2 To Our Shareholders

72 Sustainable Development
74 Legal Compliance and Corporate Ethics

8 DNP in Brief

76 Information Security and Protection of Personal Information

10 Synopsis of Performance

78 Managing Intellectual Property

14 DNP at a Glance

79 Research and Development

16 Products

80 Product Safety

18 Management Concept and Business Vision

80 DNP’s Approach to Universal Design

19 Business Expansion through Core Technologies

81 Creating Lively Workplaces

20 The Making of DNP

82 Environmental Protection

22 Major Events of This Fiscal Year84 Contributing to Society

24 Investor Information

Special Feature

26 Creating Communication
28 Part 1: Information Communication Business Strategy
28

86 Corporate Governance88 Corporate GovernanceInterview with Executive Vice President

93 Guiding Principles and Code of Conduct

Yoshinari Kitajima

94 Internal Control

32 Part 2: Strategic Business Approach

95 Board of Directors, Statutory Auditors and Corporate Officers

32

Creating a New Era in Publishing Distribution

34

A Consumer-Oriented Approach to Planning

36

Security Solutions: The Road That Lies Ahead

38

The Future of Communication Technology

98 Management’s Discussion and Analysis

40

Topics: Examples of Cutting-edge Technology

108 Selected Financial Data

96 Financial Section

110 Consolidated Financial Statements

44 Segment Information
46 Information Communication
46

115 Notes to Consolidated Financial Statements
127 Independent Auditors’ Report

Business Strategies

48

Portrait

50

Financial Results

52

Topics56 Lifestyle & Industrial Supplies
56

Business Strategies

58

Portrait

60

Financial Results

62

Topics128 Appendix
128 Printing Process and its Basic Technologies
133 Sources of Information about DNP
134 Major Subsidiaries and Affiliates
136 Glossary

64 Electronics
64

Business Strategies

66

Portrait

68

Financial Results

70

TopicsThis annual report is aimed at providing information about DNP’s businesses,
management vision, and business results. Opinions and forecasts contained in
the report were based on the best judgment of management at the time thereport 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 88-92), “DNP” refers to Dai Nippon
Printing Co., Ltd.)1

To Our Shareholders
To Our Shareholders
株主の皆様へ2

DNP Annual Report 2009 ＞ To Our Shareholders

The fiscal year through March 2009 was a dramaticone, during which financial crisis in the United States
triggered worldwide financial instability and causeda large drop in consumption. In Japan, particularly
from the second half of the fiscal period, corporate
profits and employment rapidly worsened. Together
with other factors, this resulted in a significant
decline in the economy. In the printing industry
as well, stagnant demand, higher materials costs,
increased competition placing downward pressureon unit prices – all combined to make the businessenvironment harsher than ever.
Below are some of the measures that DNP is
taking in order to continually increase our corporate
value despite these conditions.
First of all, we undertook structural reforms in
our Electronics business, which was immediately
challenged by the drastic market changes, in orderto reshape the segment so that it will be able
to respond more nimbly to market changes andtechnological developments. We are transforming
our LCD color filter and photomask businesses toenable them to rapidly respond to even the sharpest
changes in the supply-demand picture, for example
by consolidating production bases or switchingover production lines. In addition, we reevaluatedproduction equipment and other assets based on
future cash flow, and wrote down some 48.7 billion
yen worth of assets.
Next, we stepped up efforts aimed at developing
the publishing industry as a whole, in collaboration
with many other publishing-related companies.
These efforts include producing attractive content
and establishing livelier content distribution platforms
in order to revitalize an industry that has been in a
prolonged slump since the market peaked in 1996.
We believe that restoring the vitality of the publishingindustry as a whole will fuel DNP’s growth. We
are taking a variety of concrete measures, including
joining forces not only with publishers but also withbooksellers and libraries, developing electronic
books and supporting international content
development. Rather than limiting our role to thatof a manufacturer, i.e. printer, we are bolstering our
education and publication distribution businesses inorder to stimulate the publishing industry.
In addition, we are accelerating commercializationof new businesses with good growth potential, forexample in the energy and life science fields. This
January, in order to meet global demand for clean

energy to replace fossil fuels, we opened a newplant for manufacturing solar battery components inFukushima Prefecture, and also established Energy
Systems Operations to facilitate the constructionof integrated systems of sales, manufacturing,and development. We are also applying printing
technologies in order to develop sophisticated andoriginal products and technologies in life sciencefields such as pharmaceuticals, medical care, andhealth care. In the fiscal year through March 2009,
we became the first entity in Japan to commercialize
a glass substrate for cell pattern culture, and weestablished efficient production technology forcell sheet culture film, a product that promises tocontribute increasingly to regenerative medicine.
As a result of these efforts, net sales in the fiscal
year ended March 2009 amounted to 1.58 trillion
yen, with operating income of 46.2 billion yen.
Largely because we posted stock evaluation losses
and impairment losses (primarily from Electronics),
our net result was a loss of 20.9 billion yen. In linewith these severe results, we reduced our dividend
payout by 4 yen to 32 yen per share.
Currently, the business environment hasdeteriorated in many industries, and every company
is searching for ways to restore its performance.
We are convinced that the key to DNP's growth lies
in identifying our clients’ problems through taiwa*
based on the bonds of deep trust that we have builtwith long-standing customers, and by guiding themto solve those problems through meticulous work.
The printing and information technologies that wehave cultivated throughout our corporate history are
powerful resources for solving those problems. We
aim to find opportunities in these difficult times; byprogressing along with our customers, we intend
to achieve sustainable growth as a company that
contributes to society.
* Taiwa is a process of identifying problems and finding solutions through the exchange ofviewpoints and ideas.

Going forward, we will continue to make every
effort to succeed in meeting the expectations of ourshareholders and everyone else who has a stake in
DNP.

President Yoshitoshi Kitajima

3Performance in the Fiscal Term
Ended March 2009

Electronics and Information
Communication Segments

Q1 What do you think of DNP's performanceQ2 The Electronics segment suffered major

in the term ended March 2009?
DNP's performance this term was severely affectedby factors like the plunge in demand that resulted fromworldwide economic recession, higher materials prices,and lower unit prices. Our business results reflected
these extremely harsh conditions. Especially in thesecond half of the term, demand for LCD color filters
and anti-glare film fell suddenly in response to major
production adjustments by LCD panel manufacturers.
Demand for photomasks and other electronic devices
also decreased due to stagnation in the market for
semiconductor products. In addition, the publishingmarket failed to break out of the slump that began 10
years ago, and commercial printing sales declined,
partly because companies reduced their advertisingbudgets as their performance worsened. As a result,net sales declined by 1.9% to 1.58 trillion yen andoperating income declined 47.0% to 46.2 billion yen.
In order to cope under these harsh conditions, we
initiated structural reforms in our Electronics segment.
As part of that initiative, we reevaluated some ofour equipment, including color filter and photomask
production equipment, in light of future cash flow
projections, and posted impairment losses of roughly
48.7 billion yen. We also posted evaluation losses
of about 13.6 billion yen related to stock holdings. As
a result of these write-downs and other factors, weended the term with a net loss of 20.9 billion yen.
The effect of materials cost increases was about
13.2 billion yen, some 1.4 billion yen more than theprevious year. Cost increases were especially sharp
for wrapping film and other petroleum products, andfor printing paper. We succeeded in passing on about
half of these cost increases through negotiations
with customers, but lower unit prices resulting fromincreased competition cost us roughly 16.0 billion yen.
We countered these negatives by continuing
our companywide efforts at cost structure reform.
Particularly in our manufacturing divisions, we madea Group-wide push to implement “Production 21”
cost-cutting measures, thereby improving process
efficiency, increasing yields, reducing materials losses,
and shortening downtime required for preparation andcoordination. Overall, we succeeded in cutting costs
by about 36.5 billion yen or some 1.5 billion yen morethan the previous term.

4

drops in revenues and profits. How doyou plan to handle this situation?
We will continue to view our Electronics segment
as strategically important, and will implement
structural reforms aimed at securing high growthand competitiveness. The segment's performance
deteriorated sharply this term due to sudden drops
in demand and prices, but we took the following
emergency measures to get its performance back on
track.
First, concerning display components, we willconcentrate on producing high added-value LCD color
filters, such as those used in large-screen televisions,with emphasis on production of 8th-generation and10th-generation large-size substrates at the newfacilities that are currently under construction in Sakai
and Himeji. We will switch production of small andmedium-size color filters used in mobile phones,
monitors, and notebook computers to productionlines that can also handle larger substrates in order
to boost profitability by using more versatile andefficient production methods. Regarding non-LCD
display components, we intend to expand our businessby using DNP technologies to develop a variety of
products for organic EL displays and touch screens,which are expected to grow substantially in the future.
In the photomask arena, we are reinforcing
profitability by consolidating production sites andequipment to make maximum use of production
capacity. Specifically, we closed our Sagamihara Plant
in May 2009, removed outdated equipment from allof our production bases, and transferred equipment
to the new plant we are currently building in Taiwan.
We recognize the importance of the Southeast Asianmarket and are opening a factory in Taiwan to serve
as a speedy product supply base from which toexpand our business in the region. Finally, in advanced
product development, an area in which DNP excels,
we are continuously investing in 32 nm and 22 nm
next-generation products. We are accelerating thedevelopment of high added-value next-generation
products by making the most of our technologicalstrengths, including new technologies such as
nanoimprint and EUV lithography*.

* EUV lithography: technology using Extreme Ultraviolet (extremely short-wavelength)
light to burn minute circuit images onto silicon wafers

DNP Annual Report 2009 ＞ To Our Shareholders

Q3 It seems that the Information Communication segment, which is the mainstay of DNP's sales
and profits, is also continuing to experience harsh conditions.
DNP's Information Communication segment is thecore business that has continued to assure the Grouplarge and steady profits. This remains the case, but
because the business environment remained harsh in
the term ended March 2009, we actively implemented
measures for revitalizing the publishing industry.
The publishing market itself has been in a prolonged
slump lasting more than 10 years, and we realizedthat this poses a serious problem. Since its foundingin 1876, DNP has grown along with the publishingindustry, so it is most important for us to take steps torevitalize the industry as a whole.
As part of this overall effort, in the term ended
March 2009 DNP acquired Maruzen Co., Ltd. andJunkudo Co., Ltd. as consolidated subsidiaries andcoordinated their operations with those of TRC Inc., alibrary operations support company that was alreadyunder the DNP Group umbrella, in order to strengthen
our education and publishing distribution businesses.
Our aim is to expand our business by combining thesesubsidiaries' assets, including expertise, customer
development capacity, and brand strength in thefields of bookstore and library operations, with DNP'scapacity for CRM analysis, electronic publishing, online
sales, and various services and products related tosales promotion.
Furthermore, we have initiated a broad rangeof activities – from planning and production ofdigital content to marketing, sales promotion, andconstruction of related systems – in response to
growth in the electronic publishing market, which
includes distribution of novels and cartoons to mobile
phones. Outside Japan, we responded to increasing

demand for Japanese content, especially cartoons andfashion-related material, by linking production basesaround the world and promoting our GMM (global
metamedia) system of producing in optimal locations.
We aim to create new businesses by being ready todigitize, network, and globalize.
Meanwhile, many companies affected by the
economic downturn have trimmed their advertisingbudgets, so demand for printed materials such as
catalogs, pamphlets, and direct mail has declined. We
expect the harsh business conditions to continue, but
we see this as a major opportunity because companies
are looking for more effective advertising solutions,and we can offer a variety of services that solve theirproblems. For example, we can handle all kinds ofinformation media from paper to the Internet, analyze
market and customer trends, operate customer support
centers and sales campaign offices, and provide ondemand printing.
Moreover, businesses have an increasing needfor information security and protection of personal
information. As long as a company continues to
do business, it must increase the reliability of its
information security. In recent years, DNP has
promoted the acquisition of PrivacyMark certification
for business units and Group companies that handle
data processing; this fiscal term Dai Nippon Printing
received PrivacyMark certification for the entire
company. Besides beefing up our own security
systems, DNP provides other companies with security
solutions, primarily involving smart cards.

5

DNP’s Strengths and Long-Term Strategies

Q4 What are you doing now to boost
corporate value and achieve sustainablegrowth?
Right now, business conditions have worsened inmany industries and most companies are searching
for ways to restore their corporate performance. The
fact that companies are grappling with many issues
means that they have many problems to solve.
Given that DNP's corporate vision is to be a “P&I
Solutions” provider, this presents us with an important
opportunity to help corporate clients and society solve
their problems. Taking advantage of our printing andinformation technologies, clearly identifying a variety
of problems, and carefully solving them one by one iswhat will fuel DNP's growth.
DNP has already generated a large number ofadvanced products and services that enrich people’s
lives. Long ago, we established the weekly publicationof magazines, and helped make color televisions
widely accessible by developing shadow masks.
We were quick to incorporate digital and network
technologies into printing production processes,
thereby contributing to the development of electronic
publishing. We have succeeded in a wide variety offields, for example, by developing smart cards withadvanced information security systems, highly
functional packaging products that are easy for anyone
to use, and eco-friendly decorative materials fordwelling spaces, and by supporting businesses in every
area from planning and development to customer
support and distribution based on CRM analysis.
Our creativity is rooted in a boundless spirit ofinnovation, and I believe it is particularly important
to maintain a “consumer’s point of view.” We havealways stimulated innovation by constantly focusing
on what consumers want and what will benefit them,and by providing safe, convenient, high-performance
products and services that are considerate of theuser. Going forward, we aim to remain quick to noticechanges in the needs of businesses and consumers
by deepening taiwa with them. And we will promotechanges that are widely accepted in society, including
new business models.
In order to speedily implement such changes andboost our competitiveness, we will actively seek
strategic tie-ups and alliances. We will also enhance
our Group-wide “Production 21” activities with aneye toward overall optimization in order to improve
productivity. Through these activities, we aim to boost
corporate value and achieve sustainable growth.
6

Q5 What concrete results did you achieve thatwill help DNP realize sustainable growth?
We entered the life science and energy businesses,
two fields with good expectations for future growth.
We believe that by applying our printing andinformation technologies to living cells, we cangenerate products that contribute to the developmentof regenerative medicine and preventative medicine
and also expand our Life Science business.
For example, in July 2008 we became first in theworld to commercialize a cell culture substrate thatenables the culturing of cells in particular patterns.
The launch of this “CytoGraphTM” substrate wasbuilt on the success of our collaboration with Tokyo
Medical and Dental University in 2004, when we
succeeded in forming capillary patterns. We plan to
apply this technology to areas like the regenerationof capillary blood vessels, repair of skin damaged by
bedsores or other injuries, and treatment of periodontal
disease. Furthermore, we have established mass
production technology that will allow us to take cells
cultured in petri dishes and form them into sheets thatare convenient to use in surgery and other medical
applications. These sheets are expected to be very
effective in regenerative therapies involving applicationof sheets of cells to diseased or injured skin, corneal
tissue, periodontal membranes, heart muscle orother tissues. Currently, our Life Science-related sales
amount to about 30.0 billion yen per year, but we aim
to increase them to around 70.0 billion yen in 2016.
Another field that is garnering a great deal ofattention is solar batteries, which generate electricity
without burning petroleum or other fossil fuels, thereby
helping to reduce C02 emissions. We are working
to expand our business in this field largely throughproduction of solar battery components, which webegan manufacturing at a new plant in Fukushima
Prefecture in January 2009, giving us a foothold in this
rapidly expanding market. The new plant manufactures
back sheets and encapsulant sheets for solar batteries,
with expected sales of 12.0 billion yen in the year
through March 2011. In addition, we plan to actively
market these products overseas to promote growth in
the clean energy field.
We will work to expand our fields of business in themedium and long term on the strength of our printing
and information technologies.

DNP Annual Report 2009 ＞ To Our Shareholders

Shareholder Returns and CSR

Q6 Please share your thoughts about

Q7 What steps are you taking to address

shareholder returns in today’s harshbusiness environment.

corporate governance, internal control,and corporate social responsibility?

We view the return of profits to shareholders as animportant management policy.
Our basic policy toward allocating profits is to pay
stable dividends to shareholders, with consideration
for such factors as business performance anddividend payout ratio. At the same time, we endeavor
to enhance our financial constitution by using
retained earnings for future business expansion andstrengthening our management base.
In addition to allocating internal reserves forinvestments that support research and developmentof new products and technologies, capital investment
for the development of new businesses, and strategic
tie-ups, M&As, etc., we also watch our funding needs
and market trends and consider repurchasing our own
shares as a way of returning profits to shareholders.
We believe that all of these options can contributeto increasing future profits and therefore help return
profits to shareholders.
In the term ended March 2009, when every
company faced pressure to make difficult decisions in
response to the worldwide economic downturn, DNP
undertook radical measures aimed at improvement,
including structural reform of our Electronics segment.
Although we increased our dividend payout for six
consecutive years beginning in March 2003, wedecreased this year’s dividend payment by 4 yen to
32 yen per share, reflecting the fiscal term’s poor
performance. We also decreased bonuses paid
to directors and corporate officers by 20 to 50%,
according to each executive’s position. We repurchased
stock for the seventh consecutive year since March
2003, amounting to 166.5 million shares this fiscal
term.
At present we plan to leave our dividend payout at 32
yen per share next term as well.

At DNP, we value taiwa with all of our various
stakeholders. One reason we disclose appropriate
information in a timely fashion and work hard to achieve
accountability is that we can uncover new issues andgo on to resolve them through lively taiwa.
Furthermore, in order to achieve long-term,
sustainable improvement in corporate value and to gain
the trust of shareholders and all other stakeholders,
we position corporate governance as an importantmanagement task. We need to build adequate
monitoring systems and maintain their appropriate
operation in order to facilitate quick and appropriate
decision-making and business execution.
In May 2006, we began working toward theestablishment of an internal control system. In the fiscal
term through March 2009, we began preparing internal
control reports based on Japan's Financial Instruments
and Exchange Act, and we are now working to achieve
an even greater degree of transparency.
As a forerunner in the area of corporate social
responsibility (CSR), DNP has been honored by various
parties, including receipt of the Key Firm of IntegrityAward and Global Environment Award. We view thesehonors as recognition of our desire to be a “company
of integrity” and of our steady and concrete efforts tofulfill that desire, including the establishment of ourOpen Door Room and adoption of the DNP Group CSR
Procurement Criteria.
Looking ahead, we want to continue to create value
for all of our stakeholders through DNP's businesses,
and to fulfill our responsibilities as a company that istrusted and needed by society.

7

DNP Annual Report 2009 ＞ DNP in Brief

DNP in Brief

CONTENTS
10 Synopsis of Performance
14 DNP at a Glance
16 Products
18 Management Concept and Business Vision
19 Business Expansion through Core Technologies
20 The Making of DNP
22 Major Events of This Fiscal Year
24 Investor Information

9

Synopsis of Performance

Dai Nippon Printing Co., Ltd. and Consolidated Subsidiaries

Grand Summary of Financial Results

Years ended March 31

change

2008

2009

2007

2009/2008

Statements of Operations (¥ million)
Net sales¥ 1,584,844¥ 1,616,053¥ 1,557,802–1.9%Operating income

46,177

87,104

96,145–47.0%

Ordinary income

47,39086,502

101,348–45.2%

Income (loss) before income taxes(27,842)

88,46998,950̶

Net income (loss)(20,933)

45,172

54,842

̶

940,086¥ 1,040,135¥ 1,099,439–9.6%

Balance Sheets (¥ million)
Total net assets¥

Interest-bearing debt
Total assets

124,263

80,104

69,22855.1%

1,536,557

1,601,193

1,700,250–4.0%

123,011–16.3%Cash Flow Statement (¥ million)
Cash flows from operating activities¥

131,569¥

157,283¥

Cash flows from investing activities(100,726)(122,523)(150,717)–17.8%Cash flows from financing activities(33,952)(73,728)(42,590)–54.0%

Free cash flow*

30,84334,760(27,706)–11.3%Per Share Data** (¥)
Net income (loss)
Net assets¥(32.35)

¥

¥

78.10

̶

1,393.91

1,516.35

1,544.02

–8.1%

32

36

32

–11.1%Cash dividend

67.08

Profit Margins (%)
Operating income margin

2.91

5.39

6.17

–2.48

EBITDA margin

5.09

12.36

12.87

–7.27

Net income (loss) to net sales

-1.32

2.80

3.52

–4.12

ROE (%)

-2.20

4.35

5.14

–6.55

ROA (%)

-1.33

2.74

3.26

–4.07

Financial Ratios

D/E ratio (%)

14

8

6

̶

30.22

70.09

76.46

̶

PER (times)

̶

23.64

23.74

̶

PBR (times)

0.64

1.05

1.20

̶

EV/EBITDA (times)

7.19

4.94

5.74

̶

Interest coverage raio (times)
Valuations (against share prices on March 31)

PCFR (times)

6.74

6.76

8.30

̶

Dividend yield (%)

3.56

2.26

1.73

1.29%

25,55058,31019,475–54.5%

̶

53.7

41.0

̶

AA＋ (stable)

̶

34.53

̶

Return to Shareholders
Value of shares repurchased (¥ million)
Dividend payout ratio (%)
OthersLong-term credit rating (R&I)
Foreign ownership (%)

AA (stable)
23.63* Cash flows from operating activities - cash flows from investing activities

10

AA＋ (stable)
29.53** No diluting securities outstandingDNP Annual Report 2009 ＞ DNP in Brief ＞ Synopsis of Performance

Accelerated efforts in education and publication distribution businesses.
Started operational reform of Electronics segment; wrote down some 48.7 billion yen in
impairment losses.
Secured 131.6 billion yen in operating cash ﬂow and 30.8 billion in free cash ﬂow*.
*Cash ﬂows from operating activities – cash ﬂows from investing activities

Net Sales

Operating Income

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

2,000

150

1,500

1,424.9

1,507.5

1,557.8

1,616.1

1,584.8

80

120.5

120.7

60

120

59.9

65.2
54.8
45.2

96.1

40

87.1

90

20

1,000
60

46.2

–20.9

0

500
30

0

– 20

0

05

06

07

08

– 40

09

05

06

07

08

09

Net Income (Loss) per Share

ROE

ROA

(¥)

(%)

(%)

100

91.23
82.56

7

78.10

80

6.0

6.3

6

67.08

4

06

3.9

4.0

07

08

09

3.3

5.1
4.4

5

60

05

2.7

3

4
2

3

40

2

1

20
1

−32.35

0

0

0
–1

–20

–1

–2
–40

-2.2

–3

05

06

07

08

09

05

06

07

08

09

-1.3
–2

05

06

07

08

09

11

Income (Loss) Before Income Taxes

EBITDA(¥ billion)(¥ billion)

120

107.7

114.6

250

99.0

100

203.2

88.5

200

200.4

189.4

199.7

80
60

150

40
100

20

80.7

–27.8

0

50
–20
0

–40

05

06

07

08

09

05

06

07

Total Net Assets*

Net Assets per Share(¥ billion)

(¥)

1,200

1,007.9

1,063.3

08

09

2,000

1,099.4
1,040.1

1,000

940.1

1,507.9
1,500

1,544.0

1,516.4

1,409.2

1,393.9

800

600

1,000

400
500
200

0

0

05

06

07

08

09

05

06

07

1,662.4

1,700.3

08

09* Figures for 2005 and 2006 show total stockholders' equity.

Interest-bearing Debt

Total Assets(¥ billion)(¥ billion)

140

2,000

124.3
120

1,600.180

1,601.2

1,536.6

1,500

100

80.1
72.8

67.9

69.2

1,000

60
40

500

20
0

0

05

06

07

08

09

05

06

07

08

PER (Price Earnings Ratio)*

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

25

23.35

23.74

23.64

1.5

21.18

09

1.41
1.24

1.20

20

1.05
1.0

15

0.64
10
0.5
5

0

0

05

06

07

08

09

* The fiscal year through March 2009 is not shown
because there was a net loss that year.

12

05

06

07

08

09

DNP Annual Report 2009 ＞ DNP in Brief ＞ Synopsis of Performance

Capital Expenditures*

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

200

40

35.6

34.1

162.9
150

30

136.1

28.7

30.1

26.4

116.1
100

96.2

20

86.1

50

10

0

0

05

06

07

08

09

05

06

07

08

09

*Figures include capital expenditures for intangible fixed assets.

Depreciation Expense

Free Cash Flow*(¥ billion)(¥ billion)

120

109.9

80

106.9

100.2

100

60

87.3

52.1

80.4
80

40

60

20

40

0

20

–20

0

34.8

–10.1

–27.7

06

07

30.8

–40

05

06

07

08

09

05

08

09

* Free cash flow = Net cash from operating activities –* Net cash from investing activities

Net Sales by Segment

Operating Income by Segment(¥ billion)(¥ billion)

Information
Communication

718.4

Lifestyle &Industrial Supplies

256.0

0

19.9

2.6

Electronics

71.7

Beverages

31.7

Lifestyle &Industrial Supplies

551.8

Electronics

Information
Communication

0.3

Beverages

200

400

600

800

0

10

Capital Expenditures by Segment

Employees by Segment(¥ billion)(persons)
Beverages
1,243

Information
Communication

34.3

0

10

20

30

Corporate
1,280

Lifestyle &Industrial Supplies
12,963

4.1

Others40

Information
Communication
20,284

29.7

Electronics

30

Electronics
4,547

28.0

Lifestyle &Industrial Supplies

20

40

13

DNP at a Glance

ProﬁleBusiness Portfolio

With printing and information technologies at its core,
DNP is a comprehensive printing company that is theworld’s top supplier of many products
DNP is one of the world’s largest comprehensive printing
companies. It provides diverse products and services ina wide range of ﬁelds to about 30,000 corporate clientsand to consumers in Japan and around the world. On thestrength of the printing and information technologies that
DNP has cultivated since its founding in 1876, DNP has
not only branched out from publishing and commercial
printing to such ﬁelds as packaging, decorative materials,
display-related products, and electronic devices, but has
become the world’s top supplier of a large number of
products. Today, DNP continues to take on the challenge of
expanding into new business ﬁelds, including those related
to the environment, energy, and life science. We aim toprovide solutions to a variety of problems, by enhancing our
dialogue with businesses and individuals and by developing
and combining technologies.
The DNP Group employs about 40,000 people. In
Japan, DNP has 48 sales bases and 58 production plants.
Overseas, the Group has 21 sales ofﬁces in 16 countries
and seven production plants in six countries. Overseas
sales contributed 13.3% of the Group’s overall net sales inthe ﬁscal year ended March 2009.

A business portfolio that is well-balanced fromthe standpoints of stability, expandability, growthpotential and risk
DNP has two main businesses: Printing, which contributes
95% of the Group’s net sales, and Beverages, which
generates 5% of net sales through Hokkaido Coca-Cola
Bottling Co., Ltd.
Printing consists of an assortment of businesses that DNP
developed by applying printing and information technologies
and adopting a variety of business types and formats as we
expanded strategically into diverse ﬁelds.
We divide our Printing business into three segments
according to the types of products and services provided:
Information Communication, Lifestyle and Industrial
Supplies, and Electronics. Together, these segments
comprise a business portfolio that is well-balanced from thestandpoints of stability, proﬁtability, growth potential, andrisk.
In our Beverages business, we take advantage of the
Coca Cola brand strength while also developing original
DNP products. We are working on bolstering our beverages
business base, for example by promoting production andprocurement in liaison with bottlers in other parts of Japan.

