of Financial
Results

0

14 ■

20.9

20

0
Lifestyle
Materials
15

According to Japan’s Land, Infrastructure and Transportation
Ministry, Japanese housing starts in the fiscal term throughMarch 2015 declined by 10.8% year on year to about 880,000
units, marking the first decline in five years. The decline
Net sales
followed a jump in housing starts toward the end of theSales of floor and wall coverings and other Lifestyle Materials
previous year, when residents rushed to build before adeclined due to an increase in the Japanese consumption tax.
Sales PET
Operating
Income(¥ billion)
Depreciation(¥ billion)
scheduled consumption
tax hike. DNP’s Lifestyle Materials
However, sales Netof aseptic
plastic bottle
fillingsystems Assets
and(Net sales)(Assets)(Operating(Depreciation)business concentrated
on selling eco-friendly products madefilm packaging
products increased, and sales
ofincome)
dye-sublimation
800
800
120
with DNP’s unique electron
beam (EB) coating technology andthermal transfer
printing media were solid, so 120
overall segment
other high-added value
sales grew by 11.78 billion yen, or 2.5%.
100
100 products that offer outstanding design
600
600
and functionality. Although
we worked hard to increase our
80
80
share of the market, the drop in demand outweighed those
Operating income
400
400
60
efforts310.8
and sales ended
below the previous-year level.
Operating income
was affected by higher prices60for films,
resins,300.1
Going forward, we
232.0 as well as
and other raw materials
by increased40competition
40 aim to develop new applications including
230.3
25.1
200
200
24.4
23.7
residential andautomotive
products using EB coating andwhich drove down
unit prices.
Nevertheless,thanksto other
18.4
20
20
aesthetic steel plates for use in railway cars. In addition, we
factors such as increased net sales and photo printing materials
00intend to strengthen 0overseas business development. Primarily
exports (which 0were helped by the cheaper yen),operating
14
15
14
15
at the “DNP Sumai Mirai Lab” that we established in Octoberincome grew by 10.5% or 2.27 billion yen. The operating
2014, we are expanding cooperation between industry,
income margin increased 0.4 percentage point from thegovernment and academia and plan to develop new products
previous year’s 4.6%, to 5.0%.
and services that will offer greater comfort and abundance in a
April 2014, DNP’s optical film business was transferred from Lifestyle and Industrial* InSupplies
variety of living spaces including homes, offices, commercial
to the Electronics segment. Figures for the term ended March 2014 in thechart above have been adjusted to reflect the new configuration of the Lifestyle andfacilities and vehicles.
Industrial Supplies segment.

46

To Our Shareholders■ Industrial Supplies

Special Feature
Segment Information
How DNP Works to Achieve
Sustainable Development

Imaging Communication
In the commercial photo printing market, companies are
increasingly switching from the conventional silver halide
method to dry methods that do not require a developing
solution. Buoyed by this trend, DNP’s sales of dye-sublimation
thermal transfer printing media (color ink ribbons and receiverpaper)used for printing photos have grown significantly in theSoutheast Asian, North American, and European markets. The
business’s performance was also helped by the full start-up of
our new plant in Malaysia, which we finished building in
December 2013. We also enjoyed strong sales of thermal
resin-type transfer printing media, which is employed forprinting bar codes used in production control and distribution.
Sales in this sector in the term ended March 2015 exceeded
those of the previous year.
In the overall “imaging market” that we view as this sector’sbusiness arena, there is growing demand among consumers forphoto printing and photo album creation, which we believe
presents an opportunity to provide high-added value services
that make the most of information technologies. In order tosmoothly develop these types of solutions, in April 2015 wetransferred Imaging Communication to our Information
Communication segment. By combining our global framework
for manufacturing and selling dye-sublimation type and thermal
resin-type thermal transfer printing media with a variety of
information services, we intend to develop high-added value
businesses aimed at consumers and corporate clients.

DNP in Brief

Advanced Materials
According to the Japan Photovoltaic Energy Association, thefiscal term through March 2015 saw increased (in terms of
power generation capacity) domestic shipments of industrialuse photovoltaic cells, primarily for use in large-scale solar
power plants. Shipments increased by 8% to 9,216,325
kilowatts over the same period a year earlier, to an all-time highlevel. Among the encapsulants, back sheets and otherphotovoltaic module components offered by DNP, there was anincrease in sales of high-performance, highly durable productsthat improve power generation efficiency.
DNP’s lightweight, easy-to-process soft packs for lithium-ion
rechargeable batteries are among the most popular in theworld. In the term ended March 2015, demand for smartphones
and tablet PCs was solid. Sales of soft packs for use in in-car
devices were sluggish despite high hopes for wider use of suchdevices, and subsegment sales dipped below the previous year’slevel.
In the future, we intend to boost the functionality of ourcomponents used in photovoltaic cells and lithium-ion
rechargeable batteries. In addition, we plan to use ourproprietary converting (materials processing) technologies as we
focus on developing and marketing highly reliable new
products. We will continue to work on expanding our advanced
materials business through products like films for controlling
light and heat, and high-added value barrier films for medical
and industrial applications.

Financial Section
Appendix

DNP Annual Report 201547

Presentation of Growth Businesses and Strategic Businesses

Packaging

Expanding business around three ideas: environmental protection,high performance, globalization

DNP engages in a wide variety of packaging operations in Japanand overseas with the aim of becoming the “No.1 partner” of
consumers and corporate clients. As part of our efforts to help meetworldwide demand for affluent and convenient lifestyles that place
minimal burden on the environment, we are working on developing
new materials and designing high-performance packages that areeasy to use.
Particularly in Japan, the birth rate has fallen, the average age hasrisen and lifestyles have diversified to the point that significant
changes are occurring in markets for the kind of products thatpackaging is mainly used for—beverages, snack foods and otherfood products, daily household items. It is important to respondflexibly to these changes, which include trends toward more people
eating single portions (elderly people and single-personhouseholds), increased sales of ready-to-eat dishes, and greaterawareness of food safety and security issues. At DNP, we are also
consumers. More than ever before, we collaborate with clientcompanies and consider the consumer’s point of view as we work
to improve packaging functionality, to develop added value and to
introduce universal design principles for making products easy for all
kinds of people to use.
Overseas, one of our main policies is to expand business within
Asia. Since 1972, DNP has been supplying packaging products inIndonesia, where we have captured the top market share in many

fields including household items and food products. Building on thissuccess, in May 2013 we built a packaging factory in Vietnam,
where the economy is continuing to grow rapidly. We intend to
make use of these overseas production bases to supply high-added
value products and services to Japanese companies doing businessoverseas and to other global companies.
Going forward, we will continue to expand our packaging
business in Japan and overseas, armed with the comprehensive
strength that enable us to handle every aspect of the businessincluding anticipating social changes and changes in the needs ofconsumers and corporate clients, market analysis and planning,
package design and manufacturing, and sales promotion support.

■■ Development of easy-to-use pouch using tactile sensors

Development of bacterial detection film culture media
and bacteria measuring system

DNP is focusing on applying the printing and information
technologies that are its strong suit to the development of new
businesses in the medical care and health care fields. As part ofthese efforts, in the fiscal term ended March 2015 DNP
developed easy-to-use “Medi·Ca Culture Film for Bacterial
Testing,” which makes microbial colonies very easy to see, and a“Colony Counting System for Medi·Ca Culture Film” that
increases the accuracy of detecting colonies cultured using theMedi·ca medium. By using both products together, users(mainly food manufacturers) can perform bacterial testing more
quickly and easily than with existing methods.

DNP Vietnam Co., Ltd.

Examples of packages made withbiomass plastic

As Japan’s population ages, demand has increased more thanever for universal design-based packaging that is easy for all
types of consumers to use. DNP has constructed an evaluation
system that can quantify a package’s ease of use, and is using it
to develop a variety of packages. The system uses “HapLog”
tactile sensors* that track finger movements and measure finger
pressure and contact force, together with original DNP software
made specifically for analyzing packages.
One of the packages designed with help from the system’s
analyses is the “Uneven Laser-cut Pouch.” Due to the use of
special laser cutting technology, the first time the pouch is
opened, one side ends up being lower than the other, making iteasier to open for reuse. Unlike conventional pouches whose
two sides are even upon opening, every type of user was able toopen the new pouch in a short time. The new pouch is being
offered as a package for health foods that are often used byelderly people.
tactile sensors: developed jointly by Shiseido Co., Ltd., Kato Tech Co., Ltd. and* HapLog
Tec Gihan Co., Ltd.

Medi·Ca Culture Film for Bacterial Testing

Cultured bacterial colonies

Uneven Laser-cut Pouch before opening (left) and after opening (right)

48

Lifestyle Materials

Developing global solutions for all types of living spaces

DNP in Brief

technology, regarding which we have applied for more than
1,000 patents. Our share of the market for such products has
been growing, particularly in Japan. Overseas, we have been
expanding our business in response to demand from various
regions, starting with North America, by selling decorative steel
plates for use in public facilities, business complexes and otherlarge-scale buildings as well as decorative materials for homes
and automotive interior materials.
In order to create comfortable living spaces for consumers byincreasing both “functional value” (mainly through EB
technologies) and “emotional value” (mainly through good
design), DNP offers total solutions encompassing everythingfrom materials development to space design, coordination,
installation and construction method development.

To Our Shareholders

DNP views homes, offices, medical and nursing care facilities,
commercial facilities, automobiles, railroad passenger cars andother places where people spend time as “living spaces.”
Lifestyle Materials develops and supplies a variety of products
and services for all kinds of corporate clients involved in living
spaces. As we work to expand this sector, we keep in mind
goals like minimizing strain on the environment, reducing energy
consumption, enabling safe, carefree, healthy and comfortableliving, and accommodating Japan’s aging population, smart
society, and other social trends.
We receive strong praise from corporate clients andconsumers for our high-performance, eco-friendly andattractively designed floor and wall coverings and otherproducts made with DNP’s proprietary electron beam (EB)Special Feature
Segment Informationthat a small amount of light reaches a broad area, thereby
reducing energy consumption. This material was used in East
Japan Railway Co., Ltd.’s E5 Hayabusa Shinkansen (bullet train)
and in the E7 Hokuriku Shinkansen cars that were put into
service in spring 2015. We expect it to be used in more highspeed trains worldwide and will actively promote this business in
response to growth in the market for railroad car interiors.

Financial Section
Appendix

DNP develops and sells decorative metal paneling made bycoating and/or printing a pattern, wood grain or other design
directly onto steel plates, stainless steel, aluminum or anothertype of sheet metal. These products combine the fire resistanceand other benefits of metal with authentic-feeling, luxurious
textures. They are used increasingly widely in applications
including front entrance doors, bathroom wall panels, hotel andoffice building exteriors, elevator and train car interiors, andexterior panels for household appliances.
DNP entered the market for railroad car interior materials in
2000. DNP decorative aluminum panels are lightweight andeasy to work with. Although the surface is very hard, it isprocessed in such a way that it does not feel cold to the touch.
Appreciation for these qualities has led to our paneling being
selected for use in special express trains and N700 bullet traincars in Japan. We have been winning more orders for this typeof product overseas as well. For example, in 2008 our paneling
was adopted for use on the ceilings of passenger cars in
England’s high-speed Channel Tunnel Rail Link.
In 2012, we developed “High-reflective, Light-diffusing Ellio”
interior paneling which effectively reflects and diffuses light so

How DNP Works to Achieve
Sustainable Development■ Development of decorative metal paneling for railroad car interiors

Interior of a Hokuriku Shinkansen car with DNP’s decorative steel plate on the ceiling

DNP Annual Report 201549

Electronics

Top right: Tablet PC
Above, from left: Touch panel film, Ultra-short focus projector, Testing color filters

Business Strategies
Modern life has become richer and more convenient due to
growing use of devices like digital household appliances, highdefinition display products and mobile information terminals
including smartphones and tablet PCs. Given the massive
amount of information circulating in today’s society, demand foreasy-to-use information devices that make use of cutting-edge
technologies is becoming increasingly diverse, and changes are
occurring more rapidly than ever.
DNP’s Electronics segment handles display components andelectronic devices. The segment develops and combines existing
DNP technologies and works to create new core technologies inorder to provide products, services, and systems that anticipatechanges in the needs of businesses and consumers, primarily forthe electronic equipment market. DNP’s Electronics segment
works especially hard to develop new products and new
businesses—including participation in new business fields—byfusing technologies like the world’s most advanced finepatterning and ultrafine etching techniques.

50

We endeavor to develop new products with high added value
and exceptional functionality while keeping our eye on nextgeneration trends in electronic products. As we do so, we
actively seek opportunities to collaborate with companies thathave specialized strengths, in order to speed up businessdevelopment. DNP’s Electronics segment is working on
improving the quality and functionality of its existing lineup ofstrong products including color filters, antiglare films, films for3D displays, other optical films, semiconductor photomasks andtouch panel components. At the same time, the segment istaking steps to improve its bottom line, for example by using its
plants in Japan and overseas production bases to optimize
production locations from a global standpoint, by thoroughly
cutting costs, and by boosting investment efficiency.

Display Components

Assess changes in the market environment and develop new,competitive products■

Develop products that make use of microfabrication
technologies, including components for hard disk drives, LED
modules, printed wiring boards with embedded
components, and MEMS (Micro Electro Mechanical
Systems)*4 products.
● Reinforce new product development by cooperating withother units, for example in the development of image
processing modules.
●(nanometer): one billionth of a meter*12 nmNanoimprinting: a semiconductor manufacturing technique that entails physically* transferring
a pattern to a resin-coated silicon wafer by pressing a template
bearing a minute pattern against the wafer
Extreme ultra-violet (EUV) exposure: a technique for using ultraviolet rays with
*3 extremely
short wavelengths to burn minute circuit patterns onto wafers
4 MEMS (micro electro mechanical system): a group of minute components made* with semiconductor microfabrication technologies

Appendix

Propose new products that address consumers’
diverse requirements for displays● Anticipate demand trends such as higher resolution, wider
color gamut, larger size, lighter weight, greater energy
efficiency and higher performance while also meeting
demand for products on the other end of the spectrum.
● Expand new product lineup by blending core technologies
through cooperation with the color filter and/or electronic
devices businesses.

■ Boost earning power by developing new products

Financial Section

Develop new products by thoroughly grasping customer needs

Meet global demand for semiconductor photomasks
and develop cutting-edge technologies● Keep a solid grip on one of the world’s top market shares,
particularly for the most advanced products (with line widthsof 28nm*1 or less).
● Respond to demand for miniaturization by developing
cutting-edge products with line widths of 15-16nm, andprepare frameworks for supplying them.
● Focus on commercializing next-generation microfabrication
technologies such as nanoimprinting*2 and extreme
ultraviolet (EUV) exposure*3.
● Make use of overseas production bases to actively take up
global demand.
● Make use of DNP’s world-class technological prowess tocontribute to fields beyond semiconductors, such as areas
related to IoT, big data, life sciences, etc.

How DNP Works to Achieve
Sustainable Development

Optical films■

Segment Information■

Promote new product development
by using our strongest technologies and/or
by collaborating with partners● Develop new products related to touch panels, organic EL
and LED displays, etc. by making effective use of DNP’sstrongest technologies and existing equipment, and bystrengthening cooperation with business partners.

Respond on a global scale and generate
new business models

Special Feature■

Focus on small- and medium-size liquid crystal
color filters, and on higher-definition products● Focus color filter production on the still-growing markets forsmall- and medium-size displays used in smartphones, tablet
PCs and similar devices.
● Promote cost structure reforms such as equipment
optimization and rethinking of production and development
systems.
● Focus on developing high-definition, high-quality products
needed for small- and medium-size devices in order tostabilize business.

Electronic Devices

DNP in Brief

Liquid crystal display (LCD) color filters

To Our Shareholders

Main Policies■

Further increase DNP’s share of the market for
LCD surface materials● Further develop core technologies in order to raise quality
and productivity and provide the market with morecompetitive products.

DNP Annual Report 2015

51

0

14

0

0

15

14

0

15

Financial Results
Net Sales

Operating Income (¥ billion)(Net sales)(Operating income)

800

AssetsDepreciation (¥ billion)(Assets)(Depreciation)

800

120

120

100

100

600

600
467.7

Financial400Highlights
200

80

479.5

24.0

21.7

2014.30
Net sales 			¥

14

232.0

60

400

40

(¥ billion, %)200

2015.320

15¥ 0 230.3

Operating income 			25.1		 24.4

Operating income margin		

10.8%		

0

554.7

527.1

80

Fiscal Term throughMarch 2015:
60
Business Environment and40
Summary of Financial
Results

22.4

■

20.9

20

		Display Components
0(LC color14
15 filters, optical films, etc.)

According to one research company’s figures, worldwide
shipments of flat-panel televisions in calendar 2014 increased by
3% over the previous year to about 230 million units, with the
Chinese market supplying about one quarter of the total.
Shipments increased particularly among high-added value
products, such as ultra HD (high definition) TVs that offer four
Net Sales
Operating Income (¥ billion)
AssetsDepreciation (¥ billion)
times the resolution of full HD models. Smartphone shipments(Net sales)(Assets)(Operating income)(Depreciation)amounted to some 120
1.29 billion units, exceeding the previous
800
800
120
year by 26%. This was the slowest growth rate for smartphones
100
100
in the past five years. Shipments of tablet PCs grew by just
600
600
80
80
4.4% to about 230 million
units, reflecting a considerable
slowdowninthegrowthratecompared to around 50% growth
400
400
60
60
310.8 2013. In the PC market, replacement demand
300.1
in calendar
232.0
40
40
230.3
sparked by Microsoft Corporation’s termination of support for
25.1
200
200
24.4
23.7
20
Windows XP 18.4
has run20its course, resulting in sluggish demand.
In this market, the 0increasing popularity of ultra HD televisions
0
0
0
14
15
14 has boosted
15 demand for large-scale LC color filter panels,
leading to solid production of DNP’s color filters for televisions,mainly on our 8th-generation production lines. However,demand for small- and medium-sized products decreased froma year earlier. In optical films, sales of films for 3D and touch
Net sales
panel displays declined year on year, but sales of anti-reflection
Although demand was solid for liquid crystal color filters used infilms for televisions and smartphones grew, as did projection
televisions, demand for filters used in laptop and tablet PCs
screen components and other products.
slackened. Demand for touch panel sensors and other displayGoing forward, we expect an increase in worldwide shipment
related product was also weak. Overall, color filter sales declined
volumes of high-performance smartphones that offer HD or
relative to the previous year. Sales of optical films grew from ahigher image resolution. Some analysts expect that in 2018
year earlier thanks to growth in anti-reflection films applied tothese high-end products will account for some 1.5 billion units,liquid crystal displays (LCDs). After reviewing our semiconductor
or more than 80% of the smartphone market. Also in 2018,
photomask business, we deconsolidated our Taiwan operating
sales of the ultra HD smartphones that will debut on the market
base. Due to these and other factors, photomask sales declined
in 2015 are expected to top 100 million units. In China, therelative to a year earlier. Overall, Electronics sales declined byworld’s largest LCD market, 2018 shipments of flat-panel
0.7%, or 1.69 billion yen, compared to the previous year.
televisions are expected to reach some 60 million units, or about
14% more than the 2014 figure.
Operating income
In response to these projections, DNP has decided to transfer
Depreciation and amortization expenses declined year on year
some of the color filter production equipment at its Mihara Plant
by 5.35 billion yen, mainly due to decreased major capitalin Hiroshima Prefecture to a Chinese LCD glass manufacturer by
spending and the sale of surplus equipment. However, smaller
the end of March 2016. By continuing to provide technical andnet sales and lower unit prices resulting from increased
other support, we will continue to benefit from the businesscompetition caused operating income to decline by 2.7%, or 0.7
opportunities presented by growth in the Chinese LC market.
billion yen from a year earlier. The segment’s operating income
We will also focus on developing new color filters that canmargin decreased by 0.2 percentage point, from 10.8% a year
support high-brightness, energy-efficient LC displays. In
earlier to 10.6%.
addition, we will work to expand our business by developing
April 2014, DNP’s optical film business was transferred from Lifestyle and Industrial* InSupplies
touch panel films that accommodate the trend towards larger
to the Electronics segment. Figures for the term ended March 2014 in thechart above have been adjusted to reflect the new configuration of the Electronics
displays, and by continuing to supply components for high-end
segment.
smartphones that deliver very sharp images.

52

10.6%

To Our Shareholders■ Electronic Devices

How DNP Works to Achieve
Sustainable Development

technologies, to form Photronics DNP Mask Corporation. The new company became
an equity-method affiliate of DNP, with DNP owning 49.99% of its common shares.

Segment Information

2014, DNP subsidiary DNP Photomask Technology Taiwan Co., Ltd. merged* InwithApril
Photronics Semiconductor Mask Corp., which specializes in photomask production

Special Feature

DNP is working on improving the profitability of productsthat take advantage of our etching expertise by shifting ouremphasis to higher-added value products. We enjoyed solid
sales in our lead frames business, where orders increased not
only for products used in wireless LAN devices and hard disk
drives, but also for metal plates used by Taiwanesemanufacturers making IC packages used in power supplies.
Demand for lead frames is expected to keep growing along withincreasing use of smartphones and tablet PCs. We aim toincrease our share of metal substrates for IC packages used in
power semiconductors. Demand for metal substrates used in
LED lighting for the Taiwanese and Chinese markets is also
growing. Going forward, we aim to increase sales of high-added
value products with reflectors attached. DNP enjoyed increased
sales to China of autofocus springs used in compact camera
modules built into smartphones and other mobile devices. Salesof hard disk drive components for personal computers were
slack, but sales of components used in servers increased thanks
to expanded demand for cloud services. Demand declined for
substrates with embedded components used in cameras, amainstay of our electronic modules business, but we are also
focusing on telecom-related modules for the future, as well as
developing modules that can be used in wearable devices.

DNP in Brief

In calendar 2014, the world market for semiconductors grew
9.9% year on year, the largest annual growth since 2011. In2015 and 2016, semiconductor demand is expected to grow byaround 3% annually. Future growth is expected to take placemainly in the U.S. and Asia, in a wide variety of fields including
digital household appliances and automobiles.
Thanks to this growth in demand, DNP’s Electronic Devices
business enjoyed greater sales of photomasks used for making
flash memories in Japan and logic products in China andTaiwan. Nevertheless, the business’s sales fell below theprevious-year level because DNP deconsolidated* its production
base in Taiwan, DNP Photomask Technology Taiwan Co., Ltd.
The semiconductor market of the future is expected to beaffected by increased demand for all types of devices related tospreading use of the Internet of Things linking all kinds ofeveryday objects to a network. DNP is working to expand its
cutting-edge products business in Japan and abroad. In addition
to continuing to supply photomasks for flash memories andother products, we will also focus on joint development withother companies. Regarding the use of nanoimprinting
technologies in ultrafine processing, we intend to provide
nanoimprinting solutions that comprehensively support
application development, product planning, die and prototype
production, and mass production, etc. We are also developing
new products outside of the semiconductor arena, such as
medical materials in the life science field.

Financial Section
Appendix

DNP Annual Report 201553

Presentation of Growth Businesses and Strategic Businesses

Innovations born of DNP’s core technologies
For more than half a century, DNP has been developing a wide variety of electronic components by applying the photographic filmmaking skills that we cultivated through our printing business, and by refining technologies for applying uniform coatings as well as
the photolithography and etching technologies that enable us to make extremely fine patterns. The various products and systems that
DNP supplies improve the functionality and operability of electronic devices.

Clean converting*1
Optical film for electronic displays

Electronics and electric
circuit design
Systems and module design

Electrode film for capacitive touch panels

Nanoimprinting
technologies

Photolithography*2
Exposure

Etching
Development
Stripping

Etching technologies

Optical design

Plating technologies

Materials design

UV/EB technologies

Machinery andequipment design

Die processing
technologies

Assessment andanalysis technologies

Precision coating
technologies

Simulation technologies

Coating*3

Wiping technologies

Patterning*4

Photo-alignment
technologies
Laminating technologies

Extrusion technologies
Vapor deposition andsputtering technologies

The Three Core Technologies of
DNP’s Electronics Segmentof optical technologies and other technologies, such as technologies used for applying precision thin-film coatings or for molding. Based*1 Clean converting: Aoncombination
our strength in this area, DNP has developed a wide range of optical films including anti-glare films and other films used in liquid crystal displays(LCDs). Going forward, we intend to actively respond to display market trends such as higher definition, increasing multi-functionality and greater energy
efficiency, and to provide a wide variety of products that only DNP can provide by virtue of our solid grasp of the properties of light.
2 Photolithography: A process by which images on a form plate are burned onto a resin or metal plate that has been coated with photosensitive material.
3 Coating:
Applying and fixing ink or another material, from a printing plate to which it has first been applied, onto paper, film or another material.
4 Patterning:
Originally used for making films for printing, these technologies are used to make images such as text, photographs, or illustrations on a form plate.
Minute images that have been drawn on the form plate using patterning technologies are then burned onto a resin or metal printing plate.

***

A photomask used for manufacturing semiconductors

54

A lead frame

Advanced optical films make possible
the rich expression of information

Segment Information

Color filter (magnified view at lower right)■

100-inch image display system for use
with ultra-short focus projectors

Financial Section

DNP has begun sales of its “JETBLACK®-STS” display system for
ultra-short focus projectors, which makes it possible to holdteleconferences that so closely imitate face-to-face meetings
that participants can read the expressions on each other’s faces.
Because the system’s screen eliminates superfluous exterior lightand reflects to viewers only light from the projector, images on
the screen are clearly visible even in a well-lit room, unlike
previous projector screens. Despite the system’s large size, it
consumes little electricity. Compared to a similarly sized liquid
crystal display, it is lighter, thinner, easier to handle, and offers
outstanding cost performance. DNP will continue to enrichpeople’s lives by combining the new display system with ourstrengths in data processing and content production. Beginningwith digital signage, other applications that we will explore
include remote medical care and educational services forchildren.