Three Well-Balanced Strategic Segments

Information Communication
A core business that provides stablerevenues; deals in a wide variety of
information media, including printed
materials, smart cards, IPS and networks

The 3 Segmentsof DNP’s Printing
Business

Electronics
Industrial Supplies
The force that drives expansionof our business fields; we haveapplied printing technologies to
new fields such as packaging,dwelling materials,
opto-materials and industrial
supplies

14

Our growth driver; we haveachieved an overwhelming
market share and highgrowth potential in display
components and electronic
devicesDNP Annual Report 2009 ＞ DNP in Brief ＞ DNP at a Glance

Structure

A Comprehensive Printing Company

An efﬁcient group structure that concentrates
planning, research and development, sales, and othercore functions
Long ago, as part of its quest to boost management
efﬁciency from a Group-wide perspective, DNP set out
to make more effective use of the Group’s management
resources and establish even better systems. We
succeeded in building an efﬁcient management structure
by concentrating functions such as planning, researchand development, and sales at the head ofﬁce, Dai
Nippon Printing Co., Ltd. (DNP), while distributing mostmanufacturing and technical functions among Group
companies. The DNP Group includes 157 consolidated
subsidiaries and 12 afﬁliated companies that are accounted
for by the equity method. The head ofﬁce and Group
companies concentrate on their respective roles while
cooperating closely so that the Group can operate in ahighly proﬁtable manner.
DNP continuously strives to increase its comprehensive
strength. For example, recognizing the need to respondto the particular requirements of the Hokkaido, Tohoku,
Chugoku, Shikoku and Kyushu regions, we establishedregional companies that combine sales, planning, andmanufacturing functions for each locality.

DNP as a comprehensive printing company
With printing and information technologies at its core,
DNP has expanded from books and magazines andcommercial printing into smart cards, IPS, packaging anddecorative materials, and electronic products. In otherwords, we have engaged in “horizontal expansion printing,”with the targets of our printing business expanding ina horizontal direction. We call this “expansion printing.”
Meanwhile, we also promoted the “vertical” developmentof expansion printing into business processes other than
production, including planning, proposing, design, market
research and product development, and communication
with consumers.
The coherent structure that allows the DNP Group
as a whole to expand in this manner is one of our mostimportant strengths. By continuously and successfully
adapting to changes that affect society and our customers,
DNP has evolved into a comprehensive printing company– a business format that is rarely found anywhere in theworld and that serves as a framework for further businessexpansion. Teams handling functions such as research anddevelopment, production, sales, planning, or management
interact organically with each other as we press aheadto achieve our ideal of a solutions-oriented business thatcreates business opportunities by proposing solutions forcorporate clients and consumers.

A Group Structure That Enables Efﬁcient Operation

DNP’s Business Grows through “Comprehensive Orders”

To the next project

PlanningGroupcompany

Research

Dai Nippon Printing Co., Ltd.

Group
company

Design/Development

Products
delivery/Serviceprovision

Production/
Manufacturing

Evaluationof results

Receive comprehensive orders that include
supplementary services

Sales

Development

Groupcompany

Groupcompany

Groupcompany

Dataprocessing

PlanningGroupcompany

Groupcompany

Cross-media
development

Textualinformation
processing

DB construction
andmanagement

Serveroperation

Distribution
management

Research

Promotionplanning

Production ofstill andvideo images

Programdevelopment

Information
security

Implementation/
Operationof plans

Marketing

Product
planning

Intellectual
property
management

Systemdevelopment

Customer
information
management

Customer
service center

Alliances15

Products

Product Lineup■Books and Magazines

Information Communication
Net Sales

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

120

800

Assets(Assets)(Depreciation)

120

800

100

619.1
600

557.5

539.2

80

80

60

51.0

400

31.7

40

200

200

■IPS / Business Forms

40[8] Personalized direct mail [9] Smart cards [10] SIM cards[11] Digital pens [12] Holograms

20

Not pictured: Merchandise vouchers, bank books, business forms,
magnetic cards, etc.

25.2

23.3

20.9

20

0

0

08

0

0

09

07

08

09

Note: Numbers in parentheses correspond to photographs on P 17.

■Packaging

Lifestyle and Industrial Supplies
Net Sales

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

120

800

Assets555.8(Assets)(Depreciation)

120

800

100

532.7

600

551.8

60

36.3
200

19.9

0

80

60

400

24.7

200

29.5

28.6

40

20

20

0

08

513.1

40

31.9

07

532.2

522.2

80

400

・Packaging products and eco-friendly containers[13] Processed foods [14] Toiletries and pharmaceuticals[15] Universal design products[16] PET bottles and preform [17] Aseptic ﬁlling systems[18] Packaging for Japanese-style space food

Depreciation (¥ billion)

100
600

■Lifestyle Materials[19] Residential interior materials [20] Automotive interior materials
Not pictured: Decorative materials for stores and offices (floor
coverings, furniture surface materials, modular bath interior materials,
exterior materials, etc.), surface materials for household appliances,
etc.

■Opto-Materials / Industrial Supplies[21] Optical ﬁlm for displays[22] Projector screens[23] Transfer ribbons for color printers[24] PrintRush self-service printing systems

0

0

09

07

08

09

Note: Numbers in parentheses correspond to photographs on P 17.

■Display Components

Electronics
Net Sales

Not pictured: Flyers, pamphlets, posters, event planning andexecution, store design, customer service center operation, various
types of planning and development, online businesses, etc.

60

43.1

07

■Commercial Printing[5] Catalogs [6] Calendars [7] Point-of-purchase materials

100
600

400

Not pictured: Free newspapers and magazines, PR magazines,
textbooks, CD-ROMs, DVDs, and other electronic publications,planning and production of multimedia software, book sales, etc.

Depreciation (¥ billion)

718.4

679.9

668.8

[1] Magazines [2] Books [3] Dictionaries [4] Electronic publishingbusiness[25,26,27] LCD color ﬁlters[28] Large-scale photomasks

Operating Income (¥ billion)

AssetsNot pictured: Organic EL displays, etc.

Depreciation (¥ billion)■Electronic Devices(Net sales)(Operating income)

120

800

(Assets)(Depreciation)

120

800

100
600

100
600

80

80

438.7
60

400

400

322.3

291.9

256.0

200

14.9

[29] Semiconductor photomasks[30] Lead frames for semiconductor packages[31] Substrates [32] Monitoring camera modules[33] Reader/writer modules [34] IC tags
[35] Ultracompact IC tags [36] MEMS products

427.4
49.6

51.7

329.0

60

46.0

40

40
200

19.8

20

20

2.6
0

0

07

16

08

09

0

0

07

08

09

Note: Numbers in parentheses correspond to photographs on P 17.

DNP Annual Report 2009 ＞ DNP in Brief ＞ Products

Net Salesby Segment

Operating Income
by Segment

Beverages

4.5%
Electronics

Electronics

4.7%

Beverages

0.6%

16.0%
Lifestyle andIndustrial Supplies

Information
Communication

Information
Communication

36.5%

45.0%

58.2%

Lifestyle andIndustrial Supplies

34.5%

［1］

［2］

［3］

［4］

［5］

［6］

［7］

［8］

［9］

［10］

［11］

［12］

［13］

［14］

［15］

［16］

［17］

［18］

［19］

［20］

［21］

［22］

［23］

［24］

［25］

［26］

［27］

［28］

［29］

［30］

［31］

［32］

［33］

［34］

［35］

［36］

17

Management Concept and Business Vision

Management Concept

Business Vision
P&I Solutions

The DNP Group will contributeto the emergently evolving
society of the 21st century.

We will identify and solve the problems and issues
that consumers and corporate clients face within theemergently evolving society by fusing our Printing
Technologies (PT) and Information Technologies (IT).

When DNP was ﬁrst founded, its motto was to “run acivilized business.” This was just after the political andsocial upheaval of the Meiji Restoration, and expressed thecompany’s desire to contribute broadly to the developmentof Japanese society. During the 130 years that have passed
since, we have maintained this aspiration. Even in the 21st
century, our desire to contribute to society has not changed.
Autonomous individuals and organizations inﬂuenceeach other, society changes in response to unexpectedphenomena, and these phenomena in turn further inﬂuence
individuals and organizations. We call this an “emergently
evolving society.” In this type of an emergently evolving
society, we believe that quickly noticing changes andidentifying and solving the problems faced by corporate
customers and consumers leads to social contribution. Allof us at DNP work together every day to realize this ideal.
By actively leading social evolution and development, we
not only expand our business, but also fulﬁll our social
responsibility.

In an emergently evolving society, markets and consumers’
needs change in unpredictable ways. Telecommunications
networks, ﬁnancial and distribution systems, education,
food, clothing and shelter, and other social infrastructure
are constantly changing. As corporations and consumers
increasingly wonder how they will cope amid such changes,
we can discover business opportunities for DNP in the needto solve their problems.
We believe that by noticing signs of change before othersdo, coming up with possible solutions for problems, andgetting a head start on making proposals, we can develop
our business and contribute to society. We can make themost of these business opportunities by making use of the
PT and IT that we have cultivated in order to offer various
products and services, and by developing new solutions andbecoming involved in the building of a new infrastructure.

PT = Printing Technologies• Materials technologies:
technologies for synthesizing new materials, andfor dispersing or mixing materials. Used with inks,
adhesives, etc.
• Patterning technologies:
formation of letters or images etc. on a basematerial. Includes making printing plates,
lithography, and inkjet technologies.
• Converting technologies:
processing technologies that change a material’s
shape or compound materials etc. Includes
technologies for bookbinding, ﬁlm formation,
coating, copying, etc.

Management
concept

We will identify and solve the

The DNP Group willcontribute to theemergently evolving
society of the
21st century.

problems and issues that consumers
and corporate clients face within theemergently evolving society by fusing
our Printing Technologies (PT) andInformation Technologies (IT).

IT = Information Technologies

Business vision

Guiding Principles

P&I Solutions

Five Principles

Concept Phrase [P&I Solutions DNP]

18

• Data processing technologies: technologies for the
input, output, conversion, synthesis, accumulation
or transmission of data. Includes editing of text
or images, database creation, and networking
technologies.
• Human Media Interaction (HMI) technologies:
technologies related to interaction between
humans and information. Includes font design,color matching, and natural language processing
technologies.
• Information security technologies: technologies forassuring that information is accurately transmitted
to the correct target and stored without allowing
improper usage. Includes encrypting technologies,
personal information processing and management
technologies, and biometric technologies, etc.

DNP Annual Report 2009 ＞ DNP in Brief ＞ Management Concept and Business Vision / Business Expansion through Core Technologies

Business Expansion throughCore Technologies

Expansion Printing and
P&I Solutions

used for making printing plates. From there, we expanded
applications for our technologies to other areas, including leadframes for semiconductors, photomasks, and micro-electromechanical systems (MEMS), resulting in the establishment of
our Electronics segment.
Meanwhile, our information technologies had also been
continuously evolving since the company's founding, sparked
by our quest for methods of facilitating the most comfortableand pleasant ways of expressing information. We have beendeveloping DNP's original Shueitai font since the 19th century,
along with color management and design. In the early 1970s,
we began digitizing information, which marked a major turning
point. By nimbly adapting to the rapid trend toward digitalizationand networking, and by actively developing original DNP
technology, we established information security technology thathas become indispensable to today‘s social infrastructure andenabled us to build up a wide variety of businesses.
Now we aim to continue broadening our business andcontributing to society in line with DNP's business vision of “P&I
Solutions” – which means combining printing and information
technologies in order to solve problems for our customers andfor society. This is taking us into all kinds of business ﬁelds thatneed DNP technology, starting with solar battery components
and other energy-related areas, and technologies forregenerative medicine, such as capillary blood vessel formationand cell sheet engineering.

Increasing Our Business through "Expansion Printing"and "P&I Solutions"
The history of DNP’s business growth is the history of theevolution and application of our two core technologies – printing
and information. Since its founding in 1876, DNP has reﬁnedthese technologies to world-class levels and broadened ourﬁeld of business by deriving diverse technologies from printing
and applying those technologies to a wide range of ﬁelds.
This type of business expansion, based on the concept of“expansion printing,” began to take off all at once in the 1950s.
First we entered the packaging business in 1951, based on theidea that we could develop printing techniques for materials
other than paper. We went on to apply this idea to cloth, wood,
plastic, and metal, etc. This led to the creation of our Lifestyle
Materials business, which handles construction materials andrelated products and is now part of the Lifestyle and Industrial
Supplies segment that includes businesses like thermal transfer
recording media used in photo printing and anti-glare ﬁlm used
in ﬂat-panel displays. Then in 1958, DNP became the ﬁrst
Japanese company to succeed in the development of shadow
masks for domestic television production. This required
making millions of ultramicroscopic holes in copper plate only
0.2mm thick, a technology that we developed by applying
photolithography and other micro-processing techniques
Strategies for promoting
commercialization of technologicaldevelopments
Three axes of technological development;
Combining them to create new businesses

Recommendation engine

Data mining
Network security
IPS

ce

n
dva

A

tio

ma

for

in
s in

Emergently
evolving society

MPEG4
moduleIC tag system
MEMS

IC card

DVD
CD-ROM

g

sin

ces

ro
np

Information filtering

ss

ene

Printedwiring boards

o

ns

ter

at
fp

Organic EL

in
gf

sin

Color filter
Photomasksls
Biomaterial
Solar battery
ria
components
ate
m
cell
ent
Shadow masks Fuelcomponents
Digital photo materials
llig

Lead frames

rea

Inc

Ultra-hard film

Combinationsof PT and IT
Printing
Technologies(PT)

Information
Technologies(IT)

Ultra-barrier film forelectronic devices

ng

ki
Ma

e

int

High-function optical films

Eco-friendly building materials
Packaging materials
that are impermeable to gases

Creating new businesses
s %NERGY BUSINESSs ,IFE 3CIENCE BUSINESS
s %NVIRONMENT RELATED BUSINESSs /THER NEW BUSINESSES

19

The Making of DNP

1876 Founding

1950

1960

1970

Printing

Comprehensive Printing

1878 Establishment of corporate creed: “Run a civilized business”

Promotion of Expansion Printing

Information Communication
Books and Magazines1877 First Western-style book produced in Japan
DNP begin development of DNP’soriginal “Shueitai” font

1909 Completion of size 5 Mincho Shueitai
1914 Exhibit of offset-printed matter at1972 Begin

1956 Printing of Japan's first weekly magazine issued

digitalizationof text andimages(CTS)

by publishing company

Tokyo Taisho Exhibition

Commercial Printing
1926 Introduction of gravure printing press

1971 Developmentof scented printing

Business Forms
1955 Installation of rotary press

1898 Installation of rotary press for printing ledgers

1965 Begin mass production of OCR ledgers
1970 Begin printing plastic cards
1973 Massfor printing ledgers

production ofmagnetic
plastic cards
1974 Full-scale
magnetic

Lifestyle and Industrial Supplies
Packaging1951 Full-scale entry into paper

1961 Announcement ofgoods businessplastic container printing

1951 Begin in-house production of1969 Begin producing laminated tubes
1972 Development of
aseptic packaging
system1962 Begin producing paper cups

flexible packaging

Lifestyle Materials
1951 Development of19741961 Begin printing directly onto steel plates

Introductionof Curlfit
technology
for printing
on curved
surfaces

specialized printing
methods for vinyl,cellophane, cloth, etc.

Electronics
Display Components
1958 Successful prototyping of photomask

1971 Begin research anddevelopment ofcolor filters

Electronic Devices
1959 Successful prototyping of photomasks
1964 Begin lead frame production

20

DNP Annual Report 2009 ＞ DNP in Brief ＞ The Making of DNP

1980

1990

Information
Processing

2000

2010

Information
Communication

P&I Solutions
2001 Announcement of DNP Group’s 21st Century Vision
2006 Celebrate 130th anniversary of DNP’s founding

1982 Development of computerized typesetting system
1985 Development of world‘s first electronic publication on CD-ROM
1989 Production of High-Definition Gallery freeze-frame software
1992 Begin development of “Shueitai” font
1997 Start of online publishing business

1981 Establishment of new
video printing systemtechnology

production of
stripe bank books

2008 Alliances with TRC Inc. and Maruzen Co., Ltd.
2009 Alliance with Junkudo Co., Ltd.

1989 Construction of global network system
2001 Launch “Orikomio!” web site for Internet flyers
1990 Start communication satellite uplink
1993 Establishment of J.League Data Center
1995 Begin operation of “Media Galaxy” Internet service
1997 Commercialization of soy-based ink
1997 Establishment of “EC Galaxy” electronic commerce

1978 Begin large-scale hologram
1999 Promotion of IPS business/Launch of IC tag project
2000 Production of contactless IC tags
1981 Start smart card development
2004 Card Data Management Service (CDMS)
1984 Development of rainbow holograms2005 Establishment of “SSFC” office security consortium1986 Development of transparent holograms2007 Begin providing dual biometric smart cash cards
1987 Development of recordable optical cards
1990 Development of “S-Mail” peel-off postcards

1992 Development of aseptic plastic bottle filling system
2007 Development of packaging for Japanese-style space food1975 Begin producing retort pouches
and preform method
1976 Development of aseptic filling system for single-portion containers
1984 Begin producing PET plastic bottles
1998 Development of transparent barrier film

1977 Development of stainless decorative sheet

1995 Begin producing sheet with EB coating
1996 Development of electrodes for lithium-ion secondary batteries

Opto-Materials / Industrial Supplies
1981 Development of fusion-type thermal transfer recording

1996 Establishment of anti-glare

mediumfilm technology for LC
displays

1983 Start producing projection screens1978 Development of new type of photomask (flat masks)
1985 Development of LCD color filter production technology(production started 1987)

2004 Development of “JETBLACK” front projection screens2005 Begin development of “PrintRush” self-service printing system
2008 Establishment of DNP Fotolusio Co., Ltd.

2001 Development of flexible organic EL displays
2003 Development of full-color organic EL panels
2006 Mass production of color filters using inkjet method

1995 Launch multilayer wiring formation technology
1999 Enter semiconductor package substrate field
2001 Begin MEMS (micro electromechanical systems) processing under contract
2002 Complete production line for “B2 it” high-density build-up boards
2007 Development of ultra-compact IC tags
2007 Development of bio-MEMS

New Businesses

2003 Development of solar battery modules
2004 Regenerative medicine: Successful formation ofcapillary patterns

2005 Development of fuel cell components
2007 Printing method for organic solar batteries
2008 “CytoGraphTM” cell pattern culturing
technology

2008 Cell sheet culture film2009 Launch of Energy Systems Operations

21

Major Events of This Fiscal Year

2008
July
▶ DNP supported the launch of a venture business by

students from Keio University’s Shonan Fujisawa Campus
by establishing a limited liability company, My Earth Projects
LLC, on July 7. The new company’s main activity is the saleof an original card game called “My Earth®,” which is aimed
at primary and middle school students. The game allows
children to have fun as they learn how ecological systems
work and how human activities affect natural environments.
The company plans to expand its business in liaison withother companies that address environmental issues.
▶ DNP established a joint venture in Hong Kong on July 9 with

Taiwan-based, globally renowned printed wiring board maker
Unimicron Technology Corporation. The new company,
UD Alliance Technology Ltd., will manufacture printed
wiring boards based on DNP’s unique B2itTM buildup board
technology, and market them primarily to mobile phone
manufacturers in China and other parts of Asia. In addition
to supporting the new company by providing manufacturing
technology, DNP will promote global standardization of
B2itTM technology.
▶ DNP received companywide PrivacyMark accreditationfrom the Japan Information Processing Development
Corporation on July 24. PrivacyMark accreditation is given
to businesses that take appropriate measures for protecting
personal information. Several of DNP's informationprocessing subsidiaries had already received accreditation,and since September 2000, DNP’s Commercial Printing
Operations, IPS Operations, C&I Operations, and two otherbusiness units had received PrivacyMark accreditation, but
this was the ﬁrst time for the entire Company to receive
accreditation.
▶ DNP and Maruzen Co., Ltd. signed a detailed operationaland capital alliance agreement on July 31, following the twocompanies’ announcement in August 2007 of their intention
to join forces. The agreement calls for DNP to underwrite
the entire amount of a third-party allotment of shares by
Maruzen, and for collaboration between the two companies
in a wide range of business ﬁelds.
Also on July 31, DNP and Maruzen signed a memorandumof understanding regarding the start of discussions aimed atcreating a collaborative framework between DNP, Maruzen,
and TRC Inc., a DNP Group company. One area in which thecompanies aim to collaborate is strengthening the marketingof publications to universities.

22▶ DNP began selling “CytoGraph TM” cell pattern culture

substrate in July, mainly to medical and research facilities,
becoming the ﬁrst company in Japan to commercialize
this technology for the stable production of living cells
in a variety of patterns. The product applies patterningtechnology used for making original printing plates to formlines, dots, or whatever pattern is required by creating areas
where cells adhere to a glass surface and areas where they
do not. Through the launch of this product, DNP aims topromote ties with medical and research institutions andgather information about their needs, so that in the future
the company can enter the ﬁeld of regenerative medicine.

August▶ DNP supports the advancement of art and culture, primarily

through the preservation and dissemination of graphic artsand historical cultural assets made with printing techniques.
We have also engaged in the businesses of processing
copyrights for artistic images, providing digital data, andplanning, producing and marketing all types of culturalcontent and related merchandise, including the planningand execution of exhibitions. In order to expand this typeof business, we integrated the operations of three Group
companies* and established a new company called DNP Art
Communications Co., Ltd., which commenced operations
on August 1.
*The three Group companies were Trans Art Inc., DNP Archives.com. Co., Ltd., andMaison de DNP Ginza Co., Ltd. All three were wholly-owned subsidiaries of DNP.

▶ DNP began construction of a plant in Himeji City, Hyogo

Prefecture, to produce color ﬁlters for 8th generation
LCDs. The new plant, scheduled to start operation in thesummer of 2010, is located adjacent to a plant being built
by IPS Alpha Technology, Ltd., an LCD panel manufacturer
operated jointly by Panasonic Corporation and Hitachi, Ltd.
DNP is also building a new facility for manufacturing color
ﬁlters for 10th generation LCDs within Sharp Corp.’s plantin Sakai City, Osaka. It is scheduled to begin operating inautumn of 2009. With the construction of these two new
facilities, DNP aims to have the world's largest supply
capacity for color ﬁlters used in large-scale LCD panels.

September▶ DNP, Tokyo Women’s Medical University (TWMU) andCellSeed Inc. jointly established an efﬁcient production
method that applies printing technology to the productionof cell sheet culture ﬁlm used in regenerative medicine. Cell
sheet engineering entails culturing cells in uniform layers
on petri dishes and removing them in the form of sheetsthat are convenient to use in surgery or other medical

DNP Annual Report 2009 ＞ DNP in Brief ＞ Major Events

2009
procedures. The newly developed cell sheet culture ﬁlm
consists of a layer of polymers that expands or contracts as
the temperature changes, making it easy to peel off cultured
cells in sheet form. There is a wide range of applications forcell sheet engineering, which can regenerate injured bodyparts through the application of sheets of cells taken from apatient’s own skin, cornea, periodontal membrane or heart
muscle, etc., leading to high expectations for future success.

October▶In order to strengthen and expand its digital photo print

business, DNP integrated three related businesses* andestablished a new company, DNP Fotolusio Co., Ltd., on
October 1. DNP holds the top share of the global market
for dye-sublimation thermal transfer media used mainly inink ribbons for color printers. DNP also has an ID photobusiness and markets self-service, high-speed photoprinting “PrintRush” kiosk terminals that can print a sheet ofphotos in three seconds. The market for digital photo prints
is expanding due to more widespread use of digital cameras,
including those mounted on mobile phones.
*The three companies were DNP ID Imaging Co., Ltd, DNP Photo Marketing Co., Ltd.,and PrintRush Co., Ltd. All three were wholly-owned subsidiaries of DNP.

December▶The boards of directors of DNP, DIC Corporation (formerly

Dainippon Ink and Chemicals, Inc.), and The Inctec Inc.
(a DNP subsidiary) resolved on December 15 to begin
discussing integration of DIC’s domestic printing ink
division with Inctec’s printing ink division. By combining
the expertise and management resources of the twocompanies, DNP aims to improve operational efﬁciency,
boost competitiveness, and create a robust corporate
constitution capable of surviving even in harsh businessenvironments. The Group also aims to develop high-quality,
outstandingly competitive new products, and to create astable supply framework.
▶DNP announced its approval on December 16 of anagreement between DNP subsidiaries Maruzen Co., Ltd.
and Junkudo Co., Ltd., to merge their managements andform a joint holding company by means of equity transfers.
The two companies are considering possible frameworks
for collaboration that would allow them to make the mostof their assets, including TRC’s IT and logistics systems
and expertise in sales methods, and Maruzen’s brandstrength and customer base. Through the merger, the twocompanies aim to reinforce their joint operations, including
library operation subcontracting and selling books touniversities.

January▶ DNP completed construction of a new facility for

manufacturing back sheets and ﬁlling material for solar
batteries at its Izumizaki Plant in Fukushima Prefecture. The
new facility began operation in January. Solar batteries are
attracting attention as a relatively clean energy source, andthe market for them is expected to grow nicely. During
the ﬁscal year through March 2010, production capacity
at the new plant is to be increased incrementally until
it can supply triple the current amount, or enough solar
battery components to generate the equivalent of one
gigawatt of electric power per year. Also in January, DNP
launched Energy Systems Operations, which will coordinate
manufacturing and sales of solar battery-related products inorder to strengthen the Group's efforts in the energy ﬁeld.

March▶ DNP reinforced its research capacity by establishing alaboratory within Tokyo Women's Medical University Instituteof Advanced Biomedical Engineering and Science (TWIns) as
a base for research into cutting-edge regenerative medicine.
The laboratory is intended to further strengthen joint research
into cell sheet engineering and allow DNP to work moreclosely than ever with Tokyo Women's Medical University,
CellSeed Inc., and Olympus Corp.
DNP has positioned expansion of regenerative medicinerelated business as one of its major policies, and aims toachieve 70.0 billion yen in sales from the life science ﬁeld asa whole in the ﬁscal year through March 2017.
▶ DNP acquired 51% of Junkudo Co., Ltd.’s outstanding

shares on March 18. Kobe-based Junkudo owns andoperates 33 large-scale bookstores throughout Japan. For
some time the company had been considering increasing
its capital with an eye toward future business expansion,
while one of DNP's management policies was to strengthen
its education, and publishing and distribution business, so
the alliance was a good ﬁt for both companies. DNP will
support Junkudo’s business by providing expertise in ﬁelds
such as CRM analysis and electronic publishing.
▶ DNP, Maruzen Co., Ltd., and Junkudo Co., Ltd. signed abasic agreement on March 24 to form a business alliance
between the three companies, aimed at revitalizing thebook market. The three companies will focus primarily on
bookstore operations and their academic and educational
businesses*. They will go on to discuss details such as
collaboration from the standpoints of operations and capital,
integration of management, and dispatch of directors withthe goal of reaching a ﬁnal agreement by the end of August
2009.
*For more information about DNP’s education and publishing distribution businesses,
please see the Special Features section of this Annual Report on pages 32 to 33.

23

Investor Information(as of March 31, 2009)

Dai Nippon Printing Co., Ltd.
Major Stock Indices in which DNP is a Constituent:Head Office:1-1, Ichigaya-Kagacho 1-chome, Shinjuku-ku,

Nikkei Stock Average

Tokyo 162-8001, JapanTOPIX Large70
MSCI World Index
S&P/TOPIX 150

Established:

Dow Jones Sustainability Indexes

1876

Ethibel Sustainability Index
Morningstar Socially Responsible Investment Index

Number of Employees (consolidated):
40,317

Stock Code:
7912

Paid-in Capital:¥114,464 million

Administrator of Shareholder Register:Mizuho Trust & Banking Co., Ltd.

Number of Common Stocks:
Authorized 1,490,000,000 shares

2-1, Yaesu 1-chome, Chuo-ku,

IssuedTokyo 103-8670, Japan

700,480,693 shares

Annual Meeting of Shareholders:Number of Shareholders: (more than 1,000 shares)

The annual meeting of shareholders of DNP is

23,369normally held in June each year in Tokyo, Japan
Stock Exchange Listings:
Investor Relations:Tokyo, Osaka

Dai Nippon Printing Co., Ltd.
Major Shareholders:Shares (thousands) Percentage (%)

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

40,9455.85

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

Japan Trustee Services Bank, Ltd. (Trust A/C 4G)

31,774

4.54

Tokyo 162-8001, JapanThe Dai-ichi Mutual Life Insurance Co.

30,882

4.41

Tel: +813-5225-8220

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

28,455

4.06

Fax: +813-5225-8239

The BNYM as Depositary Bank for DR Holders

20,745

2.96

Mizuho Corporate Bank, Ltd.

15,242

2.18

Nippon Life Insurance Co.

14,3492.05

Mizuho Bank, Ltd.

12,471

1.78

Employees Shareholding Association

10,797

1.54

State Street Bank and Trust Company 505225

6,800

0.97

Other than above, DNP holds 55,600,972 of its own shares.
While the registered owner of these shares is Dai Nippon Printing Co., Ltd.,
1,000 of the shares are in effect not owned by the company.

24

IR Group, Press and Public Relations

Web Site Address:
http://www.dnp.co.jp/

DNP Annual Report 2009 ＞ DNP in Brief ＞ Investor Information

Share Price Evolution (Tokyo Stock Exchange)(between April 1, 2006 and March 31, 2009)DNP Stock Price (yen)Increase (%)*
−DNP
20

−Nikkei Average

2,500−TOPIX

10

0
2,000
-10

-20

1,500

-30

-40

-50
1,000
-60

-70
500

07

08

09

*Index 100 = March 31, 2006

(as of March 31, 2009)

Voting Rights
Type

Number of Stocks (stocks)

Number of Voting Rights (rights)

Stocks with no voting rights——

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

Stocks with limited voting rights (other)——

Stocks with voting rights (treasury stocks, etc.)

Common stocks

56,684,000—

Stocks with voting rights (other)

Common stocks

641,131,000

641,131

Stocks with less than trading units

Common stocks

2,665,693—

Outstanding shares
Total voting rights of stockholders

700,480,693——

641,131

Treasury Stocks
Holder(as of March 31, 2009)

No. of Stocks Held

Percentage of Holding to No. of Outstanding Shares

Dai Nippon Printing Co., Ltd.

55,599,000

7.94

Kyoiku Shuppan Co., Ltd.

1,085,000

0.15

Total

56,684,000

8.09

25

Special Feature

Creating Communication
In this Special Features section, we ask DNP’s corporate leaders to introduce the growth strategies of ourInformation Communication segment, whose main divisions are Books and Magazines, Commercial Printing,and Business Forms. We’ll look at DNP’s present – how we discover problems faced by corporate clients andconsumers and create new communication styles in order to solve them. And we invite you to take a glimpse of
DNP's future.

26

CONTENTS
28

Part 1: Information Communication Business Strategy

28Interview with Executive Vice President
Yoshinari Kitajima

32

Part 2: Strategic Business Approach

32

Creating a New Era in Publishing Distribution

34

A Consumer-Oriented Approach to Planning

36

Security Solutions: The Road That Lies Ahead

38

The Future of Communication Technology

40

Topics: Examples of Cutting-edge Technology

27Part 1:

Information Communication Business Strategy

First, please explain the Information

Q Communication segment’s position within DNP.
In the year ended March 2009, Information
Communication contributed 45% of overall Group sales and
58% of operating income.
In the 75 years from DNP’s founding in 1876 until
the early 1950s, this segment’s Books and Magazines
business and Commercial Printing business formed thecompany’s core. From the 1950s, we began applying anddeveloping printing and information technologies to newfields: we expanded to include a Lifestyle and Industrial
Supplies segment with product categories like packaging
and decorative materials, and an Electronics segmentthat makes color filters and photomasks. Meanwhile,
our Information Communication segment added new
businesses too, such as smart cards and information
processing services, but it’s fair to say that Information
Communication has always been the segment that
constituted the basis of DNP’s earnings.

this segment also faced a harsh business
Q Hasn’t
climate in recent years?
In the several years, we’ve been aware that our
segment’s declining operating income margin is a major
problem.
Especially in the fiscal term ended March 2009, we’ve
felt the effects of decreased advertising budgets and amajor decline in demand amid big drops in consumption
resulting from the worldwide spread of financial instability
and sudden deterioration in corporate performance. Our
Commercial Printing and Business Forms businesses havealso remained under a great deal of pressure, due to suchfactors as decreased orders for catalogs and pamphlets andreduced issuance of smart cards.
At the same time, our Books and Magazines business

Executive Vice President

Yoshinari Kitajima

28

DNP Annual Report 2009 ＞ Special Feature: Creating Communication ＞ Information Communication Business Strategy

has been affected by a decline in the overall domestic

a variety of businesses aimed at the electronic publishing

publishing market, which has continued since the market

market, which has been growing remarkably in recent years.

peaked in 1996. Publication sales volume for the fiscal term

Examples of these are operation of DNP's own electronic

through March 2009 don’t offer any hope: books declined

bookstore site, planning and production of electronicyear on year by 1.5%, and magazines by 4.5%. Given thispublication content, commissioned operation of electronic

situation, we believe it is necessary to implement structural

bookstores, and agency services.

reform of the overall publishing industry including our own
part in it, and stimulate the industry in order to restore thevitality of our own Books and Magazines business. We
have been thinking about how DNP, as a group that hascome this far with our fellow publishers, can make thisrevitalization a reality.

Please discuss other efforts related to Books and

Q Magazines business.

As one example, DNP's Shueitai font has been highly
acclaimed by authors and readers as an aesthetic and easyto-read format for expressing the Japanese language. DNPQWhat specifically are you doing to revitalize thepublishing industry?

began developing this font at the dawn of the Japanese
printing industry. Ever since, it has been used in a large
number of publications and, in response to the needs ofCurrently, the basic policy of our Books and Magazines-

the times, it was digitalized and subject to a variety ofrelated sections is to “expand our fields of business fromdevelopments including making it compatible with Universal

upstream to downstream as the publishing industry's

Design principles and easy to read whether it appears on anumber one partner.” We want to actively pursue concrete

high-definition display or the screen of a mobile telephone.

measures that will expand the publishing market, and help
stimulate the publishing market.
In the past, DNP took a “manufacturing” stance as aAlso, Japanese magazine content, particularly fashion
magazines and comics, has become very popular outside
Japan, and there is growing demand for worldwide

printer within the publishing value chain. Going forward,

development of printed materials such as art-related books

we will promote vertical development of every phaseand various kinds of product catalogs. From the late 1990s,

from media planning to editing, manufacturing, and sales,

DNP has maintained a network of more than 50 majorfor example by expanding contact with readers throughbusiness bases around the world, to which we send digitalbookstores, libraries, and the Internet, etc., collecting andprinting data in order to optimize production locations. We

analyzing information about readers' needs, and linking that

handle translation and editing services in the languages of

information to the planning of sales promotions. In Japan,

more than 60 countries, and we are also working hard at

we took Maruzen, Junkudo, and TRC into our corporate

global publication distribution.

Group as part of our effort to revive publishing distribution
with a focus on bookstores and libraries. We want toapply various types of expertise to the field of publishing
distribution: examples are the publication databases andIC tag-based publication control systems that many libraries
are beginning to operate, and point-of-sale promotion
methods that we cultivated for the commercial printing
field.
We will also take advantage of the head start that we
got when we began to digitize work processes as early
as 40 years ago, and work harder than ever at horizontal
expansion into diverse information media in addition topaper. In particular, we will accelerate the development of

29

Part 1: Information Communication Business Strategy

What kinds of things are you doing in

Q Commercial Printing and Business Forms?

As DNP handles information in an increasingly

variety of fields, information security
Q widebecomes more important than ever, doesn’t it?

Let me first give you a little background. Consumers’

In recent years, we have had an increasing amount ofneeds have diversified, as have the media through whichbusiness that involves contact with customer information,

consumers access product information, and there havesuch as bill and statement issuance, manufacture andbeen big changes in buying patterns. As a result, in

issuance of smart cards, operation of campaign offices andaddition to traditional methods of sales promotion, we

customer service centers, and analysis of buying patterns.

ascribe increasing importance to forums where consumers

In the Business Forms field, we have been developing

exchange views about products and media that enable the“Security Solution” businesses built around DNP’sformation of more direct relationships between consumers

advanced security technologies.

and corporations. In fact, there have been big declines inSome 30 years ago, DNP began research andTV and newspaper advertising, while Internet advertising isdevelopment of smart cards, which play an importanton the rise.

role in information security, and we have steadily refined

In the term ended March 2009, DNP’s Commercial

technologies for manufacturing smart cards, recording

Printing business also saw a slight decline in printed

personal information on them, and developing smart card

materials like pamphlets and flyers, while at the same

software. In addition to developing the MULTOS multi-

time we enjoyed good growth in orders for services

application operating system for smart cards, which made itsuch as customer or market analysis, event or promotion

possible to load multiple applications on a single card, DNP

planning, web site construction, and management ofdramatically increased the security level of cash cards andsales campaigns. In response to these changes, we are

ID cards by developing the world's first smart cards to use

developing a business that we call “Total SP* Solutions”

vein authentication. It was through this kind of innovation

to solve problems related to our corporate clients' overall– directly inspired by market needs – that DNP came tosales promotion activities. Our aim is to increase thecontrol an overwhelming share of the domestic smart card

effectiveness of sales promotions through a “coordinatedmarket. DNP also boosts information security throughpromotion” approach that makes good use of three types ofour role as secretariat of the Shared Security Formats

media: mass, direct, and point-of-purchase.

Cooperation (SSFC), a large group of companies that deal in

In Business Forms, we are working on reinforcing

office equipment, entry gates, monitoring systems, etc. and“Business Process Outsourcing (BPO),” whereby wework together to create a standard format for smart card-

perform various services for corporate clients on an

based office security.

outsourcing basis. BPO entails handling of corporate clients’

We view the maintenance of information security and thecustomer information and other sensitive information, so

protection of personal data as high-priority management

DNP is building environments and operational systems totasks. Providing appropriate protection for all of the

support a high level of information security. Because we

information that our customers entrust us with has been

provide advanced security functions, our clients need not

an important responsibility since DNP's founding, andworry about outsourcing their operations to us, and theythat sense of responsibility has been passed on from one

can focus on their core businesses.

generation of employees to the next. In recent years, we* Sales Promotion

have stepped up our efforts aimed at personal information
protection, for example by acquiring company-wide
PrivacyMark accreditation for Dai Nippon Printing Co., Ltd.
as well as for Group companies that handle information
processing.

30

DNP Annual Report 2009 ＞ Special Feature: Creating Communication ＞ Information Communication Business Strategy

What are the keys to finding effective solutions

Q for diverse problems?

Finally, please share your thoughts about

the Information Communication
Q expanding
segment.

I think you can get a sense of the breadth and depth of

Publishers want to collect the opinions of readers, andthe Information Communication segment’s business justreaders want their opinions to reach authors and publishers.

from a brief mention of the key business strategies that

Companies want new product ideas, and consumers want

I've discussed so far: “the publishing industry’s number

to communicate their ideas about products. Businesses

one partner,” “Total SP Solutions,” “BPO,” and “Security

want to strengthen their relationships with customers,

Solutions.” We believe that solving customers’ problems

and consumers want to support their favorite businesses.

leads to business expansion, but it is important to make theAny place these kinds of people-to-people relationships arepoint here that we can only discover the problems faced byformed is where we believe our business opportunities lie.

corporate clients and consumers if we take the initiative tolook for them.

For example, businesses and consumers connect throughprinted materials like books and magazines, catalogs and

The DNP Group as a whole has some 30,000 corporate

pamphlets, but opportunities for communication can also beclients. We can’t even count the number of consumers who

increased through events, campaigns, and the use of web

do business with our corporate customers. Through repeatedsites and other forms of digital media. Our role is not just

taiwa with business people and consumers, we haveto produce printed material. By processing information intobrought into sharp relief even problems that lurked murkily

pleasant, easy-to-understand formats while maintaining a

below the surface, and we've gone on to carefully resolve

high level of information security and making good use of

those problems one by one. Through this process, we havethe characteristics of various types of information media,

identified themes on which we need to concentrate.

we can turn the whole spectrum of corporate and consumer

The Information Communication segment, too, hascommunication into our field of business.

succeeded in identifying its most important themes throughthe process of confronting and resolving the problems

When DNP was founded in 1876, we expanded theof a large number of companies, including publishers,

business under the motto “run a civilized business” bydistributors, manufacturers, and everyone in between.

developing letterpress printing, which was the cutting-edge

I think it is important that we concentrate management

technology of the time. After that, we continued to work

resources on these themes, and assign them levels ofwith the cutting-edge technology of each era, based onprioritypy as we work to resolve them.

an awareness of delivering “the information people wantin the formats they want it in.” In other words, we havecontinued to enliven people-to-people communication byprocessing information into pleasant and easy-to-understandformats.
In today’s harsh business environment, where so many
problems await resolution all over the world, deepening
people-to-people communication is probably more important
than ever. We intend to take on that challenge whileworking at the same time to maintain our stable profit base.

31

Part 2:Strategic Business Approach

Creating a New Era in Publishing Distribution
Aiming for business expansion by building a platform for revitalizing the
publishing industry
Since the term ended March 2008, DNP has formed operational and capital alliances with book store operators Maruzen
Co., Ltd. and Junkudo Co., Ltd., with TRC Inc., a company that provides book distribution and other services for public
libraries, and with publisher Shufunotomo Co., Ltd. DNP also joined major Japanese publishers Kodansha Ltd., Shueisha
Inc., and Shogakukan Inc. in purchasing a stake in Bookoff Corp., operator of Japan’s largest chain of used bookstores. Until
recently, DNP expanded the printing field based on a concept it calls “expansion printing.” Now we are starting to develop
a new platform business by entering the upstream and downstream areas of the Books and Magazines supply chains.

Q

Could you give an overview of the operational andcapital alliances that you’ve been forming? Some are inareas that are new for DNP, like publishing houses andpublishing distribution.

From “horizontal expansion printing” to “verticalexpansion printing”
DNP has a stake (48.3%) in Kyoiku Shuppan Co., Ltd., andsince the fiscal term ended March 2008, we took on threepublishing distribution-related companies as consolidated
subsidiaries with which we plan to have comprehensive
operational tie-ups -- Maruzen Co., Ltd. (51.3%), Junkudo Co.,
Ltd. (51.0%), and TRC Inc., which serves public libraries bysupplying books and contracted operation (50.3%). In May
2009, we also invested in major publisher Shufunotomo Co.,
Ltd. and in Japan’s largest used book seller, Bookoff Corp.
So far DNP has expanded its business horizontally underthe business concept of “expansion printing,” by developing
the field of printing in various directions, including commercial
printing of products like catalogs and pamphlets, smart cards

and business forms, and even packaging, decorative materials,
and electronic components. But our Books and Magazines
business, rather than just producing media, has begun
expanding vertically into every phase from planning to sales
and distribution. DNP will continue to approach business fromthe standpoint of a “manufacturing,” as we always have, butfrom now on we intend to put more emphasis than we did in
the past on the point of view of consumers and society.
is the goal of this series of operational and capital
Q Whattie-ups?

Our ultimate goal in solving the publishing industry’s
problems and revitalizing the overall industry is renewed
growth in media production as DNP’s core business.
Throughout its history, DNP has been closely connected to
the Japanese publishing industry through the printing business.
As a result of growing use of the Internet and other new
media, this industry has not been performing well in recent
years. We believe that the Japanese publishing industry canregain its vitality by resolving three problems -- the high ratioof unsold books being returned to publishers, the high cost ofdigitalization, and dependence on advertising revenues.
These problems are too big for a single publisher orbookstore to resolve by itself. But with the cooperation of
the companies with which we recently formed alliances, we
believe that DNP can help resolve these problems and revitalize
the publishing industry by using the comprehensive planningand problem-solving capacities that we cultivated throughour experience with printing and information technologies,
commercial printing, and business forms. And we believe thata renewal of the publishing industry will lead to new growth in
DNP's printing and media production businesses.

Managing Director

Tetsuji Morino

32

DNP Annual Report 2009 ＞ Special Feature: Creating Communication ＞ Strategic Business Approach

Q What can DNP do to resolve the high rate of book returns?
We aim to optimize publishing distribution through marketingand the production of on-demand media
Japanese publishing distribution is based on commissioned
sales, so publishers allow bookstores to return unsold books, andthe industry’s biggest problem is the high rate of return books.
Currently, about 40% of books and magazines are returned to the
publisher. This is said to be costing the publisher industry morethan 10% of its sales. We believe that reducing the book return
rate would allow the overall industry to lower its costs, which
would lead to raising the industry’s profit margin and enlivening
publishing companies. Our plan is to join forces with Maruzen,
Junkudo, and TRC and promote improvements in publishing
distribution based on marketing and on-demand technologies inorder to bring down the book return rate.
To date, TRC has developed its business based on a marketingorientation. For example, it succeeded in reducing book return rates
by constructing a publications database and basing its purchasing
and distribution of books on highly accurate predictions. Junkudo iswell-versed in the market for specialized books, and Maruzen has
brand strength and unique know-how acquired through more than
130 years of selling books. By organically blending their strengths
with DNP's technologies and sales promotion know-how, we plan
to provide readers with the printed materials that they want, when
they want them, through the distribution channels that they prefer,and as a result, to bring down book return rates.
Going forward, we also want to combine print on demand(POD) with a new type of inventory control. POD is a system forprinting only the number of copies required, according to readers’requests. Introducing this type of system would not only greatly
reduce publishers’ inventories and enable them to cut costs, but
it would also lead to increased sales by making it possible to issue
more up-to-date new editions. Bringing down the book return rateby itself might tend to reduce sales in the short run for a printerlike DNP. But from a medium or long-term standpoint, reducing
the book return rate should strengthen publishing companies sothey will have more resources to invest in marketing and to use
for expanding and revitalizing the publishing industry by providing
consumers with the content they want. We believe that providing
a platform for POD and inventory control will lead to a bigger shareof the market for DNP so that in the end, DNP will benefit.

Q How do you handle the problem of digital costs?
A platform for both print and digital media
The second major problem faced by the printing industry is the
addition of digital costs. With the spread of personal computers,
mobile phones, and computer networks, some of the content fromnewspapers and magazines is now displayed on the Internet. But,
with the exception of a small proportion of content, it is difficult
to charge money for Internet viewing, so the cost of producing
digital content ends up being an additional burden that puts furtherpressure on publishing companies.
In order to solve this problem, we will lower digital content
production costs by introducing concentrated management andmechanisms that link online viewing to the sale of publications. In
order to contribute to the creation of a new base for the publishingindustry, we are building a comprehensive content distribution
platform that handles both print and digital media. We aim to

expand our business by being the first to commercialize such aplatform.
are you doing about publishing companies’
Q Whatdependence on advertising?

Raising earning capacity through horizontal development ofmagazine brands and expansion overseas
The publishing industry’s third problem is the slump in themagazine business caused by declining corporate advertising.
We plan to resolve this problem by making new use of magazine
brands and expanding overseas. For example, Shufunotomo Co.,
Ltd. with which we formed an alliance this year, has a magazine
called “S Cawaii!!” which is popular among teenage girls. By
linking this magazine brand with fashion brands, thereby tying
together the planning capacity and know-how of manufacturers
and distributors, it is possible to branch out into areas like thedevelopment of fashion products aimed at teenage girls.
In recent years, Japanese magazines have increasingly foundreaders overseas, primarily within Asia. DNP has built a content
data transmission network with 50 countries around the world, andwe have a translation system that can handle about 60 languages.
By making use of this type of global framework and popularmagazine brands, we can further increase overseas readership.
Maruzen also has expertise that will be useful in developing
publishing content for overseas consumption. Maruzen has a long
history of importing from the West, and remains Japan's foremost
importer and seller of Western books to this day. Maruzen could
use the overseas network that it cultivated through its importbusiness to support the overseas development of Japanesecontent.
In short, by developing various types of merchandise undermagazine brands, and by promoting the development of magazine
content overseas, we intend to secure new sources of revenues
and helped strengthen each publishing company's management
base.

Q What other effects will this have on DNP’s business?
Solving the industry’s problems will boost DNP’s businessgrowthWe believe that building a new platform and solving the overallpublishing industry’s problems through vertical development willlead to business growth for DNP.
As an example, we think that IC tag-based book management
can be an effective way to reduce book return rates and increase
sales, and we are taking a leading role in introducing such a system.
By acquiring shares in Bookoff Corp., we want to establish a soundsecondary market for publications, and there too, we see IC tags
as an effective way to get a grasp of each item’s distribution history
throughout the entire supply chain. We have already used IC tags
to greatly improve convenience and management efficiency: Onepublic library operated by TRC on a contract basis attached IC tags
to all of its roughly 850,000 books. When a library patron uses a
dedicated terminal to search for a book, its location is shown on
the screen; and when a patron reserves a book, the library shelfwhere the book is lights up.
DNP will continue to promote a variety of new ideas – not justthose involving IC tags – to stimulate the entire publishing industry.

33

Part 2: Strategic Business Approach

A Consumer-Oriented Approach to Planning"Coordinated Sales Promotion" including analysis of customer and market trends
In recent years, the field of commercial printing has expanded greatly, so that it now includes every aspect of sales
promotion from planning and execution to analysis of results. Keeping in mind all of our corporate clients’ processes, fromproduct development to manufacturing and sales, we propose more effective ways to communicate products’ special
characteristics to consumers, to attract them, and to get them to buy our customers’ products.

kinds of businesses has Commercial Printing
Q Whatpursued so far?

“Total SP* Solutions” grew out of printing, which is a formof “manufacturing”*SP = Sales Promotion
Five years ago, we came up with the idea of “Total SP
Solutions” as the field of commercial printing field broadened.
Until then, we took a “mass” approach, primarily using leaflets
to communicate information about products and services toa large number of consumers all at once. However, because
this method no longer appeals effectively enough to individual
consumers regarding their particular needs, we combined
the traditional “mass” method with a “direct” approach that
addresses individual needs, and a “point-of-purchase” (POP)approach that works directly on consumers at the store. The
result was even stronger sales promotions, which we call “Total
SP Solutions.”
In today’s sales promotion market, advertisers competewith a variety of other players for market share. However,most advertising agencies are not equipped to produce
sales promotion materials, printed or otherwise, and tend to
specialize in a “mass” approach centered on mass media
including television, radio, and newspapers. DNP, however,has the means to produce various types of information media,
so we have accumulated expertise not only in mass media, but
in the direct and point-of-purchase approaches, including websites, direct mail, production of POP promotions, and operationof customer service centers. We deal with a variety of typesof businesses, and we offer comprehensive sales promotion
by closely integrating the functions of our sales section, whichis the contact point for customers, our planning section, whichhandles consulting, planning and development, services,and our manufacturing sections, which produce content andhandle prepress processes.
do you have in mind for the future of Total SP
Q WhatSolutions?

We will develop Coordinated Sales Promotion that links“mass,” “direct,” and “point-of-purchase” approaches
In order to solve our customers’ sales promotion
problems, it is important to create a situation wherein
all three approaches – “mass,” “direct,” and “pointof-purchase” – function together organically. ThroughIntegrated Sales Promotion that links these three
approaches, we can create synergistic added value in theoverall sales promotion process.
We have been strengthening our marketing functions, forexample by analyzing buying patterns based on consumerpurchase histories and point-of-purchase behavior andlinking that information to product and business model
development. By clarifying the characteristics andfunctions of various sales tools and developing morediverse and flexible sales tools, we are proposing more
effective promotional strategies. We can optimize catalogs
and pamphlets to suit the characteristics of a particularManaging Director

Takao Shimizu

34

DNP Annual Report 2009 ＞ Special Feature: Creating Communication ＞ Strategic Business Approach

are Commercial Printing’s strategies for the
Q Whatfuture?

geographical area or target market, including the numberof pages, and thickness and quality of paper, and wedevelop POP promotions that improve the percentages ofcustomers who approach the shelves where specificproducts are located and the percentage of customers whopick up one of those products off the shelf.
Let’s look at the reinforcing of a point card system as
an example of a successful coordinated sales promotion
making use of purchasing history analysis and othermarketing functions. Specifically, we enhanced the card
member database, updated the point cards, planned andproduced leaflets and pamphlets, planned and operated
events and campaigns improved in-store advertising, andbuilt and operated a web site. As a result, the numberof point card holders and the value of merchandise sales
increased, contributing to improvement in our clientcompany’s bottom line.

Q

We will devise strategies that deepen communication
between corporate clients and consumers, and promotecomprehensive solutions.

What functions will the Commercial Printing division bestrengthening in order to promote Coordinated Sales
Promotion?

We will strengthen our planning, consulting, andmarketing functions
DNP’s Commercial Printing business is changing froma business model focused primarily on printing andproduction to a model that supports client companies’
overall sales promotion. Along with this, what corporateclients demand from us is shifting from good quality printed
materials to planning, development and execution of sales
promotion measures related to the consumption patternsof consumers targeted by our client companies. Looking at
our division’s profit structure, there has been a big increasein the proportion of sales from services like planning,
consulting, and marketing, and we plan to strengthen thesefunctions even further in the future.
Meanwhile, in order to improve the quality of printed
materials and other manufactured products, we areconstructing unique, more objective quality standards.
Now that we handle the entire sales promotion process,we believe it’s important to satisfy not only our corporateclients, but the consumers who are their customers. That
is why we plan to construct new quality standards based on
consumers’ point of view.

We do business with a variety of types of companies
and we have the advantage of diverse contact with various
departments in a large number of companies. In order todeepen a company’s communication with consumers andpromote its products and services more effectively, DNP takes
a broad view of society as a whole across industry lines, views
the customer's perspective more objectively, and supports
the construction of corporate communication activities andpromotional strategies. Also, we work with client companies
to uncover various problems for which we propose solutions.
Our specific strategies are as follows. First, we will promote
print on demand (POD), constructing printing systems
that can respond to the diverse and detailed demands ofcorporate clients and consumers. Next, in order to boost theefficiency of corporate clients’ business processes, we areestablishing “digital workflows” using DNP’s information
technologies and various types of expertise. We also formeda planning and development team that we call the “In Store
Marketing Laboratory,” which researches and develops
effective in-store sales promotion methods based on viewing
stores not as places where companies sell, but as places
where consumers buy. Our In Store Marketing Laboratory
and Waseda University’s Research Institute of Marketing
Communication (directed by Prof. Naoto Onzo) co-sponsoreda “Sensory Marketing Study Group,” through which experts
from various industries participated in studying relationships
between marketing and sounds, smells, etc. that stimulate
the five senses. By generating a curry aroma at actual stores,
we verified the effectiveness of aroma in sales promotions.
Finally, we created a planning and development section
within Commercial Printing Operations, which is developing
applications for sales promotion solutions that take advantage
of printing and information technologies.
Guided by the concept of “Total SP Solutions,” DNP willlink various functions including planning, sales, technology
development, and manufacturing to support CoordinatedSales Promotion and further expand our Commercial Printing
division.