How DNP Works to Achieve
Sustainable Development
Appendix

DNP has developed a high-luminance blue resist that enables
display of brighter colors and has begun offering them in its LCD
color filters. In recent years, increasing use of color management
to match colors displayed across different media platforms, suchas televisions, smartphones, digital signage and paper
pamphlets, has led to the use of brighter colors. As a result, we
see increasing demand for a solution that will enable color
reproduction over a broader gamut of colors. In order toimprove brightness in LC color filters, DNP developed a dyebased color resist that has greater heat resistance thanconventional pigment-based products, and improved thetransparency of the blue resist, which has less brightness thanother color resists. By pairing the color filter with the rightbacklight, it becomes possible not only to widen the color
reproduction gamut, but also to conserve electricity by reducing
the number of LEDs used in the product.
DNP plans to provide these LC color filters and resists to panel
manufacturers, aiming to capture 30% of the market for highSpecial Feature■ Making energy-efficient, high brightness LCDs a reality

DNP in Brief

In 1990, DNP used the coating technologies that it had
cultivated through its printing operations to start developing
low reflection films that suppress glare on display surfaces andimprove contrast, allowing the display to deliver vivid images.
DNP went on to capture the top share of the world market for
anti-reflection films.
Previously, developers of these types of films found that when
they increased the anti-reflective properties, the film’s hardness
decreased and it became more susceptible to scratching andsoiling. DNP approached its product development from a fresh
angle and in 2014 succeeded in developing ultra-low reflection
film that is both highly soil-resistant and significantly reduces
glare from indoor light, making it possible to produce a displaythat exhibits images with vivid contrast.
Antireflective film is manufactured by adjusting the thickness
and refractive index of layers of low reflective material applied
to a base film so that light reflected from the surface of the film
and light reflected from the film’s intermediate layers willinterfere with each other and cancel each other out. Thanks to
DNP’s know-how and technical prowess, we were able to fulfill
two competing needs, i.e. to achieve desirable degrees of bothreflectance, which is the key to clearly visible images, and of
hardness, which protects against scratches. Regarding ultra-low
reflection film, we are verifying its durability under a wide rangeof conditions including high temperatures and high humidity,
with an eye toward marketing them not only in Japan but for
use in televisions distributed worldwide. We aim to further
improve low reflection functionality and increase our share of
the market. DNP will always remain one step ahead of the times
as we explore new issues and provide high-added value opticalfilm products to markets around the world.

resolution LCDs in 2016. DNP will continue research anddevelopment aimed at commercializing not only the processing
technologies involved but also the materials technologies. In
addition, we will work to develop color filters that are optimized
for combination with optical films that can further expand thecolor gamut, and offer these as a new solution for highdefinition (HD) smartphones and ultra HD (4K and 8K)
televisions. In anticipation of wider use of 8K televisions, we arealso developing red and green dye-based color resists inaddition to blue, in order to contribute to even further
improvements in display brightness and color reproduction.

To Our Shareholders■

Teleconference using an ultra-short focus projector
DNP Annual Report 201555

How DNP Works to
Achieve
Sustainable
Development

CONTENTS

56

58

Compliance with Laws and Social Ethics

59

Product and Service Safety and Quality Assurance

60

Information Security

61

Business Continuity

62

Research and Development

62

Intellectual Property Management

63

Environmental Conservation and a Sustainable Future

65

Brand Management

66

Corporate Governance73

Board of Directors, Statutory Auditors and Corporate Officers

To Our Shareholders

DNP in Brief

Special Feature

Segment Information

How DNP Works to Achieve
Sustainable Development
Financial Section

Appendix

57

DNP Annual Report 2015

Compliance with Laws and Social Ethics
Rather than simply having each of our employees comply with laws and regulations in the execution of DNP’s business activities, we
believe that DNP can win society’s trust by maintaining even higher ethical standards than those expected by society, and byconsistently remaining fair and equitable as we help to maintain and develop orderly, free and competitive markets. In order to beable to act in ways that meet society’s expectations, DNP works to instill corporate ethics throughout its corporate group.

Key Concepts Underpinning DNP’s Approach to Corporate Ethics
DNP stresses the following concepts as we work to impart a broader and deeper awareness of corporate ethics: continuity, autonomy,
positivity, and efficiency.

Framework and Systems for Promoting Corporate Ethics
DNP has established a “Corporate Ethics Committee,” composed of corporate directors and executive officers in charge of thebusiness units in our head office. This umbrella organization is charged with instilling and disseminating corporate ethics throughout
the DNP Group. There is also a corporate ethics committee within each business unit and the administrative section of each Group
company. Through these committees, the entire DNP Group works together from a variety of approaches to promote corporate
ethics.
Systems for Promoting Absolute Corporate Ethics
Head Office

Operating Units

1 Management-by-objectives
evaluation system
3 Compliance assessment system
Corporate
EthicsCommittee

4 Corporate ethics training

6 Supplier Hotline

Management-by-objectives

1 evaluation system

Plan

Do

ActionCheck

4 Corporate ethics training
Reporting●●

Regular training sessions according toemployee level
Self-directed corporate ethics training

In order to increase the awareness of each and every employee, we included corporate ethics as one of
the self-assessment categories in our “management-by-objectives evaluation system” (evaluation-based
compensation system).

2 rules and laws

Each business unit and Group company does its own examination and assessment according to a checklist
prepared by the relevant section of the head office, and devises its own improvement measures asneeded. We have been using this system since 1997, based on the idea that people should guard theirown organization by themselves.

3 Compliance assessment system

In 2005 we adopted a system whereby the relevant section of the head office evaluates each business
unit and Group company according to standards shared by the entire DNP Group. These evaluations are
conducted regularly, twice a year.

4 Corporate ethics training

We believe that our corporate ethics initiatives will be more certain to succeed when each and every
employee has a strong awareness and correct understanding of the issues involved. Therefore, weorganize various occasions for education and training.

5 Open Door Room

We established the Open Door Room in 2002 as a way for employees to bring questions and reports related tocorporate ethics. We established “DNP Group Open Door Room Operating Standards” to ensure that employees
can consult and report without fear of repercussions.

6 Supplier Hotline

In 2009, we established our “Supplier Hotline” to give suppliers an avenue for providing information in the eventthat in their dealings with the DNP Group, they become aware of any illicit acts (or behavior that suggests thepossibility of illicit action) on the part of an employee or someone else connected with DNP.

Autonomous examination of58

Autonomous examination of

2 rules and laws
Corporate
EthicsCommittee

Regular training sessions according toemployee level● Self-directed corporate ethics training● Training related to individual themes●

5 Open Door Room

1 Management-by-objectives
evaluation system

Examination
・Guidance・
Education

Product and Service Safety and Quality Assurance
As a manufacturer providing society with products and services, DNP is aware that its efforts to secure safety and quality are more
important than any other concern. We strive to provide products and services that satisfy customers by envisioning various
circumstances under which our products and services may be used and considering, from the user’s viewpoint, what qualities aredesired, what will be safe, and what will be easy to use. Based on our findings, we make improvements again and again.
To Our Shareholders

Measures to Ensure Product Safety■ Product Safety Policy
DNP Group products conform to required standards and legal
regulations without fail, and our basic guideline requires that wemeet our corporate social responsibilities by offering products which
exceed customer needs and expectations for safety.
These Guidelines are known throughout the DNP Group, andproduct safety controls are thoroughly enforced.
The DNP Group shall engage in the following product safety
efforts under the basic policy noted above:
1. Ensuring product safety is a priority issue.
product sales.
3. We shall work to gather data from consumers and customers
concerning safety.

Special Feature

2. Thorough product safety evaluations are conducted prior to new

4. In the event of a product accident occurrence, we shall seek toprevent recurrence by taking prompt and appropriate actions
including gathering data, issuing notices both within andoutside the company, product recalls, etc.
Segment Information

Initiatives Aimed at Ensuring Quality■ Quality Policy
1. Based on the catchphrase, “P&I Solutions DNP,” we combine
printing technologies and information technologies to provide
products and services of world-class quality that solve ourcustomers’ problems. By maintaining and improving the qualityof our products and services, we gain our customers’ trust.
2. We make it our mission to provide products and services thatare safe to use and gentle on the environment. Through athat we place on the environment.
3. We develop the world’s most advanced manufacturing
technologies and construct production systems that meet theworld’s highest standards for efficiency.

Financial Section

variety of corporate activities, we aim to minimize the burden

How DNP Works to Achieve
Sustainable Development

DNP provides safe and reliable products and services that meet
the world’s highest standards for quality. In order to maintainand improve the quality of our products and services, DNP
established the DNP Group Quality Policy.
Because DNP engages in a wide variety of businesses, we use
different safety and quality assurance methods according to thetypes of products and services that we offer. In addition topromoting quality assurance activities that are appropriate foreach business field, we carefully assess the needs of ourcustomers and society and initiate Group-wide actions andemployee education in order to maximize synergistic benefits.

DNP in Brief

Obviously, DNP must comply with publicly mandated productstandards and legal regulations. Our corporate responsibilities
are laid out in the DNP Group Product Safety Policy.
DNP has established product safety committees in its head
office, in each business unit, and in each Group company. In
addition, the DNP Group Product Safety Regulations describes
the organizational frameworks and checklists to be used for
product safety management. Each business unit and each Group
company works to ensure the safety of the products it handles
by implementing product safety management based on theseregulations.
Because ensuring product safety is an ongoing task, we
examine our product safety assurance methods and conduct risk
assessments of our entire product lineup twice each year. Basedon the results of these assessments, we may review our control
systems or make product design changes or manufacturing
process improvements in order to achieve an even higher degreeof product safety.

4. In order to meet these goals, all of our employees work together
and engage in regular taiwa, both with each other and withpeople outside the Company. By “looking carefully, listening
continuously improve the quality assurance systems that enable

Appendixcarefully, and thinking carefully,” we intend to maintain and
us to satisfy our customers on an ongoing basis.

DNP Annual Report 201559

Information Security
Information security and the protection of personal information have become more important than ever. DNP handles a large volumeof personal information and other information assets. For us, proper management and protection of information assets are criticaltasks that could even be called part of our social mission. Our management addresses information security as one of its top-priority
concerns, and works to strengthen related systems and to educate employees.

Information Security and Personal Information Protection
It is obvious to us that we have a responsibility to protect personal information, data entrusted to us by corporate clients, and otherinformation assets. We have established policies related to information security and personal information protection. We maintainstrict and continuous control by strengthening related systems and educating employees, etc.

■ DNP Group’s Basic Policy on Information Security
At the DNP Group, our management concept is to “contribute to theBasis of Conduct

creation of an intellectually active, rich, 21st century society with

We will apply appropriate physical, electronic and human measures inemergent evolution.” We have employed “P & I Solutions DNP” asorder to protect information assets entrusted to us from clients andour concept phrase for putting this management concept into

general consumers as well as information assets possessed by thepractice. This means utilizing the range of both print technology and

DNP Group itself from leakage, tampering, inhibition of use, etc. due

information technology that we have built up over the course of theto accidents, crime and disasters. By boosting the worth of ouryears to offer solutions to the challenges facing our clients andbusiness thus, we will gain the trust of society.
Legal & Social-Ethical Compliancegeneral consumers, giving shape to the vision we have presented.
In an emergently evolving society, a communication environment
with an advanced level of security that is safe and highly reliable is anindispensable element.
We have accumulated a great deal of expertise in information

We will act in good faith to comply with information security-related
laws and social ethics.
Self-Development & Awareness Campaigns
We will continually implement development, awareness andsecurity utilizing the information assets entrusted to us from clients

education related to this policy through ample recognition of theand general consumers as well as information assets of our own toprovide our clients and general consumers with a diverse range ofimportance of information security.
Management Systemservices. Through recognition of this expertise as a competitive edge

In order to continually improve and implement information security-

as well as the continual, systematic enhancement of it, we hope torelated activities, we will construct, in accordance with this policy,

contribute to the development of a society with emergent evolution,

information security management systems in each department withperpetually expanding the business of our clients’ and of our own. It

clear recognition of authorities and responsibilities.

is for these purposes that we set forth our basic policy on information
security as follows:■ Personal Information Protection Policies
A variety of companies and organizations entrust DNP with personal

3. Specify reasons for using personal information; acquire, use andinformation so that we can help them provide all types of services

provide personal information in fair and appropriate ways. Takeand products for consumers. In addition, we have developed various

measures to prevent personal information from being used for any

types of services and products that make effective use of personal
information in businesses that DNP operates itself. Through thesevarious businesses, we have become well aware of the importance of

whose own personal information is being held by the Company.

personal information and it is obvious to us that we are obligated to

5. When the performance of services on behalf of a client company

provide appropriate protection for such information.
We will handle personal information appropriately, in line with
DNP’s Personal information Protection Policies.
1. Strictly comply with laws, national government guidelines, andother regulations related to personal information protection; strive
to protect personal data.
2. Take necessary and appropriate safety precautions to prevent

involves the handling of personal information, use the information
only within the scope of the requested services.
6. Establish in-house regulations concerning the handling of personal
information; build, maintain and continuously improve related
systems.
7. Respond appropriately to complaints or questions from someone
whose personal information is being held by the Company

leakage, loss or destruction of personal data. In the event thatregarding DNP’s handling of personal information or our systems

a problem should occur, take prompt measures to correct thefor protecting personal information.

situation.

60

purpose other than the specific purpose for which it was acquired.
4. Respond appropriately to a request for disclosure from someone

Information Security Management System
At DNP headquarters weestablished the DNP Group
Information Security Committee,
and under its auspices the
Personal Information Protection
Office. Together they inspectand guide DNP’s business units
and Group affiliates.

Framework for Promoting Information Security
Head office

Operational Divisions and Group Companies

DNP Group Information Security Committee

Information Security Committee

Chief, Personal information protection manager,
Committee members

Chief, Personal information protection manager, Committee members(General manager of division or president of group company)
Person responsible for auditing and inspection

Information Security Manager

Information Security Headquarters

Person responsible for education
Person responsible for security area measures

To Our Shareholders

Information Security Promotion Office Manager

Person responsible for public relations measures
Person responsible for information system measures
DNP in Brief

Business Continuity

Central Disaster Prevention Council
Human resources subcommittee

Business
Operations
Plan for
DisasterPrevention

Facilities subcommittee
Chairperson

DeputyChairperson

Asset preservation subcommittee

Chairperson

Business Unit and Group Affiliate
Disaster Prevention Councils
Disaster Prevention
Manager
Fire Prevention
Manager

Human resources coordinator
Facilities coordinator

DeputyChairperson

Asset preservation coordinator

Business activities subcommittee
Secretariat

Public relations subcommittee

Financial Section

Business activities coordinator
Secretariat

Public relations coordinator

Community subcommittee

Community coordinator
In-house firefighting organizationIfdisaster occurs,
the Central Disaster
Prevention Council
begins to function as
Disaster Response
Headquarters

Disasterprevention system
during emergency

Central Disaster Response Headquarters

Regional Disaster Prevention Councils
Chairpersons

DeputyChairpersons

Appendix

Disaster prevention system
during normal times

Basic
DNP Group
DisasterPrevention
Plan

How DNP Works to Achieve
Sustainable Development

We established the DNP Group Central Disaster Prevention Council to create and promote basic disaster prevention measures
for the entire DNP Group. Each business unit and Group company has established its own disaster prevention council topromote measures that suit its own particular characteristics and requirements. We also established regional disaster councils
to promote cooperative measures within each geographical region. Each of these councils has prepared plans and measuresfor coping with emergency situations. In the “DNP Group Basic Code for Disaster Response,” we determined basic policies andsystems for coping with disaster or other unforeseen circumstances. DNP implements disaster prevention measures aimed atsecuring the safety of employees and related parties, and at enabling a variety of stakeholders to feel at ease.

Segment Information

Disaster Prevention Systems that Prepare DNP for Unforeseeable Circumstances

Special Feature

In the event that an emergency situation should compromise the continuity of DNP’s business operations, any interruption in ouroperations would affect not only DNP but our customers, suppliers, their employees and a variety of stakeholders. DNP has prepareda business continuity plan (BCP) in order to build a strong corporate structure that can continue operating under crisis conditions andquickly restore operations in the event of an interruption. In the course of our daily operations, we maintain a proper awareness of
disaster risks and implement employee training and other measures aimed at enabling us to cope in extreme situations.

Secretariats

Business Unit and Group Affiliate
Disaster Response Headquarters
Regional Disaster Response Headquarters

DNP Annual Report 201561

Research and Development
Research and Development Aimed at Business Creation
Research and development are extremely
important for DNP as a company that has
expanded its fields of business by developing new
ways to apply printing and information
technologies. In today’s rapidly changing world, weneed to look carefully at what is happening insociety from a consumers’ point of view, and bequick to discern existing problems and thetechnologies that are needed to solve them. We
then accelerate development by actively pursuingalliances with other companies that havespecialized strengths in addition to developing ourown original technologies.

Research and Development Expenditures (consolidated)(¥ billion)

40
35.6

35
28.7

30

26.1

26.4

04

05

34.1

33.9

33.1

30.1

31.7

30.8

30.8

31.7

12

13

14

15

25
20
15
10
5
0

06

07

08

09

10

11

Controlled by Head Office
Development Headquarters

Information Solution

Development Headquarters

C& I

Development Headquarters

Imaging Communication

Development Headquarters

Packaging

Development Headquarters

Lifestyle Materials

Development Headquarters

Fine Optronics

Development Headquarters

Information Communication

Lifestyle and Industrial Supplies
Electronics
New BusinessSupervisionCorporate R&D Division

IchigayaHead office research anddevelopment framework

Research and Development
CenterBusiness unit's development
framework

Technology Development
CenterBusiness Units

FieldsAdvanced Business Center

Medium-term
development(less than 3 years)

Short-term development (less than 1 year)

Long-term
development(3 years or more)Intellectual Property Management
Intellectual Property Initiatives that Support Wide-Ranging Business Activities
In our view, intellectual property initiatives provide the most basic underpinning for a wide range of business activities and are
indispensable to the differentiation of DNP from competitors. Because the competitive standing of our intellectual property greatly
affects DNP’s business operations, DNP employs 17 (as of June 30, 2015) in-house patent attorneys who form a powerful team forpursuing intellectual property-related initiatives. As a result of this proactive stance, DNP had 2,232 laid-open patent applications
published in the fiscal year ended March 2015, which is an extremely high number for any Japanese company.
Intellectual Property by Segment
Number of patents and utility models held

Number of patents published(case)(case)(As of March 31, 2015)

5,000(As of December 31, 2014)

800

Basic Research

700
4,000

600

Information Communication

500

3,000

Lifestyle and Industrial Supplies

400
2,000

300

Electronics

200

1,000

Other

100
0

09

10

11

12

13

14
(fisical year)

62

0

09

10

11

12

13

14

(calender year)

Environmental Conservation and a Sustainable Future

Sustainable Society
Recycling Society

Society Co-existingwith Nature

Low-Carbon Society

DNP in Brief

DNP Group
Reduction of atmosphericemissions of VOCs

Air

Switch to low
CO 2-emission energy

Response tochemical substances(RoHS, REACH)

Reduction ofgreenhouse gas emissions

Environmental
conservation management
based on voluntary standards

Water

Introduction ofrenewable energy

Rational use of energy

Introduction of
hybrid vehicles

Distribution efficiency

Soil

Promotion ofgreen purchasing

For greater life diversity:
creation of green spaces
at business sites

Promotion of modal shift

Research
Division
Purchasing that helps
protect biodiversity

Installation and improvementof low environmental
impact facilities

Development ofenvironmentallyconscious products

Promotion of sales ofenvironmentally conscious
products and environmental
awareness

Practice of LCA

Separation andcollection of office paper)(wastewater treatment facilities,
odor reduction equipment,
solvent collection equipment)

Undesiredmaterials

Waste
Promotion of“zero emissions”

Re-useUse of recovered heat

Environmental accounting

Financial Section

Use of recovered solvent

Recycling

How DNP Works to Achieve
Sustainable Development

Control of chemicals
in materials(

OUT

Marketing Sales
Promotion Division

Segment Information

Materials

Energy/Water

IN

Distribution
Division

Special Feature

Reduction of air andwater pollutants

Environmentally conscious
products and services

Reduction of emissions of
PRTR-listed substances

Offering value to society

Loss control throughproduction improvements

Production
Division

To Our Shareholders

As a manufacturer, DNP always considers how to coexist with the Earth’s environment. The most urgent problem facing humanity inthe 21st century (sometimes called “the environment century") is how to coexist with nature and preserve its gifts so that we canmaintain an inhabitable planet to pass on to the next generation. One of the values set forth in the DNP Group Code of Conduct is tohelp realize a sustainable society so that we can bequeath an abundant Earth to future generations. The entire DNP Group is working
to achieve that goal, for example by preventing global warming, protecting biodiversity, and using resources efficiently.

Use of recycled water
Establishment of voluntary plans

DNP Group Environmental Management System●

Eco-Report●

Site Eco-Reports●

Internal environmental audit (Eco-Audit)●

Environmental education
Appendix

DNP Annual Report 2015

63

Environmental Management System
In 1972, DNP became the first Japanese printing company to establish a special section charged with addressing environmental issues.
Now called the Environmental Safety Department, it initiated antipollution measures and taiwa (dialogue) with residents of local
communities. Since 1990, DNP has also concentrated on addressing global environmental issues. We created our own environmental
management system (EMS) in 1993, before the 1996 publication of international standards for environmental management systems(ISO14001). Our EMS is the basis for the environmental management activities that we perform every six months in the form of“Plan-Do-Check-Action” cycles.
In order to further boost the effectiveness of our EMS, in 1996 we began conducting Eco-Audits. If an audit reveals the need forcorrective action, the DNP Group Environmental Committee sends a written request to the relevant operational base and receives awritten response. Through activities such as Eco-Audits and regular publication of “Eco-Reports,” DNP keeps its business activities inline with relevant legal regulations and DNP Group policies. We have also established and do our best to strictly observe our own
voluntary standards (for air quality, water quality, noise, vibration, and odor generation), and voluntary guidelines (for chemical
substance management and soil contamination measures), which exceed legal requirements.

Outline of the DNP Group Environmental Management System

Management Concept
Code of Conduct

DNP Group Environmental Committee

Guidelines(environmental protection, development of environmentally conscious products andservices, management of chemical substances, soil pollution prevention)

Environmental Vision

Operations & Group Company Environmental Committees• Setting Group Environmental Targets• Determining Site Eco-Report Formats

ActivePolicyOperations & Group Company Targets

Site
Setting Site Targets

PLAN

Site Eco-Report
Environmental Target
PLAN

Training Teams

Improvement
Indicated

ACTIONDNP Group
Eco-Report

DO

Implementation
Teams
Liaison Teams

Improvement IndicatedSite Eco-Report
Evaluation/
Next-term Plan

Environmental Action
ACTION

DO

Site Eco-Report
Next-term Action
Report

CHECK

CHECK

Confirmation by Committee Chairman

Site
Eco-Report

Confirmation by
Coordinator

Summary
ReportSite
Eco-Report

Site Environmental
Committee Execution

Environmental
Activities
Promotion
Meetings

Eco-Audit

64

Brand Management
DNP as a Corporate Brand

To Our Shareholders
DNP in Brief

As a result of DNP’s business activities over the past 140 years or so, corporate clients and consumers have come to view the DNP
corporate brand as representing “reliability and high expectations” backed by DNP’s considerable technological strengths andnumerous achievements.
Recently we determined four growth areas that we intend to develop not only in Japan, but globally, both “B to B” (business tobusiness) and “B to C” (business to consumer). By making maximum use of the “DNP” brand in the various situations in which we
promote these businesses, we expect to increase both our businesses’ value and the DNP brand value.
In order to improve communication with consumers and gain consumers’ understanding of DNP, in 2012 we introduced the“DNPenguin” as our corporate symbol. By effectively incorporating the DNPenguin into advertising through newspapers, television,
DNP websites and other media, we strive to boost the appeal of the “DNP” brand.

Corporate Brand “DNP”

Special Feature

Examples of DNP’s B to C businesses

DNP’s corporate mascot that we call
“DNPenguin” (dee en penguin), which“honto”
hybrid bookstore network

Household budget-tracking
application “Receipi!”

introduces DNP’s products, services,

Segment Information

Promoting a corporate image advertising campaign
featuring a friendly mascot

and corporate activities in easy-tounderstand terms. Besides using thisadvertising, DNPenguin will introduce“DNP Topics” on our website, and willamuse consumers through original

Photobook compilation service“DreamPages Plus"

Self-service printing systems“PrintRush”

products like DNPenguin wallpaper.

How DNP Works to Achieve
Sustainable Development

character in newspaper and television

Financial Section

Future Initiatives

Actively present the DNP corporate brand and enhance brand value along with business value.
Construct categories of products and services that are easy for corporate clients and consumers to understand.
● Promote communication that makes use of the DNPenguin.
●

Appendix

In order to gain support from corporate clients and consumers and continue growing even further, DNP will base its activities on thefollowing “brand policies”:●

DNP Annual Report 201565

Corporate Governance“DNP” refers to Dai Nippon Printing Co., Ltd. in this section.

1 Corporate Governance■ Fundamental Philosophy
DNP has established a management concept of contributing
to the emergently evolving society of the 21st century. As anemergently evolving corporation of the 21st century, we
recognize that we will only be able to increase ourcompetitiveness in the future if we fulfill our corporate social
responsibilities and win the trust of shareholders, customers,
consumers, employees and other stakeholders. Toward thisend, we regard the enhancement of corporate governance asa top management priority. In addition to establishing andoperating systems that enable precise managerial decisionmaking and prompt and appropriate execution of thedecisions we make, we conduct thorough training andeducation in order to improve each employee’s awareness ofcompliance issues and strive to improve our overall corporate
governance.

■ Progress on Corporate Governance Measures(1) Corporate governance structure
DNP’s organization is designed to allow directors withspecialized expertise and experience in a wide range ofbusiness fields to participate in management decisions, totake responsibility and authority as they execute their work,and to supervise the work of other directors. Independent
outside directors also participate in decision-making in orderto facilitate prompt and precise management decisions andsmooth execution of those decisions, and to further
strengthen proper supervisory functions. Corporate officers
named by the Board of Directors execute the decisions madeby the Board of Directors, and have the responsibility andauthority to decide upon and carry out those mattersdelegated by the Board. Working in close communication
with the directors and in close proximity to the workplace,
their function is to ensure that the views of those on thefront lines are reflected in management.
In order to nimbly construct optimal management systems
for responding to changes in the business environment, andto further clarify management responsibility for each fiscal
year, we set the term of office for directors at one year.
The Board of Directors consists of 18 directors including
two independent outside directors. In principle, the Board
meets once a month. Based on the Company’s Board of
Directors Regulations, the directors ensure that meetings areappropriately run and supervise each other in day-to-day
operations. The directors and corporate officers holdexecutive committee meetings twice a month toexchange information that is helpful for efficient decision
making. To speed up the Company’s activities and make66

them more efficient, DNP has also established aManagement Committee consisting of directors at the senior
managing director level and above. The committee meetsonce a month, in principle, to review and discuss
management policies, strategies, and important businessmatters.
DNP has in place a Board of Statutory Auditors thatconsists of five auditors, including one auditor withconsiderable knowledge of finance and accounting and threeoutside auditors. In accordance with auditors’ prescribed
audit criteria and responsibilities, the statutory auditors
conduct audits of the directors’ management of day-to-day
operations and, as necessary, seek information from thedirectors and employees regarding business operations.
We believe that by adopting this type of corporate
governance structure, we ensure that the Board of Directors
can make appropriate decisions efficiently.

(2) Internal controls and auditor’s auditing
In order to maintain a structure that allows for precise
management decision-making, appropriate and prompt
execution of business, and inspection and monitoring ofthese functions, the Corporate Ethics Committee, as the
body in charge of internal control, inspects and guides DNP’soperating units according to the DNP Group’s Basic
Compliance Management Regulations, and regularly reports
to auditors regarding management conditions. In addition,
the Auditing Department (consisting of 13 employees)
ensures the propriety of operations by conducting
accounting and operational audits based on internal audit
regulations and by providing progress reports to thestatutory auditors and the accounting auditor.
The statutory auditors hold regular meetings of the Boardof Statutory Auditors, work with other statutory auditors to
perform their audit duties, and closely cooperate with theaccounting auditors by receiving from them an explanationof the audit plan at the start of the fiscal year, assessing audit
operations during the fiscal year as appropriate, andreceiving a report of audit results at the end of the fiscal year.
The names of the certified public accountants who
performed the accounting audits, the audit firms they are
employed by, and their assistants in the audit work are as
follows:● Certified public accountants who performed theaccounting audits
Senior partners and managing partners
Jun Sasayama, Hirofumi Nikaido,
Tsuguhiro Tsukakoshi, Yurika Kimura● Audit firm

Meiji Audit Corporation● Number of accounting audit assistants

17 certified public accountants, 3 others

DNP in Brief(4) Progress on other corporate governance measures
DNP set down the DNP Group Code of Conduct for
employees to follow, so as to contribute to the prosperity
and steady development of society, promote fair andappropriate corporate activity, protect the environment,
contribute to society, and establish a free and lively corporate
culture. In addition to stating that DNP does not do businesswith antisocial elements, the Code states that DNP, as an
emergently evolving company, will fulfill its corporate social
responsibilities to society, respect shareholders, customers,
consumers, employees and other stakeholders, and act inways that earn trust.