Increasing corporate value
Brand management
Trading area analysis
Mapping solutions

Consulting
Business planning support

Promotion planning

Market analysis and research
CRM marketing
Purchase data analysis

Consumers

Universal design

Businessstrategy
proposals

Product
development
Servicedevelopment

Promotion of taiwa withcorporate customers
and consumers

Customer and consumer
Distribution/
information management
Sales
In-store promotions(Shelf displays, point of purchase, etc.)
Campaign headquarters
Media promotion

All types of content production
All types of system development

Corporate
customers’
business
processes
Production/
Manufacturing

Cross-media solutions
・Paper media
・Web sites (PCs/mobile phones)
Distribution supportand management

35

Part 2: Strategic Business Approach

Security Solutions: The Road That Lies Ahead
Information security technologies as the core of our solutions business growth
Since starting our security-related business with stock certificates, magnetic stripe cards, and business forms, we have
expanded into areas like notifications, direct mail printing, enveloping and sealing, and smart cards. By taking these a stepfurther and combining them to offer diverse solutions, we have established our position as the industry leader. In recent
years, there have been big changes in the business environment due to factors such as advancing globalization, intensifiedcompetition, and legal system reforms, bringing us to a new phase in which business developments centered around DNP’sadvanced security technologies provide solutions to various problems faced by corporations and society.

describe new business developments thatQ Pleasemake use of DNP’s information security technologies.

Providing a wide range of outsourcing services underhigh-security conditions
In recent years, DNP has been providing many
companies with Business Process Outsourcing (BPO)
services, meaning that we perform a company’s diverse
business processes just as they would, except that we
do so using DNP’s information security technology. DNP
has long offered Information Processing Services (IPS)
consisting mainly of output-type business processes. For
example, we receive consumers’ personal informationfrom a client company, compile relevant data, print
information, insert the printed matter into envelopes, seal
the envelopes, and mail them. Our BPO services expands
on IPS by adding input functions such as receiving andexamining documents, data entry, database maintenance,data analysis, and call center operation, allowing us tocontract in the entire range of a client company’s businessprocesses.
BPO services require high-security environments andoperational systems that are trusted by client companies
and by consumers who are our clients’ clients. There iscurrently no other company in Japan providing the samelevel of advanced BPO services on the same scale as DNP.
As a concrete example, let’s look at what happens
when a consumer applies to a financial institution to open
a new account. The customer attaches a copy of his or
her driver’s license or other identifying document to theapplication form and brings it to the institution’s service
counter or mails it in. DNP’s Solutions Center receives
these documents and enters necessary information into
its computer system. Our Solutions Center also checks
that there are no problems with the identifying document
and, if necessary, contacts the applicant from DNP’s callcenter to resolve any questions. The final application data
is delivered to the financial institution and our BPO role inopening the new account is complete.
The biggest advantage of outsourcing these typesof processes is that it enables client companies toconcentrate their management resources on their core36

business. As a result of the worldwide financial crisisand stricter regulations resulting from legal reforms andsystemic changes, companies that make use of BPO
services currently face a harsh business environment,
requiring them to focus harder than ever on their corebusinesses. We feel certain that BPO services will expand
further as a result of DNP offering solutions that meet theneeds of client companies.
you plan to expand your smart card business
Q Do
overseas?

Overseas expansion of DNP’s unique Card DataManagement Service (CDMS)
Not just in Japan, but all over Asia, smart cards are being
used increasingly in a variety of fields including finance,transportation, and communications. In Asian countries,
single-function smart cards are currently the mainstream,
but based on our anticipation of next-generation demand,
we intend to offer high added-value solutions that makeuse of multifunction smart cards and DNP’s uniqueauthentication technologies. One of these solutions,
CDMS, has no parallel anywhere in the world, and we
think it is very likely that it will become widely popular.
CDMS stands for “Card Data Management Service.”
It means that we provide comprehensive, online
management of information to be stored on smart cards.
This service makes it possible to issue a smart card on
the spot at a service counter, quickly change a pin codeat an ATM, use a “mobile bureau” to install software or
personal data onto an IC chip in a mobile phone, and evenauthenticate an online shopper’s identity, among otheruses.
We expect that in the future, there will be many
opportunities for expanding our CDMS not only in the
Asian market, but in Western countries as well. In 2008,
at the world's largest smart card exhibition, held in France,
we introduced CDMS as a unique DNP solution. We
make an effort to expand our contacts with customers
around the world by listening directly to the opinions of
the local people. Outside Japan, smart cards are mostcommonly used in the form of SIM cards containing

DNP Annual Report 2009 ＞ Special Feature: Creating Communication ＞ Strategic Business Approach

mobile phone subscriber information, but we believe that
advanced smart card-based solutions will come into broaduse. When that happens, we believe that DNP will haveplenty of opportunity to take advantage of its strength
in this field, because very few companies provide total
smart card solutions that offer the equivalent of DNP’s
CDMS. Toward that end, we aim to expand our smart cardbusiness and actively develop it overseas, with an eye
toward potential mergers, acquisitions, or other types ofcorporate alliances.
new efforts is DNP making in its domestic smart
Q Whatcard business?

Development of new solutions including device
authentication
We are also working hard to develop domestic smart
card customers. Now that the Japanese population has
begun to shrink, we probably can’t expect that demand
for smart cards will simply shoot up in existing markets
like finance, transportation, and telecommunications.
However, people say that in the “information network
society” of the future, integrated circuits that use security
and authentication technologies will be built into all kindsof household appliances, cars, and mobile telephones,
and these chips will be able to transmit information andinitiate or maintain various functions by connecting to
networks. We intend to develop various types of device
authentication and other new solutions to support thistype of system.

prevent illicit use or leakage of information by granting
authority to access sensitive information only to certain
employees, and by recording which individuals accessed,
copied, or removed which information. Companies thathave joined the SSFC have had success in preventing
information leakage and improving operational efficiency.
The number of companies using the system is steadily
growing, and participating companies have already issued
more than 1 million SSFC-compatible smart cards. In
addition to developing the domestic market, we areworking on overseas expansion in response to the interest
expressed at the 2008 smart card exhibition in France.
Exercising uniform control over various actions
within the office requires the cooperation of numerous
specialized companies; 180 companies in Japan participate
in the SSFC consortium, from fields such as officeequipment and information systems. DNP proposed andformed SSFC, runs the consortium's offices and actively
promotes its activities.
DNP has a track record of proposing a variety of
information security solutions centered on IPS and smart
cards. In the future, we intend to actively expand theinformation security field through Business Process
Outsourcing, promotion of CDMS, SSFC, and other digital
security solutions, and by focusing on expanding our smart
card business overseas.

kinds of things are you doing with companies
Q Whatother than financial institutions?

DNP will continue to lead the Shared Security Formats
Cooperation that is increasing office security
DNP is leading the Shared Security Formats Cooperation(SSFC) that is comprehensively boosting office security.
In the past, companies used separate systems forcontrolling various types of security-related informationsuch as gateway transit records and computer login histories. SSFC makes possible uniform control ofsystems that increase office security, by providing sharedspecifications linking the data formats used in smart
cards with those used in systems that control accessto gates, storage areas, or equipment like computers or
printers. Diverse activities such as entering or leaving
offices, logging on to computers or operating printers are
all controlled through an ID number contained on a single
smart card that each user carries. The system aims to

Director

Sakae Hikita

37Part 2: Strategic Business Approach

The Future of Communication Technology
Carving out a new future for Information Communication by creating digital
workflows and other production technologies, and searching for new
information distribution channels
The Information Communication segment’s main areas of research and development are the construction of digital
workflows for printing and other manufacturing processes, and the pursuit of possibilities for new businesses arising outof IT developments. From these two standpoints, we will explore the future of Information Communication and propose
original DNP solutions to the problems of our corporate clients and consumers.

Q

What is the role of technological development
and other research and development within the
Information Communication segment, and what
results have been achieved?

Aiming for innovation in products, manufacturing
processes, and business models
The Information Communication segment’s researchand development framework centers on the Technology
Development Center, which develops production
technologies, including the creation of digital workflows forprinting processes, and the Media Technology ResearchCenter, which develops new information technologies toreplace printing on paper. These two facilities are part of aframework of cooperating facilities that includes the Researchand Development Center, which studies new expressive
technologies used in information distribution, the Electronic
Module Development Center, which develops devices andmodules used in displays, and the Nano Science ResearchCenter, which develops materials and processes to support
DNP’s other endeavors. As director of the Corporate R&D
Division, I am in charge of coordinating these five centers.

Currently, in addition to using digitalization and computer
networking for streamlining and boosting efficiency in clients’
overall activities, the Information Communication segment sees
its most important task as the creation of information distribution
technologies that reflect the needs of the consumers who are
our corporate clients' customers, so we engage in research anddevelopment aimed at accomplishing that task.
In the old days, the processes of collecting text andphotographs and creating platemaking film and printing plates
were supported by analog technologies. But these processes
began to be computerized in the 1970s, so that today they
are primarily digital technologies. The final products’ printed
materials haven’t changed, but the production processes have
evolved as a result of research and development in information
technologies, and many problems have been resolved.
Traditional paper media is not the only object of our researchand development; we research the use of a variety of media toenergize information distribution to consumers. Our researchand development is not aimed solely at product innovation;
we also plan to propose innovative business models to our
corporate clients.

Q What fields of research are you currently focusing on?
On the production technology side, we are working on
maintenance of digital printing workflows based on platelessprinting, and use of such workflows for POD (print on
demand). In the area of collection and analysis of customer
needs, we are focusing on technologies related to Consumer
Generated Media (CGM).
In the past few years, film and plate-making processes havebecome unnecessary as we now have ways to output digitallyprocessed text and images using inkjet or electrophotographic
printers, so we can offer speed and quality at the same time.
Based on the construction of digital workflows using theseprinting technologies, DNP is developing a POD system thatcan print only the necessary number of copies and customize
the content of printed material. In addition to printing large
Corporate Officer

Takashi Wada

38

DNP Annual Report 2009 ＞ Special Feature: Creating Communication ＞ Strategic Business Approachquantities of catalogs or magazines using a rotary press, POD
makes it possible to deliver only necessary information only tothe people who need it. We expect that there is a great deal oflatent demand for POD. In the future, we would like to install
printers at bookstores so that they can print a single copy of abook in response to a customer’s order.
Another theme that we are focusing on is the developmentof technologies for collecting and analyzing consumer needs.
In the past, when our Commercial Printing division produced
catalogs or leaflets to promote products for corporate
customers, we listened mainly to the corporate client. Now,
however, in response to the wider availability of Consumer
Generated Media (CGM) – compilations of consumers’ own
product evaluations via the Internet – DNP is listening directly
to consumers’ voices and stepping up development of
information distribution technologies that corporate clients canuse in their product development, etc.
For example, in 2008 we launched “Sakimi TM,” a service
that analyzes consumer opinions posted on the Internet.
Sakimi uses DNP’s original language processing technology toanalyze a variety of information posted by consumers on blogs
and bulletin boards, and displays extracted key words andcompiled data in easy-to-understand formats such as ranking
lists, graphs, and tag clouds (visual depictions of the frequency
and weight with which words are used in websites), for use incorporate marketing strategies.
We also developed a service called “Magitti TM,” whichanticipates what a particular person is most likely to want topurchase based on time of day, location and that person’s
tastes, and sends suggestions to the person’s mobile phone.
In addition, we are developing aspects of universal design suchas easy-to-read fonts and colors and easy-to-open envelopes.

by society include technology for enciphering digital dataexchanged between smart cards and networks, and rights
management technology for confirming that exchanged data iscorrect.
of new media and materials like organic EL
Q Development
is also important to communication technology, isn’t it?

Distinguishing DNP from the competition by our ability
to propose digital signage and other solutions that meetcustomers’ individual needs
Development teams from the Research and Development
Center, Nano Science Research Center, Electronic Module
Development Center and other facilities are working together
to develop organic EL, electronic paper, and other materials
that have the potential to become new information media.
These products are expected to be useful not only in flat-panel
televisions and mobile devices, but also in new applications
such as digital signage displayed in stores and other public
places.
Not only can DNP develop applications based on
corporate and consumer needs, but we can play a part in thedevelopment and manufacturing of the actual devices. We
can propose the most effective way to actually display digital
signage in stores for advertising purposes and we can provide
the displays that we propose. This ability to propose both hardand soft aspects is one of DNP’s big advantages.
fields of research and development will the
Q WhatInformation Communication segment be paying
particular attention to?

It seems that security technologies are one of DNP's

Q specialties.

We will further refine technologies that guard both thingsand information
We have always developed and accumulated security
technologies using holograms and other specialized printing
techniques in order to prevent forgery or copying of printed
items like stock certificates, merchandise vouchers, magnetic
stripe cards and smart cards. Recently, we developed
technologies for producing three-dimensional images thatappear to project out of a flat surface and holograms thatappear to move as if animated, which can be used to more
effectively prevent forgery and identify authentic items.
In recent years, there has also been increasing demand
related to stronger information security and protection of
personal information. We believe that technologies for
identifying individuals will become especially important. DNP
has been refining its biometric technologies, for example bydeveloping the world's first vein authentication-based smart
cards. We are also working on employee and student ID
smart cards, and ways to increase security in offices and otherfacilities. Other security technologies that we are developing
and plan to apply to the creation of infrastructure needed

Focus on print on demand and “Service Science”
One area on which we plan to focus is the developmentof information technologies that will be needed when print
on demand, which I mentioned earlier, becomes widely usedby consumers. Print on demand will be a comprehensive
service that will include every step from receiving data from acustomer, printing, binding, all the way to shipping, so it will be
important to achieve a high level of information security. We
will use our technologies to enable greater convenience andpeace of mind for the growing number of customers who we
expect will use this type of personal service.
Another area of particular attention is basic research,
including language processing and algorithm development,
which our Media Technology Research Center is researching
jointly with several universities. We also do research in thearea of “Service Science” by scientifically analyzing andsystematizing human sensitivities and behavioral principles inhopes of improving service and productivity. We believe thesefields will become increasingly important in the future, so weare accelerating joint research.

39

Topics: Examples of Cutting-edge Technology

PIM Solutions That Lead Directly to Improved Corporate Earnings
DNP has been providing corporate customers with database solutions for sometime. In order to further develop this business, in 2006 we launched a Business Process
Reengineering (BPR) headquarters in C&I Operations for promoting operational reforms
within client companies. The BPR headquarter provides document and data management
solutions for corporate clients, including the design, construction, and maintenance of
information systems and applications. As part of this service, the BPR headquarter offers
Product Information Management (PIM)* solutions for making integrated use of productinformation.
* In partnership with Danish IT developer, Stibo Systems Inc., DNP offers PIM solutions including reselling of Stibo's original“STEP” PIM software under the name “Pro-V” for the Japanese market. Stibo Systems belongs to the corporate groupbuilt around Stibo A/S, a printing company established in 1794. Based on its history of producing product catalogs, Stibo
succeeded in developing PIM software that functions better than competing applications. DNP's Pro-V has already been
adopted by several companies in Japan.

Example 1

SFA*

e

Ch

ain

Sales

Production
DesignR&D

ASSET (images)

Sales
promotion

BOM* (products)
PDM*
Document management

Web sites

PIM
Product Information
Management

Industry LAN
Catalogs

ERP-CRM
CTI components database*Definitions

Glossary
SFA (Self-force automation): A way of thinking about using information technology
and supporting a company’s sales department that improves operational efficiency
and customer satisfaction. This thinking enables uniform management of customer
information, customer contact histories, status of sales negotiations, and sales
account managers’ activity plans.
BOM (Bills of Materials): A table or written directive that shows how many of which
components are needed for certain products. It may be in the form of a list or a tree.
PDM (Product Data Management): A system that uniformly manages all typesof information related to design and development in order to make the process ofdeveloping various kinds of products shorter and more efficient.
CTI (Computer Telephony Integration): A technology for integrating telephone andfax functions with computers, and for managing those functions. The technology is
widely used in the operation of support centers, customer service centers, and othertypes of call centers that respond to customers.
●of time before all of the new product information made its way
around the world, with the resulting time lags leading to delays inthe start of sales.
By introducing Pro-V, Company A was able to quickly launch its
new products and avoid missing sales opportunities. Overseas
sales companies can access the PIM server to download new
product specifications, instruction manuals, product images
and any other information needed for overseas promotion. The
system allows all the representatives in Japan to use the PIM
server to smoothly distribute product information to overseas
sales companies, allowing them to quickly get started withformulating strategic promotions and making sales.

Printing Multiple Versions of Flyers

Major domestic electronic appliance mass retailer, Company
B, uses Pro-V to produce multiple versions of flyers. Company
B has stores throughout the country. Because each store has
its local character and its own sales strategy, the company
produces dozens of flyers that partially differ in content. Before
introducing Pro-V, the head office produced a template which asales planning manager at each store edited to suit the needs ofthat particular store. When doing so, it was necessary to acquire

40

Customer support(products and parts)
SupportSimultaneously Providing All New Product Information Worldwide

Major electronic equipment manufacturer, Company A, uses
Pro-V to provide product information to multiple recipients all at
once. Company B runs a global business, with sales companies
all over the world. When it launches new products, the head
office needs to provide product information to its sale companies
worldwide so that they can produce catalogs and Web content,
etc. Until the introduction of PIM, overseas sales companies
received new product information by individually contacting
a representative in Japan. Domestic divisions in charge ofplanning, sales, advertising, or public relations related to thenew product were flooded with these types of inquiries fromsales companies around the world, which the people in chargeanswered one by one. By this method, it needed a good deal

Example 2

LeaderProduct Information
Management Group
Business Process Reengineering
Division

images, contact information, etc.), the PIM system eliminates thetime lag otherwise required for communicating and processing
information.

Valu

A PIM solution that makes the most of DNP’s unique strengths
and serves as a strategic tool for corporate management
PIM is already widely used in European and North Americancountries, with more than 100 major Western corporations like
GE and Siemens adopting Stibo Systems’ “STEP” PIM software.
PIM has only recently come into use in Japan, but since many IT
solutions peak in Japan two or three years after doing so in theWest, PIM is expected to continue to spread here over the next
few years.
The Pro-V PIM software offered by DNP makes use of theexpertise as a printing company that knows how to make use of
a company’s product information and output it in various ways.
Unlike other IT vendors, DNP provides consulting services until
each client can make full use of functions appropriates to its
needs, while creating mechanisms that maximize each client’s
profitability. PIM solutions enable companies to implement
strategic marketing and sales.
The greatest advantage of using PIM is that it preventsthe loss of opportunities to earn revenues. By linking andappropriately controlling various types of product information(specifications, instruction manuals, sales promotion information,

Yoshinori Kawakami

product images, prices, specifications and other information from
related departments in the head office, requiring that a great dealof time be spent on the editing process. With the introduction of
Pro-V, sales planning managers can acquire information efficiently
by only accessing the PIM server, leaving them free to devote
more time to the marketing and sales promotions that is theirreal work.

DNP Annual Report 2009 ＞ Special Feature: Creating Communication ＞ Topics

Augmented Reality Solutions
DNP applies image processing technologies that it cultivated through printing in orderto provide solutions that make use of Augmented Reality (AR). AR combines computergenerated images with real-world images or a person’s actual field of view, thereby
broadening the real world or creating a richer expression of it. The basic elements of an
AR system are a camera for recording real-life imagery, markers that recognize the spaceor object being recorded, additional, “non-real” information – generally expressed through3-D computer graphics (CG) – and a means of displaying the resulting combination.
In the future, AR is expected to be useful in a wide variety of fields such as sales
promotions, publishing, video games, art appreciation, education, and medicine. DNP
views AR as a new communication tool – we intend to develop a variety of applications andincorporate the technology in AR solutions.

Wider ownership of cameras and further development ofapplications essential to developing AR business
AR technology can be applied to various fields, from sales
promotion and entertainment to medicine and education.
DNP has developed high-definition image processing and CG
technologies through our printing and other businesses. By
combining these technologies with our comprehensive strengthin planning, manufacturing, and sales, we are well-positioned tooffer AR-related solutions. DNP is currently the only Japanesebusiness that is commercializing AR, and we plan to make themost of all of these advantages as we press ahead aggressively
with AR business development.
Before AR can be a truly accessible solution, however, web

Example 1

Manager,
Communication & Information
Operations

cams need to come into wider use. Camera-equipped mobile
telephones have the necessary components for AR, but fallshort in terms of the quality of CG display, CPU capacity, andthere is a need for more models that can support AR.
DNP is also hard at work on developing applications for AR.
For example, we are working on an educational application
connected to DNP’s My Earth® card game, which teaches
young people about global environmental issues. In contrast to
virtual reality (VR), which creates an entirely artificial world, AR
blends physical reality with virtual elements, making it possiblefor dreams and reality to coexist. DNP is actively developing
businesses that can grow out of this promising field.

New Type of Art Appreciation System

DNP has employed AR technology in its presentations
at the Louvre – DNP Museum Lab, a collaborative project
between DNP and the Musée du Louvre aimed at exploringnew methods of art appreciation. When a visitor of Museum
Lab points a camera-equipped display at an object on
exhibit, DNP’s original art appreciation system recognizes
a three-dimensional piece of early Islamic-period pottery
and superimposes over the actual image a CG-generated
image showing parts that have been restored. DNP also
developed a route guidance function for this system. Whena visitor scans one of the pictures or markers placed along
an exhibition route, a CG-generated character explains wherethe visitor should go next. This system can be used with acompact computer or a smart phone. The Museum Lab’s

Example 2

Minako Miyama

smart phone-based AR route
guidance system has attracted agreat deal of attention as a formof mobile AR.

Mobile AR route guidance system

Mobile display screen

Electronic Pop-Out BookDNP has developed an “electronic pop-out book” using
Augmented Reality. When the printed book is placed in frontof a camera, the pages of the book and 3-D computer graphicsgenerated tropical fish printed on the pages are displayed on
the computer screen, allowing readers to enjoy a highly threedimensional, animated view of tropical fish swimming leisurely
among ocean rocks along with explanatory information. By
reading identifying markers printed on each page of the book,the system recognizes the book's position and distance relative
to the camera, combines 3-D images that cannot be expressedon paper with the images printed in the book, and displaysthem on the screen in a natural-looking way. The reader does
not need to touch the computer; simply by turning the pages
the reader can receive more information than is contained on

the paper pages and learn more about the fish depicted there,
thereby increasing the book’s educational and entertainment
value.

Tropical fish appears on monitor

41

Topics: Examples of Cutting-edge Technology

Evolving into an Electronic Publishing BusinessIn recent years, the Japanese market for electronic publishing has been growing rapidly. DNP is developing abroad-based business to serve this market, offering comprehensive services that cover every phase of the supply
chain including publication planning and production, distribution, sales, sales promotion, contracted operations, anddevelopment.
The Rapidly Growing Electronic Publishing Market
Since the introduction of mobile phone-oriented
information services like i-mode and EZweb in 1999, theelectronic publishing market has been growing rapidly, withmost of the demand coming from mobile phone users.
The value of the market was estimated at 1.8 billion yen in2003 and close to 50.0 billion yen in 2008. Today, “mobile
comics” delivered to mobile phones accounts for roughly
70% of the electronic publishing market. Other growth areas
include literature, photo collections, and audio books.

Most readers of electronic publications are in their 20s and
30s and grew up using mobile phones and playing mobile
games. This is the same generation that buys the mostmobile terminals as functionality of the terminals improves,
so the market is expected to grow steadily in the future.
Japanese comics and other content have also become
popular internationally. From an ecological standpoint as well,electronic publishing can be expected to grow worldwide asa paperless information medium.

DNP and Electronic Publishing
DNP's involvement in electronic publishing began in
1985, with the development of the world's first electronic
dictionary on CD-ROM. Ever since, we expanded thisfield by providing services that addressed the cuttingedge information media of each era, including satellite
communication, digital broadcasting, the Internet, and mobile
phones, and by developing industry-leading standards andtechnologies.
In 2006, we increased our stake in MobileBook.jp Inc.*,
making the company an affiliate of the DNP Group, andstepped up related efforts by building a content distribution
platform and becoming an agent for electronic publications.
At the same time, DNP has its own content sales businessthat operates multiple electronic bookstores via theInternet and mobile phones. In addition, the DNP Group
as a whole provides comprehensive services including
planning and production of electronic publication content,
and development and contracted operation of electronic
bookstores.
*(URL: http://mobilebook.jp)
Sales site A

Provision of
distribution
licenses

MobileBook.jp handles bothersome operations
Sales computation
and reporting

Publishingcompany

Operation checkfor contents

DNP Sales site

Content delivery

Content
production

Support for
constructing
sales sites ofpublishingcompanies andcontent holders

Account settlements)

Content usage
licensing contracts

Publishingcompaniesand content
holders

Sales site C

Content production
and conversion(

providing content
to multiple
sales sites

Sales site B

Working with publishers to promote MobileBook.jp (MBJ) electronic book business
MBJ was co-founded in January 2005, primarily
by publishing companies and DNP, with the aim ofcreating a market and sound distribution channels
for electronic publishing. Today, DNP is MBJ's
largest shareholder and plays a leading role in its
management. The company’s top shareholders are
19 major publishing houses, with Kodansha Ltd.,
Kadokawa Shoten Publishing Co., Ltd., Kobunsha
Co., Ltd., and Shinchosha Publishing Co., Ltd.
participating as external board members.
MBJ’s main businesses are electronic publishing
agency services and providing a distribution
platform, including ASP provision of the functions
needed to establish and operate online electronic
bookstores. As an agent, MBJ receives comic

42

book, novel or other content from a publisher, andprovides distribution licenses to electronic bookstore
sites. This is currently MBJ's core business. On
the ASP side, MBJ develops and operates electronic
bookstores on behalf of publishing companies.
Current ASP users include Denshi Bunko Paburi -- ajoint venture between 13 major Japanese publishers
including Kodansha, Shogakukan, Shueisha, andKadokawa Shoten, and Kobunsha’s Bunko YomYomelectronic bookstore.
As of June 2009, MBJ was supplying 460
electronic bookstores with 36,000 titles offered by atotal of 300 publishing companies, making it one ofJapan's biggest electronic publication agencies.

Mobilebook.jp, Inc.
President

Kounoshin Nomura

Sales site A

Sales site B

Sales site CDNP Annual Report 2009 ＞ Special Feature: Creating Communication ＞ Topics

ColumnCommunicative Consumer-Oriented Marketing
There is a growing number of communicative consumers – consumers who actively gather information
about products and services, and actively create relationships with companies, for example by participationin sales campaigns. This type of consumer generally places great importance on casual communication withother consumers. Now that consumers can easily exchange information with each other through Internet
forums such as blogs and bulletin boards, companies recognize a need to quickly learn to deal effectively
with this type of consumer.
DNP actively engages communicative consumers and promotes a style of “communicative consumeroriented marketing” that can be useful in corporate customers' sales promotions.
What is a “Communicative Consumer”?
As more and more “communicative consumers” actively
gather and disseminate information and actively form
relationships with companies, it is no longer just productfunctions or specifications that strongly influence sales– nowadays communication between companies andconsumers in itself also makes a significant difference.
DNP’s “communicative consumer-oriented marketing”
focuses on the consumer rather than the product,and emphasizes continued communication even after
a consumer has purchased a product. We also build
channels through which consumers and companies cancommunicate directly. We believe it is important to takea long-term view, to carefully cultivate relationships with
consumers, and to increase a company’s brand value alongwith the number of partnerships with consumers.

Expansion of Consumer Generated Media (CGM)* Channels
In the past, companies communicated to consumers
mainly through “media channels” such as television ornewspaper advertising, and through “purchasing channels”
such as POP displays or other in-store communications.
Today, with the increase in communicative customers, two
additional channels are gaining importance: a “publicity
channel” and a “CGM channel.” DNP addresses both ofthese.
The publicity channel goes beyond simple advertisement
to provide information through broadcast programs orarticles in newspapers or magazines. It refers to a whole

range of activities aimed at increasing understanding of a
product or service. Through the CGM channel, consumers
evaluate products or services based on direct dialogue withthe company, opinions shared via the Internet or in casualconversation, or recommendations they have received
from specialists, after which they can share the results of
their evaluation. The CGM channel is expanding as fast as
the number of communicative consumers grows, to thepoint that appealing to this channel has become the key tosuccessful sales promotion.

*Consumer Generated Media (CGM): forums that publicize content created by consumers themselves and enhance it by distributing additional information, enabling opinion
exchange, etc.

The Communicative Consumers Study GroupAs communicative consumers increasingly make theirpresence felt, DNP has banded together with several
companies to form a communicative consumers study
group, which conducts Internet-based surveys. To date,
the group conducted surveys about chocolate candy andalcohol, which revealed the preferences of communicative
consumers concerning these products, and the fact thatthey would like more detailed information than is given
in advertisements. The study group plans to analyze thecharacteristics of communicative consumers based on

survey results, and incorporate theanalysis results when considering
future marketing plans.
With the number of communicative
consumers expected to grow in the
future, DNP intends to address themmore actively and in doing so, tocontribute to corporate activities.
Pamphlet cover

43

DNP Annual Report 2009 ＞ Segment Information

Segment Information

CONTENTS
46 Information Communication
46 Business Strategies
48 Portrait
50 Financial Results
52 Topics
56 Lifestyle & Industrial Supplies
56 Business Strategies
58 Portrait
60 Financial Results
62 Topics
64

Electronics
64 Business Strategies
66 Portrait
68 Financial Results
70 Topics

45

Information Communication
BUSINESS STRATEGIESOur Information Communication segment constitutes a stable revenue base composed of three businessdivisions: Books and Magazines, which has been a core business since DNP’s founding, Commercial Printing;and Business Forms. The segment covers a wide variety of media, beginning with paper and including electronic
media such as the Internet and digital broadcasting. We intend to expand these businesses by providing original
solutions that capitalize particularly on our strengths in software development for smart cards and similar media,
customer relationship management and other forms of market analysis, and information security.

Basic Strategies
Due to the development of worldwide information networks, consumers have been using a variety of communication
channels to gather the information they want and to actively express what they want to say, but diversiﬁcation of
consumers’ values has made it more difﬁcult for businesses to get a good grasp of what consumers want and need.
Meanwhile, businesses are being asked to make the surest possible provisions for protecting sensitive information.
Given these conditions, the Information Communication segment strives to provide services and systems that enablesafe and reliable communication, in addition to editing and processing the information that consumers want into theformats in which they want it. We intend to expand our business with corporate clients by providing comprehensive
solutions, starting with market analysis and consulting services aimed at gathering accurate information about
consumers’ needs and wants and applying that information in business activities, and including all types of services
such as planning and development of sales promotion tools and back ofﬁce functions.

46

Expanding Our Businessthrough P&I Solutions

Since this business segment is deeply involved in interpersonalcommunication, we aim to develop unique solutions that combine
printing and information technologies to solve problems related to
information communication on behalf of our corporate clients andconsumers.

Developing Diverse
Communication Formats

In order to solve problems for corporate clients and consumers,
we will combine diverse media and diverse content to create optimal
formats, and build communication infrastructure in order to generate new
products and services.

Providing Comprehensive
Business Process Solutions
for Corporate Clients

DNP has become proﬁcient in maintaining the advanced information
security required for editing and processing massive amounts of data
and for handling important information. We aim to use this expertise andother strengths to actively encourage businesses to outsource services
from us in order to solve a variety of problems that they face regarding
their business processes.

Generating New Markets
through Global Expansion
and Linking Businesses

We are ready to take on the challenge of pioneering brand new ﬁelds,
for example by developing global businesses that make use of our
network of overseas bases or by generating synergistic beneﬁts throughcooperation with companies that excel in a speciﬁc area.

DNP Annual Report 2009 ＞ Segment Information ＞ Information Communication ＞ Business Strategies

Major Policies
Promoting P&I Solutions by Expanding Solutionsoriented BusinessWe intend to move beyond the production-centeredbusiness development style of our past and further expand
our solutions-based business by offering original solutions
that combine printing and information technologies in waysthat only DNP can.
In order to increase the added value of our products
and services, the Information Communication segment
proposes a variety of ideas covering every manufacturing
process, from upstream to downstream, including sales
promotion planning, product development, market researchand customer relationship management.
For example, by providing corporate clients with personal
information protection or other data security functions,
we help them achieve more direct communication with
consumers. Or by linking smart cards and other security
solutions with various media such as electronic forms,
IC tags, print on demand, and personalized direct mail,we will create new business services that provide
comprehensive solutions to customers’ problems.
Furthermore, we will respond to the diversiﬁcation of
information media by developing businesses like online
distribution of books, images, and other digital content.
We will pursue strategic alliances and the developmentof information services tailored to customers’ needs sothat we can enliven not only the publishing industry, but
distribution, manufacturing, and other industry sectors. In
the future, we intend to make solutions-based business abigger part of our overall business and increase revenues.
Expanding Solutions-based Business through Cooperation
between Business Segments

Improving cooperation among business segments,
enhancing various systems, and making effective use ofbusiness bases will enable us not only to provide processimproving solutions that ﬁt a client’s type of business andindustry, but also to create a framework that will allow us
to provide more comprehensive solutions.
The DNP Gotanda Building (in Tokyo’s Shinagawa Ward)and the Namba SS Building (in Osaka’s Nishi Ward) are
equipped with a variety of presentation functions andserve as forums for working with corporate clients to
identify problems and hammer out optimal solutions.
In order to further promote P&I solutions and ensure
their future development, we intend to enhance ourframework by redeveloping the Ichigaya Plant that serves
as the central base for P&I solution development. The
Ichigaya Plant opened in 1886, 10 years after DNP’sfounding, and for more than 120 years has been the
focal point for DNP’s expansion into various businessﬁelds. Our redevelopment plan calls for concentratinghead ofﬁce functions and the planning, development andsales functions of the various business segments thatare currently dispersed in suburban locations, as well as
reviewing our manufacturing systems from the standpointof distribution and other aspects of overall optimization,and consolidating production bases, etc. We plan to start
construction in the ﬁscal year through March of 2009,
with completion scheduled for 2017.
Promoting our Outsourcing-based Services Delivery
Business
We aim to use the technologies and expertise that wehave cultivated over the years, and the good relationshipsthat we have built with corporate clients, to offer services
that support our clients’ overall business processes.
As we input, output, edit, process and store massive
amounts of data, we take responsibility for taking advanced
security measures when handling information received
from companies or consumers. In addition to providing
various types of research analysis, consulting, operationof Internet data centers, customer service centers,
campaign ofﬁces and handling of mailing services andother back ofﬁce functions, we also provide print on
demand services entailing customization of each piecethat we print with different information. We intend to
expand our business by providing comprehensive
solutions to the particular problems of individualcompanies as well as problems related to the businessprocess of entire industries.
Furthermore, we will build up our outsourcing-based
services business and will effect mergers, acquisitions, orbusiness tie-ups when we need to acquire highly specialized
technologies or expertise or to speed the start-up of a new
business.
Promoting Global Expansion and Business Tie-ups in order
to Create New Businesses

We will build a worldwide network of printing
companies and promote our Global Meta-Media (GMM)
system for transmitting printing data to support production
in optimal locations. We will respond actively to overseas
printing demand by operating a multilingual translation
service and expanding into the Asian market through the
Shanghai subsidiary that we established in 2005, and willdevelop other new businesses with an eye to the global
market.
During the ﬁscal year ended March 2009, DNP
acquired Maruzen Co., Ltd. and Junkudo Co., Ltd. as
consolidated subsidiaries, thereby strengthening our
network in the ﬁeld of education and publications
distribution following the acquisition in the previous ﬁscal
term of TRC, Inc., a major supplier of books and dataservices to Japanese libraries. Our aims are to combine
DNP’s products and services with the expertise of
these new subsidiaries in order to stimulate businessin the education and publishing markets as a whole, byenhancing sales promotions at bookstores and promoting
the introduction of smart cards and IC tags in public
and university libraries, as well as to bolster DNP’s corebusiness of printing books and magazines.

47

Information Communication

PORTRAITStrengths
■

■

■

■

■

■

The printing and information technologies that wehave cultivated since our founding, and the researchand development capacities that support, apply, anddevelop those technologies
Expressive techniques that allow us to deliver text,
images, and other information in formats that are easy
to see, easy to use, and pleasant to experience
Integrated systems that allow us to make effective
use of all types of information media – from paper toelectronic networks – and to provide total solutions
for planning, producing, and/or operating products andservices
The capacity for integrated management of every phaseof system introduction, from consultation regarding
various systems, to design, development, production,and post-introduction follow-up
The ability to promote new businesses by collaborating
across industry lines and generating synergistic beneﬁts
The ability to offer both general-purpose and highly
customized solutions, thanks to our wealth ofexperience in solving problems for corporate clients andconsumers

Books and Magazines
Operating Divisions
In addition to printing books and magazines, we
handle a broad range of media, including planning andproduction of CD-ROMs and DVDs, and network-based
electronic publishing. In addition to conventional publishingcompanies, our customers include a variety of content
holders in Japan and abroad. We intend to expand thisbusiness by editing and processing customers’ contents
into the most appropriate formats and providing products
and services that meet customers’ needs.

Industrial Trends
In recent years, wider access to the Internet anddigital broadcasting has resulted in big changes incommunication styles, and has brought consumers into
contact with increasingly diverse forms of information
media. The Japanese publishing industry’s market
was said to be worth roughly 2.17 trillion yen in 2008.
This reﬂects an ongoing decline in sales, primarilyof magazines, due to competition from the Internet
and other factors. At the same time, the market
for electronic publishing is growing explosively, as
evidenced by the boom in mobile phone novels. This
market, which was estimated at 1 billion yen in 2002,
grew to 35.5 billion in 2007 (doubled from the previous
ﬁscal year), and is expected to exceed 100 billion yen
within a few years. In addition, there is increasing
demand overseas for Japanese content, primarily
related to comic books and fashion.

Strategic Opportunities
First, the electronic publishing market is expected to grow.
The electronic publishing market is expected to continue
to grow in the future as information media and consumer
needs become increasingly diverse. This will result in greater
demand from publishing companies and other content
holders for such services as electronic publication planningand digital data production, provision of a platform forcontent distribution and accounting, and marketing and sales
promotion activities.
Export of Japanese content – primarily animation,
comics, and fashion magazines – is expected to continue
to accelerate, presenting new opportunities for production
in optimal overseas locations and other forms of global
expansion.

48

DNP Annual Report 2009 ＞ Segment Information ＞ Information Communication ＞ Portrait

Commercial Printing

Business Forms

In addition to printing promotional materials such as
catalogs and pamphlets, we also handle a wide variety of
products and services related to sales promotion, including
web sites, in-store sales promotions and operation of
campaigns, mailing centers and customer service centers.
Serving many corporate customers in various industries,
including manufacturing, distribution, and advertising,
we strive to help all of our clients increase their sales andreduce costs and administrative burden.

This sector enjoyed signiﬁcant growth in information
processing services (IPS), which entails individualized
processing of massive amounts of personal data, and inareas like development, production, and service operation
related to smart cards and IC tags. Keeping in mind thatevery company that handles information is a potential
customer, we are working to expand this ﬁeld, not onlyin Japan but overseas as well, by building information
security systems that provide special protection for
personal information.

Businesses have changed their sales promotion
strategies in response to diversiﬁcation of consumers’
lifestyles. We are starting to see a trend toward allocating
more advertising expenses to activities that allow a direct
approach to consumers and take advantage of diverse
information media for maximum effect.
From the second half of 2008, economic recession
triggered by the worldwide ﬁnancial crash has had a major
impact on Japanese advertising budgets, which affects
printing of all types of promotional materials including
catalogs, posters, and direct mail. In 2008, Japanesecompanies’ advertising outlays shrank by 4.7% from theprevious year, to 6.69 trillion yen. Budgets for television,
newspaper, and other mass media advertisements
declined for the fourth year in a row, and expenses related
to sales promotions declined for the ﬁrst time in ﬁve years,
but Internet advertising expenses continued to grow due tothe emergence of new and more sophisticated methods.

As consumers are increasingly aware of the importanceof personal information protection and other aspects of
information security, there is greater demand for highadded-value information services that are secure andhighly reliable. Most recently, there has been a decline indemand for cash cards, credit cards, and other smart cards
issued by ﬁnancial institutions due to changes in relevantlaws and the impact of the recent ﬁnancial crisis, as well
as decreased demand for SIM cards due to slower salesof mobile phones. Nevertheless, backed by increased
demand for information security, the Japanese smart card
market is expected to grow from an estimated 175 million
cards in 2007 to more than 300 million in 2012. In addition,
the market for smart card solutions that provide security,
convenience, and increased customer satisfaction is also
continuing to grow.
In the IPS market, the trend is toward higher added
value related to areas like customer analysis andrelationship management, so printing companies that can
provide a high level of security continue to receive a higher
percentage of orders.
Regarding IC tags, each industry is building a common
framework in order to boost supply chain efﬁciency.

Since the use of personal computers and mobile phones
has become part of daily life and advertising money is shifting
toward the Internet, we need to clarify how best to respondto these changes, particularly regarding sales promotion
activities. Companies are in greater need of solutions thatconnect their business with consumers who make useof multiple information media, especially to support sales
promotions and e-commerce by integrating web sites with instore and paper media.

Amid expectations for a steadily growing smart card
market, the trend toward stronger corporate internal controls
is increasing the need to use ID cards for ofﬁce security.
In addition to the high degree of security that these cards
obviously require, there is also demand for the multifunctionality and network-linked services offered by smart
cards.
In the IPS ﬁeld, there is opportunity in the growing market
for high added-value services such as the generation of invoiceswith advertisements that are tailored to individual recipients
based on analysis of spending patterns.

49

Information Communication

FINANCIAL RESULTS

Financial Highlights

Business Environment(¥ billion, %)2009.3¥

Net sales

718.4

2008.3¥2007.3679.9¥

Operating income

31.7

43.1

51.0

Operating income margin

4.4%

6.3%

7.6%

Net Sales

Operating Income(Net sales)
800(¥ billion)(Operating income)
120

718.4

679.9

668.8

100
600
80

400

60

51.0
43.1
31.7

40

200
20

0

0

07

50

668.8

08

09

In the ﬁscal year ended March 2009, demand forprinting, as measured by sales from the publishing ofbooks and magazines, declined year on year for the fourthstraight year and extended a downward trend going backto 1997. In the commercial printing business, a decline inadvertising-related companies’ sales was one example ofa swing from an uptrend to a downtrend, and advertising
spending notably slumped as corporate earnings
worsened, although the Beijing Olympic Games provided
a boost in 2008. In the business forms business, demand
temporarily declined from the year-ago level, which wasboosted by special demand related to a revision of the
Financial Instruments and Exchange Act, and the revised
Money-Lending Business Control and Regulation Act
contributed to a slump in ﬁnancial institutions’ demand forsmart cards. Increased material costs and declines in unit
prices from intensiﬁed competition had a major effect andmade the industry environment even more challenging.

DNP Annual Report 2009 ＞ Segment Information ＞ Information Communication ＞ Financial Results

Summary of Financial Results
In the Books and Magazines, book sales rose but
magazine sales declined. In the Commercial Printing
business, sales of catalogs, ﬂyers, and pamphlets declined
because of a decrease in advertising spending, but
demand for store design/construction and event planning
increased over the previous ﬁscal year. In the Business
Forms, sales of IPS (information processing services),
smart cards, and ledgers declined. Total segment sales
increased by 338,529 million yen, or 5.7%, from theprevious ﬁscal year to 718,426 million yen, thanks to theaddition of sales from newly consolidated subsidiaries inthe education and publications distribution businesses.
Despite aggressive cost-cutting measures, operating
income was heavily affected by higher material costs
and lower unit prices and declined by 11,386 million yen,or 26.4%, from the previous ﬁscal year to 31,690 million
yen. The segment’s operating income margin was 4.4%,
down 1.9 percentage points from the previous year.
The segment contributed 45.0% of DNP’s total net
sales, and 58.2% of its operating income.

■ Books and Magazines
Estimated sales of Japanese domestic publications
from April 2008 to March 2009 declined 3.3% from theprevious ﬁscal year to 1,994.9 billion yen, with salesof books down 1.5% to 877.2 billion yen and sales ofmagazines down 4.5% to 1,117.6 billion yen. There wasno major improvement in the return rate for books andmagazines. Magazine advertising plunged, remaining atleast 15% below previous-year levels from August 2008,
and one magazine after another ceased publication.
Of the 182 new magazines that were launched during
the ﬁscal year, DNP prints 37%, or 67, up 22 from theprevious ﬁscal year. Similarly, of the 203 magazines that
discontinued publication during the year, DNP had been
printing 46 of these, or 23%. A decline in the number ofmagazine copies printed, owing to weak sales, also had anotable impact.
With the market still in a long-term slump, DNP
stepped up its sales activity and increased book sales
over the previous ﬁscal year, but overall sales in theBooks and Magazines declined 5% from the previous
ﬁscal year.

■ Commercial Printing
From April 2008 to March 2009, Internet advertising
spending remained strong and rose 8%, but overall
advertising-related companies’ sales declined 9% fromthe previous ﬁscal year. The downturn, which reversed
an uptrend, accompanied a deterioration in corporate
earnings. The slump in spending on advertising in thefour major types of media – TV, radio, newspapers, andmagazines – was particularly noteworthy.
Sales of catalogs, ﬂyers, and pamphlets declined, butorders for store design/construction and event planning
increased over the previous ﬁscal year. High-marginorders for planning and other projects increased, but sales
decreased 3% because of the heavy impact of an overall
decline in unit prices and an increase in the costs ofprinting paper.

■ Business Forms
In the Business Forms, sales of forms declined sharply
because a market contraction from the year-ago level,
which was boosted by special demand for securities andinsurance agreement forms related to the revised Financial
Instruments and Exchange Act that took effect in 2007,
was not offset. In addition, sales of bank books declined,
partly because electronic statements have become
more common. Revenue from information processing
services (ranging from data entry to printing and shipmentof personal mail) also slumped because of a decline inadvertising spending and intensiﬁed price competition,and despite a boost from a shift to color forms inconjunction with the revised Financial Instruments andExchange Act. As a result, sales declined 7% from theprevious ﬁscal year.

51

Information Communication

TOPICS

Books and Magazines■ Revitalizing the overall market by strengthening
partnerships
Printing and publishing have been core businesses since
DNP’s founding in 1876. Based on the aspiration expressedby our corporate creed of the time, “Run a civilized business,”
we have always contributed to the evolution of society andculture in the course of growing our business. For most of its
history, DNP approached the publishing industry primarily asa manufacturer. Since the industry has remained in a slump inrecent years, however, we have taken on more diverse roles
and have reinforced our education and publication distribution
businesses in order to broadly revitalize the industry as a whole.
So in addition to selling content for mobile phones in the rapidly
growing market for electronic publishing, we engage in a wide
range of businesses including marketing and sales support forbookstores, libraries, and other customers, along with content
production, processing, and distribution. We actively pursue
alliances with many other companies, and intend to continue
developing the potential of the publishing and printing ﬁelds as atrusted partner.
■ Promoting operational tie-ups that will stimulate thepublishing market
In February 2008, DNP acquired TRC Inc. as a consolidated
subsidiary. In August 2008 we acquired Maruzen Co., Ltd. and in
March 2009 Junkudo Co., Ltd., making them both consolidated
subsidiaries.
TRC specializes in providing services to public libraries,
including consulting, subcontracted operation, and an exhaustive
database of Japanese books and magazines (TRC MARC).
Maruzen, founded in 1869, sells books at 49 stores throughout
the country and, based on strong ties with educational andresearch institutions, operates school libraries, among otherbusinesses. Junkudo operates 33 large bookstores in major
cities throughout Japan and its revenues are increasing greatly.
We aim to combine the assets of these companies, including
their expertise, brand strength, and customer bases, with DNP’sstrength in areas such as CRM analysis, promotion planningand development, content production, online services, andprint on demand, to offer new types of services. DNP aims tostrengthen its core publishing and printing businesses bystimulating the overall publishing market.

“Maru-M-Vision” digital sign at a
Maruzen book store

52■ Active approach to the growing market for electronic
publishing
Japan’s electronic publishing market has been growing rapidly
in recent years. In the year through March 2008, it roughly
doubled relative to the previous year, to 35.5 billion yen according
to Internet Media Research Institute. In particular, growth was
led by comics distributed to mobile phones. DNP is also focusing
on this market; for example, we operate our own comics site
called “Manga-kocchi.”
DNP collaborated with EMI Music Japan Inc. and G.B.
Company to develop “Utacomi” content combining music andcomics, and began distribution from the Manga-kocchi site tomobile phones from December 2008. Utacomi electronic comics
contain music clips up to 45 seconds long, in order to both add
value to the comics and promote the music.
We also added new titles to the mobile phone picture books
that we have been selling through our “Yomicchi” site, whichsells electronic publications for downloading to mobile phones. A
mobile phone picture book tells a story by displaying one scene
at a time on a mobile phone screen, like an old-fashioned story
card show. We plan to continue distributing popular content likethis type of story book and content based on original company
characters, etc.

Commercial Printing■ Proposing new types of sales promotion
As more companies experience lackluster results amid today’s
harsh business environment, there is a noticeable shift towardtrimming advertising budgets and using advertising media thatallow for easy measurement of customers’ response. While
television and newspaper advertisements are on the decline,
Internet advertising is growing rapidly, and promotions atstores and on the street are also becoming more active. DNP
proposes new types of sales promotions and provides a variety
of functions such as consumer trend analysis, planning anddevelopment of events and campaigns, printed material linked
with website content, shipping of merchandise, and customer
center operation.

DNP Annual Report 2009 ＞ Segment Information ＞ Information Communication ＞ Topics■ Innovation in digital signage
There is increasing demand for electronic signs that display
information in stores, public buildings, and other places where
people gather. DNP and Hitachi Ltd. joined forces to develop
Japan’s ﬁrst digital signage system using multiple mobile phones
as a display platform.
The brand new system is a highly effective, attentiongrabbing method that displays a single message or image
on multiple mobile phones, with each phone showing part of
the whole. We conducted a test run for about two months
beginning in March 2009 at an “au” mobile phone shop run byKDDI Corp. in Tokyo’s Shinagawa Ward. As we move ahead withcommercialization of this system, we will evaluate its advertising
effectiveness and add functions such as the ability to vary
advertising content according to time and location.

Smart Cards

Digital signage using images on multiple mobile phone displays■ Mining consumer opinions from the Internet for use inmarketing
Now that consumer opinions posted in blogs, bulletin boards,social networking services and other Internet forums have come tohave a great deal of inﬂuence on the purchasing and other behaviorof fellow consumers, companies have begun to focus on ways
to collect and use these opinions to enhance traditional modes ofsales promotion. DNP has launched a service called “SakimiTM”(Japanese for “looking ahead”) that uses original DNP language
processing technology to extract key words and expressions fromconsumer opinions published on the Internet and display themin such formats as graphs or ranking lists. By making it easy forclient companies to grasp customers’ needs, this service enables
them to increase the effectiveness of their marketing and sales
promotions. DNP expects to provide the service to about 100
companies in the year through March 2011, generating some 1.0
billion yen in sales.
1

Consumer
Consumer
Generated
VoicesMedia*

Community
portals

Socialnetworking services

Blogs

Customersurveys

Bulletin boards

Other consumer
input

Extraction

2

Analysis ofConsumer
VoicesSakimiTM

Functions Provided- Keyword extraction- Key phrase extraction- Feedback compilation - Rankings

Processing

3

Delivery of “Mieru-ka”
Keywordextraction

Key phrase
extraction

Analysis content
Feedbackcompilation

Rankings

Point-ofpurchase

Mobile phones

Optimalcombination

Media
Personalcomputers■ Providing on-demand geographical information
There is increasing demand for Geographical Information
Systems (GIS) that show area breakdowns in map form to aid
in local marketing – for example when a company is planningto open a new store, or determining where to effectively placesalespeople or sales ofﬁces or where to distribute newspaper
inserts, ﬂyers, or direct mail, etc. In order to meet this need,
DNP teamed up with Kokusai Kogyo Co., Ltd., a major Japanesesurveying and engineering ﬁrm, to launch “Earth Finder SaaS,”
a GIS service designed to assist local marketers, in November
2008. Operating the service as a SaaS (software as a service),
i.e. using the Internet to provide only those functions that eachcustomer needs, decreases the cost and time required for
introducing the system to new customers. DNP expects to takein 300 million yen in Earth Finder sales in the ﬁscal term throughMarch 2010.

Digital signage

Outline of Sakimi service*Consumer Generated Media (CGM):
Allows consumers to enhance content that they generate themselves by publishing andexchanging opinions via Internet or other electronic forums■ Expanding our security business by linking smart cards
and networks
DNP has led the Japanese market for smart cards ever since
we entered the business in 1981. Not only do we manufacture
and issue smart cards, but we developed operating system andapplication software that has become the de facto industry
standard. DNP currently holds a roughly 40% share of the overallsmart card market in Japan, including around 90% share of themarket for smart cash cards, with most of the latter made forJapanese megabanks. In addition, we have secured some 50%of the rapidly growing market for contactless smart cards usedas employee ID cards, transportation cards, and electronicmoney, etc.
In the future, we intend to expand services that link smart
cards with computer networks and to develop more governmentrelated and entertainment-related applications in order toincrease our security solution business that make use ofadvanced authentication function.
■ Entry control system combining smart cards and faceauthentications
In recent years, many companies have been developing entry
control devices and systems that enhance security in places likeofﬁces or event venues. DNP teamed up with Tatsuta System
Electronics Co., Ltd. and Shiba Electronic Systems Inc. todevelop a gate system that provides both reliable identiﬁcationand smooth passage in and out of protected rooms. By linking ID
cards, gates, and face authentication, the new system solves
such problems as the risk of entry by an unauthorized party
using an employee ID, and the use of excessive time forauthentication. Furthermore, the system conforms to the Shared
Security Formats Cooperation (SSFC) standard for ofﬁce
security, making it possible to construct even higher security
environments by linking the entry system with ofﬁce equipment
such as computers, printers, and storage lockers. As the sales
contact for the new system, DNP will aim for 1.0 billion yen insales by the ﬁscal year through March 2011.