To Our Shareholders(3) Development of a risk management structure
To manage risks related to compliance, information security,
the environment, disasters, product safety, insider tradingand export management, the Corporate Ethics Committee,
other special committees, and other head office divisions
develop rules and conduct training as part of risk-related
preemptive efforts, and respond promptly to avert orminimize losses to the DNP Group. When new risks arise, we
promptly appoint specific divisions and directors to takeresponsibility for responding.

(5) DNP’s corporate governance structure
Special Feature

General Meeting of Shareholders
Audit

Audit

Board of Directors
Management Committee
Representative Directors

Segment Information

Corporate Ethics Committee

ReportingOpen Door Room
Directors in charge

Reporting

Environmental Committee
Complaint Handling Committee

Audit

Audit

Legal and other main divisions

Guidance

ReportingAssistance

Corporate Social Responsibility Committee
Audit

Financial Section

Audit unit

(Environment & Product Liability Department, Employee
Relations Department, Technical & Engineering Division,
Finance & Accounting Division, Corporate Planning &Control Department, Intellectual Property Division,
Legal Affairs Department, etc.)

Guidance
Training(Autonomous implementation, inspection,
review, improvement)

Central Disaster Prevention Council

Audit

How DNP Works to Achieve
Sustainable Development

Product Safety Committee

Board of Statutory Auditors

Group companies

Information Security Committee
Auditing Department

Divisions

Oversight of internal controls

Head office

Operating units

Accounting Auditors

Corporate officers
Audit

Information Disclosure Committee
Insider Trading Prevention Committee

Guidance
ReportingAppendix

Coordination

DNP Annual Report 201567

(6)Interests between DNP and its outside directors andoutside statutory auditors
DNP has two outside directors and three outside statutory
auditors. Outside directors and statutory auditors do nothave any particular personal relationships, capital
relationships, transactional relationships, or other interests
with DNP. The role of outside directors is to supervise insidedirectors and contribute to improving the transparency andaccountability of the Board of Directors by providing
management advice based on their judgment. The role ofoutside statutory auditors is to enhance the propriety ofaccounting and operational audits and to supervise
management.
DNP does not have any standards of independence forappointing outside directors and outside statutory auditors,
but to avoid conflicts of interest with general shareholders, it
references the standards of independence for independent
officers as stipulated by financial instruments exchanges.
DNP has also established the following insignificance criteria
related to the attributes of independent officers determined
to pose no risk of influencing the voting decisions ofshareholders.
・Transactions worth less than 2% of DNP’s annual sales
during the most recent fiscal year.
・Donations of less than the greater of either an annual
average during the previous three years of ¥10 million or
2% of the total annual revenues of the donation recipient.
Outside director Tadao Tsukada is designated as anindependent officer, and we believe he can provide usefuladvice to DNP’s management based on a deep knowledge
and wealth of experience related mainly to mechanicalengineering and play a role in supervising management froman objective standpoint. Mr. Tsukada owns 2,000 shares of
DNP stock.
Outside director Tsukasa Miyajima is designated as anindependent officer, and we believe he can provide usefuladvice to DNP’s management based on a deep knowledge
and wealth of experience related mainly to jurisprudence andplay a role in supervising management from an objective
standpoint.
Outside statutory auditor Shin-ichi Ikeda is designated as
an independent officer and can help bolster auditing basedon a broad knowledge gained from business experience atother companies. Mr. Ikeda owns 2,000 shares of DNP stock.
Outside statutory auditor Makoto Matsuura is designatedas an independent officer and can help bolster auditing
based on his legal expertise as an attorney.
Outside statutory auditor Kuniaki Nomura can help bolster
auditing based on his legal expertise as an attorney.
DNP and its outside directors and outside statutory
auditors have concluded agreements that limit the directors’
and auditors’ liability for damages within the parameters set
forth in Article 423, Paragraph 1 of Japan’s Companies Act,so long as they execute their duties in good faith andwithout serious negligence.

68(7) Number of directors
DNP’s Articles of Incorporation specify that the number ofregular members on the Board of Directors shall be no morethan 20.
(8)Requirements for shareholder approval of director
nominees
DNP’s Articles of Incorporation specify that the approval of
director nominees requires the attendance of at least one
third of shareholders with voting rights and a majority of thevotes of these shareholders, and does not depend on
cumulative votes.
(9)Matters to be resolved at the meeting of shareholders
that can be resolved by the Board of Directors
1) Share buybacks
DNP’s Articles of Incorporation specify that the Company
may buy back its shares in the open market, in accordancewith Article 165, Paragraph 1 of Japan’s Companies Act,
upon approval by the Board of Directors, in accordance with
Article 165, Paragraph 2 of Japan’s Companies Act, to allow
the Company to use capital more efficiently and implement a
flexible capital structure policy in response to changes inbusiness conditions.
2) Exemption of directors from liability
DNP’s Articles of Incorporation specify that directors(including former directors) may, by a resolution of the Boardof Directors, in accordance with Article 426, Paragraph 1 ofJapan’s Companies Act, be exempted from liabilities in
Article 423, Paragraph 1 of Japan’s Companies Act so thatthe directors can sufficiently carry out their expected
responsibilities.
3) Exemption of auditors from liability
DNP’s Articles of Incorporation specify that statutory auditors(including former statutory auditors) may, by a resolution of
the Board of Directors, in accordance with Article 426,
Paragraph 1 of Japan’s Companies Act, be exempted fromliabilities in Article 423, Paragraph 1 of Japan’s Companies
Act so that the statutory auditors can sufficiently carry out
their expected responsibilities.
4) Interim dividend
DNP’s Articles of Incorporation specify that the Company
may, by a resolution of the Board of Directors, pay amonetary dividend stipulated in Article 454, Paragraph 5 ofJapan’s Companies Act to shareholders of record as of
September 30 of each year and shareholders with actual
stock certificates, so that profits can be flexibly passed on toshareholders.

(10)Requirements for shareholder approval of special
resolutions
DNP’s Articles of Incorporation specify that the approval of
special resolutions stipulated in Article 309, Paragraph 2 ofJapan’s Companies Act requires the attendance of at least
one third of shareholders with voting rights and at least two
thirds of the votes of these shareholders, so that theshareholders’ meetings can run smoothly.
To Our Shareholders■ Compensation Paid to Directors and Statutory Auditors
Total compensation by type (¥ million)
Base compensation

Bonus

Number of directors
and statutory
auditors covered

1,258

1,110

148

20

Statutory auditors

79

79

—

2

Outside directors
and auditors

100

100

—

5

Directors(excluding outside directors)(excluding outside auditors)

Total compensation

Special Feature(¥ million)

Category of director/
statutory auditor

DNP in Brief(1) Total compensation paid by DNP, by category of director/statutory auditor, total compensation by type,
and the number of directors and statutory auditors covered

Notes: 1. Bonuses are provisions for bonuses for directors and statutory auditors for the fiscal year.
2. There were 16 internal directors, two internal statutory auditors and five outside directors as of the end of the fiscal year.

(2) Company directors and total compensation
Total
compensation

Company(¥ million)

Total compensation by type (¥ million)
Base compensation

Bonus

323

Dai Nippon Printing Co., Ltd.

298

24

Koichi Takanami

129

Dai Nippon Printing Co., Ltd.

115

13

Masayoshi Yamada

129

Dai Nippon Printing Co., Ltd.

115

13

(Director)(Director)(Director)

Notes: 1. Total compensation is shown only for those with compensation of at least 100 million yen.
2. Bonuses of Dai Nippon Printing Co., Ltd. are the amounts expected to be paid as bonuses for the current fiscal year.

Financial Section(3) Policies regarding the determination of compensation for directors and statutory auditors
Compensation for directors is calculated within the limits on directors’ compensation approved by shareholders at a general
meeting, reviewed and discussed by the Management Committee, and deliberated and decided on by the Board of Directors.
Compensation for each director is determined based on a broad range of factors, including the operations they are in chargeof, their responsibilities, achievements, and contributions.
Compensation for statutory auditors is calculated within the limits on statutory auditors’ compensation, and the compensationof each statutory auditor is determined based on discussions with the statutory auditor.

How DNP Works to Achieve
Sustainable Development

Yoshitoshi Kitajima

Segment Information

Name(director type)

Appendix

DNP Annual Report 201569

■ Stockholdings(1) Stocks held for reasons other than for pure investment purposes
No. of stocks: 393
Total on the balance sheet: 341,594 million yen(2) Holding category, company name, number of shares, amount recorded on the balance sheet, and holding purposeof stocks held for reasons other than for pure investment purposes(Previous fiscal year)
Stocks held for reasons other than pure investment purposes
Company name

Number ofsharesAmount recordedon balance sheet (¥ million)

Holding purpose

The Dai-ichi Life Insurance Co., Ltd.

6,606,600

9,909

Enhance business relationship

NuFlare Technology, Inc.

1,000,000

6,820

Strengthen business alliance

Taisho Pharmaceutical Holdings Co., Ltd.

692,700

5,756

Enhance business relationshipMizuho Financial Group, Inc.

27,134,319

5,535

Enhance business relationshipAsahi Group Holdings, Ltd.

1,860,029

5,373

Enhance business relationship

Terumo Corporation

1,101,000

4,961

Enhance business relationship

Ezaki Glico Co., Ltd.

3,226,766

4,410

Enhance business relationship

NISSIN FOODS HOLDINGS CO., LTD.

898,7114,183

Enhance business relationship

YAMATO HOLDINGS CO., LTD.

1,660,600

3,693

Enhance business relationship

YAKULT HONSHA CO., LTD.

701,000

3,631

Enhance business relationship

Aica Kogyo Co., Ltd.

1,293,743

2,974

Enhance business relationship

Hulic Co., Ltd.

2,040,000

2,884

Enhance business relationshipToyo Suisan Kaisha, Ltd.

794,980

2,738

Enhance business relationship

CALBEE, Inc.

1,032,800

2,508

Enhance business relationship

TOSHIBA CORPORATION

4,547,000

1,987

Strengthen business alliance

NSK Ltd.

1,814,000

1,926

Strengthen business alliance

Lion Corporation

3,140,665

1,918

Enhance business relationship

FUJIFILM Holdings Corporation

685,965

1,900

Enhance business relationship

Meiji Holdings Co., Ltd.

282,200

1,837

Enhance business relationship

Daikin Industries, Ltd.

300,000

1,734

Enhance business relationship

Mitsubishi Chemical Holdings Corporation

3,598,790

1,543

Strengthen business alliance

Sapporo Holdings Limited

3,796,388

1,541

Enhance business relationship

Mitsubishi Electric Corporation

1,300,000

1,510

Enhance business relationship

Eidai Co., Ltd.

2,237,000

1,386

Enhance business relationship

Mitsubishi UFJ Financial Group, Inc.

2,399,760

1,360

Enhance business relationship

Senshukai Co., Ltd.

1,509,663

1,271

Enhance business relationship

SMK Corporation

3,200,000

1,244

Enhance business relationship

Hakuhodo DY Holdings Inc.

1,720,000

1,238

Enhance business relationship

ROHM Co., Ltd.

268,366

1,235

Enhance business relationshipShiseido Co., Ltd.

677,619

1,230

Enhance business relationship

Stocks held in trust or other legal entity while retaining voting rights or voting instruction rights

Note:

70

Company name

Number ofsharesAmount recordedon balance sheet (¥ million)

Holding purpose

Terumo Corporation

1,930,500

8,698

Hold voting instruction rights for shares in retirement benefit trust

TV Asahi Corporation

4,030,000

7,536

Hold voting instruction rights for shares in retirement benefit trust

Astellas Pharma Inc.

913,770

5,592

Hold voting instruction rights for shares in retirement benefit trust

Japan Tobacco Inc.

1,000,000

3,240

Hold voting instruction rights for shares in retirement benefit trust

Specified stocks and stocks held in trust with voting rights are not added together when selecting stocks with the largest amounts as recorded in the balance sheet.

(Current fiscal year)
Stocks held for reasons other than pure investment purposes
Number ofsharesAmount recordedon balance sheet (¥ million)

Holding purpose

141,375

Enhance business relationship

6,606,600

11,531

Enhance business relationship

Ezaki Glico Co., Ltd.

1,614,101

7,844

Enhance business relationshipAsahi Group Holdings, Ltd.

1,860,029

7,093

Enhance business relationship

Terumo Corporation

2,202,000

6,980

Enhance business relationship

Taisho Pharmaceutical Holdings Co., Ltd.

692,700

6,192

Enhance business relationship

YAKULT HONSHA CO., LTD.

701,000

5,867

Enhance business relationshipMizuho Financial Group, Inc.

27,134,319

5,728

Enhance business relationship

CALBEE, Inc.

1,032,800

5,391

Enhance business relationship

NISSIN FOODS HOLDINGS CO., LTD.

898,711

5,311

Enhance business relationship

YAMATO HOLDINGS CO., LTD.

1,660,600

4,603

Enhance business relationship

Meiji Holdings Co., Ltd.

282,200

4,134

Enhance business relationship

Aica Kogyo Co., Ltd.

1,293,743

3,622

Enhance business relationshipToyo Suisan Kaisha, Ltd.

794,980

3,362

Enhance business relationship

NSK Ltd.

1,814,000

3,189

Strengthen business alliance

FUJIFILM Holdings Corporation

685,965

2,933

Enhance business relationshipStrengthen business alliance

NuFlare Technology, Inc.

500,000

2,670

Mitsubishi Chemical Holdings Corporation

3,598,790

2,514

Strengthen business alliance

Daikin Industries, Ltd.

300,000

2,413

Enhance business relationship
Enhance business relationship

3,140,665

2,298

4,547,000

2,292

Strengthen business alliance

ROHM Co., Ltd.

268,893

2,212

Enhance business relationship

2,199

Enhance business relationship1,300,000

1,857

Enhance business relationship

Sapporo Holdings Limited

3,796,388

1,807

Enhance business relationship

Mitsubishi UFJ Financial Group, Inc.

2,399,760

1,784

Enhance business relationship

SMK Corporation

3,200,000

1,667

Enhance business relationship

Ajinomoto Co., Inc.

630,931

1,662

Enhance business relationshipTosoh Corporation

2,609,000

1,581

Strengthen business allianceIsetan Mitsukoshi Holdings Ltd.

783,600

1,557

Enhance business relationship

KUBOTA Corporation

774,000

1,472

Enhance business relationshipShiseido Co., Ltd.

677,619

1,445

Enhance business relationship

Hulic Co., Ltd.

1,040,000

1,405

Enhance business relationship

Kobayashi Pharmaceutical Co., Ltd.

156,445

1,345

Enhance business relationship

Kikkoman Corporation

350,940

1,338

Enhance business relationship

Senshukai Co., Ltd.

1,511,663

1,315

Enhance business relationship

MORINAGA & CO., LTD.

2,965,000

1,251

Enhance business relationship

NIPPON STEEL & SUMITOMO METAL CORPORATION

3,905,768

1,181

Strengthen business allianceKDDI Corporation

142,200

1,160

Enhance business relationship

Financial Section

1,720,000

How DNP Works to Achieve
Sustainable Development

Hakuhodo DY Holdings Inc.
Mitsubishi Electric Corporation

Segment Information

Lion Corporation
TOSHIBA CORPORATION

Special Feature

37,700,000

DNP in Brief

Recruit Holdings Co., Ltd.
The Dai-ichi Life Insurance Co., Ltd.

To Our Shareholders

Company name

Stocks held in trust or other legal entity while retaining voting rights or voting instruction rights
Number ofsharesAmount recordedon balance sheet (¥ million)

Holding purpose

Terumo Corporation

3,861,000

12,239Hold voting instruction rights for shares in retirement benefit trust

Astellas Pharma Inc.

4,568,850

8,989

Hold voting instruction rights for shares in retirement benefit trust

TV Asahi Holdings Corporation

4,030,000

8,080

Hold voting instruction rights for shares in retirement benefit trust

Japan Tobacco Inc.

1,000,000

3,800

Hold voting instruction rights for shares in retirement benefit trust

Appendix

Note:

Company nameSpecified stocks and stocks held in trust with voting rights are not added together when selecting stocks with the largest amounts as recorded in the balance sheet.

(3) Stocks held for pure investment purposes
None

DNP Annual Report 201571

2 Compensation Paid to Accounting Auditors(1) Compensation paid to accounting auditors
Previous fiscal year
Compensation foraudit certification (¥ million)

Current fiscal year

Compensation forother services (¥ million)

Compensation foraudit certification (¥ million)

Compensation forother services (¥ million)

Dai Nippon Printing Co., Ltd.

92

—

96

—

Consolidated subsidiaries

121

—

127

—

Total

213

—

223

—

(2) Other material compensation details
None(3) Compensation paid to accounting auditors for services other than audit work provided to DNP
None(4) Determination of compensation for audit services
DNP’s compensation for audit services is determined based on a variety of factors, including the number of expecteddays for the audit and the company size.

72

Board of Directors, Statutory Auditors and Corporate Officers(As of June 26, 2015)

Managing Directors

Standing Statutory Auditors

Corporate Officers

Yoshitoshi Kitajima

Kunikazu Akishige

Kazunari Tanaka

Kiyotaka Nakagawa

Motoharu Kitajima

Naoki Hoshino

Naohiko Sugimoto

Executive Vice Presidents

Masaki Tsukada

Shin-ichi Ikeda*

Shuichi Kobayashi

Koichi Takanami

Sakae Hikita

Masayoshi Yamada

Fujio Yamazaki

Statutory Auditors

Ryota Chiba

Yoshinari Kitajima

Takashi Saito

Makoto Matsuura*

Nobuyuki Asaba

Kouichi Hashimoto

Kuniaki Nomura*

Mitsuru Tsuchiya

Satoru Inoue

Mitsuhiko Hakii

Hirofumi Hashimoto
Senior Corporate Officers

Kazuhiko Sugita

Masahiko Wada

Directors

Shigemi Furuya

Masafumi Kuroyanagi

Tetsuji Morino

Tadao Tsukada*

Ryuji Minemura

Tokuji Kanda

Tsukasa Miyajima*

Masato Koike

DNP in Brief

Senior Managing Directors

Kazuhiko Takada

To Our Shareholders

President*Outside directors or auditors

Masato Yamaguchi
Special Feature

Morihiro Muramoto
Kenji Miya
Toshiki Sugimoto

Segment Information
How DNP Works to Achieve
Sustainable Development
Financial Section
Appendix

Yoshinari Kitajima

Koichi Takanami

Yoshitoshi Kitajima

Masayoshi Yamada

DNP Annual Report 201573

Financial Section

CONTENTS
76 Management’s Discussion and Analysis
86 Selected Financial Data (unaudited)
88 Consolidated Financial Statements
110 Independent Auditors’ Report74

To Our Shareholders

DNP in Brief

Special Feature

Segment Information

How DNP Works to Achieve
Sustainable Development
Financial Section

Appendix75

DNP Annual Report 2015

Management’s Discussion and Analysis

Operating Results■ Business Environment
Japan’s economy maintained modest growth during the current fiscal year (April
2014–March 2015), aided by government economic policies and monetaryeasing by the Bank of Japan. However, the economy has still not reached afull-fledged recovery, due partly to sluggish consumer spending after the
consumption tax hike and higher prices for imported products (e.g., rawmaterials) due to the weak yen trend. The printing industry continued to face atough business environment, due partly to a decline in order prices amid weak
demand and stiffer competition, and higher raw material costs. A discussion of
the business environment affecting each of DNP’s business segments is provided
below.
Information Communication● In the Books and Magazines business and the Education and Publications
Distribution business, demand continued to slump on an ongoing contraction of
the publications market since 1997 and the impact of a consumption tax hike.
Publication industry sales fell 3.9% year on year to ¥1,594.6 billion (according to
The Research Institute for Publications, Japan). Magazine sales fell 3.9% to¥849.0 billion on a decline in circulation and increase in the number of
discontinued publications. Book sales were also down 3.9% at ¥745.5 billion
amid few hit titles. Concerning the e-book business, the e-book market grew arobust 35.3% year on year to ¥126.6 billion during the fiscal year ended March
2015, and adding e-magazines, the overall electronic publishing market totaled¥141.1 billion (according to Impress Research Institute, Ltd.).
● In the Commercial Printing business, corporate advertising expenditures grew
2.3% year on year in the fiscal year ended March 2015 (according to the
Ministry of Economy, Trade and Industry). However, while television andinternet advertising increased, sales promotions on printed material decreasedby 2.3%. Sales were also affected by declines for advertising flyers and direct
mail, and by a shift to internet distribution of product catalogs and instruction
manuals.
● In the Business Forms business, as part of efforts to cut costs and streamline
operations, more companies are using websites to post various notifications
and respond to applications and inquires. Ensuring high-level information
security is becoming more important due to the online exchange of sensitive
corporate data and consumers’ personal information. In line with these trends,
the market for Business Process Outsourcing (BPO) is gaining momentum.
Outsourcing demand has expanded as a result of major financial institutions
revising their business operations, and the Japan Consumer Credit Association
has hastened the introduction of smart cards as a result of setting a target ofusing smart cards for 80% of all credit cards by December 2016 with the aimon enhancing security.
Lifestyle and Industrial Supplies● The pullback in reaction to front-loaded demand ahead of the consumption
tax hike generally ended in the second half of the fiscal year through March2015. However, consumer spending was sluggish for daily goods (e.g.,
toiletries), foods, and beverages, and demand continued to decline for
packaging materials. Meanwhile, consumption of foods, daily goods, andother daily necessities increased in ASEAN amid ongoing economic growth,and demand has expanded for packaging materials, mainly film packaging.

76

In the Lifestyle Materials business (including decorative materials), domestic
housing starts fell 10.8% year on year to around 880,000 units during the
fiscal year ended March 2015, the first decrease in five years (according to the
Ministry of Land, Infrastructure, Transport, and Tourism). In addition to areaction to front-loaded demand toward the end of the previous fiscal year
before the consumption tax hike, housing starts were affected by higher
construction costs for materials, labor, and other items.
● In the Industrial Supplies business, the commercial photo printing market saw
a shift mainly in North America from conventional silver halide development
systems to dry methods that do not use developing solutions. In energyrelated business, domestic solar cell shipment volume (power generation
capacity equivalent) grew 8% year on year to an all-time high of 9,216,325
kilowatts in fiscal 2014 on growth for industrial applications, mainly largescale solar power generation plants (mega solar) (according to the Japan
Photovoltaic Energy Association). However, the installation of solar power
generation panels has slowed, due partly to inadequate supply of suitablesites for mega solar projects and to a sharp rise in construction material costs.

To Our Shareholders●

DNP in Brief
Special Feature
Segment Information

Electronics● In the display panel market in 2014, panel makers in China and elsewhere
maintained high capacity utilization, especially in the production of large ultra
HD TV panels with high profitability. TV panel prices rose from April 2014 for
50–60-inch ultra HD models, and prices also fell only slightly for 32-inchmodels amid high shipment volume. However, laptop PC panels were inoversupply, and tablet panels were pressured by ever larger smartphones.
Panel prices decreased for both applications.
● In the semiconductor market, PC shipment value fell 0.8% year on year in2014, but demand trends differed between emerging and developed markets.
In emerging markets, PC shipment volume dropped 9.5% year on year on
reductions in public works spending, spread of smartphones, and otherfactors. In developed markets, meanwhile, shipment volume rose 8.4%, thefirst increase in four years, due to replacement demand for U.S.-based
Microsoft’s Windows XP operating system and a decline in PC prices. Goingforward, the semiconductor market is expected to see growing demandmainly in the U.S. and Asia in a wide range of areas, including for digital home
appliances and automobiles. World Semiconductor Trade Statistics (WSTS)
forecasts annual growth of around 3% in 2015–2016.

How DNP Works to Achieve
Sustainable Development
Financial Section
Appendix

Beverages● As consumers have become more heath conscious in recent years, thebeverage industry has seen growth for teas, mineral waters, beverages
classified as food for specified health use (FOSHU), and vegetable drinks.
Meanwhile, carbonated drinks have trended downward. The businessenvironment remained difficult in the fiscal year ended March 2015, due partly
to the consumption tax hike and unseasonable summer weather. The locationof consumer contact with soft drinks is also changing, as indicated in part by
growth for coffees at convenience stores.

DNP Annual Report 201577

■ Overview
DNP, based on its P&I Solutions business vision, has aggressively pursued
domestic and overseas business from consumer and social perspectives under
the catchphrase “Today’s Innovation is Tomorrow’s Basic.” It has also
implemented structural reforms, including business structure reorganization,from the standpoint of overall optimization. As a result, DNP’s consolidated net
sales grew 0.9% year on year to ¥1,462,118 million in the fiscal year ended
March 2015.
Consolidated operating income fell 3.8% year on year to ¥48,174 million, duepartly to the impact of price cuts and higher raw material costs, and to a slump
for paper printed material in the Information Communication segment. The
consolidated operating income margin fell by 0.2 percentage points to 3.3%.
The operating income margin decreased by 0.6 percentage points to 1.1% in
the Information Communication segment, increased by 0.4 percentage points to
5.0% in the Lifestyle and Industrial Supplies segment, decreased by 0.2
percentage points to 10.6% in the Electronics segment, and increased by 0.6
percentage points to 1.8% in the Beverages segment.
		2015.3		2014.3		2013.3
Net sales (¥ million)¥ 1,462,118¥ 1,448,550¥

1,446,607

Gross profit margin (%) 		

19.1%		

18.8%		

18.0%Operating income margin (%) 		

3.3%		

3.5%		

2.5%

Ordinary income margin (%)		

3.7%		

3.7%		

2.8%

Net income margin (%)		
1.8%		

1.8%		

1.3%

Net income per share (¥)

¥

41.82

¥

39.82

¥

29.84

■ Net Sales
Net sales totaled ¥1,462,118 million in the current fiscal year, up 0.9%, or¥13,568 million, from the previous year. Foods, daily goods, and other products
subject to the strong consumer focus on low prices did not benefit much froman economic recovery and were affected by discount demands amid continued
stiff competition.
Net Sales by Segment(Year ended March 2015)

Beverages
4.1%
Electronics
15.7%

Lifestyle andIndustrial Supplies
32.6%

78

Information
Communication
47.6%

Information Communication
In the Books and Magazines business, sales decreased for both magazines andbooks, due mainly to an increase in discontinued magazines, a decrease incirculation and pages, and a decline in book best sellers. In the Commercial
Printing business, DNP strengthened cooperation with other business segments
and worked to expand new business, including by providing information
distribution services using digital signage to companies in the transport, tourism
and distribution industries. However, overall sales fell below year-ago levels due
to weak sales throughout the year for flyers, catalogs, and point-of-salematerials for in-store sales promotion. In the Business Forms business, smart cardsales increased for financial institutions and electronic money, and settlement
services expanded favorably, including international brand prepaid systems.
However, Information Processing Services (IPS; ranging from data entry toprinting and shipment of personalized mail and other items) were sluggish, andoverall sales decreased. In the Education and Publications Distribution business,amid a downturn in sales of books and magazines, sales in this businessincreased on contributions from favorable sales in the library support business,

To Our Shareholders

growth in online sales and e-book sales, making SHUFUNOTOMO Co., Ltd. a
consolidated subsidiary, and other factors.
As a result, overall segment sales fell by 0.2%, or ¥1,352 million, to ¥698,952
million.