53

Information Communication TOPICS■ Online authentication using one-time passwords
As Internet shopping grows more widespread, so dodamages arising from identity theft, phishing and other typesof fraud, spurring demand for secure methods of electronic
settlement. To answer this demand, DNP created Japan’s ﬁrst
domestically developed authentication software to be approved
by Visa International. The software is based on the “3-DSecure” protocol devised by Visa for authenticating credit cardtransactions over the Internet. DNP began providing an online
authentication service, “SIGN3D TM ,” using the new software inAugust 2008. The service links cardholders, credit card-afﬁliatedstores, and DNP’s authentication server via the Internet andprovides a high degree of security by using one-time passwords.
We are actively developing DNP Card Data Management
Services, a business that provides SIGN3D TM and other smart
card-linked services via the Internet. DNP is promoting sales tocredit card companies and banks, and anticipates 500 million yen
in sales by the ﬁscal year through March 2012.
〈Schematic diagram of 3-D Secure〉
Cardholder
カード会員

Affiliated 加盟店サイ
Merchant's
ト Website①Card number,

expiration dateOne-time password
ID

Plug-in (MPI)

Password
One-time
password③Password

entry requests④Password entry⑥Confirmation ofcard validity

DNP

Card Issuer②Confirmationof registration
Outsourcing⑤Authentication result

Authentication
server (ACS)

Affiliated MerchantManagement/
Service Company(Acquirer)
ACS : Access Control Server
MPI : Merchant Server Plug-in■ Forklift entry control system using electronic tollcollection (ETC) format
DNP and Mitsubishi Electric Corp. jointly created Japan’s ﬁrst
domestically developed forklift entry control system combining
SSFC-compatible smart employee ID cards with the type of
ETC device used for highway toll collection, in order to bolster
security in factories. Conventional systems require forklift drivers
to step down from their vehicle and pass their employee ID overa card reader when entering or leaving a facility. The new systemsolves the resulting decline in operational efﬁciency. As longas the driver’s employee ID is inserted in the ETC-type device
mounted on the forklift, it automatically communicates to thegate control system that he is authorized to pass through, andthe system opens and closes the gate for him. DNP plans togradually introduce the system in its own factories from autumn
of 2009, and market it to outside customers after conﬁrming its
effectiveness.

54

New Products and Services■ Expanding our IC tag business by combining printing andinformation technologies
IC tags are being used in an increasingly wide variety of ways,
and their importance has grown more than ever. For example,
they are used to improve operational efﬁciency in distribution andmanufacturing businesses, and for building traceability systems.
DNP has played a leading role in expanding the IC tag market bycreating industry standards, constructing environments suited to
IC tag use, and developing various tag applications.
In response to calls for even lower-cost solutions to stimulate
the spread of IC tags, DNP succeeded in developing paper IC tags
that cost about 30% less to process compared to conventionaltags, which are made by applying aluminum foil laminate andetching on a substrate of PET ﬁlm or another plastic material. The
new product uses a cheaper paper substrate, and by applying foilpressing technology used in printing, we reduced the number ofprocessing steps required for manufacturing by about two thirds.
DNP plans to start mass producing the new tags in the ﬁscal year
through March 2011.
DNP also developed an IC tag-based temperature monitoring
system for refrigerators and freezers as a low-cost, reliable way
to maintain appropriate temperatures at food manufacturing andsales facilities. The system uses active tags with a built-in battery
that can emit radio waves and a temperature sensor that detects
the temperature inside the refrigerator and transmits it to DNP’scentralized sensor data management server. If an abnormal
temperature is detected, the system informs the factory or store
by phoning in an automated voice message or sending e-mail. DNP
is marketing the system to a wide range of customers including
restaurants, hotels, and food manufacturers, with a target of 1.0
billion yen in sales by the ﬁscal year through March 2011.
■ Developing a variety of holograms to help ﬁght
counterfeiting
Holograms with a three-dimensional look are very difﬁcult to
duplicate and are therefore in increasing demand for preventing
counterfeiting in a wide variety of applications such as credit
cards, cash cards, cash vouchers, employee and other ID cards,
and brand authentication certiﬁcates for all kinds of products.
DNP got an early start in hologram printing; we began
product development in 1972 and succeeded in mass producing
embossed holograms in 1981. Then in 2001 we began mass
production using the Lippman method, which is more difﬁcult
to produce than embossed holograms. Currently there is only
one other company in the world besides DNP that can produce
holograms by the Lippman method.
In September 2008, we began marketing the RELIEFGRAM™,a high-brightness, high-resolution, high-security hologram thatappears as if it were a three-dimensional object protruding fromthe surface on which it is printed. The RELIEFGRAM™ is madewith unique “Scratch-3D ®” technology that DNP developed inorder to produce 3D computer graphics. Because the image
is so sharply three-dimensional, it is easy to distinguish a real
RELIEFGRAM™ from an impostor.
Meanwhile, China’s National Anti-counterfeiting Technology
Product Management Ofﬁce certiﬁed DNP’s high-security
embossed hologram technology as extremely effective at

DNP Annual Report 2009 ＞ Segment Information ＞ Information Communication ＞ Topics

preventing counterfeiting. This certiﬁcation cleared the way for
active development of the technology in China, where there isa rapidly growing market for security labels to counter heavy
damages incurred from the passing off of copy-cat merchandise.
DNP has already received the same “Certiﬁcation of Review andAssessment of Anti-Counterfeiting Technology” for its Lippmann
holograms.

A RELIEFGRAM in which the imageof the earth appears to ﬂoat above
its surroundings■ Launching a card game that teaches eco-awarenessthrough play
Supporting the launch of a venture business by students from
Keio University’s Shonan Fujisawa Campus, DNP joined two
students in establishing a limited liability company called My
Earth Projects LLC in July 2008. The new company’s businesscenters around selling a card game that it developed, called“My Earth®,” in which players either try to protect the global
environment or seek to damage it. Players draw cards that teachthem about various threats that natural environments face andthe importance of environmental protection activities. My Earth
Projects also issues a card product called “Challenge of theCompanies” that introduces the conservation efforts of various
companies, an effort that is supported by about a dozen othercompanies including Toyota Motor Corp. and Sony Corp.

“My Earth” card game

being printed, thereby giving a greater sense of depth and threedimensionality. DynaCube 3D can currently be used to print insizes ranging from A3 (420 x 297mm) to 550 x 450mm. In the
future, DNP aims to increase the size range and promote thetechnology for use in large scale items such as posters or point ofpurchase advertisements.

Example of DynaCube 3D
The picture on the left was taken from the left;
the picture on the right was taken from the right■ Light-emitting material for printing on paper or clothusing conventional printing presses
DNP developed a material that emits light at a low voltage andcan be printed onto paper or cloth in any desired pattern, suchas letters or images. In recent years, luminescent materials havebeen used increasingly to boost the advertising effectiveness ofposters, point-of-purchase materials and other products. DNP’s
new light-emitting material is made from a special metal alloy
and ionic liquid. It can be printed with a regular screen or offset
printing press, thereby making it possible to print luminescentposters or other point of purchase materials more quickly andcheaply than is possible with organic EL or other materials that
require large-scale, specialized equipment such as a clean roomor vacuum equipment. DNP plans to improve the material’s
luminescence and launch it commercially by 2014.

Various materials shine after light-emitting material is printed onto themLeft: printed glass sheet
Right: printed cloth■ Development of advanced 3D printing technology
DNP has developed a highly advanced 3D printing technology
jointly with DNP Media Create Co., Ltd. (a wholly owned
subsidiary of DNP that plans and produces sales promotion tools
for corporate clients) and the research laboratory of Yasuhiro
Takaki, an associate professor at Tokyo University of Agriculture
and Technology (TUAT). DNP began selling the new technology,
called DynaCube 3D™, from November 2008.
Three-dimensional images are generally printed by laminating
lenticular sheet (plastic ﬁlm with an array of tiny lenses
embedded in the surface) onto the material to be printed.
DynaCube 3D™ is based on this same technique, but uses
new methods of image processing and printing that increase
the perspective between the components within the material

55

Lifestyle & Industrial Supplies
BUSINESS STRATEGIESThe Lifestyle and Industrial Supplies segment is composed of three business divisions: Packaging, Lifestyle
Materials and Opto-Materials/Industrial Supplies. The segment plays a vital part in our corporate clients’manufacturing processes and provides products that are important in the daily life of consumers. By applying
and developing printing technologies, this segment serves as the driving force behind DNP’s continued bold
expansion into new ﬁelds like environment, energy, and life science.

Basic Strategies
In recent years, consumers have begun to insist that their lifestyles include more global environmental friendly – including
less energy consumption – and more safety and peace of mind in food, clothing, and housing. In order to satisfy theserequirements, manufacturing companies have been focusing on developing products that address concerns such asenvironmental friendliness and food safety, and on reducing the environmental impact of manufacturing processes. And
DNP and many manufacturers have even taken on the important mission of helping to create an environmentally friendly
society.
Our Lifestyle and Industrial Supplies segment maintains an awareness of this mission and emphasizes high functionality,
environmental responsibility, and greater added value as it continuously develops products that are indispensable toconsumers and to the manufacturing processes of our corporate clients. Starting with printing on non-paper materials likeﬁlm or steel, we apply basic printing skills to make a wide range of high-function, high-quality products. DNP is already theworld’s largest supplier of some of these products, such as optical ﬁlm used in electronic displays and color ribbons forprinting photos from digital cameras, and we are working on boosting sales in Japan and abroad.

56

Developing High-Function,
Eco-friendly Products

Guided by an awareness of universal design (making products easy
for all kinds of customers to use) and environmental responsibility,
we will develop more highly functional, eco-friendly products thatmeet consumers’ demands for “good health, safety, comfort, andconvenience.”

Adding Greater Value andShifting into Growth Fields

We will further explore the potential of printing technologies and stepup the development of high added-value products and services thatmeet the precise demands of consumers and corporate clients. We
will be quick to read market trends and develop products in areas withgood prospects for future growth, such as decorative materials madewith electron beam (EB) coating technology, functional ﬁlms used inpackaging, and various types of optical ﬁlms and ink ribbons.

Actively Developing New
Business Fields

We will take a broader view of our market and look at areas of greatsocial concern, such as the environment, energy and life science,as potential growth areas in which we aim to develop cutting-edge,
original technologies and products. As we create new businesses, wewill actively develop alliances with a large number of corporations andresearch institutes, in addition to applying our own original technologies.

DNP Annual Report 2009 ＞ Segment Information ＞ Lifestyle & Industrial Supplies ＞ Business Strategies

Major Policies
Packaging: Bolstering our Lineup of Highly Functional,
Eco-friendly Products
We see increasing awareness of environmental
problems and food safety issues as a source of new
business opportunities, and we intend to enhance ourlineup of eco-friendly products that meet the needs ofcorporate clients and consumers.
One product we developed in order to reduce theenvironmental impact and the cost of our clients’manufacturing processes is an aseptic plastic bottle-ﬁllingsystem, and we have been steadily increasing sales of thistype of product. Also, we have been extending applications
for our transparent, highly impermeable IB (Innovative
Barrier) ﬁlm, targeting the medical, pharmaceutical, andindustrial materials ﬁelds in addition to foods.
We also intend to expand this business by offering
comprehensive solutions that cover every phase ofbusiness from research and analysis of consumer buying
behavior based on our original methodology, to productplanning, manufacturing, and sales promotion.
Lifestyle Materials: Building our Product Portfoliowith a Focus on Eco-friendly, High Added-value
Products
This division aims to realize healthy and comfortableliving spaces, and will concentrate on high added-value
products utilizing DNP’s original EB (electron beam)coating technology, which has won high acclaim within
the industry. EB products display outstanding qualities like
resistance to abrasion, soil, and weathering. Besides using
this technology in our mainstay “Safmare” eco-friendly,
vinyl chloride-free decorative sheet for residential interiors,
we have begun actively applying it in the ﬁelds of ﬂooring,
wallpaper, and exterior materials.
We are also making use of original DNP-brand products
like “WS Safmare” by joining forces with building materials
manufacturers to approach residential developers andgeneral contractors in the planning and design stages inorder to develop a broad-based business that addresses
the supply chain as a whole. And we are expanding
our total living space solutions business through suchoperations as measuring and assessing living environment
quality, which we do at our dwelling space analysis andevaluation center.
In addition to enhancing our product portfolio, consisting
mainly of eco-friendly, high added-value products, anddeveloping a variety of businesses related to living
environments, we will actively promote overseas sales.
Opto-Materials/Industrial Supplies: Aiming for Mid- andLong-term Growth by Supplying a Variety of Products
In our Opto-Materials business, we apply and develop

technologies like coating, lamination, and patterning tooffer a variety of optical ﬁlm products used in thin displaysfor devices such as televisions, personal computers, andmobile phones. We are also developing high-function
products for use in touch panels, electronic paper, andother interactive, touch-activated displays. Additionally, weapply clean converting technology using high-precision,
high-quality surface processing to make high-function ﬁlms
required for electronics applications like semiconductors orelectronic devices.
In the ﬁeld of information media supplies, we responded
to increased competition in the photo print business by
integrating our three existing subsidiaries to form DNP
Fotolusio Co., Ltd. in October 2008. We aim to make effective
use of synergy between the products and sales channels
we’ve built up so far in order to increase sales and to boost
efﬁciency in order to lower costs and boost revenues. We
also intend to expand overseas sales channels, and actively
develop markets primarily in the U.S. and Europe.
Concerning ink ribbons for printing bar codes, DNP
acquired Sony Chemical & Information Device Corporation’s
worldwide thermal transfer ink ribbon business. DNP
intends to enhance its various overseas production sites
in order to strengthen its overall global manufacturing andsales framework.
Full-scale Development of Energy Systems BusinessIn order to build integrated systems for selling, developing,and manufacturing in the energy ﬁeld, we launched ourEnergy Systems Operations in January 2009. Under thisnew framework, we intend to apply printing technologies
to the development of products for which there is existing
demand, and actively supply them to the market. In the ﬁeldof solar batteries, where demand is expected to grow, we
will focus on further raising performance and lowering costs
for encapsulant sheets (sealants) and back sheets, both ofwhich make use of all types of converting technologies,
including coating, laminating, and multilayer co-extrusion
techniques. We will also develop and promote new productsthat place less pressure on the environment.
Developing New Markets through Global Expansion
In our Packaging and Lifestyle Materials Opreations,most of our manufacturing takes place in Japan, but
we are actively promoting the development of sales inoverseas market, especially in East Asia. In the information
media supplies business, we will bolster sales in global
markets primarily from overseas manufacturing and sales
bases, such as our ink ribbon joint venture production plant
in France and our dye-sublimation print materials sales
company in the U.S. We will pursue development of manyof our other products, including solar battery components,
with an eye toward overseas markets.

57

Lifestyle & Industrial Supplies

PORTRAITStrengths
■

■

■

■

■

Capacity for developing and designing products,
principally through specialized planning, research, anddevelopment staff. Ability to incorporate universal
design to make products that anyone can use easily.
The ability to develop original, advanced, industryleading technologies: In the packaging ﬁeld, ourcapacity for technological development and plantdesign supports our position as Japan’s top supplier of
aseptic ﬁlling systems. In Lifestyle Materials, we have
EB coating technology that generates numerous highfunction, eco-friendly products. In Opto-Materials/
Industrial Supplies, our capacity for technologicaldevelopment made us the world’s biggest seller ofdye-sublimation thermal transfer recording media.
The ability to develop and provide solutions to avariety of problems, and to implement comprehensive
proposals based on our broad network of corporateclients
The ability to implement mergers, acquisitions andcorporate alliances in order to expand our businesssmoothly
Manufacturing and sales frameworks that enable us toexpand into global markets

PackagingOperating Divisions
Our Packaging Operations offers comprehensiveplanning and development of a variety of packaging
products, including design and development of materials
that serve speciﬁc functions, ﬂexible manufacturingsystems that can handle large or small lots, and containerﬁlling equipment and plants. Manufacturers of foods,
beverages, medical supplies, pharmaceuticals, electronic
components, industrial materials – or any other company
that has a need to “wrap things”– are all potential
customers. We plan to expand this business by providing
precisely the right packaging to ﬁt the characteristics ofeach material to be wrapped.

Industrial Trends
As lifestyles become more diverse due to factors suchas a growing awareness of health and environmental
issues, the declining birth rate, aging society, and women’s
increasing participation in the world outside the home, andas the effects of global warming and other environmental
changes become more evident, people are attaching more
importance to reducing resource consumption and to safety
and peace of mind at the same time that they seek afﬂuenceand convenience in their lives. Businesses and consumers
demand that products be designed with ample consideration
for health and the environment, a trend that is expected tostrengthen even more in the future. The market has beencalling for the development of safer, more reliable packages,
including those made with materials that shut out moistureand oxygen in order to preserve the freshness of package
contents. In order to meet the market’s demand for highly
functional, convenient products, it is necessary to design
products in accordance with universal design principles,making them easy for anyone to use, and to have theadvanced technological capabilities and expertise that makesuch products possible.

Strategic Opportunities
Demand continues to grow for more eco-friendly, safer,more reliable packages, products that are convenient forpeople who live alone or households where both spouses
work, and products based on universal design. DNP has
received high marks from the market for its proﬁciency
in constructing more efﬁcient, lower environmentalimpact processes for manufacturing such products, and indeveloping easy-to-use products.
Also, our business opportunity is growing for products
such as aseptic ﬁlling systems that preserve the valuable
ﬂavors and aromas of container contents, and transparent
vapor deposition barrier ﬁlms that keep moisture andoxygen out of medical and pharmaceutical products.

58

DNP Annual Report 2009 ＞ Segment Information ＞ Lifestyle & Industrial Supplies ＞ Portrait

Lifestyle Materials

Opto-Materials / Industrial Supplies

Our Lifestyle Materials Operations develops and supplies
a wide range of products including interior and exteriormaterials for residential and institutional buildings, room
dividers and storage products, and interior materials forautomobiles and railroad cars. Potential customers arecompanies that deal in “comfortable dwelling spaces,”
whether in Japan or abroad. On the strength of DNP’soriginal EB coating technology, we provide a large numberof high-function, eco-friendly products that have been very
well received by corporate clients and consumers. Thisdivision also works with the building industry to provide
solutions to problems related to construction methods.

The Opto-Materials/Industrial Supplies Operations develops
and manufactures many products of which DNP is the world’s
top supplier, including anti-glare ﬁlm used in LC displays anddye-sublimation thermal transfer recording media used in ink
ribbons for printing photos. The division’s main customers are
the world’s leading electronics companies, but our photo print
business also markets DNP’s own brand of products directly
to consumers. In the energy ﬁeld, our products include backsheets and encapsulant sheets for the rapidly growing solar
battery market.

Japanese housing starts have remained sluggish due toeconomic recession and the effects of a 2007 revision to thenation’s Building Standard Law, but demand is expected to
grow in the future when the economy recovers. Despite theslump, there is steadily increasing demand for specialized
products such as those designed with the environment orhuman health in mind, or those that excel in terms of design
or functionality.
There is also increasing demand for technology andideas that can help reduce overall costs and streamline
construction of large-scale projects like ofﬁce buildings,
hospitals, and commercial facilities.

As a result of growth in the market for LC televisions andother ﬂat-panel displays, demand for various types of opticalﬁlms is increasing. The need for greater functionality, lower
cost, and stable supplies of large quantities of optical ﬁlms is
expected to continue into the future. In the photo print market,
there is a surge in demand for printing photos taken with digital
cameras, including phone-mounted cameras. About one
quarter of the estimated 85.0 billion photos printed worldwide
each year are digital photos. The number of digital photo prints
is continuing to grow and is expected to reach 50.0 billion in2010. In the energy ﬁeld, growth is expected in the market
for solar batteries, which are attracting attention as a clean
energy source to replace fossil fuels. The solar battery market
is expected to expand to 4.7 trillion yen in 2012.

Continued growth in the market for high-function
products designed with health and the environment inmind presents an opportunity for DNP. This includes
growing demand for eco-friendly products that use
water-based inks and do not use vinyl chloride (oleﬁn)based materials, or formaldehyde or other volatile organic
compounds (VOCs) said to cause sick building syndrome.
As Japan currently leads the world in the development ofthese kinds of eco-friendly products, in the future we can
expect greater demand from overseas markets.
We also see great opportunity in the area of
construction-related solutions that reduce environmental
burdens and other undesirable side effects resulting fromthe construction of buildings.

Demand for ﬂat panel televisions and computer monitors
is expected to increase, partly due to demand from emerging
countries. This in turn will stimulate demand for functional
optical ﬁlms such as surface ﬁlms that improve picture quality
by reducing glare, and special surface ﬁlms that protect touch
screens from abrasion and dirt.
In the digital photo print market, we expect continued
growth in the use of printing methods based on dyesublimation thermal transfer recording media, which stand out
for high speed and durable prints, among other advantages.
In addition, growing demand for digital photo print kiosks
installed in camera shops, appliance stores, convenience
stores, etc. presents us with an opportunity.
We also intend to take advantage of the opportunity todevelop solar battery components that prevent deteriorationof production equipment and solar cells while helping to lower
panel costs and boost energy conversion efﬁciency.

59

Lifestyle & Industrial Supplies

FINANCIAL RESULTS

Financial Highlights

Business Environment(¥ billion, %)2009.3¥

Net sales

551.8

2008.3¥2007.3555.8¥

Operating income

19.9

31.9

36.3

Operating income margin

3.6%

5.7%

6.8%

Net Sales

Operating Income(¥ billion)(Operating income)120(Net sales)
800

100
600

555.8

532.7

551.8
80

400

60

36.3

40

31.9

200

19.9

0

20

0

07

60

532.7

08

09

Corporate earnings have slumped and job conditions
have worsened because of the recession that originatedwith the US ﬁnancial crisis. As a result, consumer
spending in Japan dropped off sharply in the ﬁscal year
ended March 2009, contracting 4.8% from the previous
ﬁscal year.
Housing starts rose 0.3%, reversing the previous ﬁscal
year’s steep slump, but declined in the second half of theﬁscal year under review because of an uncertain outlook
owing to the recession.
Earnings conditions remained challenging as a resultof a rise in petrochemical material costs, a decline inunit prices from intensiﬁed competition for orders, and a
decline in demand for optical ﬁlms for ﬂat-panel displays.

DNP Annual Report 2009 ＞ Segment Information ＞ Lifestyle & Industrial Supplies ＞ Financial Results

Summary of Financial Results
In Lifestyle and Industrial Supplies, demand was
generally solid for packaging, but sales of lifestylematerials declined for a second straight year because of
weak housing demand owing to the economic slump.
In Industrial Supplies, sales of various types of battery
materials were strong, but optical ﬁlm sales declined
sharply. Overall segment sales slipped 0.7%, or 3,970
million yen, from the previous ﬁscal year to 551,822
million yen.
Operating income fell 37.5%, or 11,946 million yen, to
19,917 million yen because of a sharp falloff in orders foranti-glare ﬁlm since the third quarter and a deterioration in
proﬁtability in the photo-related businesses owing to the
yen’s strength. The operating income margin declined 2.1
percentage points to 3.6%.
The segment contributed 34.5% of DNP’s total net
sales and 36.5% of its operating income.

■ Packaging
In the Packaging business division, sales were higher
than in the comparable year-ago period because ofincreases in sales of ﬂexible packaging, paper containers,
paper cups, and in particular large aseptic ﬁlling systems*,
and despite a decline in sales of preformed bottles (primary
products for making PET plastic bottles). Increased costsof ﬁlm, resin, and other materials had an impact, but it
was mitigated by a pass-through of some of the cost
increases to packaging product prices, spurred by someincreases of end product prices in the food industry. As aresult, sales increased 4% from the previous ﬁscal year.
* Aseptic ﬁlling systems are for ﬁlling packaging materials that have been sterilized in a sterile
environment with sterilized food products and materials. DNP developed such a system
for milk portions in 1976. It was the ﬁrst one made in Japan. It then developed Japan’sﬁrst aseptic ﬁlling system line for beverages for PET bottles in 1994. Since then, it hasdeveloped faster systems and systems for preformed bottles. In the past ﬁve years, DNP
accounted for 80% of the PET bottle aseptic ﬁlling systems installed in Japan.

■ Lifestyle Materials
Sales of environmentally friendly non-PVC wallpaperand ﬂooring materials based on DNP’s proprietary EB
coating technology* increased, and the proportion of theﬂooring material market accounted for by such materialsrose. However, overall sales, including North American
sales of decorative laminates for furniture and automotive
interior materials, declined 7% from the previous ﬁscal
year because of a sharp slump in demand since thesecond half, owing to weak housing demand.
* EB (electron beam) coating technology uses electron beams to harden materials bypolymerizing coating resin atoms. Materials treated with such technology have hardersurfaces than urethane and plastics hardened with ultraviolet rays, and hence greater
resistance to damage, dirt, and sunlight, high durability, practicality, and very stable quality.
The technology is a next-generation environmentally friendly one that can help save energy
and reduce CO2 emissions and be used for solventless coating.

■ Opto-Material / Industrial Supplies
In Opto-Material/Industrial Supplies, sales of backsheet ﬁlm for solar power systems, ﬁlling material, andother battery materials increased substantially, with help
from increased social awareness of environmental issues,
but sales of LCD anti-glare ﬁlm, contrast improvementﬁlm for plasma display panels, and other optical ﬁlms
decreased sharply. Sales of color and monochrome
ink ribbons remained weak in the wake of the global
economic recession. As a result, sales declined 6% fromthe previous ﬁscal year.
DNP supplies roughly 70% of polarizing ﬁlm,
manufacturers’ total anti-glare ﬁlm, a core optical ﬁlm
product. Starting in August 2008, however, sales andorders from these companies dropped off sharply
because LCD panel manufacturers drastically cut output.
In the photo printing market, which is in the midst ofa transition from the use of silver halide photographic
paper to dye sublimation printing, sales of color ink
ribbons to photo developing labs that use commercial
dye-sublimation printers increased. However, conditions
remained challenging, with declines in the volume ofdigital camera and camera phone sales and the numberof digital photo prints made in the overall market. Salesof monochrome ribbons for facsimile machines declined
substantially again, as in prior years. This trend is expected
to continue, but the barcode business acquired from Sony
Chemical & Information Device Corporation contributed tosales growth.

61

Lifestyle & Industrial Supplies

TOPICS

Packaging■ New “Human Research Lab” provides basis for brandstrategies
In February 2009, DNP opened a “Human Research Lab”
that studies and analyzes package designs and sales promotion
methods for product and service brands, in order to appeal more
effectively to consumers.
As consumers’ values diversify and they are exposed to moreproduct information, it has become more important than everfor companies to reliably communicate brand messages about
each of their products and services. DNP’s Human Research
Lab studies various facets of consumer behavior, including
psychological and actual issues affecting product awareness,selection, purchase, and use. The Lab uses an original method
for numerically quantifying the degree to which brand value isbeing appropriately communicated to consumers, and makes
use of this information in solution proposals. The Lab consists
mainly of a testing room, where test subjects from the generalpublic experience a product or service, and a monitor room
where companies can observe the subjects’ experience. DNP
evaluates the effectiveness of advertisements and packaging
based on interviews with test subjects, observation of their
behavior, and eye movements, etc. We expect that this facility
will improve DNP’s ability to develop package designs and instore advertisements, and we aim for 1.5 billion yen in overall
related sales by the ﬁscal year through March 2011.

Monitoring room at the Human
Research Lab■ New aseptic ﬁlling system optimized for commercial use
DNP developed an aseptic ﬁlling system suitable for 1 to 5-litercommercial-use containers of soups or liquid seasonings. We
began marketing the DynAsept-Deca ﬁlling system in March2009.
In recent years, Japanese lifestyles have become morediverse due to social trends like fewer children, longer lifespans, and more women working outside the home. Thesechanges have led to strong sales of ready-to-eat foods andboxed lunches. Traditionally, seasonings and other ingredientsused in commercial preparation of foods were sold in large
metal containers in sizes ranging from 3 to 20 liters. However,customers have been asking increasingly for smaller containersthat are easier to open and to use, that better addressenvironmental concerns, and that better preserve the ﬂavor ofcontents. DynAsept-Deca meets these demands as a systemfor ﬁlling 1 to 5-liter PET plastic containers with liquid foods in aroom-temperature, aseptic environment.
DNP has been developing aseptic ﬁlling systems for foodcontainers and PET beverage bottles ever since we developed

62

our ﬁrst aseptic ﬁlling system for single-portion coffee whitenerin the 1970s. We intend to expand this market by applying our
expertise to the introduction of new systems tailored to thecommercial-use ﬁeld, where there is large demand.

Aseptic system for ﬁlling
plastic bottles

Opto-Materials■ The world’s hardest level surface ﬁlm for electronic
displays
With the advent in recent years of thinner, more compact
personal computers and touch-panel devices, more people areusing mobile equipment in a variety of environments. Hard-coatsurface ﬁlm is applied to displays in order to keep touch screens
clear despite repeated use, and to prevent scratching or soilingof display screens even during travel or outdoor use. However,these ﬁlms do not always protect the screen from scratching whenpressure is applied with an object such as a ﬁngertip or pen.
DNP cultivated clean converting technology in the course ofdesigning and developing manufacturing processes that can beadapted to a variety of materials, and we were able to use thattechnology in the development of a ﬁlm for ﬂat-panel displaysthat provides greater hardness than any other surface ﬁlm in theworld. The new ﬁlm is scratch resistant, repels ﬁngerprints, oil,and other dirt, and wipes clean easily if dirt does adhere to it.
DNP will actively market the new ﬁlm to manufacturers of mobile
terminals like notebook PCs, touch-screen game consoles and
PDAs, whose displays require a high degree of hardness, andalso plans to apply the technology to anti-reﬂective and anti-glare
surface ﬁlms that it already markets.

A pencil scratches conventional
hard-coat surface ﬁlm

DNP’s new hard-coat surface ﬁlm
resists pencil scratching

DNP Annual Report 2009 ＞ Segment Information ＞ Lifestyle & Industrial Supplies ＞ Topics

New Products and Services■ New ﬁlm for organic devices with barrier function
equivalent to that of glass
There are high expectations that organic devices like
EL displays and organic thin ﬁlm solar batteries will be thenext generation of electronic components. Because organic
devices are vulnerable to moisture, they have generally been
manufactured on substrates of inorganic materials with low
permeability to water vapor, such as glass. However, because
glass is heavier and less ﬂexible than ﬁlm substrates, developers
have been seeking a ﬁlm substrate with strong barrier properties
that can accommodate the trend toward lighter, more ﬂexible
electronic devices.
DNP solved this problem by succeeding in the developmentof an ultra-impermeable plastic ﬁlm substrate with a water
vapor transmission rate of only 10 -7 /g m2 /day. We succeededin forming a high-precision, ﬂat, smooth barrier layer largely by
improving the cleanliness of our manufacturing processes andprecisely controlling vacuum processing. DNP will now workon mass production technology for the barrier ﬁlm, with an eye
toward reaping 800 million yen in sales in the year through March2014.

Developing New Business Fields■ Full-ﬂedged development of solar battery business,
including factory start up
Solar batteries are attracting attention as a “clean energy”
replacement for fossil fuels, and in recent years the market has
been growing by 30 to 40% annually. DNP has been researchingand developing solar battery components since the late 1990s,
and in 2003 we developed commercially viable back sheets andencapsulant sheets. In order to increase production capacity in linewith the expanding market, we built a new factory on the campusof our Izumizaki Plant in Fukushima Prefecture, where we began
manufacturing back sheets and encapsulant sheets in January
2009. We plan to gradually increase production through March
2010, and we intend to supply enough solar battery components togenerate the equivalent of one gigawatt of electric power per year.

society that runs on clean energy.
Going forward, we intend to use coating and laminating
technologies, materials technology, and other techniques like
multilayer coextrusion to improve the performance and lower thecost of solar battery components. Also, we plan to help improve
quality and streamline the operations of solar battery panel
manufacturers, for example by taking advantage of the fact that
we make both back sheets and encapsulant sheets to supply a
new product that combines both components. DNP plans toactively market its products in Japan, Europe, Asia, andelsewhere. We expect some 12.0 billion yen in sales of theseproducts in the ﬁscal term through March 2011.
■ Commercialization of Japan’s ﬁrst cell pattern culture
substrate, “CytoGraph™”
As a result of joint research into the application of patterningtechniques used in printing to the ﬁeld of regenerative medicine,
DNP’s Biomaterials Laboratory and Tokyo Medical and Dental
University succeeded in 2004 in establishing a method oftransferring capillary blood vessels.
Taking this success a step further, in July 2008 DNP beganselling CytoGraphTM , a substrate that enables stable cell culturesin a variety of patterns. This product makes use of printing
technology to deﬁne areas where cells will adhere or notadhere to a glass substrate. DNP became the ﬁrst in Japan tocommercialize this type of cell culture substrate, primarily for use
by medical or research institutions. The technology is expected
to be effective for repairing skin damage from bedsores, and inperiodontal disease treatment, etc.
Furthermore, DNP established a laboratory within the“TWIns” research and educational facility associated with Tokyo
Women’s Medical University and Waseda University, as a basefor research into cutting-edge regenerative medicine. DNP
has already been collaborating with Tokyo Women’s Medical
University since 2004 in research aimed at commercializing
regenerative medical treatments using cell sheets. Cell sheetengineering entails culturing cells in uniform layers on Petridishes and removing them in the form of sheets that areconvenient to use in surgery or other medical procedures. There
are high hopes for the future of cell sheet engineering in a wide
range of applications, including the regeneration of injured bodyparts through the application of cells taken from a patient’s own
skin, cornea, periodontal membrane or heart muscle.
By applying printing technologies to the ﬁeld of life science andconstructing a business model that helps improve Quality of Life,DNP aims to contribute to sustainable society and to realize ourown growth.

Solar battery panel

Also in January 2009, DNP launched a new Energy Systems
Operations to strengthen our solar battery business bycoordinating development, manufacturing, and sales. The
converting technology that DNP reﬁned over many years serves
as the core of the new business unit. Through activities like
providing components for solar batteries, we aim to help realize a

Microphotograph of cells cultured
in a pattern

63

Electronics
BUSINESS STRATEGIES

DNP’s Electronics segment further develops the world’s most advanced printing techniques, including microprocessing, to supply numerous semiconductor and display products that support our society. Our Electronics
segment drives the expansion of DNP’s markets and the Group’s potential for rapid growth by developing a
steady stream of products that meet the needs of client companies, such as photomasks (original plates formaking LSI circuits), multilayer wiring boards, and color ﬁlters used in liquid crystal displays (LCDs).

Basic Strategies
Our daily lives have become more convenient due to the widespread use of a variety of electronic devices, startingwith information devices like televisions, personal computers, and mobile phones, and including household appliances.
Although these devices are continually enhanced with new functions, it is important that they be priced so that
consumers can afford them. For this reason, increasing functionality and lowering costs are both important themes inthe development and manufacturing of electronic products.
More than half a century ago, in 1958, DNP became the ﬁrst company in Japan to develop shadow masks for color
televisions, and in 1959 we succeeded in developing photomasks. Ever since, the Company has remained an industry
leader by continually reﬁning its technologies, and has become the world’s top provider of many products despitesudden changes in the market. In addition to developing cutting-edge technologies and actively deploying the latest
equipment, we also speed up our business development through mergers, acquisitions, and corporate alliances.

64

Emphasizing Technological
Development

Bolstered by world-class advanced technology, DNP’s electronics
products have won acclaim for being No.1 in the world in many ﬁelds.
In order to maintain and further sharpen this competitive edge, we willplace even more emphasis on research and development, and work
to develop new products by perfecting our quality control and microfabrication techniques.

Rapid Response to Change

We aim to achieve continuous growth in our business by responding
appropriately to rapidly changing market conditions and customer needs.
We do this by building ﬂexible production frameworks that include “inplant” and “by-plant” manufacturing, and by being open to a variety ofpossibilities such as optimal component supply and modularization of
new technologies.

Concentrated Allocation ofManagement Resources

While giving ample consideration to potential changes in productlife cycles and other business risks, we aim to concentrate ourmanagement resources on strategically important products in order toachieve high proﬁtability.

Accelerating BusinessStartups

In order to respond to rapid changes in marketplace requirements,
we intend to shorten the development time for new products and new
businesses. We aim to accomplish this by expanding our businesses
efﬁciently, which includes exploring possibilities for M&As, or otheralliances that facilitate ongoing cooperation between strong partners.

DNP Annual Report 2009 ＞ Segment Information ＞ Electronics ＞ Business Strategies

Major Policies
Readiness to Supply a Wide Variety of Products inTime to Take Advantage of Product Life Cycles
Historically, DNP has avoided the risks inherent in
overdependence on a single product by maintaining afull product lineup and being ready to meet demand
for whichever product becomes most popular. Ourbasic strategy has been to meet demand for all typesof displays, in all sizes. In the future, we intend toconcentrate management resources on expanding
production capacity and developing new technologies
and products so that we will be able to respond nimbly torapid changes in market demand.
Conditions in the LC display market are expected to be
tough. Our response will be to boost our competitivenessby reﬁning inkjet and other technologies for lowering color
ﬁlter manufacturing costs, and by thoroughly eliminating
waste in order to improve our earnings potential.
Meanwhile, as LCD panel manufacturers inaugurate
production lines for large-scale products, we will set up
new production bases and integrate them with existingbases to optimize our overall production framework.
Also, we are accelerating research and development
aimed at enhancing the performance of existing products
and improving their added value, for example throughtouch-panel functions, as well as lowering costs. We
are also moving forward with research and development
related to next-generation display products like metalmasks for organic EL displays, as we strive to expand ourbusiness through new products.
Flexible Business Models Focused on Proﬁtability
Since LCD panel substrate sizes have increased with
the introduction of 8th and 10th-generation products,
our customers are counting on us to build color ﬁlter
production models that enable us to respond ﬂexibly totheir needs and concerns. Whatever our response to
the challenges imposed by increasing substrate size –including when it entails building new facilities as “byplants” adjacent to a customer’s manufacturing facilities or“in-plants” directly connected to a customer’s production
line – we give ample consideration to the likely impact
on return on investment (ROI). Our policy is to givedue consideration to business models that emphasize
ROI as we choose from a wide array of possibilities
including corporate tie-ups and royalty businesses, inorder to expand our own business while ﬂexibly meetingcustomers’ needs.

Maintaining our Top Share of the World Photomask
Market by Virtue of Advanced Technology
DNP photomasks, especially the most advanced
products, have a solid reputation for outstanding quality.
DNP continues to hold the top share of the worldwide
market for photomasks, excluding in-house production
by semiconductor manufacturers. What makes our
photomasks stand out is our capacity for advanced
technological development, which no competitor cancome close to matching. About two thirds of DNP’sphotomask sales come from advanced products with line
widths of less than 90nm. DNP controls more than half of
the world market for cutting-edge photomasks with line
widths of 45 or 65nm.
In addition to our existing facility established through
DNP Photomask Europe S.p.A. in Italy, we are building a
new factory in Taiwan’s Hsinchu Science Park, where weplan to start mass production. Going forward, we aim toincrease collaboration with customers and incorporate thefruits of joint development as we prepare to develop andsupply under-32nm products ahead of our technologicalroadmap targets, in order to solidify our hold on the top
share of the world photomask market.
Building a Strong Business Constitution by
Cultivating New Mainstays for the Electronic Device
Business
In order to cultivate new core businesses that willcomplement photomasks, we intend to expand our LSI
design business and to develop and aggressively market
a wide range of products that use microfabrication andother printing techniques, including components for harddisk drives, semiconductor packages, and fuel cells, aswell as high-density build-up wiring boards and MEMS
products. We view the electronic module sector as aparticularly promising growth area where we intend toconcentrate management resources. In addition, we willbuild a ﬂexible and strong business constitution that is
not overly vulnerable to ﬂuctuations in the semiconductor
market. One way we will do this is by developing our IC
tag business in combination with application development.

65

Electronics

PORTRAITStrengths
■

■

■

■

■

■

World-class technologies backed by expertise inprinting: micro-processing, color management andpatterning techniques, photolithography, etc. Also,
the capacity to develop original new technologies
and products.
Quality control technology that allows DNP to provide
a high degree of precision and stable quality
Integrated systems and comprehensive
organizational strength that support a large capacity
for product development and manufacturing
Corporate expansion strategy that motivates DNP
to move ahead of competitors in areas like thedevelopment of unique, original technologies andaggressive capital investment in mass production of
cutting-edge products
Ability to create market trends by working proactively
with semiconductor manufacturers, device
manufacturers, research and development institutes,
etc.
Flexibility and comprehensive strength that enable
us to combine various assets and abilities to achieve
high productivity and greater functionality in our
products, enabling us to respond to rapidly changing
markets and diversifying customer demands

Electronic Devices
Operating Divisions
DNP’s Electronic Devices Operations got its start 50
years ago, in 1959. On the strength of our high-deﬁnition
patterning and etching technologies, we succeeded indeveloping photomasks, which are made by forming
high-deﬁnition semiconductor circuit patterns on a glass
substrate. In 1964, we succeeded in developing lead frames
used for manufacturing semiconductors. Since then, we
have been working closely with manufacturers in Japanand overseas in order to provide diverse types of productsthat are indispensable to electronic devices. In addition, we
take advantage of our strengths in areas like higher-density,
higher-functioning products that require micro-processing,such as buildup boards and MEMS products.

Industrial Trends
In 2008, worldwide economic recession led to a slump indemand for products like automobiles and mobile phones,
which had previously been driving the semiconductor
market. As a result, prices for DRAM, NAND ﬂash, and othermemory media plummeted, and the global semiconductor
market shrank by 2.8% from the previous year.
The business climate is expected to remain harsh in 2009,and it will likely take some time before a recovery is seen.
Market observers point out the possibility of an industry
reorganization, particularly among chip manufacturers.
Given this situation, most leading semiconductor
manufacturers are expected to further reduce the line
width of their circuits in order to remain competitive. Mass
production of 45nm and 32nm products is expected to begin
in 2009.
However, some manufacturers have given up on doing
their own development or production due to the large capital
investment required for reducing line width, and there isa growing trend toward commissioning development andproduction to foundries in Taiwan or Singapore.

Strategic Opportunities
Despite the signiﬁcant impact of worldwide economic
recession, the world’s major chip makers, along withfoundries in Taiwan and Singapore, are expected to moveahead with further miniaturization of circuit line widths.
In addition to an increase in 65nm products, demandfor cutting-edge 45nm products is expected to expand
signiﬁcantly. In the 32nm ﬁeld, a combination of ArF
immersion and double exposure has become a promising
candidate to be the next-generation photolithography
technique. We expect to see future opportunity as use of
ArF immersion scanners becomes more widespread anddemand grows for 32nm photomasks. Our responses tothe reorganization and consolidation of semiconductor
manufacturers and their increasing reliance on outsourcing
will be important for our continued success.

66

DNP Annual Report 2009 ＞ Segment Information ＞ Electronics ＞ Portrait

Display Components

Our Display Components Operations started out more than half a century ago, in 1958,
with the successful development of shadowmasks for CRT televisions. Since then, we
have continued to provide a variety of products that solve manufacturers’ problems as themarket evolves.
This business division currently develops and manufactures a wide variety of displayrelated products, starting with color ﬁlters for LC displays, and supplies products to worldclass manufacturers in Japan, South Korea, China, Taiwan, and elsewhere. In our color
ﬁlter business, we are increasingly integrating with customers’ production facilities throughin-plant, by-plant, or other cooperative arrangements. We are also actively engaged indevelopment of next-generation displays, including organic EL displays.

From the second half of 2008, the world market for LCD panels suddenly lost steam due
to manufacturers’ production adjustments. Partly due to worldwide economic recession
resulting from the recent ﬁnancial crash, it is highly likely that the overall market for ﬂat-panel
displays will remain sluggish for some time. In the medium and long terms, however, themarket is expected to continue growing thanks to factors like the digitalization of terrestrial
TV broadcasting and growth in demand sparked by lowered product prices.
Meanwhile, LC displays continue to diversify, for example to accommodate larger
or more mobile products. Now that large-scale models of LCD televisions are becoming
the mainstream, adoption of the inkjet production method has become crucial, as therelatively low costs of manufacturing startup and operation make it highly competitive.
Meanwhile, there is also demand for products that take advantage of the beneﬁts of thephotolithographic method, so it is more important than ever to increase our capacity fordeveloping and producing by both inkjet and photolithographic methods.
In the market for small and medium-sized LCDs, there is demand for better visibility, sothat smart phones and portable game machines can be seen clearly even out of doors,while wider viewing angles are sought for car navigation monitors. Products using organic
EL displays, which are considered to be the next generation of ﬂat-panel displays, arestarting to appear on the market. In the future, these products are expected to present toughcompetition for LCDs in terms of cost, faster response time that makes them better forviewing moving images, power consumption, and potential for production in larger formats.

In the LCD market, falling product prices and the high cost of investing in equipment
for making larger glass substrates pose important challenges to the panel makers who
are our customers. As color ﬁlter manufacturers, we expect that this situation willbring us more business opportunities as long as we maintain superior technology andcost competitiveness and establish a framework that enables us to respond ﬂexibly tocustomers.
In the future, the market for organic EL displays and other next-generation displays is
expected to grow. We intend to make the most of business opportunities related to nextgeneration displays, including supplying color ﬁlters and other components for organic EL
displays, and supplying modular panels. We also see opportunity in the growing market
for high added-value products such as polychrome ﬁlters that have a fourth color added tothe conventional RGB (red, green, blue) composition, thereby greatly expanding the rangeof colors that can be reproduced, and color ﬁlters that are integrated as a single unit withphase difference ﬁlm and a polarization plate.

67

Electronics

FINANCIAL RESULTS

Financial Highlights

Business Environment(¥ billion, %)2009.3¥

Net sales

256.0

2008.3¥2007.3322.3¥

Operating income

2.6

19.8

14.9

Operating income margin

1.0%

6.1%

5.1%

Net Sales

Operating Income(Net sales)
800(¥ billion)(Operating income)
120

100
600
80

400

60

322.3

291.9

256.0

200

14.9

40

19.8

20

2.6
0

0

07

68

291.9

08

09

Global output of products that use some of the segment’s
products grew less in 2008 than in 2007. LCD TV output
increased 27 million units in 2008 to 106 million, but the growthrate slowed from 75% in 2007 to 34%. PC output increased
10.9% to 302.2 million, but this growth rate was down slightly
from 13% in 2007. Mobile phone output exceeded 1 billion
units for the third straight year and totaled 1.18 billion units, but
again, the growth rate slowed from 12% to 3.5%. Output of
all three products was higher in 2008 than in 2007, but market
conditions worsened sharply in the second half of the ﬁscal
year. LCD products clearly slumped in October–December
2008, with total output of TVs, including LCD TVs, down 5%
year on year in the quarter and mobile phone output down
12.6%. The trend continued into 2009. In January–March, PC
output fell 7.1% and TV output declined 6%.

DNP Annual Report 2009 ＞ Segment Information ＞ Electronics ＞ Financial Results

Summary of Financial Results
Sales of LCD color ﬁlters were strong through the second
quarter but declined substantially for the full year as panel
manufacturers increasingly cut output starting in September
2008. DNP stopped producing back panels for plasma
display panels in December 2008, after panel manufacturers
decided to stop producing the panels. Sales of semiconductor
photomasks were lower than in the previous ﬁscal year
because demand from semiconductor manufacturers, whose
earnings seriously worsened, dropped off sharply.
Given this drastic deterioration in conditions, DNP has
tried to make itself structurally able to adapt quickly torapid changes in the order environment by consolidating its
manufacturing facilities and replacing its production lines,
mainly for color ﬁlters and photomasks. It took 48.7 billion yenof impairment losses on manufacturing ﬁxed assets, based on
estimates of future cash ﬂow.
As a result, the segment’s net sales fell 20.6%, or 66,337
million yen, from the previous year to 255,975 million yen.
Operating income worsened sharply starting in the third
quarter and declined 87.0%, or 17,241 million yen, from theprevious ﬁscal year to 2,577 million yen. The operating income
margin worsened by 5.1 percentage points to 1.0%.
The segment contributed 16.0% of DNP’s total net sales,
and 4.7% of its operating income.

■ Electronic Devices
Sales of photomasks slumped sharply, as earnings in thesemiconductor industry showed no signs of recovering, thedevelopment of new products was pushed back or suspended
in a number of cases, and demand and the average amount oforders declined throughout the year.
Among etched products, sales of lead frames were weak
but sales of suspensions and other hard drive materials
were strong through the second quarter. However, demand
dropped off sharply starting in the third quarter, as cutbacks
in corporate IT spending and declines in consumer spending
became notable.
Sales of high-density build-up circuit boards for increasingly
advanced mobile phones were solid through the second
quarter, thanks to strong market acceptance of DNP’sproprietary B2it technology* for making smaller, higher-density
printed circuit boards. Demand for mobile phone camera
modules, however, dropped off sharply starting around
November and declined substantially for the year.
*B2it technology is DNP’s proprietary technology for build-up circuitboard interlayer connections (through-hole connections) using bumps(conductive paste for electrically connecting layers) formed with screen
printing. It has broad applicability to component mounting and allows fordesign ﬂexibility because connections can be located anywhere in any
layer.

■ Display Components
Sales of color ﬁlters were strong up through the second
quarter, but then starting in the third quarter, production lines
for small and medium sizes up to the 8th generation sizes
were heavily affected, as panel manufacturers worldwide
increasingly cut output. In particular, Chinese and Taiwanesepanel manufacturers reduced output by as much as 70%
for extended periods. The average selling price was stablethrough the second quarter but ended up down 15% over theprevious ﬁscal year because weak demand led to increased
price pressures from the third quarter onward.

69

Electronics

TOPICS

Display Components（ mm ）

2,850

10th Generation■ World’s largest capacity for supplying large-scale color
ﬁltersIn recent years, the ﬂat-panel display market has continued
to grow. In particular, the market for LC displays is expected tocontinue to expand due to increased demand for use in devices
like personal computers and mobile communication terminals,
and to replace CRT televisions. As large-scale LC displays
become more popular, color ﬁlters are also growing in size, andwe need to increase the size of glass substrates in order to boost
production efﬁciency. Each side of an 8th- or 10th-generation
substrate measures more than 2m in length and only 0.7 mm
in thickness. High-precision mass production using such large,
thin glass sheets requires specialized technology to prevent
breakage. By establishing the necessary production expertiseand continuing to supply high-quality products, we have earned
the trust of our manufacturing clients. Furthermore, we have met
expanding market demand by strengthening cooperation with
LCD panel makers and boosting production capacity, mainly forlarge-scale color ﬁlters, in order to improve production efﬁciency
and create added value.
In August 2008, we began building a new 8th-generation LCD
color ﬁlter plant in Himeji, Hyogo Prefecture, adjacent to thesite where IPS Alpha Technology Ltd. (an LCD panel production
joint venture between Panasonic Corporation and Hitachi Ltd.)is constructing a new plant. DNP plans to start up its newplant in the summer of 2010. We are also building a new 10thgeneration color ﬁlter plant on the grounds of a factory that Sharp
Corporation is currently building in Sakai, Osaka Prefecture, withstart-up planned for autumn 2009. With the addition of these two
new plants, DNP aims to have the world's largest capacity forsupplying color ﬁlters for use in large-scale LCD panels.
Timeline of DNP’s Color Filter Business Development
1989
1994
2001 – 2004
20022005 – 2006
2006
2008
2009
2010

Started at Kuki Plant (1st generation)
Otone Plant (2nd – 4th generations)
Mihara Plant (4.5 – 5th generations)
Kurosaki Plant (3rd – 4.5th generations)
Kurosaki Plant (6th generation)
DNP Color Techno Kameyama Plant(8th generation)
Kurosaki Plant (8th generation)
Sakai Plant (10th generation)(scheduled)
Himeji Plant (8th generation) (scheduled)

8th generation LCD color ﬁlter

70

2,160

8th Generation
1,870

7th Generation

170 cm tall

1,500

6th Generation
1,100

5th Generation
730
550
370
300

4th Generation
3rd
Generation

400 470 650 920

1,300

1,800 2,200 2,400

3,050（ mm ）Note: Precise sizes vary by manufacturer.

Electronic Devices■ Increasing market share by developing thin, compact devices
Today’s market demands increasingly high performanceand thinner, more compact designs for digital equipment suchas mobile phones, notebook computers, digital cameras, andcar navigation systems. This translates into a rapid increasein demand for even smaller, thinner, denser semiconductor
packages. In order to meet this demand, DNP has been applying
its original technologies to the development of slim and compact
electronic devices, leading to the launch of two new products inJanuary 2009.
One of these products is the world’s thinnest printed wiringboard (PWB) with embedded components. This type of PWB,
with components like IC chips and condensers integrated as asingle unit, makes a major contribution to the miniaturization ofelectronic equipment. DNP is a leader in this ﬁeld – in April 2006
it became the ﬁrst to commence mass production of PWBs
embedded with passive components, producing more than 100
million of them by November 2008. By using DNP’s unique B2it
(B-Square-it) production technology and making improvements
to substrate and wiring materials, etc., DNP succeeded in making
its new PWB only 0.45 mm thick, or more than 30% thinner thanprevious products.
The other new product is a lead frame for the world’s
thinnest semiconductor package. Lead frames are made of thin
strips of metal used to extend the wiring of IC chips or othersemiconductor packages. Increasing miniaturization and density
have posed challenges for lead frame manufacturers. Whereas
in previous products the IC chip is mounted on top of the leadframe, DNP developed technology for embedding the IC chip
into a concave, etched bed, eliminating the mounting plate andleaving only as much wiring as is necessary. By making not only
the lead frame but also the IC chip and encapsulation resin as
thin as possible, DNP succeeded in creating a product that is
only 0.15 mm thick, or one twentieth of the thickness of typical
products already on the market. DNP already received a US
patent for this product in July 2008, and has a patent application
pending in Japan as well. We aim for 300 million yen in sales inthe year through March 2010.

DNP Annual Report 2009 ＞ Segment Information ＞ Electronics ＞ Topics

s 3TANDARD CONVENTIONALPRODUCTs 4HIN CONVENTIONALPRODUCT n MM THICK
Lead frame

IC chip

 n MM THICKs $.0S NEW PACKAGE
MM THICK

Bonding wire
Sealing resin

SolderPrinted board

Structure and relative thicknesses of semiconductor packages

Lead frames for new package■ Printing copper wiring patterns on a ﬁlm substrate
DNP and Micro Denshi Co., Ltd., a manufacturer ofmicrowave-related equipment, have co-developed a method of
printing wiring patterns containing copper onto standard plastic
substrates such as PET ﬁlm.
Diversiﬁcation of electronic devices has generated demand fora way to form electronic circuits on low-cost, ﬂexible substrates
like PET ﬁlm, and a technique using nanoparticles of silver has
already been developed. The disadvantages of silver are its highcost and the occurrence of insulation failures when the productis used for a long time. Copper is cheaper than silver, but it used
to require sintering for about one hour at a temperature above
300°C after wiring patterns were printed. DNP’s new technology
solves this problem by using microwave plasma irradiation tosinter nanoparticles of copper at a lower temperature, around
150°C, in less than a few minutes.
This new technology can be applied to displays and organic
solar batteries as well as electronic circuits. DNP aims tocommercialize it by 2011.

micro channel chips for use in medical diagnosis and research.
As a result of this collaboration, in July 2008, DNP enhanced its
product lineup by designing and developing a total of four new
micro channel chips. Micro channel chips consist of microscopic
channels formed on the surface of a substrate; because DNP
uses a silicon substrate that is harder than organic materials,
our products tend to maintain their shape and resist heat better
than competing products. The new product lineup includes achip that can form uniform micrometer-sized droplets of an oilwater emulsion and a chip that can extract single micro-dropletsof liquid, functions that can be applied to the development or
manufacture of pharmaceutical or chemical products, or tofunctional analysis of cells or proteins. Manufacturing the chips
with the same localized anti-pollution technology that is used insemiconductor manufacture makes it possible to achieve highyields even when producing large-size chips, and allows us to
supply chips at lower prices than was previously possible.
Going forward, DNP intends to devote a good deal of energy
to the development of MEMS and increase our share of thispromising market.