DNP in Brief

Lifestyle and Industrial Supplies
In the Packaging business, sales of paper packaging decreased, but overall sales
increased on growth in sales of aseptic PET plastic bottle filling systems andstrong overseas sales, especially in Indonesia. In the Lifestyle Materials business,
DNP focused on sales of interior materials that use its proprietary Electron Beamcoating technology, but overall sales decreased, affected mainly by weakdomestic housing starts. In the Industrial Supplies business, sales of dyesublimation thermal transfer printing media for photo printing increased onmarket growth in North America and Europe and the launch of full operations at
the Malaysian plant that opened in December 2013. Sales of thermal resin-typetransfer printing media for printing barcodes also increased, due mainly to
growing overseas demand, especially in North America and Latin America.
As a result, overall segment sales rose by 2.5%, or ¥11,780 million, to¥479,453 million.

Special Feature

DNP’s Overseas Sales(¥ billion)

250
216.5

Overseas sales totaled ¥230,205 million in the current fiscal year, up 6.4%, or¥13,748 million, from the previous year. The ratio to overall sales was 15.7%, up
0.8 percentage points from 14.9%. By region, sales in Asia (mainly South Korea,
Taiwan, China, and Indonesia) were up 5.4% from the previous year at¥160,681 million, and other regions (mainly the U.S., France, UK, and Germany)
were up 8.7% at ¥69,524 million.

197.6

192.2

195.6

11

12

13

Financial Section

200

230.2

How DNP Works to Achieve
Sustainable Development

Beverages
Overall segment sales grew by 8.8%, or ¥4,833 million, to ¥59,641 million,
driven by high growth for I LOHAS, a brand of mineral water that uses alightweight PET bottle, and by efforts to bolster sales of new products and core
brand products.

Segment Information

Electronics
Sales of color filters for LCD displays increased for large TVs, but decreased
overall on a decline for mobile devices. Optical film sales increased, despite adecline for 3D TV films, due to growth for surface films for polarizing plates.
For photomasks, DNP focused on acquiring overseas demand, but sales
decreased on a decline in domestic demand. For lead frames and otherproducts, the company worked to expand sales of high-value-added etchingproducts, but sales decreased on lower demand for printed wiring boards.
As a result, overall segment sales fell by 0.7%, or ¥1,686 million, to ¥230,306
million.

150

100

50

14

15

DNP Annual Report 2015

Appendix079

■ Cost of Sales
Gross Profit Margin
(%)

25

20

19.0
17.3

18.0

18.8

19.1

14

15

15

10

5

0

11

12

13

■ Selling, General and Administrative Expenses

SGA Expenses to Net Sales
(%)

20

16

14.7

15.0

15.5

15.4

15.8

12

Operating income totaled ¥48,174 million in the current fiscal year, down 3.8%,
or ¥1,925 million, from the previous year. The operating income margin was
3.3%, down 0.2 percentage points from 3.5% in the previous year.

4

11

12

13

14

15

Operating Income Margin
(%)

10

8

6
4.3
3.5

4

3.3

2.5

2

0

Selling, general and administrative expenses totaled ¥230,990 million in thecurrent fiscal year, up 3.9%, or ¥8,616 million, from the previous year. Selling,
general and administrative expenses equated to 15.8% of net sales, up 0.4
percentage points from the previous year.

■ Operating Income

80

The cost of sales totaled ¥1,182,954 million, up 0.6%, or ¥6,877 million, fromthe previous year. The gross profit margin was 19.1%, up 0.3 percentage points
from 18.8%.
Prices increased for resins, films, and other petrochemical products and forprinting paper, but higher raw material costs had a ¥5.2 billion impact in thecurrent fiscal year, down ¥1.1 billion from ¥6.3 billion in the previous year. DNP
worked to pass through these costs to product prices throughout the year,
achieving a pass-through rate of 90% in the current fiscal year, versus just 40%
in the previous year.
DNP pursued several cost-cutting initiatives including a reduction of personnel
costs from cutting overtime hours, reduction of equipment and repair costs fromthe sale and disposal of equipment while consolidating manufacturing
processes, and improvements in production efficiency, yields, and material losses
from organizational integration in the Information Communication segment andPackaging operations. As a result, DNP cut costs by ¥27.8 billion during thecurrent fiscal year.

2.3

11

12

13

14

15

Information Communications
In addition to growth for smart cards (e.g., electronic money for financial
institutions) and settlement services (e.g., international brand prepaid systems),
DNP worked to cut costs in manufacturing segments by raising the ratio ofinternal production. Nevertheless, segment operating income totaled ¥7,534
million, down 36.7%, or ¥4,367 million, from the previous year, as a result ofprice declines caused by stiffer competition, higher raw material costs, increased
outlays for developing e-books and other new businesses, and other factors.
The operating income margin was 1.1%, down 0.6 percentage points from
1.7% in the previous year.
Lifestyle and Industrial Supplies
DNP was affected by higher costs for raw materials, mainly for films and otherpetrochemical products. However, segment operating income totaled ¥23,996
million, up 10.5%, or ¥2,273 million, from the previous year, due to efforts toincrease business efficiency and pass through higher costs to product prices, anincrease in sales of main products, and weak yen benefits when exporting photo
printing materials. The operating income margin was 5.0%, up 0.4 percentage
points from 4.6% in the previous year.
Electronics
Depreciation decreased by ¥5,349 million from the previous year as a result ofefforts in recent years to sell surplus equipment while restraining large
investment, among other factors. However, segment operating income totaled80

To Our Shareholders¥24,428 million, down 2.7%, or ¥690 million, from the previous year, due partly
to price cuts prompted by stiffer competition. The operating income margin was
10.6%, down 0.2 percentage points from 10.8% in the previous year.

DNP in Brief

Beverages
Segment operating income totaled ¥1,077 million, up 65.3%, or ¥425 million,
from the previous year, due to higher sales and rigorous cost-cutting efforts. The
operating income margin was 1.8%, up 0.6 percentage points from 1.2% in theprevious year.

■ Nonoperating Income (Expenses) and Extraordinary Income (Losses)

Special Feature
Segment Information

ROE
(%)

7
6

■ Net Income
Net income totaled ¥26,924 million, up 5.0%, or ¥1,282 million, from theprevious year. Net income per share was ¥41.82, up ¥2.00.

5
4
3

2.7

2.8

2.7

14

15

2.2

2
1

How DNP Works to Achieve
Sustainable Development

Nonoperating income totaled ¥12,536 million, up 19.3%, or ¥2,029 million,
from the previous year; and nonoperating expenses totaled ¥6,950 million,
down 5.1%, or ¥370 million. As a result, net nonoperating income was ¥5,586
million.
Ordinary income totaled ¥53,759 million, up 0.9%, or ¥474 million, from theprevious year.
Extraordinary income totaled ¥4,845 million, up ¥2,527 million from theprevious year. Key items included gains on the sale of property, plant andequipment of ¥245 million, down ¥764 million from ¥1,009 million in theprevious year; and gains on the sale of investment securities of ¥4,442 million,up ¥4,094 million from ¥348 million in the previous year. Extraordinary losses
totaled ¥7,543 million, up ¥548 million from the previous year. Key items
included decreases in losses on the disposal of property, plant and equipment
and in other losses; and business integration losses of ¥4,342 million. As aresult, net extraordinary losses totaled ¥2,698 million, down from ¥4,677 million
in the previous year.
As a result of the above, income before income taxes and minority interests
totaled ¥51,062 million, up ¥2,454 million from the previous year.

0

–2
–3

– 1.8

11

12

13

Financial Section–1

Appendix

DNP Annual Report 201581

Liquidity and Capital Resources■ Cash Flow
		2015.3		2014.3		2013.3
Cash flow from operating activities ¥

85,731

Cash flow from investing activities		 （50,540）
Free cash flow¥

120,109（58,371）		

¥100,498（72,588）

35,191		 61,738		27,910(¥ million)

Interest-bearing Debt to Cash Flow Ratio(times)

2.5
2.3

2.1

2.2

2.0
1.6

1.5

1.5

1.0

0.5

0

11

12

13

14

15

Capital Expenditures and Free Cash Flow(¥ billion)

200

150

100

102.2

98.2

88.3
63.5 61.7

57.5

50
28.5

0

11

12

Capital expenditures

82

13

55.0
35.2

27.9

14

Free cash flow

15

Net cash provided by operating activities totaled ¥85,731 million, down 28.6%
from the previous year.
Net cash used in investing activities totaled ¥50,540 million, down 13.4%, or¥7,831 million, from ¥58,371 million in the previous year.
Net cash used in financing activities totaled ¥23,865 million, down ¥56,173
million, from ¥80,038 million in the previous year.
As a result of these activities, cash and cash equivalents at the end of the
fiscal year totaled ¥212,762 million, up 6.5%, or ¥12,949 million, from theprevious year.
Free cash flow—i.e., net cash provided by operating activities minus net cashused in investing activities—was ¥35,191 million, down ¥26,547 million from¥61,738 million in the previous year.

■

Capital Expenditures; Depreciation; Research and Development
Expenditures, etc.

Capital expenditures this fiscal year were mainly invested in streamlining, andtotaled ¥55.0 billion, down 13.3%, or ¥8.4 billion, from the previous year. By
segment, capital expenditures in the Information Communication segment were
¥17.8 billion, down ¥5.9 billion from the previous year and accounting for 32%
of total capital expenditures. The Lifestyle and Industrial Supplies segment was¥18.5 billion, down ¥7.2 billion and accounting for 34%. The Electronics
segment was ¥14.3 billion, up ¥4.8 billion and accounting for 26%. Other
businesses were ¥4.4 billion, unchanged and accounting for 8%.
Depreciation totaled ¥67.0 billion, down 8.7%, or ¥6.4 billion, from theprevious year. By segment, depreciation in the Information Communication
segment was ¥22.6 billion, up ¥0.6 billion from the previous year and accounting
for 34% of total depreciation. The Lifestyle and Industrial Supplies segment was¥20.9 billion, down ¥1.5 billion and accounting for 31%. The Electronics segment
was ¥18.4 billion, down ¥5.3 billion and accounting for 27%. Other businesses
were ¥5.1 billion, down ¥0.2 billion and accounting for 8%.
Research and development expenditures totaled ¥31.7 billion, up 3% from¥30.8 billion in the previous year.

To Our Shareholders■ The Balance Sheet		2015.3		2014.3		2013.3
Total assets (¥ million)¥ 1,809,462¥ 1,574,754¥ 1,578,976

Current ratio (%) 		
175%

175%		164%

Working capital/net sales (%)		22%22%		20%

Debt-to-equity ratio (%) 		
17%¥

1,675.63

20%		25%¥

1,447.96¥

DNP in Brief

Net assets per share (¥)

1,386.86

Current Ratio
(%)

200

177

177
164

175

175

14

15

150

Special Feature

100

50

0

11

13

55.1

54.2

56.6

11

12

13

How DNP Works to Achieve
Sustainable Development

12

Equity Ratio
(%)

80

60

Segment Information

59.2

59.6

Financial Section

DNP’s total assets at the end of this fiscal year amounted to ¥1,809,462 million,
up 14.9%, or ¥234,708 million, from the previous year.
Among current assets, cash and cash equivalents and time deposits totaled¥213,979 million, up 5.3%, or ¥10,767 million, from the previous year. Trade
receivables totaled ¥366,068 million, up 2.5%, or ¥9,087 million. Inventories ofmerchandise and finished products, work in process, raw materials and supplies
totaled ¥147,906 million, up 5.9%, or ¥8,250 million. As a result, current assets
totaled ¥763,122 million, up 4.1%, or ¥30,068 million.
Among long-term assets, property, plant and equipment totaled ¥512,791
million, down 3.0%, or ¥15,747 million, from the previous year. Intangible assets
totaled ¥30,583 million, down 3.7%, or ¥1,168 million. Investments and otherassets totaled ¥502,966 million, up 78.7%, or ¥221,557 million. As a result,long-term assets totaled ¥1,046,340 million, up 24.3%, or ¥204,641 million.
Current liabilities totaled ¥435,405 million, up 4.1%, or ¥16,982 million, fromthe previous year. Long-term liabilities totaled ¥249,965 million, up 38.9%, or¥70,019 million. As a result, total liabilities amounted to ¥685,370 million, up
14.5%, or ¥87,001 million.
Additionally, net assets totaled ¥1,124,092 million, up 15.1%, or ¥147,707
million.
DNP repurchased a total of about 112.86 million of its shares between fiscal
2002 and fiscal 2008 and retired 59 million treasury shares between fiscal 2004
and fiscal 2008. As of March 31, 2015, the number of treasury shares totaled
56,647,614, or 8.09% of total shares outstanding of 700,480,693 shares. The
number of treasury shares increased by 60,784 shares from the previous year
due to the purchase and sale of odd-lot shares.
DNP will repurchase up to 18 million shares between May 15 and August 31,
2015 (the maximum purchase amount is ¥20 billion). It also retired 20 million
treasury shares on May 28, 2015.

40

20

0

15

DNP Annual Report 2015

Appendix14

83

Business Risks
The performance and the results of DNP could be significantly affected by a variety of factors and circumstances that might arise in
the future. Because DNP is aware of these risk factors, its policy is to strive to minimize their potential effects.
The Company considers the following factors to be key risks, as of the publication date of this annual report.

■

The Japanese and overseas economies andconsumption trends

DNP engages in a wide range of businesses with an extremely
large number of corporate customers, and conducts steadily its
business so as not to overly depend on specific customers. DNP
does most of its business in the Japanese market, but if
consumer spending and other components of domestic demand
slump, owing to domestic economic weakness in sympathy with
global economic trends, declines in order volume and unit prices
may affect its corporate performance. Additionally, DNP could
be directly or indirectly affected by market trends in various
industries in Japan or overseas. In particular, electronics-relatedindustries are susceptible to global declines in unit prices causedby an expansion of production in emerging countries andchanges in demand, and DNP’s performance could be affectedby major changes in market trends.

■ Overseas business activities
DNP conducts overseas business activities in the Americas,
Europe, Southeast Asia, and elsewhere, and these activities facerisks including social and political turmoil caused not only byeconomic factors, such as unexpected changes in laws andregulations, stricter environmental laws and regulations, fragilityof industrial infrastructure, and difficulty of hiring and securingpersonnel, but also by terrorism, war, and other factors. DNP’sperformance could be affected if its overseas business activities
are obstructed as a result of these risks materializing.

■ Development of new products and services
DNP uses its printing and information technologies to develop
and provide to a broad range of industries products and services
that solve problems facing companies, consumers, and society.
The pace of technological innovation in these areas has been
accelerating, and customers’ needs have been rapidly
diversifying. We believe that, in the future, competition in thearea of product development will become more intense thanever before in Japan and overseas, and it is possible that DNP’sperformance could fluctuate significantly due to unforeseeablechanges in market trends or a shortening of product life cycles.

84■

Strategic business and capital alliances andcorporate acquisitions

DNP engages in strategic business and capital alliances andcorporate acquisitions, and its performance could be affected if
it is unable to achieve initially expected results and synergies asa result of deterioration in the business environment affecting
the companies and businesses involved in these alliances andacquisitions.

■ Fluctuations in raw material procurement
We work hard to secure stable supplies and maintain optimal
prices by procuring raw materials such as printing paper and film
from multiple suppliers in Japan and overseas. However, there issome potential for temporary imbalances between supply anddemand due to sharp fluctuations in petroleum prices, sudden
surges in demand from emerging markets, and the impact ofmajor disasters, the depletion of natural resources, and climatechange. DNP will respond during such times by negotiating withclient companies and business partners, but its performance
could be affected if raw materials procurement becomes
extremely difficult or if purchasing prices rise sharply.

■ Currency fluctuations
Particularly in fields such as Lifestyle and Industrial Supplies, andElectronics, we are expanding our dealings in products andservices with overseas customers. Because we expect the effectsof currency rates to gradually become more important, we use
such means as foreign exchange forward contracts to hedge therisks of currency fluctuations. Nevertheless, it is possible thatradical swings in currency values could have a more serious
effect on DNP’s performance.

Environmental protection andstricter environmental regulations

Information security andpersonal information protection

Special Feature■

DNP works to establish corporate ethics throughout the groupand earn the trust of society by each and every employee
complying with laws and regulations in conducting businessactivities, maintaining higher ethical standards than required bysociety, and contributing to maintaining and advancing orderly
and freely competitive markets with a consistently fair attitude.
Nevertheless, DNP’s performance could be affected in the eventof being subject to lawsuits and resulting fines in Japan oroverseas.

DNP in Brief

DNP is affected by legal regulations in Japan and other countries
related to energy conservation, climate change prevention (e.g.
reduction of greenhouse gas emissions), reduction of the use ofharmful substances, air pollution prevention, water quality
protection, waste treatment, and product recycling. These
regulations could possibly be strengthened or changed in the
future. In addition, DNP’s business could be substantiallyaffected if faced with a situation in which soil is contaminatedby harmful substances and it is held responsible for assessment
and cleanup.

■ Lawsuits and fines

To Our Shareholders■

Segment Information

Computer networks and information systems have become
essential tools for conducting business, and there are now
greater risks of software and hardware defects, computer virus
infections, and personal data leaks. DNP regards the protectionof data and personal information as a top priority. It is doing all
it can to protect and maintain systems and data bystrengthening its organization and training employees, but if
problems arise in these areas, then its business activity could be
affected.

■ Response to changes in legal regulations, etc.

How DNP Works to Achieve
Sustainable Development

We conduct our business based on strict compliance with thelaw and social ethics. Wherever we operate, in Japan oroverseas, we are subject to a wide variety of legal regulations
and restrictions, including laws related to product liability,
monopoly prohibitions, the protection of personal information,patents, taxes, imports and exports, etc. We can imagine that in
the future such regulations could become even more restrictive.
On the other hand, market and industry trends may change
substantially as a result of deregulation. If that should occur, it ispossible that DNP’s business performance could be affected bylimitations on its business activities, the burden of responding toregulatory changes, or increased costs.

Financial Section■ Disasters

Appendix

DNP takes steps to protect production equipment and othermajor facilities from fires and earthquakes, seeks to disperse
production facilities, and works to minimize production
shutdowns and product supply disruptions caused by disasters.
We also use various types of insurance to transfer risk.
Nevertheless, DNP’s performance could be substantially affectedin the event of major earthquakes, natural disasters such as
heavy rainfall or flooding caused by climate change, disease
outbreaks, or other unexpected events that cause production
shutdowns or significantly damage or impair the social
infrastructure.

DNP Annual Report 201585

Selected Financial Data (unaudited)
Dai Nippon Printing Co., Ltd. and Consolidated Subsidiaries
Years ended March 31

2015

2014

2013

2012

Statements of Operations Data (¥ million)¥ 1,462,118¥ 1,448,550¥ 1,446,607¥ 1,507,228

Cost of sales		1,182,954

		1,176,077

		1,186,558

		1,246,878

Gross profit

		 279,164

		 272,473

		 260,049

		 260,350

Selling, general and administrative expenses

		 230,990

		 222,374

		 224,269

		 226,335

Operating income		48,174

		

50,099		

35,780		

34,015

Ordinary income		

53,759		

53,285

		

40,318

		

36,843

Income (loss) before income taxes and minority interests 		

51,062

		

48,608

		

35,152

		

2,673

		

26,924

		

25,642

		

19,218

		 (16,356)

Net sales

Net income (loss)
Balance Sheet Data (¥ million)¥ 1,809,462¥ 1,574,754¥ 1,578,976¥ 1,608,806

Property, plant and equipment—net

		 512,791

		 528,538

		 538,455

		 579,567

Long-term liabilities

		 249,965

		 179,946

		 184,136

		 251,414

Total liabilities

		 685,370

		 598,369

		 641,921

		 694,593

Total stockholders’ equity

		

		

		

		

Stockholders’ equity

		 902,217

		 892,110

		 887,194

		 888,650

Total net assets

		1,124,092

		 976,385

		 937,055

		 914,213

Total assets

–

–

–

–

Other Selected Data (¥ million)
Capital expenditures¥

55,024¥63,465¥88,315¥98,189Depreciation expenses

		67,034

		

73,459		

80,200		

95,829R&D expenditures		

31,748

		

30,820		

30,820		

31,690

¥

41.82

¥

39.82

¥

29.84

¥

(25.39)Earnings (loss) per share—fully diluted

		

41.44

		

39.65

		

29.79

		

–

Dividends paid per share

		

32.00

		

32.00

		

32.00

		

32.00

Book value per share		 1,675.63

		 1,447.96

		 1,386.86

		 1,352.71

No. of common shares outstanding (exc. treasury shares) 		643,833,079

		643,893,863

		643,990,364

		644,062,928

Common Share Data (¥, shares)
Earnings (loss) per share—primary

Financial Ratios (%, times)
As a percent of net sales:
		 Gross profit

		 19.09%

		 18.81%

		 17.98%

		 17.27%

		 Selling, general and administrative expenses

		 15.80

		 15.35

		 15.50

		 15.02

		 Operating income

		 3.29

		 3.46

		 2.47

		 2.26

		 Income (loss) before income taxes and minority interests		 3.49

		 3.36		 2.43		 0.18

		 Net income (loss)

		 1.84		 1.77		 1.33

		 -1.09

Return on equity

		 2.67		 2.81		 2.18

		 -1.84

Current ratio

		

175

		

175

		

164

		

177

D/E ratio

		

17

		

20

		

25

		

26

		
86

		

		

		

2011
1,589,373

¥

2009

2008

2007

2006

¥ 1,584,844¥ 1,616,053¥ 1,557,802¥ 1,507,506

		 1,287,581

		 1,286,682

		1,324,522

		1,327,872

		1,268,072

		1,202,160

		

301,792		

296,701

		 260,322

		 288,181

		 289,730

		 305,346

		

233,973		

230,187

		 214,145

		 201,077

		 193,585

		 184,676

		

67,819		

66,514

		

46,177

		87,104

		

96,145

		 120,670

		62,786

		68,841

		

47,390		

86,502

		 101,348

		 124,715

		52,696

		

49,496

		 (27,842)

		88,469		

98,950		 114,640

		

25,033

		23,278		 (20,933)

		

45,172

		

54,842

		¥

1,649,784¥

1,618,854¥ 1,536,557¥ 1,601,193¥ 1,700,250¥ 1,662,377

		614,827

		

616,848

		 604,904

		 639,343

		 635,784

		 568,966

		249,575		

190,045

		 126,671

		 106,691

		 118,437

		 118,287

		697,343		

661,990

		 596,471

		 561,058

		 600,811

		 571,170

		

–

		

–

		

		

		

		1,063,309

		925,702		

921,775

		 917,348

		 990,122

		1,027,475

		

–

		

952,441		

956,864

		 940,086

		1,040,135

		1,099,439

		

–

¥

102,173¥

119,063		

97,977

		

91,695

		 106,883

		 109,902

		33,147

		

33,850		

34,112

		

¥

38.86

¥

36.13

¥

(32.35)¥¥

116,139¥–

162,886

136,059

		 100,161

		

87,26435,556

		30,113

		28,692

67.08

¥

78.10

¥

91.23

–

		

–

		

–

		

–

		

–

		

–

		

32.00

		

32.00

		

32.00

		

36.00

		

32.00

		

26.00

		

1,410.44

		

1,422.34

		 1,393.91

		 1,516.35

		 1,544.02

		 1,507.90

		644,238,930

		644,357,076

		661,366,377

		694,226,171

		704,972,101

644,142,530

		 18.74%

		 16.43%

		 17.83%

		 18.60%

		 20.26%

14.72

		 14.54

		 13.51

		 12.44

		 12.43

		 12.25

4.27

		

4.20

		 2.91		 5.39

		 6.17

		 8.00

3.32

		

3.13

		 -1.76

		 5.47

		 6.35

		 7.60

1.57

		

1.47

		 -1.32

		 2.80

		 3.52

		 4.32

2.74

		

2.57

		 -2.20

		 4.35

		 5.14

		 6.29

177

		

157

		

144

		

157

		

166

		

178

25

		

18

		

14

		

8

		

6

		

6

DNP Annual Report 2015

Appendix18.99%

Financial Section		

How DNP Works to Achieve
Sustainable Development¥

Segment Information

96,156–

65,188Special Feature¥–

DNP in Brief

1,583,383

To Our Shareholders

¥

2010

87

Consolidated Financial Statements

Consolidated Balance Sheets
Thousands of
U.S. dollars (Note 3)

Millions of yen

Dai Nippon Printing Co., Ltd. and Consolidated Subsidiaries
March 31, 2015 and 2014

2015

2015

2014

AssetsCurrent assets:
Cash and cash equivalents (Notes 4 and 15)
Time deposits (Note 15)
Trade receivables (Notes 10 and 15)
Allowance for doubtful receivables
Inventories (Note 6)
Prepaid expenses and other current assets (Notes 5, 10 and 13)
Total current assets¥

Investments and advances:Non-consolidated subsidiaries and associated companies(Notes 10 and 15)
Investment securities (Notes 5 and 15)
Other (Note 15)
Total investments and advances

Property, plant and equipment, at cost (Note 7) :Land
Buildings and structures
Machinery and equipment
Leased assets
Construction in progress
Total
Accumulated depreciation
Net property, plant and equipment
Other assets
Net defined benefit asset (Note 8)
Other (Notes 7 and 13)
Total other assets

Total assets

88¥

212,7621,217
366,068(822)
147,906
35,991
763,122¥

199,813
3,399
356,981(2,791)
139,656
35,996733,054$

1,773,017
10,142
3,050,567(6,850)1,232,550
299,924
6,359,350

51,835
346,053
8,072
405,960

33,935
183,877
8,634
226,446

431,958
2,883,775
67,267
3,383,000

154,094537,358
883,201
29,37841,458
1,645,489(1,132,698)
512,791

153,160
536,979
894,767
31,393
27,577
1,643,876(1,115,338)
528,538

1,284,117
4,477,983
7,360,008
244,817345,483
13,712,408(9,439,150)
4,273,258

65,931
61,658
127,589

19,234
67,482
86,716549,425
513,817
1,063,242

1,809,462¥

1,574,754$

15,078,850

Thousands of
U.S. dollars (Note 3)

Millions of yen

2015

2015

2014

Liabilities and Net Assets¥¥

48,962
14,330249,605
38,656
8,942
57,928418,423$444,758
94,092
2,157,392
335,175
67,292529,666
3,628,375

124,336
32,34893,281
249,965

119,305
29,55031,091
179,946

1,036,133
269,567
777,341
2,083,041

114,464
144,898
737,241

114,464
144,898
727,070

953,867
1,207,483
6,143,675(94,386)
902,217(94,322)892,110(786,550)
7,518,475

147,914(0)
7,247
21,450176,61116
45,248
1,124,092

34,5983
145
5,473
40,21916
44,040976,385

1,232,617(0)60,392
178,750
1,471,759
133
377,067
9,367,434

Special Feature

Long-term liabilities:
Long-term debt (Notes 7 and 15)
Net defined benefit liability (Note 8)
Other long-term liabilities (Notes 7 and 13)
Total long-term liabilities

53,371
11,291
258,887
40,221
8,075
63,560435,405

DNP in Brief

Current liabilities :Short-term bank loans (Notes 7 and 15)
Current portion of long-term debt (Notes 7 and 15)
Trade payables (Notes 10 and 15)
Accrued expenses (Note 10)
Income taxes payable (Note 13)
Other current liabilities (Notes 7, 10 and 13)
Total current liabilities

To Our Shareholders

Dai Nippon Printing Co., Ltd. and Consolidated Subsidiaries
March 31, 2015 and 2014

Contingent liabilities (Note 17)

1,809,462¥

1,574,754$

15,078,850

Financial Section¥

How DNP Works to Achieve
Sustainable Development

Total liabilities and net assets

Segment Information

Net assets
Stockholders’ equity
Common stock Authorized : 1,490,000,000 shares;
Issued : 700,480,693 shares;
Capital surplus (Note 9)
Retained earnings (Note 9)
Treasury stock, at cost
56,647,614 shares in 2015 and 56,586,830 shares in 2014 (Note 9)
Total stockholders’ equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Net deferred gains (losses) on hedges
Foreign currency translation adjustments
Remeasurements of defined benefit plans (Note 8)
Total accumulated other comprehensive income
Stock acquisition rights
Minority interests
Total net assets

The accompanying notes are an integral part of these consolidated financial statements.
Appendix

DNP Annual Report 201589

Consolidated Statements of Income
Thousands of
U.S. dollars (Note 3)

Millions of yen

Dai Nippon Printing Co., Ltd. and Consolidated Subsidiaries
Years ended March 31, 2015 and 2014

Net sales (Note 18)
Cost of sales (Notes 11 and 18)
Gross profit
Selling, general and administrative expenses (Notes 11 and 18)
Operating income

2015¥

1,462,118
1,182,954
279,164
230,990
48,174

Other income (expenses) (Note 12):Interest and dividends income
Interest expenses
Equity in earnings of affiliates
Foreign exchange transaction gain
Net loss on sale or disposal of property, plant and equipment
Net gain on sales of investment securities
Loss on devaluation of investment securities
Loss on business integration
Other

Income before income taxes and minority interests
Income taxes (Note 13):
Current
Deferred
Net income before minority interests
Minority interests
Net income¥

The accompanying notes are an integral part of these consolidated financial statements.

90

2015

2014
¥

1,448,550
1,176,077
272,473
222,374
50,099$12,184,317
9,857,950
2,326,367
1,924,917
401,450

4,138(2,453)
2,171
1,754(1,941)
4,456(67)(4,342)
(828)
2,888

3,738
(2,914)743
1,068(3,861)
385
(489)
–
(161)
(1,491)

34,483(20,442)
18,092
14,617(16,175)
37,133(558)(36,183)(6,900)24,06751,062

48,608425,517

14,097
8,475
22,57228,49014,5897,224
21,813
26,795

117,475
70,625
188,100
237,417(1,566)26,924¥(1,153)25,642$(13,050)
224,367

Consolidated Statements of Comprehensive Income
Thousands of
U.S. dollars (Note 3)

Millions of yen

28,490

¥

¥

2015

2014
¥

26,795$

237,417

113,164(31)
6,991
15,20015,125
1
13,099–943,033(258)
58,258
126,667

1,869
137,193
165,683

698
28,92355,71815,575
1,143,275
1,380,692

163,3162,367¥

54,4571,261$

1,360,967
19,725

U.S. dollars (Note 3)

2015

Special Feature

Yen

DNP in Brief

Net income before minority interests
Other comprehensive income
Valuation difference on available-for-sale securities
Net deferred gains (losses) on hedges
Foreign currency translation adjustments
Remeasurements of defined benefit plans
Share of other comprehensive income in associates
accounted for using the equity method
Total other comprehensive income
Comprehensive income
Attributable to:Shareholders of parent company
Minority interests

2015

To Our Shareholders

Dai Nippon Printing Co., Ltd. and Consolidated Subsidiaries
Years ended March 31, 2015 and 2014

2015

2014

¥

1,675.63¥

1,447.96$

13.96

Net income per common shareprimary

¥

41.82

¥

39.82

$

0.35

Net income per common share
fully diluted

¥

41.44

¥

39.65

$

0.35

How DNP Works to Achieve
Sustainable Development

The accompanying notes are an integral part of these consolidated financial statements.

Segment Information

Net assets per common share

Financial Section
Appendix

DNP Annual Report 201591

Consolidated Statements of Changes in Net Assets
Millions of yen

Dai Nippon Printing Co., Ltd. andConsolidated Subsidiaries
Years ended March 31, 2015 and 2014

Balance at April 1, 2013
Changes of items during the period
Net income
Cash dividends paid
Changes resulting from changeof scope of equity method
Purchases of treasury stock
Disposal of treasury stock
Changes in valuation difference
on available-for-sale securities
Changes in deferred gains (losses)on hedges
Changes in foreign currencytranslation adjustments
Changes in remeasurementsof defined benefit plans
Changes in minority interests
Total changes of items during the period
Balance at March 31, 2014
Cumulative effects of changes
in accounting policies
Adjusted balance at March 31, 2014
Changes of items during the period
Net income
Cash dividends paid
Changes resulting from changeof scope of consolidation
Changes resulting from changeof scope of equity method
Purchases of treasury stock
Disposal of treasury stock
Changes in valuation difference
on available-for-sale securities
Changes in deferred gains (losses)on hedges
Changes in foreign currencytranslation adjustments
Changes in remeasurementsof defined benefit plans
Changes in minority interests
Other
Total changes of items during the period
Balance at March 31, 2015

Stockholders’ equity

Accumulated other comprehensive income
Valuation
Foreign
Stock
RemeasureNet deferreddifference on
currency
ments of defined acquisition
available-for-sale gains (losses)
translationrightsbenefit planson hedges
securities
adjustments

Number ofsharesissued(in thousands)

Commonstock

CapitalsurplusRetainedearnings

700,480

114,464

144,898

722,058(94,226)

18,9089(12,987)–

16

43,915

–
–

–
–

–
–

25,642(20,625)

–
–

–
–

–
–

–
–

–
–

–
–

–
–

–
–
–

–
–
–

–
–
–

(4)
–
(1)

–
(97)
1

–
–
–

–
–
–

–
–
–

–
–
–

–
–
–

–
–
–

–

–

–

–

–

15,690

–

–

–

–

–

–

–

–

–

–

–

(6)

–

–

–

–

–

–

–

–

–

–

–

13,132

–

–

–

–
–
–
700,480–––
114,464–––
144,898––
5,012
727,070––(96)(94,322)––
15,69034,598

–
–
(6)
3

–
–
13,132
145

5,473
–
5,473
5,473

–
–
–
16

–
125
125
44,040–700,480–
114,464–
144,898

4,001
731,071–(94,322)–
34,598

–
3

–
145

–
5,473

–
16

(506)
43,534

–
–

–
–

–
–

26,924(20,622)

–
–

–
–

–
–

–
–

–
–

–
–

–
–

–

–

–

(141)

–

–

–

–

–

–

–

–
–
–

–
–
–

–
–
–

10
–
(1)

–
(67)
3

–
–
–

–
–
–

–
–
–

–
–
–

–
–
–

–
–
–

–

–

–

–

–

113,316

–

–

–

–

–

–

–

–

–

–

–

(3)

–

–

–

–

–

–

–

–

–

–

–

7,102

–

–

–

–
–
–
–
700,480––––
114,464––00144,898

–
–
–
6,170
737,241––0(64)(94,386)–––
113,316
147,914

–
–
–
(3)
(0)

–
–
–
7,102
7,247

15,977––
15,97721,450

–
–
–
–
16

–
1,714
–
1,714
45,248

Accumulated other comprehensive income
Valuation
Foreign
RemeasureStock
Net deferreddifference on
currency
ments of defined acquisition
available-for-sale gains (losses)
translation
benefit plansrightson hedges
securities
adjustments

Minority
interests

Treasurystock,
at costMinority
interests

Thousands of U.S. dollars (Note 3)

Balance at April 1, 2014
Cumulative effects of changes
in accounting policies
Adjusted balance at March 31, 2014
Changes of items during the period
Net income
Cash dividends paid
Changes resulting from changeof scope of consolidation
Changes resulting from changeof scope of equity method
Purchases of treasury stock
Disposal of treasury stock
Changes in valuation difference
on available-for-sale securities
Changes in deferred gains (losses)on hedges
Changes in foreign currencytranslation adjustments
Changes in remeasurementsof defined benefit plans
Changes in minority interests
Other
Total changes of items during the period
Balance at March 31, 2015

Stockholders’ equity

Number ofsharesissued(in thousands)

Commonstock

CapitalsurplusRetainedearnings

700,480

953,867 1,207,483

6,058,917(786,017)

288,31725

1,208

45,608133

367,000–
700,480––
953,867 1,207,483

33,342
6,092,259–(786,017)–
288,317

–
25

–
1,208

–
45,608–133(4,217)362,783

–
–

–
–

–
–

224,367(171,850)

–
–

–
–

–
–

–
–

–
–

–
–

–
–

–

–

–

(1,175)

–

–

–

–

–

–

–

–
–
–

–
–
–

–
–
–

83
–
(9)

–
(558)
25

–
–
–

–
–
–

–
–
–

–
–
–

–
–
–

–
–
–

–

–

–

–

–

944,300

–

–

–

–

–

–

–

–

–

–

–

(25)

–

–

–

–

–

–

–

–

–

–

–

59,184

–

–

–

–
–
–
–
–
0
–
0
953,867 1,207,483–––
51,416
6,143,675

–
–
0
(533)
(786,550)–––
944,300
1,232,617

–
–
–
(25)
(0)

–
–
–
59,18460,392

133,142––
133,142
178,750

–
–
–
–
133

–
14,284–
14,284
377,067––––
700,480

The accompanying notes are an integral part of these consolidated financial statements.

92

Treasurystock,
at costConsolidated Statements of Cash Flows
Thousands of
U.S. dollars (Note 3)

Millions of yen

Dai Nippon Printing Co., Ltd. and Consolidated Subsidiaries
Years ended March 31, 2015 and 2014

51,062¥¥

48,608$425,517(104,225)(47,592)
39,725
123,934
844,767(1,275)(129,067)
714,425

2,161(52,627)
3,961(2,330)7,846(8,989)(1,484)(54,876)
7,168(7,922)
1,232(7,766)18,008(438,558)
33,008(19,416)
65,383(74,908)(675)–(5,625)–
4,990(4,877)(50,540)

796
5,127
(646)
(58,371)–
41,583(40,641)(421,166)

4,029
11,153(10,232)
2,947(1,850)(2,443)(20,613)(365)(68)(6,423)(23,865)
2,790
14,116
199,813168
9,227(7,453)
850(50,760)(2,956)(20,625)(440)(99)(7,950)(80,038)
6,051(12,249)
212,062

33,57592,942(85,266)
24,558(15,417)(20,358)(171,775)(3,042)(567)(53,525)(198,875)
23,250117,634
1,665,108

64

–

533

(1,274)–(10,616)43
212,762¥–
199,813$

Appendix

15,085
3,042(6,147)
1,703
134,699(249)(14,341)
120,109

Financial Section(12,507)(5,711)
4,767
14,872
101,372(153)(15,488)
85,731

How DNP Works to Achieve
Sustainable Development

558,617
658
5,833(123,325)
1,258(18,092)
16,575(34,483)
20,442(37,133)
558
16,500

Segment Information

73,459140(516)(7,478)
719
(743)
3,648
(3,738)
2,914
(385)
489
3,899

Special Feature

67,03479
700(14,799)
151(2,171)
1,989(4,138)2,453(4,456)67
1,980

DNP in Brief

¥

2015

2014

To Our Shareholders

Cash flows from operating activities:
Income before income taxes and minority interests
Adjustments to reconcile income before income taxes
and minority interests to net cash provided by operating activities:
Depreciation
Impairment loss on fixed assets
Provision for doubtful receivables (net)
Net defined benefit asset (net)
Net defined benefit liability (net)
Equity in earnings of affiliates
Amortization of consolidation goodwill (net)
Interest and dividends income
Interest expenses
Net gain on sales of investment securities
Loss on devaluation of investment securities
Net loss on sale or disposal of property, plant and equipment
Changes in assets and liabilities
Trade receivables
Inventories
Trade payables
Other assets and liabilities
Sub-total
Extra retirement payments
Payments of income taxes
Net cash provided by operating activities
Cash flows from investing activities:
Net decrease (increase) in time deposits
Payments for purchases of property, plant and equipment
Proceeds from sales of property, plant and equipment
Payments for purchases of investment securities
Proceeds from sales of investment securities
Payments for purchases of intangible assets
Payments for acquisition of subsidiaries' shares,
resulting in consolidation scope change
Proceeds from acquisition of subsidiaries' shares,
resulting in consolidation scope changeInterest and dividends received
Other investing
Net cash used in investing activities
Cash flows from financing activities:
Net increase in short-term bank loans
Proceeds from long-term debt
Repayments of long-term debt
Proceeds from issuance of debentures
Payments for redemption of debentures
Interest paid
Dividends paid
Dividends paid to minority shareholders
Payments for purchases of treasury stocks
Other financing
Net cash used in financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Increase in cash and cash equivalents
resulting from change of scope of consolidation
Decrease in cash and cash equivalents
resulting from merger of consolidated subsidiaries
Increase in cash and cash equivalents
resulting from merger with unconsolidated subsidiaries
Cash and cash equivalents at end of year

2015

358
1,773,017

The accompanying notes are an integral part of these consolidated financial statements.

DNP Annual Report 201593

Notes to Consolidated Financial Statements

Dai Nippon Printing Co., Ltd. and Consolidated Subsidiaries March 31, 2015 and 2014

1. Basis of Presenting the Consolidated Financial Statements
Dai Nippon Printing Co., Ltd. (hereinafter referred to as the “Company”) and its domestic subsidiaries maintain their books of account andprepare their financial statements in conformity with accounting principles and practices generally accepted in Japan (“Japanese GAAP”),
and its foreign subsidiaries in conformity with the Company’s group accounting policies based on International Financial ReportingStandards (“IFRS”) or accounting principles generally accepted in the United States of America (“US GAAP”).
The accompanying consolidated financial statements have been compiled from the consolidated financial statements filed with the
Financial Services Agency of Japan as required by the Financial Instruments and Exchange Act of Japan. Certain reclassifications of accounts
and modifications have been made in the accompanying consolidated financial statements to facilitate understanding by readers outside
Japan. Certain reclassifications have also been made in the 2014 financial statements to conform with current classifications. In addition,
the notes to the consolidated financial statements include additional information which is not required for disclosure under accounting
principles and practices generally accepted in Japan.
2. Significant Accounting Policies
Consolidation
The accompanying consolidated financial statements include the accounts of the Company and its significant majority-owned subsidiaries.
All significant intercompany accounts and intercompany transactions have been eliminated in consolidation.
Consolidated financial statements include the accounts of the Company and 112 consolidated subsidiaries. Some subsidiaries areconsolidated with their fiscal year ends that differ from that of the Company. Significant transactions that took place between their fiscal
year ends and the Company’s fiscal year end are reflected in the consolidated financial statements.
Investments in non-consolidated subsidiaries are stated at cost and, for valuation of such investments, the equity method has not been
applied since these investments are considered immaterial in the aggregate. However, investments are devalued if the decline in value isjudged to be other than temporary.
Investments in 20% to 50% associated companies are principally accounted for by the equity method.
The differences between costs and underlying net assets at the date of investment in consolidated subsidiaries are included in other assets
or other long-term liabilities and are amortized over a period mainly for five years.
Translation of foreign currency accounts
Monetary assets and liabilities denominated in foreign currencies of the Company and its domestic subsidiaries are translated into Japanese
yen at the exchange rates at the balance sheet date. Revenues and expenses denominated in foreign currencies are translated at theexchange rates prevailing during the year. The resulting translation gains (or losses) are included in other income (or expenses).
The translation of foreign currency financial statements of foreign consolidated subsidiaries into Japanese yen has been made forconsolidation purposes in accordance with the translation method prescribed in the accounting standard for foreign currency transactions.
The balance sheet accounts of the foreign consolidated subsidiaries are translated at the exchange rates in effect at the balance sheet date,
except for common stock and capital surplus, which are translated at historical rates. Revenue and expense accounts are translated at the
average exchange rates during the year. The resulting translation adjustments are presented as “foreign currency translation adjustments”
as reported in a separate component of accumulated other comprehensive income in the consolidated balance sheets.
Cash and cash equivalents
Cash and cash equivalents include all highly liquid investments, generally with original maturities of three months or less, that are readily
convertible to known amounts of cash and are so near maturities that they present insignificant risk of changes in value because ofchanges in interest rates.
Inventories
Inventories are stated at cost which is determined substantially by the average method being written-down to reflect the decline ofprofitability.
Marketable securities and investment securities
Debt securities that are held to maturity with positive intent and ability (“held-to-maturity debt securities”) are stated at amortized cost.
Available-for-sale securities with available fair market values are stated at fair value. Unrealized gains and losses on available-for-salesecurities, net of applicable taxes, are reported in a separate component of accumulated other comprehensive income in the consolidatedbalance sheets.
Non-marketable securities are stated at cost determined by the average method. For other than temporary declines in fair value,
investment securities are reduced to net realizable value by a charge to income.
Property, plant and equipment and depreciation
Property, plant and equipment are carried at cost. Major renewals and additions are capitalized, while minor renewals maintenance andrepairs are charged to income when incurred. Interest expenses on capital expenditures during the construction stage are not capitalized.
Depreciation of property, plant and equipment is principally computed by the declining-balance method at rates based on estimateduseful lives. However, depreciation of buildings acquired on or after April 1, 1998 is computed by the straight-line method.

94

The estimated useful lives for depreciation purposes range as follows:
Buildings and structures
Machinery and equipment

3 to 50 years
2 to 13 years

Leased assets
Finance leases which do not transfer ownership were accounted for as operating lease prior to April 1, 2008 but are capitalized since then.
Depreciation for leased assets is computed on a straight-line basis over the lease period with a residual value of zero.

Impairment of fixed assets
The Company and its subsidiaries review fixed assets for impairment whenever events or changes in circumstance indicate the carrying
amount of an asset or asset group may not be recoverable. An impairment loss would be recognized if the carrying amount of an asset or
asset group exceeds the sum of the undiscounted future cash flows expected to result from the continued use and eventual disposition of
the asset or asset group. The impairment loss would be measured as the amount by which the carrying amount of the asset exceeds its
recoverable amount, which is the higher of the discounted cash flows from the continued use and eventual disposition of the asset or the
net selling price at disposition.

Financial Section
Appendix

Derivatives and hedging activities
The Company and certain consolidated subsidiaries use derivative financial instruments (“derivatives”) for foreign currency forward
contracts, interest rate swaps and currency swaps to manage the risk arising from fluctuations in the foreign currency exchange rate andinterest rates. The Company and its subsidiaries do not enter into derivatives contracts for speculative purposes.
Derivatives are carried at fair value and changes in fair value are recognized as gains or losses, unless the derivatives are used for hedging
purposes.
If derivatives meet certain hedging criteria, recognition of gains or losses resulting from changes in the fair value of derivatives is deferred
until the related gains or losses on hedged items are recognized.
In cases where foreign currency forward contracts or currency swap contracts meet certain hedging criteria, the hedged items are statedby the contracted rates (“alternative method”). In addition, if interest rate swap contracts meet certain hedging criteria, the net amount tobe paid or received under the interest rate swap contracts is added to or deducted from interest on the assets or liabilities for which theinterest rate swap contracts were executed (“exceptional accrual method”).

How DNP Works to Achieve
Sustainable Development

Income taxes
The asset and liability approach is used to recognize deferred tax assets and liabilities for the expected future tax consequences of
temporary differences between the carrying amounts and the tax bases of assets and liabilities. Deferred taxes are measured by applying
currently enacted tax laws to the temporary differences.
The Act for Partial Amendment of the Income Tax Act, etc., (Act No.9 of 2015) and The Act for Partial Amendment of the Local Tax Act,etc., (Act No.2 0f 2015) were enacted on March 31, 2015.
Consequently, the statutory tax rate used to calculate deferred tax assets and liabilities changed from 35.6% to 33.1% for temporary
differences expected to be realized during the fiscal year beginning on or after April 1, 2015 until March 31, 2016. The rate will be changed
to 32.3% for temporary differences expected to be realized during the fiscal years beginning on or after April 1, 2016.
As a result of these changes in the corporate tax rate, deferred tax assets (net of deferred tax liabilities) increased by ¥5,733 million($47,775 thousand), and income taxes-deferred increased by ¥2,077 million ($17,308 thousand). In addition, the valuation difference on
available-for-sale securities increased by ¥6,887 million ($57,392 thousand), net deferred gains (losses) on hedges increased by ¥0 million($0 thousand), and remeasurements of defined benefit plans increased by ¥923 million ($7,692 thousand).

Segment Information

Research and development expenses
Research and development expenses are charged to income as incurred.

Special Feature

Employees’ retirement benefits
The Company and domestic significant consolidated subsidiaries applied the accounting standard for employees’ retirement benefits.
Under the accounting standard, accrued pension and liability for employees’ retirement benefits has been provided based on the estimatedamounts of projected pension and severance obligation and fair value of plan assets at the end of the fiscal year. Benefit formula basis isapplied for the method of attributing expected retirement benefits to periods. Prior service cost is being amortized as incurred by thestraight-line method over the period within the average remaining service periods (primarily 6 years) of the eligible employees. Actuarial
gains and losses have been amortized from the following fiscal year by the declining-balance method over the periods within the averageremaining service periods (primarily 9 years) of the eligible employees.

DNP in Brief

Intangible assets
Intangible assets included in other assets are carried at cost less accumulated amortization calculated by the straight-line method over theirestimated useful lives. Software for internal use included in intangible assets are amortized by the straight-line method over five years.

To Our Shareholders

Assets with an acquisition cost of ¥100,000 ($833) or more per unit and less than ¥200,000 ($1,667) per unit are depreciated over three
years on a straight-line basis, whereby one-third of such acquisition costs may be taken as depreciation expense each year.

Net assets and income per common share
Net assets per common share were computed based on the number of shares outstanding after deducting treasury stock at March 31,
2015 and 2014, respectively.
Net income per share was computed based on the average number of shares of common stock outstanding after deducting treasury
stocks during each year. Necessary adjustments were made on the net income or the number of shares for diluted net income per share inorder to reflect dilutive effects.

DNP Annual Report 201595

Change in accounting policies
Application of “Accounting Standard for Retirement Benefits”
The Company and domestic significant consolidated subsidiaries adopted the provisions of the main clauses in Paragraph 35 of the
Accounting Standard for Retirement Benefits (ASBJ Statement No.26, May 17, 2012; hereinafter, the Accounting Standard) and in
Paragraph 67 of the Guidance on the Accounting Standard for Retirement Benefits (ASBJ Guidance No.25, March 26, 2015; hereinafter, theGuidance) starting in the first quarter of the current fiscal year.
Accordingly, the Company and its subsidiaries has revised the method of calculating retirement benefit obligations and service costs;
changed the method of attributing expected retirement benefits to periods from a straight line-basis to a benefit formula basis; andchanged the method of determining a discount rate from a method in which bond duration as the basis for determining the discount rate isdetermined based on a number of years similar to the average remaining service period of employees to a method that mainly uses multiple
discount rates established for each period of expected retirement benefit payments.
With the adoption of the Accounting Standard, etc., in accordance with the transitional treatment stipulated in Paragraph 37, theCompany and its subsidiaries reflected in retained earnings the amount of the impact of the change in the method of calculating
retirement benefit obligations and service costs at the start of the current fiscal year.
As a result, net defined benefit liability at the start of the current fiscal year increased by ¥2,393 million ($19,942 thousand), net defined
benefit asset increased by ¥9,190 million ($76,583 thousand), and retained earnings increased by ¥4,001 million ($33,342 thousand).
Additionally, operating income increased by ¥1,567 million ($13,058 thousand), and income before income taxes and minority interests
increased by ¥1,629 million ($13,575 thousand) in the current fiscal year.
3. Basis of Translating Financial Statements
The consolidated financial statements are expressed in Japanese yen in accordance with accounting principles generally accepted in Japan.
The Japanese yen amounts have been translated into U.S. dollar amounts, solely for the convenience of the readers, at the rate of¥120=U.S. $1, the approximate exchange rate on the Tokyo Foreign Exchange Market at March 31, 2015. Such translations should not be
construed as representations that the Japanese yen at that or any other rate could be converted into U.S. dollars
4. Cash and Cash Equivalents
Cash and cash equivalents as of March 31, 2015 and 2014 were comprised of the following:Thousands of
U.S. dollars (Note 3)

Millions of yen

2015
Cash and deposits(excluding time deposits with a maturity over three months)

¥

2015

2014

212,762¥

199,813$

1,773,017

5. Marketable Securities and Investment Securities
The carrying amount and aggregate fair value of marketable and investment securities classified as held-to-maturity debt securities as ofMarch 31, 2015 and 2014 were as follows:
Millions of yen

Carrying amountMarch 31, 2015
Others¥202

Fair value¥

202

Difference¥0

Thousands of U.S. dollars (Note 3)

Carrying amountMarch 31, 2015
Others$

1,683

Fair value
$

1,683

Difference$0March 31, 2014 No relevant items.

The acquisition cost and aggregate fair value of marketable and investment securities classified as available-for-sale securities including thosewith no fair value as of March 31, 2015 and 2014 were as follows:
Millions of yen

March 31, 2015
StocksOthers
Total

Acquisition cost

Unrealized gains

Unrealized losses

¥

¥

¥

¥

130,487
2,214
132,701¥

216,152
19
216,171

¥

1,112
–
1,112

Fair value¥¥

345,5272,233
347,760

Thousands of U.S. dollars (Note 3)

96

March 31, 2015
StocksOthers
Total

Acquisition cost

Unrealized gains

Unrealized losses

$

$

$

$

1,087,392
18,4501,105,842$

1,801,267
158
1,801,425

$

9,267
–
9,267

Fair value$$

2,879,392
18,6082,898,000

Millions of yen

March 31, 2015
StocksOthers
Total

Acquisition cost

Unrealized gains

Unrealized losses

¥

¥

¥

¥

130,487
2,214
132,701

216,152
19
216,171

¥

1,112
–
1,112

¥

Fair value¥

345,5272,233
347,760¥

Thousands of U.S. dollars (Note 3)

Acquisition cost

Unrealized gains

Unrealized losses

$

$

$

$

1,087,392
18,4501,105,842$

1,801,267
158
1,801,425

9,267
–
9,267

$

Fair value$

2,879,392
18,6082,898,000$

Millions of yen

Acquisition cost

Unrealized gains

Unrealized losses

¥

¥

¥

¥

132,605262
132,867

53,16010
53,170

¥

¥

2,121
0
2,121

¥

Fair value
183,644272
183,916¥

DNP in Brief

March 31, 2014
StocksOthersTotal

To Our Shareholders

March 31, 2015
StocksOthersTotal

The proceeds from sales of available-for-sale securities for the years ended March 31, 2015 and 2014 were ¥5,726 million ($47,717
thousand) and ¥1,140 million, respectively. The gross realized gains on these sales for the years ended March 31, 2015 and 2014 were
¥4,443 million ($37,025 thousand) and ¥348 million, respectively, and the gross realized losses on these sales for the years ended March 31,
2015 and 2014 were ¥1 million ($8 thousand) and ¥25 million, respectively.
Special Feature

The redemption schedules for securities with maturities at March 31, 2015 and 2014 were as follows:
Millions of yen

March 31, 2015
Corporate bonds
Trust beneficiary right on sales credit

Due in one
year or lessDue after one year
through five years

–
1,900

¥

¥

201
–

Over five years
¥

180
–

March 31, 2015
Corporate bonds
Trust beneficiary right on sales credit

Due in one
year or lessDue after one year
through five years–
15,833

$

$

1,675
–

Over five years
$

1,500
–

Due after one year
through five years

Due in one
year or less
30

¥

¥

–

Over five years¥

150

Thousands of
U.S. dollars (Note 3)

Millions of yen

2015
¥

¥

97,232
28,27822,396
147,906

2015

2014
¥

¥

91,68228,50919,465
139,656$$

810,267
235,650
186,633
1,232,550

Appendix

Merchandise and finished products
Work in process
Raw materials and supplies

Financial Section

6. Inventories
Inventories at March 31, 2015 and 2014 consisted of the following:

How DNP Works to Achieve
Sustainable Development

Millions of yen

March 31, 2014
Corporate bonds

Segment Information

Thousands of U.S. dollars (Note 3)

7. Short-term Bank Loans and Long-term Debt
Short-term bank loans at March 31, 2015 and 2014 were represented by bank loans and bank overdrafts, etc., bearing interest at an
average rate of 0.66% per annum for 2015 and 0.67% per annum for 2014.

DNP Annual Report 201597

Long-term debt at March 31, 2015 and 2014 consisted of the following:Thousands of
U.S. dollars (Note 3)

Millions of yen

2015
Unsecured debentures
1.358% due 2021
0.350~1.705% due 2020
0.350~0.54% due 2019
0.350~0.54% due 2018
0.350~0.79% due 20170.350~0.79% due 2016
0.40~0.79% due 2015¥

Mortgage loans, maturing 2015~2030
Unsecured loans, maturing 2015~2022
Current portion of long-term debt
¥

2015

2014

50,00050,200
2,370
470
710
1,050
–
13,474
17,353
135,627(11,291)
124,336

50,00050,000
170
270
510
850
1,850

¥

13,767
16,218
133,635(14,330)
119,305¥$$

416,667
418,333
19,750
3,917
5,917
8,750
–
112,283
144,608
1,130,225(94,092)
1,036,133

Finance lease obligations at March 31, 2015 and 2014 which are included in other long-term liabilities consisted of the following:Thousands of
U.S. dollars (Note 3)

Millions of yen

2015
Finance lease obligations
Current portion of lease obligations¥¥

16,810(4,738)12,072

2015

2014
¥

16,285(6,670)
9,615

¥

$
$

140,083(39,483)
100,600

The assets pledged as collateral for the company and its consolidated subsidiaries’ indebtedness, such as property, plant and equipment
and other assets, were ¥10,852 million ($90,433 thousand) and ¥11,233 million at March 31, 2015 and 2014, respectively.
With minor exceptions, interest rates on mortgage loans ranged from 0.47% to 2.86% per annum for 2015 and from 0.60% to 2.86%
per annum for 2014, while interest rates on unsecured loans ranged from 0.52% to 2.00% per annum for 2015 and from 0.54% to 2.00
% per annum for 2014.
The aggregate annual maturities of long-term debt after March 31, 2015 were as follows:
Years ending March 31
2016
2017
2018
2019
2020
2021 and thereafterThousands of
U.S. dollars (Note 3)

Millions of yen¥

11,291
7,451
9,155
5,723
51,521
50,486135,627¥$$

94,09262,092
76,292
47,692
429,341
420,716
1,130,225

The aggregate annual maturities of finance lease obligations after March 31, 2015 were as follows:
Years ending March 31
2016
2017
2018
2019
2020
2021 and thereafterThousands of
U.S. dollars (Note 3)

Millions of yen

¥

¥

4,738
3,454
2,717
2,263
1,523
2,115
16,810$$39,48328,78322,642
18,858
12,692
17,625140,083

8. Retirement Benefits
The Company and its subsidiaries have several retirement plans covering all of their employees, i.e. defined benefit corporate pension plan,a governmental welfare contributory pension plan, lump-sum retirement plan and defined contribution pension plan. Upon retirement
or termination of employment for reasons other than the cause of dismissal, employees are entitled to lump-sum payments based on thecurrent rate of pay, length of services and accumulated number of points determined based on the employment services.
Under the Defined Benefit Pension Plan Law, the Company has established new defined benefit pension plans on March 1, 2005 underwhich most of the retirement benefit liability of the Company and its subsidiaries is covered by the employees’ pension fund.

98

The reconciliation of beginning and ending balance of the projected benefit obligation at March 31, 2015 and 2014 were as follows:
Thousands of
U.S. dollars (Note 3)

Millions of yen

2015¥

219,322(6,798)
212,524
11,9191,861
6,616(7,933)
(130)
17
279
225,153¥¥

211,159–
211,159
11,154
3,758(1,018)(6,737)
(13)
1,051
(32)
219,322$$

1,827,683(56,650)
1,771,033
99,325
15,50855,133(66,108)(1,083)142
2,325
1,876,275

DNP in Brief

¥

2015

2014

To Our Shareholders

Change in projected benefit obligation:
Balance at the beginning of year
Cumulative effects of changes in accounting policies
Adjusted balance at the beginning of year
Service cost
Interest cost
Actuarial gain/loss
Benefits paid
Prior service cost
Change of scope of consolidation
Other
Balance at the end of year

The reconciliation of beginning and ending balance of the plan assets at March 31, 2015 and 2014 were as follows:

2015
¥

¥

2015

2014

209,006
5,177
30,973
19,936(6,523)
167
258,736¥¥

178,478
4,435
14,105
17,187(5,268)69
209,006$$

1,741,717
43,142
258,108
166,133(54,359)
1,392
2,156,133

The reconciliation of projected benefit obligation and plan assets to net defined benefit liability and asset recognized in the consolidatedbalance sheets as of March 31, 2015 and 2014 were as follows:
Thousands of
U.S. dollars (Note 3)

Millions of yen

Funded projected benefit obligation
Plan assets
Unfunded projected benefit obligation
Net amount of liabilities and assets recognized in consolidated balance sheets¥

194,476(258,736)(64,260)
30,677(33,583)¥¥

32,348(65,931)¥(33,583)

190,468(209,006)(18,538)
28,854
10,316$$

269,567(549,425)

29,550(19,234)¥

10,316

1,620,633(2,156,133)(535,500)
255,642(279,858)$(279,858)

The components of net periodic benefit costs for the years ended March 31, 2015 and 2014 were as follows:
Thousands of
U.S. dollars (Note 3)

Millions of yen

2015

2014

Service cost
Interest cost
Expected return on plan assets
Actuarial gain/loss
Amortization of prior service cost¥

11,8501,861(5,177)(2,157)321¥

11,0903,758(4,435)
1,038
445

$

98,75015,508(43,142)(17,975)
2,675

Net periodic benefit costs of the defined benefit plan

¥

6,698

¥

11,896$55,816DNP Annual Report 2015

Appendix

2015

Financial Section

Net defined benefit liability
Net defined benefit asset
Net amount of liabilities and assets recognized in consolidated balance
sheets

¥

2015

2014

How DNP Works to Achieve
Sustainable Development

2015

Segment Information

Change in plan assets:
Balance at the beginning of year
Expected return on plan assets
Actuarial gain/loss
Contributions by the employer
Benefits paid
Other
Balance at the end of year

Special Feature

Thousands of
U.S. dollars (Note 3)

Millions of yen

99Remeasurements of defined benefit plans, before income-tax effect, at March 31, 2015 and 2014 consisted of:Thousands of
U.S. dollars (Note 3)

Millions of yen

2015
Unrecognized actuarial gain/loss
Unrecognized prior service cost
Total

¥
¥

30,860(782)
30,078

2015

2014
¥
¥

8,761
(1,231)
7,530$$

257,167(6,517)
250,650

The major categories of plan assets as of March 31, 2015 and 2014 were as follows:

Bonds
Stocks
Other
Total

2015

2014

20%
52%
28%
100%

25%
47%
28%
100%

2015

2014

1.3%
2.5%

1.6%
2.5%

Assumptions used for the years ended March 31, 2015 and 2014 were set forth as follows:

Discount rateLong-term expected rate of return on plan assets

9. Net Assets
Japanese companies are subject to the Companies Act of Japan (the “Companies Act”). The significant provisions in the Companies Act
that affect financial and accounting matters are summarized below;(a) Dividends
Under the Companies Act, companies can pay dividends at any time during the fiscal year in addition to the year-end dividend upon
resolution at the stockholders meeting. For companies that meet certain criteria such as; (1) having the Board of Directors, (2) having
independent auditors, (3) having the Board of Corporate Auditors, and (4) the term of service of the directors is prescribed as one year
rather than two years of normal term by its articles of incorporation, the Board of Directors of such company may declare dividends(except for dividends in kind) at any time during the fiscal year if the company has prescribed so in its articles of incorporation. The
Company meets all the above criteria. However, its articles of incorporation have not stipulated that the Board of Directors may declare
dividends at any time during the fiscal year.
The Companies Act permits companies to distribute dividends-in-kind (non-cash assets) to stockholders subject to a certain limitation
and additional requirements.
Semiannual interim dividends may also be paid once a year upon resolution by the Board of Directors if the articles of incorporation of
the company so stipulate. The Companies Act provides certain limitations on the amounts available for dividends or the purchase oftreasury stock. The limitation is defined as the amount available for distribution to the stockholders, but the amount of net assets after
dividends must be maintained at no less than ¥3 million.
Cash dividends of ¥16.00 ($0.1) per share, aggregating ¥10,310 million ($85,917 thousand) were approved at the generalstockholders’ meeting held in June 2015 with respect to the year ended March 31, 2015.
(b) Increases/decreases and transfer of common stock, reserve and surplus
The Companies Act requires that an amount equal to 10% of dividends must be appropriated as a legal reserve (a component ofretained earnings) or as additional paid-in capital (a component of capital surplus) depending on the equity account charged upon thepayment of such dividends until the total of aggregate amount of legal reserve and additional paid-in capital equals 25% of thecommon stock. Under the Companies Act, the total amount of additional paid-in capital and legal reserve may be reversed without
limitation. The Companies Act also provides that common stock, legal reserve, additional paid-in capital, other capital surplus andretained earnings can be transferred among the accounts under certain conditions upon resolution of the stockholders.
(c) Treasury stock and treasury stock acquisition rights
The Companies Act also provides for companies to purchase treasury stock and dispose of such treasury stock by resolution of theBoard of Directors. The amount of treasury stock purchased cannot exceed the amount available for distribution to the stockholders
which is determined by specific formula.
Under the Companies Act, stock acquisition rights are presented as a separate component of net assets.
The Companies Act also provides that companies can purchase both treasury stock acquisition rights and treasury stock. Such treasury
stock acquisition rights are presented as a separate component of net assets or deducted directly from stock acquisition rights. At
present, the Company has not issued such stock acquisition rights.

10010. Accounts with Non-consolidated Subsidiaries and Associated Companies
Account balances with non-consolidated subsidiaries and associated companies as of March 31, 2015 and 2014 are summarized as follows:
Thousands of
U.S. dollars (Note 3)

Millions of yen

¥

¥

6,374
460
51,063
170
602
4,631
321
1,079

¥

¥

4,913
1,468
33,183
150
602
5,436
233
1,396

$

$

53,117
3,833
425,525
1,417
5,016
38,592
2,675
8,992

DNP in Brief

Trade receivables
Other current assets
Investment securities
Long-term loans
Other investments
Trade payables
Accrued expenses
Other current liabilities

2015

2014

To Our Shareholders

2015

11. Selling, General and Administrative Expenses
Selling, general and administrative expenses for the years ended March 31, 2015 and 2014 consisted of the following:Thousands of
U.S. dollars (Note 3)

Millions of yen

Salaries and allowances
Accrued bonuses
Provision for retirement benefits
Depreciation
Research and development expenses
Other

¥

67,867
6,110
1,458
13,70931,749110,097
230,990¥¥

66,297
5,940
3,194
13,39328,715
104,835
222,374$$

565,558
50,917
12,150114,242
264,575
917,475
1,924,917

Total research and development expenses (including manufacturing costs) amounted to ¥31,749 million ($264,575 thousand) and¥30,820 million for 2015 and 2014, respectively.
12. Other Income
The following types of income from non-consolidated subsidiaries and associated companies were included in other income.

2015
Interest and dividends income
Rent income on facilities

¥

2015

2014
31
133

¥

62
165

$

258
1,108

2014

35.6%
0.9
0.9
0.3
3.0
4.2
(0.7)
44.2%

38.0%
0.7
2.2
3.6
–
1.4
(1.0)
44.9%

DNP Annual Report 2015

Appendix

Normal effective statutory tax rate
Expenses not deductible for income tax purposes
Amortization of consolidation goodwill
Change in valuation allowance
Loss on business integration
The effective income tax rate change
Other
Actual effective tax rate

2015

Financial Section

13. Income Taxes
The Company and its domestic consolidated subsidiaries are subject to a number of different taxes based on income, which, in the aggregate,
resulted in a normal effective statutory tax rate of approximately 35.6% and 38.0% for the years ended March 31, 2015 and 2014, respectively.
In addition, the statutory tax rate will change approximately 35.6% to 33.1% effective for the fiscal years beginning on or after April 1,2015 until March 31, 2016 and to 32.3% afterwards. These changes were caused by the revision of the Income Tax Act, etc., in 2015. (Refer
to 2. Significant Accounting Policies: Income Taxes)
The actual effective tax rate reflected in the accompanying consolidated statements of operations differs from the normal effective statutory tax rate
primarily due to the effect of permanently non-deductible expenses, current operating losses and different tax rates applicable to foreign subsidiaries, etc.
The following is a reconciliation of the difference between the normal effective statutory tax rate and the actual effective tax rate for the years
ended March 31, 2015 and 2014, respectively.

How DNP Works to Achieve
Sustainable Development

Thousands of
U.S. dollars (Note 3)

Millions of yen

Segment Information

¥

2015

2014

Special Feature

2015

101

Net deferred tax assets (liabilities) at March 31, 2015 and 2014, resulting from temporary differences between the carrying amounts andthe tax bases of assets and liabilities were reflected on the accompanying consolidated balance sheets under the following captions:Thousands of
U.S. dollars (Note 3)

Millions of yen

2015

2015

2014

Prepaid expenses and other current assets
Other assets

¥

8,540
6,601

¥

8,677
11,083$

71,16755,008Other current liabilities
Other long-term liabilities
Net deferred tax assets (liabilities)¥(29)(65,861)(50,749)¥(84)(2,232)
17,444$(242)(548,841)(422,908)¥¥$

Significant components of deferred tax assets and liabilities at March 31, 2015 and 2014 were as follows:
Thousands of
U.S. dollars (Note 3)

Millions of yen

2015
Deferred tax assets:
Net defined benefit liability
Loss on devaluation of investment securities
Excess provision for doubtful receivables
Accrued bonuses
Loss on write-down of inventories
Operating loss carryforwards
Impairment loss on fixed assets
Other
Total deferred tax assets
Less: valuation allowance
Total
Deferred tax liabilities:
Unrealized gain on available-for-sale securities
Reserve for special depreciation
Undistributed earnings of subsidiaries
Net defined benefit asset
Other
Total
Net deferred tax assets (liabilities):

¥

$

$

¥

(16,459)(17)(818)(6,850)(2,096)(26,240)$(562,233)(92)(8,000)(177,458)(15,758)(763,541)¥

17,444$(422,908)¥¥¥(67,468)(11)(960)(21,295)(1,891)(91,625)¥(50,749)¥

109,866
28,38318,50047,7928,817
334,083
95,500139,725
782,666(442,033)
340,633

12,948
4,073
1,829
6,078
1,176
46,185
13,05915,207
100,555(56,871)
43,684

13,184
3,406
2,220
5,735
1,058
40,09011,46016,767
93,920(53,044)
40,876

¥

2015

2014

¥

$

14. Leases
Finance Leases
Effective the year ended March 31, 2009, the Company and its domestic subsidiaries adopted “Accounting Standard for Lease
Transactions.” Under this standard, finance lease transactions without ownership-transfer whose inception date is on or before March 31,
2008 are still allowed to be accounted for as operating leases.
Operating Leases
The amounts of outstanding future payments under non-cancelable operating leases as of March 31, 2015 and 2014 are also summarized
as follows:
Thousands of
U.S. dollars (Note 3)

Millions of yen

2015
Future lease payments:
One year or lessMore than one year

¥
¥

102

4,771
18,312
23,083

2015

2014
¥
¥

4,987
21,19926,186$$39,758
152,600
192,358

2. Fair value of financial instruments
Fair value and difference compared to the carrying amounts reported in the consolidated balance sheets as of March 31, 2015 and 2014
are as follows.

DNP in Brief

Millions of yen

¥

¥

(166)
(36)
(202)

213,979
366,068
353,336
9,012

Differences¥––
10,0109,012
942,395
258,887
53,371
141,943454,201

1,668
11,678
–
–
6,316
6,316

(166)
(36)
(202)

–
–
–

Segment Information

Assets(1) Trade payables(2) Short-term bank loans(3) Long-term debts
Liabilities
Derivatives *2[1] Hedge accounting is not applied[2] Hedge accounting is applied
Total

213,979
366,068
343,326
8,958(1,614)
7,344
930,717
258,887
53,371
135,627
447,885

Fair value

Special Feature

March 31, 2015
(1) Cash and deposits(2) Trade receivables(3) Short-term and long-term investment securities(4) Long-term loan receivables
Allowance for doubtful receivables*1

Carrying amounts
reported in the
consolidatedbalance sheet

To Our Shareholders

15. Financial Instruments
1. Management policy
The Company and its consolidated subsidiaries manage fund surpluses through financial assets that have high levels of safety, and raise
funds through bank loans and bond issuances. The Company and its subsidiaries also utilize derivative financial instruments to hedge therisk of exchange rate and interest rate fluctuations and do not enter into derivatives for trading or speculative purposes.
The trade receivables are exposed to the credit risk of customers and the Company and its subsidiaries minimize the credit risk inaccordance with internal customer credit management rules.
Long-term investments are mainly equity securities. Listed stocks are stated at fair value based on market prices quarterly.

Thousands of U.S. dollars (Note 3)

1,783,159
3,050,567
2,861,050
74,650(13,450)
61,2007,755,976
2,157,392
444,758
1,130,225
3,732,375

1,783,159
3,050,567
2,944,467
75,100$––83,41775,1007,853,293
2,157,392
444,758
1,182,858
3,785,008

13,90097,317––52,633
52,633(1,383)(300)(1,683)–––DNP Annual Report 2015

Appendix(1,383)(300)(1,683)$Differences

Financial Section

Assets(1) Trade payables(2) Short-term bank loans(3) Long-term debts
Liabilities
Derivatives *2[1] Hedge accounting is not applied[2] Hedge accounting is applied
Total

$

Fair value

How DNP Works to Achieve
Sustainable Development

March 31, 2015
(1) Cash and deposits(2) Trade receivables(3) Short-term and long-term investment securities(4) Long-term loan receivables
Allowance for doubtful receivables*1

Carrying amounts
reported in the
consolidatedbalance sheet

103

Millions of yen

March 31, 2014
(1) Cash and deposits(2) Trade receivables(3) Short-term and long-term investment securities(4) Long-term loan receivables
Allowance for doubtful receivables*1
Assets(1) Trade payables(2) Short-term bank loans(3) Long-term debts
Liabilities
Derivatives *2[1] Hedge accounting is not applied[2] Hedge accounting is applied
Total

Carrying amounts
reported in the
consolidatedbalance sheet¥

Fair value

203,212356,981
161,755
9,079(1,524)
7,555
729,503249,605
48,962
133,635
432,202¥203,212356,981
168,928
9,046

15
(5)
10

Differences

¥

–
–
7,173

9,046
738,167
249,605
48,962140,274
438,841

1,491
8,664
–
–
6,639
6,639

15
(5)
10

–
–
–

*1. Allowance for doubtful receivables associated with long-term loan receivables is deducted.
*2. Derivative assets and liabilities are on a net basis.
Note A: Fair value of financial instruments, marketable securities and derivatives
Assets(1) Cash and deposits and (2) Trade receivables
The carrying amounts approximate fair value because of the short maturities of these instruments.
(3) Marketable and investment securities
The fair values of equity securities are measured at the quoted market price of the stock exchange and the fair values of debt securities aremeasured at the quoted price provided by financial institutions.
(4) Long-term loan receivables
The fair values of long-term loans are mainly determined based on the present value of the future cash flows discounted by government
bonds rates plus certain credit risk premiums by categories according to the internal ratings.
Liabilities(1) Trade payables and (2) Short-term bank loans
The carrying amounts approximate fair value because of the short maturities of these instruments.
(3) Long-term debts
The fair values of bonds issued by the Company and its subsidiaries are measured based on market price, if available. The fair values ofbonds without market price are measured at the present value of total principal and interest discounted by using a rate which reflects its
remaining period and credit risk.
The fair values of long-term debts are based on the present value of total principal and interest discounted by using the current
borrowing rate for similar debt.
Derivatives
The information of the fair value for derivatives is included in Note 16.
Note B: Financial instruments whose fair value is extremely difficult to measure

March 31, 2015
Unlisted equity securities
Other

Millions of yen

Thousands of
U.S. dollars (Note 3)

Carrying amounts

Carrying amounts¥$

55,444
255

462,033
2,125

Millions of yen

March 31, 2014
Unlisted equity securities
Other

104

Carrying amounts¥

55,139204

The above are not included in “(3) Marketable and investment securities” because there is no market value and it is extremely difficult tomeasure the fair value.

DNP in Brief

Fair value of derivatives:
The contracted amount and fair value of derivatives at March 31, 2015 and 2014 were as follows:

To Our Shareholders

16. Derivative Financial Instruments
Nature of Derivative Financial Instruments:
The Company and certain consolidated subsidiaries enter into derivatives for foreign currency forward contracts, currency swap contracts,
and interest rate swaps to manage the risk arising from fluctuation in foreign currency exchange rates and interest rates. Derivatives
related to currency are utilized to hedge foreign exchange risks associated with certain accounts receivable, accounts payable and otherdebts, including forecasted transactions, denominated in foreign currencies. Interest rate swaps are utilized to hedge interest rate risks oninterest-bearing debts. The Company and its subsidiaries do not hold derivatives for speculative purposes.
Derivatives are subject to market risks and credit risks. Because the counterparties to those derivatives are limited to major international
financial institutions, the Company and its subsidiaries do not anticipate any losses arising from credit risks. The Accounting Department
controls and executes derivatives based on the internal policies of the Company.

Derivative transactions to which the Company and its subsidiaries did not apply hedge accounting
Millions of yen¥

Payables:U.S. dollars

¥

(374)
86

Unrealized gain (loss)

¥

(374)
86

¥

1
22,676

¥

0
(288)

¥

0
(288)

¥

300

¥

122

¥

122

Segment Information

Currency swap contracts
Receive U.S. dollars, and pay Japanese yen:

20,764
1,911

Fair value

Special Feature

March 31, 2015
Foreign currency forward contracts
Receivables:
U.S. dollars
Euro

Contracted amountThousands of U.S. dollars (Note 3)

Contracted amount$

Payables:U.S. dollars$(3,117)
717

Unrealized gain (loss)$(3,117)717$

8188,966$

0(2,400)$0(2,400)

$

2,500

$

1,017

$

1,017

Financial Section

Currency swap contracts
Receive U.S. dollars, and pay Japanese yen:

173,033
15,925

Fair value

How DNP Works to Achieve
Sustainable Development

March 31, 2015
Foreign currency forward contracts
Receivables:
U.S. dollars
Euro

Millions of yen

Contracted amount¥

Payables:U.S. dollars

Currency swap contracts
Receive U.S. dollars, and pay Japanese yen:

16,176
1,812

Fair value

¥

(90)
(27)

Unrealized gain (loss)

¥

(90)
(27)

¥

123
18,111

¥

(1)
(118)

¥

(1)
(118)

¥

600

¥

133

¥

133

DNP Annual Report 2015

Appendix

March 31, 2014
Foreign currency forward contracts
Receivables:
U.S. dollars
Euro

105

Millions of yen

Derivative transactions to which the Company and its subsidiaries applied hedge accounting
March 31, 2015
Foreign currency forward contracts
March
31, 2015
Receivables:
Foreign
U.S.currency
dollars forward contracts
Receivables:
Euro
U.S. dollars
Payables:Eurodollars
U.S.
Payables:Sterling pound
U.S. dollars
Euro
Sterling poundEuro
Currency swap contracts
Receive U.S. dollars, and pay Japanese yen:
Currency swap contracts
Receive U.S. dollars, and pay Japanese yen:Interest rate swaps
Receive floating and pay fixedInterest rate swaps
Receive floating and pay fixed

Hedged items

Contracted amount

Fair value

Hedged items

Contracted amount

Fair value

Trade receivables
Trade receivables
Trade receivables
Trade
Tradereceivables
payablesTrade payables
Trade payables
payablesTrade
Trade payables
Trade payables¥

Millions of yen

¥

¥

634
21
634
21
2,123
202
2,123
318
202
3,298
318
3,298

¥

(2)
–
(2)
–
(2)
(6)
(2)
(26)
(6)
(36)
(26)
(36)

Long-term loan payables

¥

117

¥

–

Long-term loan payables
Long-term loan payables

¥
¥

117
6,798

¥
¥

–
–

¥

6,798

¥

–

Long-term loan payables

¥

¥

¥

¥

Thousands of U.S. dollars (Note 3)

March 31, 2015
Foreign currency forward contracts
March
31, 2015
Receivables:
Foreign
U.S.currency
dollars forward contracts
Receivables:
Euro
U.S. dollars
Payables:Eurodollars
U.S.
Payables:Sterling pound
U.S. dollars
Euro
Sterling poundEuro
Currency swap contracts
Receive U.S. dollars, and pay Japanese yen:
Currency swap contracts
Receive U.S. dollars, and pay Japanese yen:Interest rate swaps
Receive floating and pay fixedInterest rate swaps
Receive floating and pay fixed

Hedged items

Contracted amount

Fair value

Hedged items

Contracted amount

Fair value

Trade receivables
Trade receivables
Trade receivables
Trade
Tradereceivables
payablesTrade payables
Trade payables
payablesTrade
Trade payables
Trade payables$

Thousands of U.S. dollars (Note 3)

$

$

5,283
175
5,283
175
17,692
1,683
17,692
2,650
1,683
27,4832,650
27,483

$

(17)
–
(17)
–
(17)
(50)
(17)
(216)
(50)
(300)
(216)
(300)

Long-term loan payables

$

975

$

–

Long-term loan payables
Long-term loan payables

$
$

975
56,650$$––Long-term loan payables$

56,650

$

–

$

$

$

$

Millions of yen

March 31, 2014
Foreign currency forward contracts
March
31, 2014
Receivables:
Foreign
U.S.currency
dollars forward contracts
Receivables:
Euro
U.S. dollars
Payables:Eurodollars
U.S.
Payables:Sterling pound
U.S. dollars
Euro
Sterling pound
Japaneseyen
EuroJapanese yen
Currency swap contracts
Receive Japanese yen, and pay Danish krone:
Currency swap contracts
Receive U.S.
Japaneseyen,
andDanish yen:krone:
Receivedollars,
andpaypayJapanese

Hedged items

Contracted amount

Fair value

Hedged items

Contracted amount

Fair value

Trade receivables
Trade receivables
Trade receivables
Trade
Tradereceivables
payablesTrade payables
Trade payables
payablesTrade
Trade payables
payablesTrade
Trade payables
Trade payables¥

Millions of yen

¥

¥

449
59
449
59
920
89
920
162
89
90
162
1,769
90
1,769

¥

0
–
0
5–
0
5
(2)
00
(2)
3
0
3

Trade payables

¥

62

¥

(8)

Trade loan
payablesLong-term
payables

¥
¥

¥
¥
¥
¥

(8)
–
(8)
–
(8)
–

¥

–

¥

¥

Long-term loan payables

¥
¥

62
273
335
273
335
5,730

Long-term loan payables

¥

5,730

Receive U.S. dollars, and pay Japanese yen:
Long-term loan payables

106Interest rate swaps
Receive floating and pay fixedInterest rate swaps
Receive floating and pay fixed¥¥

The fair values of foreign currency forward contracts and currency swap contracts subject to alternative method are included in tradereceivables, trade payables and long-term loan payables as hedged items. The fair values of interest rate swap contracts subject to
exceptional accrual method are included in long-term loan payables as hedged items.
Fair value of derivatives is based on forward exchange rates or information provided by financial institutions at the end of the fiscal year.

How DNP Works to Achieve
Sustainable Development(2) Application of “Accounting Standard for Retirement Benefits”
As noted in the section on changes in accounting policies, the Company and domestic significant consolidated subsidiaries changed themethod of calculating retirement benefit obligations and service costs effective from the first quarter of the current fiscal year. Accordingly,
this change has been considered in the method of calculating retirement benefit obligations and service costs for business segments.
As a result of this change, compared with the previous method, segment profits increased by ¥741 million ($6,175 thousand) for
Information Communication, by ¥375 million ($3,125 thousand) for Lifestyle and Industrial Supplies, by ¥216 million ($1,800 thousand) forElectronics, and by ¥142 million ($1,183 thousand) for Beverages.

Segment Information(1) Changes in reportable business segments
The Company changed its reportable business segments effective from the first quarter of the current fiscal year.
The Company shifted the Optical Films business from the Lifestyle and Industrial Supplies segment to the Electronics segment as a result ofintegrating the business unit responsible for display products and semiconductor photomasks and the business unit responsible for opticalfilms including LCD surface films in April 2014.
Segment information for the previous fiscal year has been prepared based on the new reportable business segments.

Special Feature

Changes in reportable business segments, etc.

DNP in Brief

18. Business Segment Information
Outline of reportable segments:
The Company and its consolidated subsidiaries’ reportable segments are components of the group whose operating results are regularly
reviewed by the Board of Directors to make decisions about resources to be allocated to the segments and assess their performance, forwhich discrete financial information is available. The group's reportable segments consist of Information Communication, Lifestyle andIndustrial Supplies, Electronics, and Beverages, based on a classification by commonality in manufacturing and marketing method of
products.

To Our Shareholders

17. Contingent Liabilities
The Company and its consolidated subsidiaries were guarantors of bank loans of other companies, amounting to approximately ¥22 million($183 thousand) and ¥33 million at March 31, 2015 and 2014, respectively. It is common practice in Japan for companies, in the ordinary
course of business, to receive promissory notes in settlement of trade accounts receivable and to subsequently discount such notes at banks.
At March 31, 2015 and 2014, the Company and its consolidated subsidiaries were contingently liable on trade notes discounted in theamount of ¥625 million ($5,208 thousand) and ¥665 million, respectively. One of the consolidated domestic subsidiaries securitized deposits
for its leased property and sold them to third parties for ¥1,119 million ($9,325 thousand) and ¥1,720 million at March 31, 2015 and 2014,
respectively.

Financial Section
Appendix

DNP Annual Report 2015107

Information on sales and profit, identifiable assets and other items by business segment
Millionsof
ofyen
yen
Millions
SegmentreportreportSegment

For 2015:
2015:
For
Net sales
sales andand operating
operating income
incomeNet
Net sales
sales
Net
Outside customers
customers
OutsideIntersegment
Intersegment
Total
Total
Segment income
incomeSegment
Segment assets
assetsSegment

Information
Information
Communication
Communication¥¥

LifestyleandandLifestyle
Industrial
Industrial
Supplies
Supplies

Electronics
Electronics

Beverages
Beverages

Total
Total

¥¥

693,649 ¥¥693,6495,303
5,303
698,952
698,9527,534
7,534
793,145 ¥¥
793,145478,540 ¥¥478,540
913
913
479,453
479,453
23,99623,996554,708 ¥¥554,708

230,298 ¥¥
230,298
88
230,306
230,306
24,42824,428
310,759 ¥¥
310,759

59,631 ¥¥ 1,462,118
1,462,118 ¥¥
59,631
10
6,234
10
6,234
59,641
1,468,352
59,641
1,468,352
1,077
57,035
1,077
57,03546,359 ¥¥ 1,704,971
1,704,971 ¥¥
46,359OthersOthersDepreciation andand amortizationamortization
Depreciation¥¥
Amortization ofof goodwill
goodwill
Amortization
Impairment loss
loss
Impairment
Tangible/intangible fixed
fixed assets
assets increased
increased
Tangible/intangible

22,598 ¥¥22,598
960
960
61
61
17,75017,75020,949 ¥¥20,949
1,038
1,038
––
18,48018,48018,361 ¥¥18,36118
18––
14,34914,3493,841 ¥¥
3,841
00
18
18
3,554
3,554

65,749 ¥¥65,749
2,016
2,016
79
79
54,13354,133Adjustment
Adjustment

Consolidated
Consolidated

1,462,118–– ¥¥ 1,462,118(6,234)(6,234)––(6,234)
1,462,118(6,234)
1,462,118(8,861)
48,174(8,861)
48,174
104,491 ¥¥ 1,809,462
1,809,462
104,491

1,285 ¥¥
1,285
––
––
891
891

67,034
67,034
2,016
2,016
79
79
55,02455,024

Thousandsof
ofU.S.
U.S.dollars
dollars(Note(Note3)
3)
Thousands
SegmentreportreportSegment

For 2015:
2015:
For
Net sales
sales andand operating
operating income
incomeNet
Net sales
sales
Net
Outside customers
customers
OutsideIntersegment
Intersegment
Total
Total
Segment income
incomeSegment
Segment assets
assetsSegment

Information
Information
Communication
Communication

LifestyleandandLifestyle
Industrial
Industrial
Supplies
Supplies

Electronics
Electronics

5,780,409 $$ 3,987,833
3,987,833 $$ 1,919,150
1,919,150 $$$$ 5,780,409
44,192
7,608
67
44,192
7,608
675,824,601
3,995,441
1,919,217
5,824,601
3,995,441
1,919,217
62,783
199,967
203,567
62,783
199,967
203,567
6,609,542 $$ 4,622,567
4,622,567 $$ 2,589,658
2,589,658 $$$$ 6,609,542

OthersOthersDepreciation andand amortizationamortization
Depreciation$$
Amortization ofof goodwill
goodwill
Amortization
Impairment loss
loss
Impairment
Tangible/intangible fixed
fixed assets
assets increased
increased
Tangible/intangible

188,317 $$
188,317
8,000
8,000
508
508
147,916
147,916

174,575 $$
174,575
8,650
8,650
––
154,000
154,000

153,008 $$153,008
150
150––
119,575
119,575

Beverages
Beverages

Total
Total

Adjustment
Adjustment

Consolidated
Consolidated

496,925 $$12,184,317
12,184,317 $$496,92583
51,95083
51,950497,008 12,236,267
12,236,267
497,008
8,975
475,292
8,975
475,292
386,325 $$14,208,092
14,208,092 $$
386,325

12,184,317–– $$12,184,317(51,950)(51,950)––(51,950) 12,184,317
12,184,317(51,950)(73,842)
401,450(73,842)
401,450
870,758 $$15,078,850
15,078,850
870,758

32,008 $$32,00800
150
150
29,617
29,617

10,709 $$10,709
––
––
7,425
7,425

547,908 $$547,908
16,80016,800658
658
451,108
451,108

558,617558,617
16,80016,800658
658
458,533
458,533

Millionsof
ofyen
yen
Millions
SegmentreportreportSegment

For 2014:
2014:
For
Net sales
sales andand operating
operating income
incomeNet
Net sales
sales
Net
Outside customers
customers
OutsideIntersegment
Intersegment
Total
Total
Segment income
incomeSegment
Segment assets
assetsSegment

108

Information
Information
Communication
Communication¥¥

LifestyleandandLifestyle
Industrial
Industrial
Supplies
Supplies

Electronics
Electronics

Beverages
Beverages

Total
Total

Adjustment
Adjustment

Consolidated
Consolidated¥¥

694,948 ¥¥694,9485,356
5,356
700,304
700,304
11,901
11,901
629,818 ¥¥
629,818

466,805 ¥¥466,805
868
868
467,673
467,673
21,723
21,723527,064 ¥¥527,064

231,992 ¥¥
231,99200
231,992
231,992
25,11825,118300,113 ¥¥
300,11354,805 ¥¥ 1,448,550
1,448,550 ¥¥
54,805
6,227
33
6,227
54,8081,454,777
54,8081,454,777
652
59,394652
59,39445,471 ¥¥ 1,502,466
1,502,466 ¥¥
45,471

1,448,550–– ¥¥ 1,448,550(6,227)(6,227)––(6,227)
1,448,550(6,227)
1,448,550(9,295)50,099(9,295)50,09972,288 ¥¥ 1,574,754
1,574,754
72,288OthersOthersDepreciation andand amortizationamortization
Depreciation¥¥
Amortization ofof goodwill
goodwill
Amortization
Impairment loss
loss
Impairment
Tangible/intangible fixed
fixed assets
assets increased
increased
Tangible/intangible

21,957 ¥¥21,957
2,666
2,666
134
134
23,681
23,681

22,447 ¥¥
22,447
1,101
1,101
––
25,77825,77823,710 ¥¥23,710
101
101
––
9,512
9,512

3,910 ¥¥
3,910
11
66
3,559
3,559

1,435 ¥¥
1,435
––
––
935
935

72,024 ¥¥72,024
3,869
3,869
140
140
62,53062,53073,45973,459
3,869
3,869
140
140
63,46563,465

[Relative information]
Information regarding regions
Millions of yen

Japan
¥

1,231,913

Asia¥

160,681

Other region¥

69,524

Total¥

1,462,118

Thousands of U.S. dollars (Note 3)Japan$ 10,265,942

Asia$

1,339,008

Other region$579,367

Total$

12,184,317

Millions of yen

For 2014 :Net salesJapan¥

1,232,093

Asia¥

152,501

Other region¥

63,956

DNP in Brief

For 2015 :Net sales

To Our Shareholders

For 2015 :Net sales

Total¥

1,448,550

Special Feature
Segment Information
How DNP Works to Achieve
Sustainable Development
Financial Section
Appendix

DNP Annual Report 2015109

Independent Auditors’ Report

To the Board of Directors of Dai Nippon Printing Co., Ltd.:
Report on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheet of Dai Nippon Printing Co., Ltd. and consolidated subsidiaries as of March 31,
2015 and the related consolidated statements of income, comprehensive income, changes in equity, and cash flows for the year then ended,
and a summary of significant accounting policies and other explanatory information (all expressed in Japanese yen).
Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements in conformity with accounting
principles generally accepted in Japan, and for such internal control as management determines is necessary to enable the preparation of
consolidated financial statements that are free from material misstatements, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit inconformity with auditing standards generally accepted in Japan. Those standards require that we plan and perform the audit to obtainreasonable assurance about whether the consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements.
The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated
financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to theentity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in
the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes
evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as
evaluating the overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
OpinionIn our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial positionof Dai Nippon Printing Co., Ltd. and consolidated subsidiaries as of March 31, 2015, and the consolidated results of their operations and their
cash flows for the year then ended in conformity with accounting principles generally accepted in Japan.
Convenience Translation
Our audit also comprehended the translation of Japanese yen amounts into U.S. dollar amounts and, in our opinion, such translation has been
made in conformity with the basis stated in Note 3 to the consolidated financial statements. Such U.S. dollar amounts are presented solely forthe convenience of readers outside Japan.
Report on Internal Control
We have audited management’s report on internal control over financial reporting of the consolidated financial statements of Dai Nippon
Printing Co., Ltd. as of March 31, 2015.
Management’s Responsibility for Report on Internal Control
Management is responsible for designing and operating effective internal control over financial reporting and for the preparation and fairpresentation of its report on internal control in conformity with assessment standards for internal control over financial reporting generally
accepted in Japan. There is a possibility that misstatements may not be completely prevented or detected by internal control over financial
reporting.
Auditor’s Responsibility
Our responsibility is to express an opinion on management’s report on internal control based on our audit. We conducted our internal control
audit in conformity with auditing standards for internal control over financial reporting generally accepted in Japan. Those standards requirethat we plan and perform the audit to obtain reasonable assurance about whether management’s report on internal control is free frommaterial misstatement.

110

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
OpinionSpecial Feature

Tokyo, Japan
June 26, 2015

DNP in Brief

In our opinion, management’s report on internal control referred to above, which represents that the internal control over financial reportingof the consolidated financial statements of Dai Nippon Printing Co., Ltd. as of March 31, 2015 is effectively maintained, presents fairly, in allmaterial respects, the results of the assessment of internal control over financial reporting in conformity with assessment standards for internal
control over financial reporting generally accepted in Japan.

To Our Shareholders

An internal control audit involves performing procedures to obtain audit evidence about the results of the assessment of internal control
over financial reporting in management’s report on internal control. The procedures selected depend on the auditor’s judgment, including
the significance of effects on reliability of financial reporting. An internal control audit includes examining representations on the scope,
procedures and results of the assessment of internal control over financial reporting made by management, as well as evaluating the overall
presentation of management’s report on internal control.

Segment Information
How DNP Works to Achieve
Sustainable Development
Financial Section
Appendix

DNP Annual Report 2015111

Major Subsidiaries and Affiliates(As of March 31, 2015)

Printing
DNP Hokkaido Co., Ltd.
General affairs, accounting work and other business services
DNP Tohoku Co., Ltd.
General affairs, accounting work and other business services
DNP Chubu Co., Ltd.
General affairs, accounting work and other business services
DNP Nishi Nippon Co., Ltd.
General affairs, accounting work and other business services
DNP Shikoku Co., Ltd.
Film making, printing, bookbinding; production and sale of packaging
Information Communication
Books and Magazines
DNP Book Factory Co., Ltd.
Offset printing and bookbinding
DNP Media Art Co., Ltd.
Film making
OGUCHI BOOK BINDING & PRINTING CO., LTD.
Printing and bookbinding
Tien Wah Press (Pte.) Ltd.
Film making, printing and bookbinding		Commercial Printing
DNP Graphica Co., Ltd.
Printing and bookbinding
DNP Media Create Co., Ltd.
Planning, production, film making and plate making
Business Forms
INTELLIGENT WAVE, INC.
Development and maintenance of software
DNP Data Techno Co., Ltd.
Production and sale of business forms and plastic cards
NBC Co., Ltd.*
Mailing of printed matter, etc.
DNP Media Support Co., Ltd.
Production and sale of all types of printed matter
MK Smart Joint Stock Company
Production and sale of plastic cards
		
Other
DNP Art Communications Co., Ltd.
Planning, production and sale of artistic images and videos
DNP AV Center Co., Ltd.
Imaging software planning and production
DNP Digitalcom Co., Ltd.
Website planning, production and delivery
DNP Social Links Co., Ltd.
Planning, development and operation of online advertising and computer systems
Lifestyle and Industrial Supplies
Packaging
LIFESCAPE MARKETING CORPORATION
Surveys and provision of various information
DNP Technopack Co., Ltd.
Production, printing and processing of packaging materials
Sagami Yoki Co., Ltd.
Production of laminated tubes
Aseptic Systems Co., Ltd.
Production, sale and consultation for aseptic systems
DNP Hoso Co., Ltd.
Filling and processing of packages
DNP Field Eyes Co., Ltd.
Surveys and provision of various information
DNP Vietnam Co., Ltd.
Production and sale of packaging products
		
PT DNP Indonesia
Production and sale of packaging products
		Lifestyle Materials
DNP Lifestyle Materials Marketing Co., Ltd.
Sale of decorative products
DNP Ellio Co., Ltd.
Printing and processing of steel, aluminum and other metals
DNP Lifestyle Materials Co., Ltd.
Production, printing, processing of decorative materials
Industrial Supplies
DNP High-performance Materials Co., Ltd.
Production and sale of coating films, multilayer films, and other films
DNP Imaging Comm Co., Ltd.
Production of ink ribbons for thermal resin-type transfer printers and for dye-sublimation thermal transfer printers
DNP Photo Imaging Japan Co., Ltd.
ID photo business and sale of photographic supplies and components; production and sale of original books
DNP ID System Co., Ltd.
Sale of equipment for making driver licenses and ID photos
DNP Imagingcomm Asia Sdn. Bhd.
Production and sale of ink ribbons for dye-sublimation thermal transfer printers
		
DNP Denmark A/S
Production and sale of precision electronic components		
DNP Imagingcomm America Corporation
Production and sale of ink ribbons for thermal resin-type transfer printers and for dye-sublimation thermal transfer printers		Foto Fantasy, Inc.
Development, production and operation of automated systems that take and print photos; sales of fun photo prints
		
DNP Photo Imaging Europe SAS
Sale of photo-related products		
DNP Imagingcomm Europe B.V.
Production and sale of ink ribbons for thermal resin-type transfer printers and for dye-sublimation thermal transfer printers		Electronics
Display Components
DNP Color Techno Kameyama Co., Ltd.
Production and sale of color filters for LCDs
DNP Precision Devices Himeji Co., Ltd.
Production of display-related components
Electronic Devices
DT Fine Electronics Co., Ltd.
Production and sale of semiconductor components
DNP Fine Optronics Co.,Ltd
Production of precision electronic components
DNP LSI Design Co., Ltd.
Design and production of drawings used in semiconductor production
Photronics DNP Mask Corporation
Production and sale of photomasks		
DNP Photomask Europe S.p.A.
Production and sale of photomasks		112

Capital(¥ million)

Ownership ratioof voting rights (%)

350		
350		
350		
400		
50		

100.0
100.0
100.0
100.0
97.0

200		
180		
49.5		
(S$1,000)
4,600

100.0
100.0
100.0
100.0

100		
100		

100.0
100.0

843
100		
20		
10		
(VND1,000,000)
100,000

50.6
100.0
100.0
95.0
36.3

300		
100		
100		
10		

100.0
100.0
100.0
100.0

430		
300		
200		
100		
80		
50		
(US$1,000)
31,500(US$1,000)
26,000

84.0
100.0
90.0
100.0
100.0
100.0
100.0
(20.0)
51.0

300		
300		
200		

100.0
50.0
100.0

200		
100		
100		
60		
(RM 1,000)
190,000(Dkr 1,000)
135,000(US$1,000)
71,980		
(US$1,000)
10		(Euro 1,000)
2,408		
(Euro 1,000)
1,000

100.0
100.0
100.0
100.0
100.0
100.0
100.0
(100.0)100.0(100.0)
100.0
100.0

2,500		
400

100.0
100.0

490		
300		
100		
(NT 1,000)
2,259,276		
(Euro 1,000)
47,200

65.0
100.0
100.0
49.9
80.6

(15.1)

5,483		
4,340		3,000		
266		
100		
50		
50		
50		
35		
3,652		2,611		2,035		2,000		100

22.073.8		 (1.0)
53.0
53.0		 (53.0)
53.0		 (53.0)
53.0		 (53.0)
53.0		 (53.0)
53.0		 (53.0)
53.0		 (53.0)
15.5		 (9.3)
99.6
51.8		 (16.0)
100.0
100.0 		(100.0)

32.0

626		
500		

100.0
33.4

435

86.8

100		
100		

100.0
94.3

63.5

100		
80		
60		
50		
40		
30		
30		
(S$1,000)
2,000(US$1,000)
420

100.0
100.0
48.2
99.8
92.5
95.0
66.7
100.0
100.0

100.0
100.0
100.0
88.8
100.0
100.0

(Krw 1,000)
500,000(US$1,000)
62,164(NT 1,000)
10,000(US$1,000)
5,400(S$1,000)
350(US$1,000)
100(US$1,000)
100(Euro 1,000)
92(A$1,000)
70

100.0
100.0
(7.2)
100.0
100.0

100.0
(100.0)100.0(100.0)
100.0
100.0

Appendix

Production and sale of soft drinks

2,935		

Financial Section

100.0

Beverages
Beverages
Hokkaido Coca-Cola Bottling Co., Ltd.

How DNP Works to Achieve
Sustainable Development

350		
100		
90		
33		
30		
20		

Segment Information

100

Special Feature

1,187

DNP in Brief

Ownership ratioof voting rights (%)

To Our Shareholders

Other
Nihon Unisys, Ltd.
Development and sale of software; computer system support services
2Dfacto, Inc.
Production, agency and sale of digitized books, magazines and other publications
Maruzen CHI Holdings Co., Ltd.
Investment in operating companies
Toshokan Ryutsu Center Co., Ltd.
Sale of books, creation of data, library operation support, and consulting
Maruzen Co., Ltd.
Educational and academic business; store operation; academic publishing and interior design, etc.
MaruzenJunkudo Bookstores Co., Ltd.
Sale of books, magazines, and stationery
MARUZEN PUBLISHING CO., LTD.
Publishinghonto Book Service Co., Ltd.
Production, agency and sale of digitized books, magazines and other publications
Yushodo Co., Ltd.
Import and sale of books, magazines, and other publications
BOOKOFF CORPORATION LIMITED
Used bookstore operation; development and operation of new used goods businesses; management guidance for affiliated stores
SHUFUNOTOMO Co., Ltd.
Publishing
BUNKYODO GROUP HOLDINGS CO., LTD.
Sale of books, magazines, CDs, DVDs, stationery, games, hobby-related products, etc.
DNP Fine Chemicals Co., Ltd.
Production and sale of chemical products
DNP Fine Chemicals Utsunomiya Co., Ltd.
Production, procurement and sale of organic and inorganic chemicals
All About, Inc.
Operation of website offering lifestyle information from specialists in various areas and Internet advertising
DNP Logistics Co., Ltd.
Packing, shipping operations, freight transport and warehouse management
DIC Graphics Corporation
Production and sale of printing ink
VISUAL JAPAN. INC.*
Development, sale, and maintenance of computer software
D.N.K. Co., Ltd.
Production, sale and repair of printing equipment and machine tools
DNP Trading Co., Ltd.
Sale and purchase of paper and other products
MobileBook.jp, Inc.
Electronic publishing and distribution platform services and e-book distribution service
DNP Multi Print Co., Ltd.
Film making, printing and bookbinding
DNP SP Tech Co., Ltd.
Planning and production of promotional materials
Kyoiku Shuppan Co., Ltd.
Editing and sale of textbooks and educational materials
My Earth Projects LLC*
Planning, production and sale of trading cards
CP Design Consulting Co., Ltd.*
Personal information protection and risk management consulting
M’s Communicate Co., Ltd.*
Consulting related to customer membership program services
At Table Co., Ltd.*
Research, consulting and planning related to production and sales promotions for supermarkets and other retailers
DNP Asia Pacific Pte. Ltd.
Coordination of DNP businesses in the Southeast Asia/Oceania region		
DNP Business Consulting (Shanghai) Co., Ltd.*
Study of Chinese market and business feasibility
		Personal Welfare, Facility Service and Others
DNP Facility Services Co., Ltd.
Building management, cleaning and security; operation of public health and recreation facilities
DNP Information Systems Co., Ltd.
Design, development and maintenance of information systems; production and sale of software
DNP Human Services Co., Ltd.
Planning and management related to personnel plans
Uzumine Country Club Co., Ltd.*Management of golf courses
DNP Accounting Services Co., Ltd.
Accounting agency and consulting services
DNP Techno Research Co., Ltd.*
Studies related to patents and the preparation of contracts
Overseas Sales
DNP Korea Co., Ltd.*Sale of precision electronic components		
DNP Corporation USA
Investment in operating companies
		
DNP Taiwan Co., Ltd.
Sale of precision electronic components		
DNP International Trading (Shanghai) Co., Ltd.*Sale of printed matter (commercial printing and packaging materials)
		
DNP Singapore Pte. Ltd.*Sale of precision electronic components and decorative materials
		
DNP America, LLC
Sale of printed materiais, precision electronic components, and decorative materials
		
DNP Holding USA Corporation
Investment in operating companies
		
DNP Europa GmbH*
Sale of printed materials and decorative materials
		
Dai Nippon Printing Co. (Australia) Pty. Ltd.*Sale of printed materials and decorative materials		Capital(¥ million)

59.9 		 (6.4)

Notes: 1. Voting rights ownership ratios (in brackets) indicate the percentage of shares owned through DNP’s subsidiaries or affiliates.
2. Companies with an asterisk are neither consolidated nor accounted for by the equity method.

DNP Annual Report 2015113

Business Expansion through Application andDevelopment of Printing Technologies
In order to meet the needs of businesses, consumers and society, DNP has evolved its printing technologies.
We take knowledge and expertise accumulated through performing each step of the printing process and expand it in multiple directions todevelop new technologies.

Basic printing processes ※Example of conventional offset printing
Planning

Manuscript/Information processing

Create layout data consisting of integrated text andimage data.

Film making

Plate making

Color separate the data into four colors (CMYK*) and output printing
data for each color onto film (film making). Transfer the informationfrom each film to a metal plate to form a master (plate making).
*C for cyan, M for magenta, Y for yellow, K for "key plate" (black)

Information
Processing

Microfabrication
Form minute patterns on metal surfaces

Process information appropriately
while controlling its security

Exposure
Light

Corrosion
Laser

Applied to digital media, information security,and other fields

Font technologies
Image processing andrecognition technologies

Media conversion
technologies
Data analysis
technologies

Information security
technologies

Digital fontE-bookApplied to electronics, life science,and other fields

Molding technologies
Nanoimprinting

Photolithography

Optical design technologies

Circuit mounting technologies

etc.

Color filter (magnified view)

Photomask
100nm

Color management LSI

114

Smart card

Touch panel sensor

etc.

150 nmCell cultivation plate (magnified view)Printing

Productdelivery

Binding and post-processing

Effectivenessassessment

To Our Shareholders

Feedback

DNP in Brief

Wrap plate around roll, supply ink, and perform
high-speed, high precision printing.

Postprocessing

Apply a thin, uniform layer of ink.

Form into easy-to-use shapes

Dyestuffs and sensitive
materials

Stabilize development quality of aseptic filling systems
and other packaging products; improve productivity

Synthesizing
technologies

Aseptic filling
technologies

EB and UV hardening
technologies

Machinery and equipment
design technologies

Vapor deposition technologies

etc.

Assessment and analysis
technologies
Inspection and measuring
technologies

Environmental protection
technologies

etc.

Financial Section

Coating technologies

How DNP Works to Achieve
Sustainable Development

Combine material design with technologies likefilm thickness control, multi-layering, and surface
processing in order to provide functionality.

Segment Information

Precision
CoatingSpecial Feature:
DNP’s Growth Strategies

Collate and bind together the printed pages toform books.

AppendixDye-sublimation thermal transfer printing media Anti-reflection film

Biomass plastic packaging materials

Aseptic filling systems for PET plastic bottle

Barrier film for packaging

Soft pack for lithium-ion
rechargeable battery

Printing inspection equipment for
printed materials

Residential interior materials

DNP Annual Report 2015115

Information
Processing

With the digitization of printing, DNP has been developing a wide range of original information
processing technologies including image processing, language processing, information security
and networking technologies. We are also pursuing research and development in fields likecomputer vision, regenerative medicine, and artificial intelligence.

Image Processing and Recognition Technologies
TECHNOLOGIESImage processing and recognition technologies apply appropriate information processing techniques to still or moving images in order to extract
useful information. They enable information media to perform sophisticated information processing tasks that only humans were able to accomplish
in the past. Sometimes these technologies even make it possible to see information that humans cannot recognize without help. Since DNP began
digitizing the text and image data that we handle in our printing businesses, we began research and development in fields such as color reproduction,in which we have continued to develop related technologies. We are now developing applications in a wide range of fields including security, energy
conservation, education, medical care, and entertainment. We are working at a variety of levels from developing our own algorithms to developing
architecture.
PRODUCTS

Fisheye image correction systems
DNP’s fisheye image correction system extracts accurate, unwarped
images from among the images taken with a fisheye lens camera.
This original system blends DNP image processing technologies withlarge-scale integrated circuit (LSI) design and mounting technologies.
Equipping a camera with an LSI loaded with our image correction
algorithm enables a significant reduction in the image processing
burden placed on the camera itself or on a server. Videos recorded witha wide field of view can be corrected and/or converted freely and in realtime to panoramic or planar images.

◉Normal image processing◉DNP’s image processing

Information Security Technologies
TECHNOLOGIESDNP has three core types of technologies related to this area: smart card OS and application development technologies; smart card issuing
technologies; and network server system development and operation technologies. In addition to manufacturing and issuing smart cards, we candevelop a variety of products and services such as IC software and peripheral smart card-based systems by refining these three types of technologies.
PRODUCTS

Smart cards
A smart card contains a microchip with non-volatile memory capable ofstoring a large amount of data, and a CPU. Smart cards may be contacttype cards, contactless, or dual interface cards that combine contacttype and contactless functions. DNP maintains one of the leading sharesof the Japanese smart card market, supplying every type of card—from
credit cards and transportation cards to electronic money cards—usedby a variety of business types and business formats.

116

Microfabrication

In the process of making masters (plate making) for printing, DNP has cultivated highly precise
processing technologies. By applying those technologies to electronics, we have created a large
number of micro-processed products including semiconductor photomasks and color filters for
LCD displays. We continue to explore the limits of the microscopic world through our cuttingedge technologies.

Photolithography
Photolithography is a technology for forming patterns by shining light on the surface of a substrate coated with photosensitive material. The pattern
forms because some areas are exposed and some are not. DNP has honed its photolithography technologies through the production of masters used
for printing. We apply these technologies to the manufacture of products like photomasks and color filters.
PRODUCTSTo Our Shareholders

TECHNOLOGIES

Photomasks
DNP in Brief

A photomask is a master used for forming semiconductor
circuits. In order to make cutting-edge semiconductors, weneed to use various special techniques in order to makephotomasks that can produce circuits whose lines have thenecessary resolution of 14 to 28nm*. DNP contributes tothe miniaturization of semiconductor product line widths byproviding photomasks that control not only the intensity but also
the phase and polarity of the light that passes through them.

Special Feature* nm (nanometer): one billionth of a meter

Color filters◉Color filters

Segment Information

We have developed high quality color filters—an importantcomponent of liquid crystal displays—by developing new coloringmaterials and using pigment miniaturization and dispersion
techniques along with photolithography technologies forpatterning of colored layers. In response to the trend toward
multi-colored layers, we have also developed multicolor filters withexpanded color reproduction ranges of four or five colors.

Close-up photograph ofa color filter

TECHNOLOGIESPRODUCTS

Financial Section

Nanoimprinting is a method that enables the transfer of patterns with line width of 20nm or less by pressing a mold against a resin-coated substrate.
The development of nanoimprinting makes use of knowledge and skills from a wide range of fields, including clarification of the mechanisms by whichpolymers react when exposed to light or to an electron beam, a good grasp of a material’s behavior at its interface, and simulation technologies in
addition to microfabrication and precision measuring techniques. Based on the technologies we have cultivated through our photomask business, wehave been pursuing development in collaboration with materials and equipment manufacturers.

How DNP Works to Achieve
Sustainable Development

Nanoimprinting

Product development

Transparent
moldLight-sensitive
resin
Substrate

Contact andUV exposure
Replica moldon whichpattern has
been formed

Release(replica)

DNP Annual Report 2015

AppendixNanoimprinting is being studied for its potential use in next-generation
semiconductor lithography, ultrahigh density HDD media manufacturing,and optical elements. Quartz or silicon is generally used for making
master molds (dies), and dry etching is used for forming a concavoconvex shape on the mold surface. DNP has developed a replica moldby using nanoimprinting lithography and a master mold made withelectron beam lithography. We plan to supply this next-generation
technology to a wide variety of corporate clients.

117Precision
Coating

Precision coating refers to processing that covers a surface by causing a film to adhere to it uniformly.
By combining material design technologies with film thickness control, multi-layering, surface
processing and other technologies, we can bestow diverse functions such as optical properties,
barrier properties, and heat resistance.
With extremely broad possibilities for application, this is one of DNP’s core technologies and we
make use of it across business unit boundaries.

Coating
TECHNOLOGIES◉PrintRush self-service

printing systems
DNP has coating technologies that we employ in the manufacture of ink ribbons for dye-sublimation thermal transfer
printers that print digital images, which enable us to apply various functional materials in a uniform layer about 1μm*
thick onto ultrathin film only about 5μm thick, at a speed of several hundred meters per minute. We have also developedmaterials such as coloring agents that are exceptionally well-suited for thin film coating and over coat materials, enabling
us to succeed at high-speed thin-film coating in terms of both processing and materials. * μm (micrometer): one millionth of a meter
PRODUCTS

Dye-sublimation thermal transfer printing media
Printers that use dye-sublimation thermal transfer printing media form images by transferring
dyestuffs from ink ribbons to receiver paper. Controlling heat energy in the printer’s thermal
head makes it possible to adjust the concentration of dyestuffs in each dot. Because they can
reproduce some 16,700,000 colors in a single dot, these printers can produce high quality
images. In addition to manufacturing and selling ink ribbons and receiver paper, DNP is
further expanding and evolving its digital photo print business by developing new printing
systems and proposing a variety of solutions that make use of its systems.

◉Dye-sublimation thermaltransfer printing media

Electron Beam (EB) Technologies
TECHNOLOGIES◉Image ofelectron beam
exposure

Electron beam (EB) technology uses electron beam exposure to instantly provide advanced functionality toresins and coating films. Depending on the type of resin used and the EB exposure conditions, some resins
can be induced to exhibit superior properties that are completely different from their natural properties.
Because EB production processes consume less energy, generate less CO2, and do not entail the use ofsolvents, they are friendlier to the environment and human health than conventional coating technologies.
PRODUCTS

Residential interior and exterior materials
By exposing various surface materials, such as doors or floor and wall coverings, to an electron beam, the materials
can be made more functional in various ways. For example, in addition to gaining greater resistance to scratches,
deterioration and discoloration, they become simpler to maintain as dirt wipes off easily. By employing additional
techniques to improve surface materials, we are developing exterior materials with exceptional weatherability
and developing automotive interior materials that can be processed into complicated shapes. We will continue to
evolve EB technology to support “functional value” that can underpin the construction of senior-friendly homes,
smart homes, and other living spaces for a comfortable future.

Vapor Deposition
TECHNOLOGIES

Vapor deposition is a coating technology whereby a gasified substance forms a coating on aplastic film within a vacuum. Alumina and silica are used in vapor deposition, with silica being usedparticularly in a method called “chemical vapor deposition.” In chemical vapor deposition, because
silica is deposited on the film surface at the molecular level, it is possible to form a minute layer
with strong barrier properties despite its thinness. DNP creates a variety of products by continuously
performing chemical vapor deposition on flexible plastic film.

◉Transparent gas barrier film

PRODUCTS

Plastic film (polyethylene terephthalate (PET), nylon, etc.)

Watermolecules

Oxygenmolecules

Inorganic oxides (silica or alumina)

Barrier films
Barrier films are used to package foods and medical supplies in order to prevent oxidation or drying, and tokeep out moisture. Unlike aluminum foil and aluminum-based vapor deposition films, DNP’s transparent vapor
deposition “IB*” film can be used in a microwave oven and is amenable to detection of metallic impurities. Also, IB
film is an environmentally friendly product whose production consumes less energy than that of aluminum foil.

* Innovative Barrier

118

Postprocessing

From bookbinding and processing of paper products to film packaging, plastic forming andaseptic bottle filling systems, DNP has developed one processing technology after another.
We have also acquired advanced technologies through testing, measuring, and analyzing avariety of products.

Aseptic Filling
TECHNOLOGIESPRODUCTSTo Our Shareholders

DNP has developed aseptic systems for filling sterilized packaging materials with food or beverages in a sterile environment, thereby contributing to
improving food safety and decreasing the burden placed by packaging materials on the environment. In addition to food preservation and sterilization
technologies, we make use of a wide variety of technologies in the development of these systems, including filling machinery design, control, sensing
technologies, and packaging materials design technologies.

Aseptic filling systems◉ Aseptic filling systems for PET(polyethylene terephthalate) bottles

DNP in Brief
Special Feature

DNP’s aseptic filling systems can be adapted for various packaging formats and fillingvolumes and can be used for filling with high quality contents. One aseptic filling system for
pasta sauce, noodle broth or other liquid foods can be used to fill any amount from 10 to
1000mL; in other words, it can manufacture anything from a single-portion package to acommercial use product. Furthermore, DNP’s system allows the supply of products that weredifficult to process by conventional retort methods because those methods required heating
for longer time periods, which tended to break down the contents. Because DNP’s aseptic
PET plastic bottle filling systems enable filling at room temperature, unlike conventional
systems that required filling at high temperatures, it is possible to use lighter, thinner bottles
that are good for reducing the burden placed on the environment.

Assessment and Analysis Technologies
TECHNOLOGIES
Segment Information

Assessment and analysis technologies are indispensable to strengthening and developing manufacturing in today’s changing market environment. In
our product development, DNP combines the latest analysis and measuring equipment and theories, identifies materials that can form product value,and explicates the mechanisms by which those materials express their functionality. We bring visualizing and sensing technologies into each factory
and analyze its production processes in order to stabilize quality and boost productivity. We endeavor to improve working environments so as to add
further protection to workers and solve all types of problems that arise on the factory floor.

Improving the manufacturing environment in clean rooms
Bare
hands

Maximum number of particles: about 5

Machinery and Equipment Design Technologies

Financial Section

Maximum number of particles: about 200

Wearing special gloves+
Regular hand washing

How DNP Works to Achieve
Sustainable Development

We manufacture high quality, high precision products in clean rooms (CRs) in which
the level of suspended particulates and other impurities in the air is controlled.
In order to maintain and manage the quality and performance of DNP products,
we use techniques that allow us to optimize the materials used in the CR as wellas to see the amount of dust generated by employees’ movements (see images
at right, taken with a high-sensitivity camera). In this way we improve employee
awareness and create a framework and mechanisms that allow us to continuously
manufacture high quality products.

TECHNOLOGIESPRODUCTS

AppendixSome of DNP’s equipment requires a high level of precision and quality that existing equipment manufacturers cannot provide. In addition to making
use of mechatronics, for the past 20 years DNP has been using structural analysis technologies in its design processes rather than relying exclusively on
the experience and intuition of veteran designers. Moreover, we continually work to make our equipment more reliable based on vibration analysis andequipment maintenance information generated in house.

Printer frame deformation analyzer
Because the printers that make books, packaging materials and other products have precision-processedcylindrical plates that rotate with a high degree of precision, they must be assembled to a highly accurate marginof error of less than 50μm. Also, because the paper or other print stock that gets pushed onto the plate canweigh more than 500kg, it is important that the machine be designed to prevent deformation of its frame andthe resulting effects on printed matter. DNP uses a scaled-down model for experimentation as well as strengthand vibration analysis in order to predict characteristic number of vibrations and amount of frame deformation.

DNP Annual Report 2015

119

Glossary

1. Terms Related to the DNP Group■ Management Concept
The DNP Group will contribute to theemergently evolving society of the 21st
century.

■ Business Vision“P&I Solutions DNP”
We will identify and solve the problems
and issues that consumers and corporateclients face within the emergently
evolving society by fusing our Printing
Technologies (PT) and Information
Technologies (IT).

■ Guiding Principles
Actions DNP should take in order toachieve our business vision and realize
our management concept
1. Engage in Taiwa* with all persons
concerned.
2. Work with an independent andcollaborative mind-set in order to solve
problems.
3. Challenge courageously, even in theface of difficult issues.
4. Act with integrity, fairness, andimpartiality, at all times.
5. Be responsible for your own decisions
and conduct.

■ The DNP Group Code of Conduct
A set of codes underlying all types ofactivities that express DNP’s corporate
ethics. All DNP Group employees mustobey these codes.
・Contributing to the development ofsociety・Social contribution as a good corporate
citizen・Compliance with the law and social
ethics・Respect for human dignity anddiversity
・Environmental conservation and therealization of a sustainable society
・Realization of a universal society’・Ensuring the safety and quality of our
products and services
・Ensuring information security
・Proper disclosure of information
・Realization of a safe and vibrantworkplace’

120■ DNP Group’s CSR
CSR (Corporate Social Responsibility) is
generally defined as “the responsibilities
of a corporation to society,” but we at
the DNP Group go further, viewing CSR
as “being a company that is trusted bysociety.”
By simultaneously meeting the threevital corporate responsibilities—“Value
Creation,” “Integrity in Conduct,” and“Transparency (Accountability)”—
we seek to continue being a trusted
company.
1. Value Creation:
Providing new value to society
2. Integrity in Conduct:
Practicing fairness and impartiality inthe value creation processes
3. Transparency (Accountability):
Being a company that is accountable
and highly transparent
2. Information Communication■ Augmented reality (AR)A technology for synthesizing images,
text, or other virtual information
with an actual scene or object in
the physical presence of the user, so
as to create a rich expression thataugments the experience of reality. For
example, a webcam or mobile phonemounted camera may record images or
identification codes along with imagesof the surrounding environment, all ofwhich are synthesized and displayed
together with preregistered informationsuch as 3D computer graphics.

A picture book using augmented reality■ Big data
Massive amounts of data of varying
types, such as trends in consumer usageof information services, merchandisepurchasing records, or global climatechanges. In recent years, big data

has attracted attention as a source ofimportant information for companies,
including consumer preferences, andindicators for predicting buying patterns.
Big data can be used by businesses more
effectively now that smartphones andother information terminals are more
widely used along with social networking
and other information services.

■ Business Process Outsourcing (BPO)
Contracting out the execution of someof a company’s business processes toan outside provider that has specialized
technology or expertise.

■ The cloudA nickname for cloud computing. Cloudcomputing makes it possible to shareand use software and data via Internet orsome other network of remote servers,
rather than using individual computers
to manage and use the software anddata, as was done in the past. Somesay it is called cloud computing because
the system is represented by a cloudin diagrams depicting the network
structure. Cloud computing saves users
money because they don’t need to set
up their own system. It saves time andtrouble because users do not need topurchase and install software or back up
their own data.

■ Digital signage
An advertising medium that uses
large, flat-panel displays linked to
an information network in order tobroadcast up-to-the-minute,localized information in stores, train
stations, or other public spaces. Digital
signage can be made to function
interactively, so that consumers
can display the specific information theyneed by using a touch panel or mobile
phone, etc.

■ Electronic library
A service that lends electronic books
to libraries by providing them via theInternet after receiving permission
from the publisher. As of March 2015,
more than 30 Japanese libraries wereparticipating. The system is expected toprovide new opportunities for the sale ofpublished content.

■ Information Processing Services (IPS)DNP offers a uniquely broad menu
of business services including
inputting and safely transmitting massive
amounts of personal information andother data, editing and processing,
printing, producing, mailing and/ortransmitting invoices, usage statements,and other forms of personalized mail—allin environments protected by advanced
information security.

■ Shueitai
An original font that DNP has beendeveloping since the early 1900s. This
beautiful, easy-to-read font with agraceful, sleek design has won highpraise from book publishers and readers.
We created a digital version in the 1970s
and began licensing its use as of 2001.
In 2005, we undertook a project called“Heisei no Dai Kaikoku” (engraving
improvement project), which is aimed at
improving the existing digital font anddeveloping new fonts.

DNP in Brief
Special Feature

A service that sells both paper andelectronic books by integrating DNP’s
e-book sales service, online bookstore forprinted books, and physical bookstore
chain operators Maruzen, Junkudo andBunkyodo. The service provides suchfeatures as a “recommend function” thatsuggests products a customer might likebased on their previous purchase history
from all three sales formats, a sharedcustomer loyalty “point service” thatallows customers to accumulate hybrid
points regardless of which sales format
they use, and an “electronic book shelffunction” that displays all of the paper
books and e-books a particular customer
has purchased. The service has been fully
operating since June 2012.

To Our Shareholders■ Hybrid bookstore network “honto”

Personalized mail■ Lippmann hologram“Biomass” may refer to the total quantityof organisms living in a particular area,or it may mean organic resources
derived from living things other thanpetroleum or other fossil resources.
Biomass material is made from resourcesof biological origin, such as vegetable
resins or natural fibers. Biomass material
has attracted attention as a material
that puts relatively little strain on theenvironment due to the idea that
CO2 absorbed by plants during theirgrowing process cancels out the CO2
emitted when the material is burned.
Since biomass material is a renewable
resource, supplies are expected to bestable.

Financial Section

frequency identification) tag
An electronic device combining a
miniature antenna with an IC chipthat records information. Radio
communication between an IC tag anda dedicated reading device makes it
possible to distinguish the individual itemthat has a particular IC tag attached to it.
IC tags take a variety of forms, including
labels, cards, and coins.

■ Biomass material

How DNP Works to Achieve
Sustainable Development■ IC tag; also called RFID (radio

3. Lifestyle and Industrial Supplies

Segment Information

Maruzen’s main bookstore inTokyo’s Marunouchi district

A type of hologram, which is a threedimensional image recorded using a
split laser beam. Lippmann holograms
are excellent for expressing vertical andhorizontal three dimensionality and asense of depth. They are extremely hard
to counterfeit because their production
requires special equipment. Theseholograms have garnered praise aroundthe world for providing a high level of
security and potential for outstanding
designs.

Appendix

DNP Annual Report 2015121

■ Photovoltaic module components

・Back sheets are weatherproof films
that protect photovoltaic modules
from external elements. They prevent
precipitation from entering modules,
making it possible to use themoutdoors for a long period of time.
Back sheets must be very durable
and moisture proof, and have goodelectrical insulating properties.
・Encapsulants are protective sheets
used to secure photovoltaic cells andtheir peripheral wiring in place, andto form photovoltaic modules. An
encapsulant forms a strong bond
between a module’s back sheet and its
front glass.

Structure of an array of photovoltaic cells (solar cells)
Photovoltaic cell
The smallest unit that functions as aphotovoltaic battery; in crystalline
photovoltaic modules, a cell consistsof a silicon wafer

Encapsulants
A sheet of material that seals thecell and protects it from theelements, i.e. rain, wind, snow,
and temperature changes

Cell
Back sheet
Wiring, etc. Weatherproof film that protects the back of thephotovoltaic module from the roof or othersurface that it rests on■ Regenerative medicine
A therapeutic method using artificiallycultivated cells or tissues to restore or
recover the function of tissue or organs
lost through disease or accident.

Film applied to the surface of display
screens in devices like computers or
televisions in order to prevent outside
light or interior light from reflecting off
the screen. There are various types ofAR films including anti-glare (AG) andlow reflection (LR) films. DNP supplies
a variety of these products by making
use of coating and other technologies
to apply thin, uniform coatings of lightdiffusing materials to rolls of base film.

■ B2it (pronounced “bee-square-it”)
DNP’s proprietary technology forconnecting layers in a buildup board byusing bumps of conductive paste formedby means of screen printing. A buildup
board is a printed board made byalternating insulating layers and wiring
layers.

■ Lead frame
A metal component inside asemiconductor package that supports
the semiconductor chip or chips andtransmits electric signals.

122■ MEMS (Micro Electro Mechanical
System)An electronic device that integrates
components like IC chips, sensors
and electronic circuits into a threedimensional structure mounted on abase, which is usually a silicon wafer.

■ Touch panel sensor
Touch panels are used on devices likesmartphones and tablet PCs. They
enable intuitive manipulation of data—
for example enlarging, shrinking, or“turning pages” by touching the screenwith fingertips. Touch panel sensors
receive signals indicating the locations
where a fingertip has touched thepanel. DNP makes a piece of glass orfilm function as a sensor by forming
electrodes on it in a grid pattern, anddelivers the final products to touch
panel manufacturers. DNP uses its
micro patterning technologies in the
manufacture of touch panel sensors.
front surface of display (direction in which light moves)

cover glass
touch panel
polarizer
glass (CF) side
glass (TFT) sidepolarizer

light guide plateliquid crystal display panel

Structure of an array of photovoltaic cells (solar cells)

Surface glass“soft pack”■ Anti-reflection (AR) film

Array
An arrangement ofmultiple modules

Sunlight

A laminated packaging film that seals inbattery materials such as electrolytes andseparators. Compared to conventional
metal can-type packaging, a soft packallows greater freedom in designinga battery’s shape and dimensions andcan help reduce its weight and cost.
Another advantage is that the soft packreleases pressure from inside the battery,
preventing deformation from excess
heat.

4. Electronics

ModuleA unit that is packaged in special
material to maintain the photovoltaic
cells’ electrical efficiency and to allow
them to withstand harshenvironmental conditions

Metal frame, etc.

■ “Soft pack” for lithium-ion battery

Example of a touch panel
combined with a liquid crystal display panel

Sources of Information about DNPWeb Site (English: http://www.dnp.co.jp/eng/)
Our web site introduces our operations in a format that is easy to understand. In addition
to disclosing information at appropriate times and in appropriate ways, we are continuously
improving the site. The following publications and reports are also available as PDF files
that can be downloaded from the web site.

■

Annual Report (Japanese and English versions)
Near the end of July every year, we release a Japanese version and an English version.
The report contains financial information, explanations of our business strategies, and otherrelevant information about our business activities during a particular fiscal year.

■

DNP English Web Site
(http://www.dnp.co.jp/eng/)

Data Book (Bilingual: Japanese/English; available only as PDF file for 			download from web site)
DNP in Brief

Issued near the end of July every year, the Data Book contains values from financial
statements of the past 10 years, and financial analysis values in the form of tables andgraphs, etc. The Data Book is published in PDF format on DNP’s Investor Relations site.
Financial statement values are taken from securities reports.
■

To Our Shareholders

Publications“DNP Report” to shareholders“DNP Report” Report to Shareholders (in Japanese)
This report is delivered quarterly to shareholders. Its contents include summaries of financial
results, special features about business activities, and introductions to various technologies.

■

Special Feature

DNP Group CSR Report (Japanese and English versions; English version 		
available only as PDF file for download from web site)
Each year we issue a report about DNP’s corporate social responsibilities, with the Japaneseversion coming out around the end of June and the English edition around August. We also
have been issuing an annual “Eco-Report” since the ﬁrst issue appeared in 1998.

■

DNP Corporate Profile (Corporate Brochure: Japanese and English versions)This publication introduces each segment’s products and services, operating locations inJapan and around the world, company history, a summary of our activities, and other basic
information about DNP.

DNP Group CSR Report■“Yuho” Annual Securities Report, etc. (in Japanese)
In accordance with Article 24 of the Securities Exchange Law, DNP submits quarterly reports to the Finance Ministry in August,November, and February. In June, DNP submits a quarterly report combined with a “Yuho” annual securities report. These arebroad-ranging reports that include consolidated financial statements with auditing reports attached, non-consolidated financial
statements, performance reviews, information about shares and corporate directors, etc.

■

In accordance with Tokyo Stock Exchange rules, we prepare earnings releases for each quarter. In addition to consolidated financial
statements, we report on the status of sales, etc.
Note: Trademarks mentioned in this annual report in connection with DNP products or services are used or registered in Japan.

About the Cover Illustration

How DNP Works to Achieve
Sustainable Development“Tanshin” Earnings Release (Japanese and English versions)

Segment Information

Reports

Beginning in 2013, for three years the covers of DNP’s annual reports have expressed belief in a sustainable future for DNP and for our planet.
Financial Section

Norito Shinmura, Graphic designer

Appendix

This is the third time for me to design DNP’s annual report cover.
The first year, the design was based on a “seeds and sprouts”
motif, symbolizing DNP’s efforts to build a future that makes themost of diversity. The “blossoming” of those seeds was depictedin the second year, and this year the cover shows further
progress, to “fruition.” My hope is that these fruits will bear
seeds that will continue into the future—a better future for DNP
and for our planet.
Annual Report 2013

Annual Report 2014

Annual Report 2015

Born in Yamaguchi Prefecture in 1960. Graduated from Osaka Designers’ College. Founded Shinmura Design Office after working for Shin Matsunaga Design Inc. Notable projects include work
for Shiseido Co., Ltd., Muji Campground, McDonald’s Japan, SSP Co., Ltd., Shinmura Fisheries and the Tokyo Olympic bid committee. Major awards include the Japan Graphic Designers
Association (JAGDA) New Designer Award, Mainichi Advertising Design Award (Grand Prix), Environmental Advertising Contest Award (Grand Prize), New York Art Directors Club (ADC)
Award (Silver Prize), International Biennale of Graphic Design in Brno Award (Gold Prize), and Tokyo Art Directors Club (ADC) Award.

DNP Annual Report 2015

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