MEMS product

MEMS Operations■ Active development of micro-channel chips and other
MEMS for use in biotech, medical, and chemical ﬁelds
DNP has been developing Micro Electro Mechanical System(MEMS) by making use of the ultra micro processing and silicon
deep etching technologies that it cultivated in the course of
manufacturing photo masks for semiconductors. In 2001 webegan offering MEMS prototype services, and in 2007 we
successfully completed a MEMS dedicated mass production
development line for six-inch and eight-inch wafers, allowing us
to now provide comprehensive service covering every step fromplanning and prototyping to mass production. DNP is Japan’s
only MEMS foundry that does not produce its own products,
allowing us to maintain a neutral position that is a signiﬁcantadvantage as we promote our MEMS business.
DNP has been working with the research group of Associate
Professor Shoji Takeuchi of the University of Tokyo to develop

71

DNP Annual Report 2009 ＞ Sustainable Development

Sustainable Development

CONTENTS
74 Legal Compliance and Corporate Ethics
76 Information Security and Protection of
Personal Information
78 Managing Intellectual Property
79 Research and Development
80 Product Safety
80 DNP’s Approach to Universal Design
81 Creating Lively Workplaces
82 Environmental Protection
84 Contributing to Society73

Legal Compliance and Corporate Ethics

In Order to Remain a Company of Integrity
To ensure that we remain a company of integrity that istrusted by society and capable of contributing to society,
the DNP Group takes pains to thoroughly imbue employeeswith an understanding of corporate ethics and to maintainstrict legal and ethical compliance throughout its corporate
activities.
We can characterize DNP’s activities aimed atmaintaining corporate ethics with the following threewords: continuity, independence, and positivity.

Efforts to Ensure Compliance with Laws andCorporate Ethics
1991

Initiated corporate ethics training

1992

Established Corporate Ethics Committee and enacted
the Dai Nippon Printing Group Corporate Pledge

1993
1994

Established the DNP Group Employee Code of Conduct
Established corporate ethics committees at each Group
company

1997

Introduced a self-checking system

1998

Revised the DNP Group Employee Code of Conduct

1999

Began holding conferences of corporate ethics
committee secretaries-Continuity:

integration into daily operations;continuous action on a daily basis-Independence: active efforts with the awareness that
ethics are each employee’s personal
concern, not just something forsomebody else to worry about-Positivity:
taking a positive approach with theawareness that corporate ethics
activities are essential if the company is
to win society’s trust

2002

By having each and every DNP employee act inaccordance with these three ideas, the DNP Group
maintains its commitment to the entire Group’s
participation in ethical corporate activities.

2008

Revised the Dai Nippon Printing Group Corporate
Pledge; established the Open Door Room

2003

Introduced voluntary corporate ethics training

2004

Introduced priority execution plans

2005

Initiated our Compliance Assessment System; launcheda project team to consider internal controls

2006

Established Basic Compliance Management Regulations
and Open Door Room Regulations

2007

Reviewed the Dai Nippon Printing Group Corporate
Pledge and the Employee Code of Conduct; establishedthe “DNP Group Code of Conduct

74

Introduced voluntary corporate ethics training at Group
companies overseas

DNP Annual Report 2009 ＞ Sustainable Development ＞ Legal Compliance and Corporate Ethics

Corporate Ethics Committees

Corporate Ethics Training

Framework for promoting ethics within the DNP GroupThe DNP Group Corporate Ethics Committee wasestablished in 1992 as a framework for ﬁrmly establishingcorporate ethics throughout the DNP Group. It is composedof executive ofﬁcers in charge of the various divisions of
the head ofﬁce. In addition, each operating unit has its
own corporate ethics committee, and each committee has
a secretariat. The committees promote the Group-wide
pursuit of ethical corporate behavior.

We believe that a high degree of awareness and correctunderstanding of corporate ethics on the part of each andevery employee is what maximizes the success of ourcorporate ethics initiatives. Based on that belief, we create
various educational opportunities for employees in order toexplain to every employee the importance of corporate ethics
and encourage every employee to develop habits of thinking
independently and acting responsibly.

Management-by-Objective Evaluation System
Making ethical behavior a daily habit for each employee
We believe that active participation by each and every
employee is crucial to the ﬁrm establishment of habits of ethicalbehavior throughout the DNP Group. Therefore, we included
compliance with corporate ethics as an evaluation item in ourManagement–by–Objective evaluation system.

Self-checking of Compliance with Laws and Regulations
In 1997, DNP introduced a self-checking system to make surethat corporate activities comply with laws and regulations. We
explained the idea to employees using the slogan, “We needto safeguard our organization.” Each operating unit performs its
own inspection and evaluation and makes active improvements
based on checklists drawn up by various divisions of the headofﬁce.

The DNP Group’s “Open Door Room” forConsultation and Reporting of Ethical Concerns
DNP established its Open Door Room in 2002 as a placefor employees to turn when they have questions or concerns
related to corporate ethics. Later, we adopted the “DNP Group
Open Door Room Regulations” as part of our framework forenabling employees to consult about or report ethical concerns
without fear of negative consequences. We worked to ensurethat all employees know about the system, so that it now
functions as a vital part of our internal controls framework.

Framework for Establishing Corporate Ethics andTransparency
Head office
Corporate Ethics Committee of each department athead officeOpen Door RoomManagement-by-Objective and Evaluation System

Compliance Assessment System
To complement the self-checking system under which each
operating unit performs its own checks, in 2005 we initiatedour Compliance Assessment System under which the Lead
Department of the head ofﬁce evaluates each unit’s degree ofcompliance twice a year according to a single standard applied tothe entire Group.
This system allows objective assessment of each unit’s
compliance level, both in absolute terms and relative to the restof the Group. Assessment results are reported to the Executive
Committee. Each unit is informed of its achievements relative tothe whole Group, and sets about making improvements.

Compliance Assessment System
Corporate Ethics Training(1) Regular training by employee level(2) Voluntary corporate ethics training(3) Training about a particular theme

Inspection, guidance,
education

ReportingOperational divisions
Corporate Ethics Committee of each operational
division or Group company
Management-by-Objective and Evaluation System
Self-checking ofcompliance with laws
and regulations

Plan

Do

ActionCheck

Corporate Ethics Training(1) Regular training by employee level(2) Voluntary corporate ethics training

75

Information Security and Protection of
Personal Information

In the course of promoting P&I Solutions, we believe
we have an inherent responsibility to protect information
assets, including personal information and other informationthat customers entrust us with. The DNP Group views
information security and protection of personal information
as one of our highest priority management tasks. We
intend to continue maintaining rigorous control over
information by reinforcing relevant systems and educating
our employees.

Protection of Personal Information
Personal Information Protection Policies
A variety of companies and organizations entrust DNP withpersonal information so that we can help them provide all typesof services and products for consumers. In addition, we havedeveloped various types of services and products that makeeffective use of personal information in businesses that DNP
operates itself. Through these various businesses, we havebecome well aware of the importance of personal information

Maintaining Information Security into the Future
DNP handles information appropriately and protects theinterests of individuals in accordance with its Personal
Information Protection Policies. In the future, we will strive
to continue maintaining frameworks for the thoroughprotection of personal information and the strictest control
over all aspects of information security. Furthermore, wewill trim our work force and boost efﬁciency in workplaces
that make use of IT by having all employees participate
in PDCA (plan-do-check-act) cycles entailing the drafting
and implementation of security management policies andidentiﬁcation of problems. We will also make use of our
security-related expertise and technologies when providing
security solutions to DNP's corporate customers.

and it is obvious to us that we are obligated to 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,
and other regulations related to personal information
protection; strive to protect personal data.
2. Take necessary and appropriate safety precautions to prevent
leakage, loss or destruction of personal data. In the event thata problem should occur, take prompt measures to correct thesituation.
3. Specify reasons for using personal information; acquire, use
and provide personal information in fair and appropriate ways.
Take measures to prevent personal information from being
used for any purpose other than the speciﬁc purpose forwhich it was acquired.
4. Respond appropriately to a request for disclosure fromsomeone whose own personal information is being held by
the Company.
5. When the performance of services on behalf of a clientcompany involves the handling of personal information,
use the information only within the scope of the requested
services.
6. Establish in-house regulations concerning the handlingof personal information; build, maintain and continuously
improve related systems.
7. Respond appropriately to complaints or questions fromsomeone whose personal information is being held by theCompany regarding DNP’s handling of personal informationor our systems for protecting personal information.
Established December 1, 1999
Revised February 1, 2005 and December 1, 2006

Dai Nippon Printing Co., Ltd.
President

76

Yoshitoshi Kitajima

DNP Annual Report 2009 ＞ Sustainable Development ＞ Information Security and Protection of Personal Information

Group-wide Information Security Framework
1. Establishing systems
Ever since we established the Personal Information Protection
Ofﬁce in April 1999, it has been responding to changes in ourinternal and external environments and working to increase theeffectiveness of our personal information protection measures.
Our current Group-wide structure is as follows: the DNP Group
Information Security Committee at our head ofﬁce supervises theInformation Security Headquarters, which inspects and guides
business units and Group companies. In addition, each of thebusiness units and Group companies that conduct DNP’s daily
business has an information security committee. The heads ofeach of these committees, along with personal information security
managers, designate people to be responsible for implementing
each area of information security, including education, security
zones measures, and information system management.
They designate others to be responsible for checking that
implementation remains thorough.
Framework for Promoting Information Security
Head Office
DNP Group Information Security Committee Chief, Personal
Information Protection Manager, Committee members
Information Security Headquarters

Business Units and Group Companies
Information Security Committee Chief, Personal Information
Protection Manager, Committee members (General Manager ofdivision or president of Group company)
Person responsible for auditing and inspection
Information Security Promotion Office Manager
Information Security Manager
Person responsible for education
Person responsible for security area measures
Person responsible for public relations measures
Person responsible for information system measures

2. Establishing in-house rules and regulations
In addition to personal information protection regulations(established in 1999 and revised in 2006), DNP has establishedGroup-wide rules with speciﬁc benchmarks. In 2002, we reviewed
all of our regulations that address information security and adopted
a new system based on our Basic Policy on Information Security(adopted 2002) and Basic Regulations Regarding Information
Security (established 2002, revised 2005), which address sevenareas of information security, such as document management,
computer access, and zones that are closed to outsiders.

3. Establishment of information protection management
systems
At all workplaces that handle personal information, weare promoting the establishment of management systems
based on Japanese Industrial Standards’ Personal Information
Protection Management System – Requirements (JISQ15001)
in addition to strict adherence to legal requirements. We are also
actively pursuing acquisition of PrivacyMark and ISO/IEC27001
certiﬁcation.

Educational Measures
DNP makes each and every employee aware of the need for
information security by providing education and training throughsuch means as pamphlets, group training sessions, and Network
Learning online education programs.

Physical Means of Protecting Information
During the ﬁscal year through March 2009, we introduced
security gate systems using smart employee ID cards at 19 newlocations, bringing the total number of locations, including salesofﬁces, where we have introduced such systems to 107. In theﬁscal year through March 2010, we plan to start phasing in the useof Japan’s ﬁrst forklift entry control system, which we developed
jointly with Mitsubishi Electric Corp., in order to improve security
systems at production sites.

Technological Measures
1. Measures taken in areas that handle personal information
Measures we have taken include preventing intrusion byoutsiders through the introduction of biometric authentication tocontrol data processing room entry and exit, installing security
cameras to discourage illicit acts, having employees wear
pocketless uniforms to prevent the removal of data or otherproperty, separating locations where data can be copied torecording media, and conducting inspections with metal detectors.
2. Safe transfer of information
DNP uses its original “Gendarme” authentication for receiving
personal information from customers securely online. We
authenticate two-way exchanges between DNP and customers byusing electronic certiﬁcates recorded on smart cards.

77

Managing Intellectual Property

Framework for Promoting IP Rights

IP Activities

DNP’s intellectual property (IP) protection framework consistsof four sections. The Patented Technology Section addresses IP
issues related to DNP’s main business segments (Information
Communication, Lifestyle and Industrial Supplies, and Electronics)
and basic research; the Legal and Licensing Section handles
contracts and provides legal support related to IP; the KansaiIntellectual Property Section handles IP issues for Kansai and therest of western Japan, and the Management Section proposes
IP strategy and operates DNP’s patent information management

In order to succeed as a provider of P&I Solutions, we createand develop intellectual property with solid commercial value, andwork at further enhancing the quality of our IP assets. In addition
to acquiring and protecting patents and other forms of intellectual
property, we take preventative measures to ensure that we don’t
infringe on the IP rights of others.
We educate our employees about intellectual property in orderto make compliance with intellectual property laws part of thecorporate culture that we foster, in addition to establishing a system
for supporting compliance.
Furthermore, we remain aware of costs and the importance of
cost effectiveness as we acquire rights, build our network of rights,
and strive to maximize DNP’s portfolio of its own patent rights.

system.

IP Management Framework

Information Communication

Lifestyle and Industrial Supplies

Electronics(1) Discover and acquire rights for patents, utility models, and designs (2) Promote use of IP in business activities (3)Handle IP-related issues (patents, utility models, designs, etc.) that arise in the course of doing business; support
business activities through patent research, handling of other companies’ patents, etc. (4) Public relations related topatents, etc.

Basic ResearchProtect and make use of innovations that resulted from research and development activities(1) Support creation of IP in line with our R&D strategy (2) Support creation of R&D patent portfolios(3) Educate employees about R&D-related IP issues

Legal and Licensing Section(1) Handle IP-related contracts (draft, review, etc.) (2) Support all types of business activities related to IP, such as
trademarks, copyrights, prevention of unfair competition, Premiums and Representation Law, etc. (3) Apply for
trademarks, acquire and manage rights, research other companies’ rights (4) Consult, negotiate, handle disputes
related to every aspect of IP

Kansai Intellectual Property Section
Handle functions of both Patented Technology Section and Legal and Licensing Section for western Japan

Management Section(1) Propose IP strategies (2) Operate patent research systems and patent management systems, maintaininfrastructure that supports research and development activities (3) Run clerical operations related to IP

78

Intellectual Property Section

Patented Technology Section

In-house attorneys
Technology Development Center
Research and Development Center
Information Media Supplies Laboratory
Electronic Module Development Center
Nano Science Research Center
Business units

DNP Annual Report 2009 ＞ Sustainable Development ＞ Managing Intellectual Property / Research and Development

Research and Development

An R&D Framework that Increases DNP’s
Contribution to Emergently Evolving Society

Research and Development
DNP aims to solve problems faced by corporate customers
and consumers and create new value by combining the printing
technologies (PT) and information technologies (IT) that we havecultivated over the course of many years.
Amid major changes in market trends and technology, we
aim to justify our customers’ faith in us by developing originaltechnologies, primarily through our Research and Development
section, by generating new “solution seeds,” and by providing
more sophisticated solutions.

Research and Development Framework
DNP's research and development section is built around the ideaof developing "solutions seeds" through research into a wide variety
of ﬁelds and fostering the growth of those seeds into commercial
products.
Our research and development facilities work closely with eachbusiness ﬁeld and direct their activities toward creating new value.
Our main research and development facilities are: DNP Researchand Development Center, Nano Science Research Center, Media
Technology Research Center, Electronic Module Development
Center, Technology Development Center, and laboratories for eachﬁeld of business (Packaging, Industrial Supplies, Lifestyle Materials,
Opto-Materials, Information Media Supplies, Display Components,
and Electronic Devices).

Controlled by Head Office
Development
supportProduction
technologies;
equipment
development

Controlled by Business Units

Corporate R&D Division

Technology Development Center

Improvement of existing products and technologies/
Development of products and technologies
for the division

R&D for new products
and technologies

Books and Magazines
Commercial Printing

Information Media Supplies
Display Components
Electronic Devices

Electronics

Media Technology Research Center

Opto-Materials

Nano Science Research Center

Lifestyle Materials

Lifestyle andIndustrial Supplies

Electronic Module Development Center

Packaging
Industrial Supplies

Research and Development Center

IPS/Business Forms

Technical section of each operations

Information
Communication

Packaging Laboratory
Advanced Industrial Supplies Laboratory
Lifestyle Materials Laboratory
Opto-Materials Laboratory
Information Media Supplies Laboratory
Display Components Laboratory
Electronic Devices Laboratory

Energy Systems
Commercialization projects

New Business Fields

Functions and Time Frames of R&D Facilities
R&D facility

Function

Head Office
Research Centers

Conducts research and development related to new products and new production processes

Electronic Module Development Center

Develops technologies, products and services related to electronic modules

Nano Science Research Center

Conducts basic, applied, and commercial-level research and development related to materials andprocesses; analyzes products

Media Technology Research Center

Researches and develops core technologies for the information communication field; develops
and refines technologies, products, and services

Technology Development Center

Researches and develops production technologies

Packaging Laboratory

Develops packaging materials technologies, and freshness preservation technologies

Industrial Materials Laboratory

Researches and develops industrial materials

Lifestyle Materials Laboratory

Develops surface materials for interior and exterior building décor

Opto-Materials Research Center

Researches and develops optical materials

Information Media Supplies Laboratory

Researches and develops all kinds of information media

Display Components Laboratory

Researches and develops all kinds of display devices and components

Electronic Devices Laboratory

Conducts research and development related to cutting-edge photomasks, mounting
components and LSI design

Development term

Medium to long term(less than five years)

Medium term(less than three years)
New Product Development

Business Unit Laboratories

Research and Development Center

Short term(less than one year)79

Product Safety

DNP’s Approach to
Universal Design

DNP views product safety as one of its top priorities. We
created a single product liability management system that isshared by the entire DNP Group, and we all work together tomake sure our products are safe.

Rather than assign responsibility for universal design only to a few individuals,
DNP believes it is important to have all employees address universal design intheir everyday work. In the ﬁscal year ended March 2009, in addition to continuing
to incorporate universal design in our products and services, we issued a “DNP
Group Universal Design Declaration” that applies to all of our business ﬁelds, inorder to accelerate our efforts in this area. We also promoted educational activities
and relations with outside organizations in order to increase understanding ofuniversal design.

Product Safety Management System
It goes without saying that our products must meet all
relevant legal and regulatory standards. Our basic policy is to
fulﬁll our corporate social responsibilities by offering productsthat exceed customers’ needs and expectations regarding
product safety.
We implement the following measures in line with this basic
policy.
1. Achieving product safety is a top priority in the course of ourwork.
2. Before marketing a new product, we conduct adequate safetyassessment.
3. We strive to gather safety-related information from consumers
and customers.
4. In the event that an accident involving a product occurs, we willtake prompt and appropriate action to prevent damage fromspreading, for example by gathering information, reporting
to authorities within and outside the Group, or recalling the
product.

Securing Even Greater Safety
Efforts to maintain product safety must be continual. Twiceeach year, we conduct regularly scheduled examinations of ourmechanisms for securing product safety and risk assessmentson all of our products. Based on our ﬁndings, we make designchanges, improve manufacturing processes, and review ourvarious systems in order to ensure an even greater degree ofsafety.
In addition to observing domestic laws governing the handlingof chemical substances used in our products, we also strive tocomply with other countries’ regulations such as the Stockholm
Convention on Persistent Organic Pollutants (POPs), theUnited States’s Toxic Substances Control Act (TSCA), and theEuropean Union’s new REACH regulation concerning chemicals
and their safe use, which took effect in 2007.
Additionally, we have been conducting product liability training
since 1994, before Japan’s Product Liability Law took effect.
We also opened up our “Network Learning” computer-based
individualized training program to rank-and-ﬁle employees fromthe ﬁscal year ended March 2001, and we have been using it toeducate employees about product safety.

80

Universal Design in Business Operations
To date, DNP has promoted universal design primarily in our packaging business.
In addition to a package’s basic functions of holding contents and providing
information, we must also think about making it easy for elderly or handicappedcustomers to recognize and use. In the ﬁscal year ended March 2009, weenhanced our product evaluation function in order to help improve product quality
from the standpoint of universal design.

Communicating DNP’s Commitment through Our “Universal
Design Declaration”
In October 2008, the head of our Universal Design Promotion Committee
unveiled the “DNP Group Universal Design Declaration” to help stakeholders
understand DNP’s approach to universal design. The declaration expresses ourintent to respond to the needs of both corporate clients and consumers, centeringon the commitment we have had since our founding to providing beautiful texts
that anyone can read and to making products that every consumer can use easily,
safely, and with peace of mind. Along with DNP’s Five Universal Design Rules,*1
the Declaration serves as a guideline for employees’ universal design practice.

Reaching a Large Number of People through Network
Learning and a Website Dedicated to Universal Design
In order to promote in-house understanding of universal design and instill
its practice, we offer an online “Introduction to Universal Design” course that
explains basic principles of universal design and provides information about DNP’sproducts.
For the public, we created a sub-site*2 of our Group website dedicated to
explaining our approach to and practice of universal design. Our Universal Design
Declaration and examples of DNP products based on universal design are
published on the sub-site. We also showed our UD products at various industry
exhibitions, including the Tokyo International Packaging Exhibition (“Tokyo Pack”)
held in October 2008.
*1 DNP’s Five Universal Design Rules (adopted in 2007, published in 2008)
Rule 1: Make it easy to understand: information should be expressed in ways that are appropriate from thestandpoint of the intended recipients
Rule 2: Make it intuitive:
it should be easy to see how to use a product; design them to be usable
based on intuition
Rule 3: Make it flexible:
make products amenable to various users and modes of use
Rule 4: Make it safe:
products should present no danger even if used incorrectly
Rule 5: Make it easy:
make products that can be used comfortably and require little strength*2 For more information, please see our website: http://www.dnp.co.jp/ud/

DNP Annual Report 2009 ＞ Sustainable Development ＞ Product Safety / DNP’s Approach to Universal Design / Creating Lively Workplaces

Creating Lively Workplaces

Human Resource Policies
Each DNP Group employee acquires specialized knowledge and skills and acts independently according to our Code of Conduct – whichcenters around the practice of taiwa cited in the DNP Group’s “21st Century Vision” – and according to Guideing Principle and the DNPGroup Code for Conduct, in order to realize both our business vision and his or her own potential for growth.
DNP creates the best possible environments, mechanisms, and organizations in order to cultivate an emergently evolving corporate
culture that supports each employee as an autonomous individual in fulﬁlling his or her role as well as possible and achieving growth and selfdevelopment.

Transparent and Fair Hiring Practices
We provide equal opportunities to anyone who shares our corporate vision and wants to work with us to realize his or her potential, and weuse fair and equitable methods of selecting and hiring employees. We also participate actively in internship programs.
Types of hiring

Description

Results

New hiring

We inform candidates of the type of person we are looking for, the steps in our hiring process, thetiming of each step, and what we are looking for in each interview. In order to avoid mismatches, weassign young employees as recruiting partners to give candidates a real-life picture of our company.

Number of hirees in the fiscal year through March 2010 (parent company)
Clerical:187 (122 men, 65 women)
Technical:
241 (183 men, 58 women)

Mid-career hiring

We advertise broadly via the Internet, with no age restrictions.
Include clear and specific job descriptions in advertisements.

Number of hirees in the fiscal year through March 2009 (parent company)
31

Internships (arranged jointly withGroup companies)

Respond to schools’ and students’ desires for real-world experience by providing opportunities to gain
work experience. These internships are not directly connected to hiring.

Accepted for August-September 2008
43 themes, 85 interns

Support for the Nurturing of Future Generations
SystemDescription

Results

Childcare leave•Until April 30 of the child’s second year, or until a child is 18 months old•Up to twice per child, within the period in which childcare leave is allowed

In the year ended March 2009: 109 employees took leave under thissystem (Dai Nippon Printing Co., Ltd.)

Support program for employees
returning to the workplace afterchildcare leave

A system aimed at creating environments that allow employees to feel secure about taking leave toaccommodate birth and childcare, to smoothly return to the workplace, and to make the most of theirpotential while working and raising a family

As of March 2009, there were 125 people registered with our online“wiwiw” program (Dai Nippon Printing Co., Ltd.)As of January 2009, the “Kangaroo Club” had 56 members in Tokyo,
including 12 men, and 8 members in Osaka“Rework” program

Under certain conditions, we rehire former employees who were forced to quit work in order to takecare of a child or other family member and later, when their life circumstances have changed, wish to
return to the workplace to make use of their experience.

As of March 2009, 80 former employees were registered for this program.
In the fiscal year ended March 2009, no employees were rehired under
the program.

Programs for Supporting Career Advancement
SystemDescription

Open recruiting system

We advertise positions requiring specialized knowledge and positions in new businesses or new product In the year ended March 2009: Number of positions offered: 90
development. Anyone with ability, experience and the desire to be challenged is free to apply.
Number of employees reassigned: 40

Results

In-house venture system

The goal is to match business divisions that need human resources with employees who want todevelop their potential.
We provide training, financing and other types of support for employees who have entrepreneurial
aspirations and want to start an independent new business. Generally, we appoint the person who
proposed the idea for a new company to be its president.

In the year ended March 2009: we supported 1 in-house venture: My
Earth Projects LLC

Certification support programThis program pays incentives to employees who successfully take on the challenge of acquiring
specialized knowledge, skills, or qualifications required for their work. (covers about 90 types ofcertification, up to 100,000 yen).

Increased the number of employees who are certified for specialized
knowledge or skills related to IT or other areas pertinent to their work
745 employees (including 362 from Dai Nippon Printing Co., Ltd. certified in
the year ended March 2009

Mastership recognition programThis program designates craftsmen with valuable production skills as “Meisters.” The system recognizes 2 employees recognized in the year ended March 2009
the importance of returning to our manufacturing roots and passing on skills to future generations. It
A total of 49 employees recognized as of March 2009
develops, evaluates, and rewards people who have such skills. Meisters are responsible for passing on
their outstanding skills not only within their own business division, but throughout the DNP Group.

Special skills recognition program Employees with advanced specialties, whose talents are recognized particularly widely both inside thecompany and outside, receive special compensation.

• Senior researcher/Senior planner: No employee recognized in the year
ended March 2009
As of March 2009, 16 employees had been recognized• Fellowships: No employee designated in the year ended March 2009.
As of March 2009, 1 employee had been recognized.

Self-reporting system

In the year ended March 2009: 302 employees
participated in self report interviews; 112 of them changed positions

We survey employees regarding their desire to change positions or workplaces in order to further theircareers, and regarding any other requests they may have related to their life plans. When the company
approves such a request, the employee is transferred to the desired position or workplace.

In-house “Study Abroad” program We allow employees who want to acquire more knowledge or skills related to their job to experience
working in a different section of the company for a limited time, after which the employees return totheir original positions.

In the year ended March 2009, 1 employee took advantage of thissystem.

81

Environmental Protection

The DNP Group helps make sustainable society a reality by developing products that put the least possible strain on
the environment, and by working to generate demand for such products from environmentally aware businesses andconsumers. In 1972, DNP became the ﬁrst Japanese printing company to establish an environment department, and in 1993
we built DNP Group’s unique environment management system (EMS). In 2000, we created the DNP Group Environmental
Committee, which has worked proactively at such tasks as preventing global warming, reducing emission of harmful
substances, reducing industrial wastes, and promoting sales of eco-friendly products.

DNP Group Environmental Policy

It goes without saying that we must observe environmental
laws and regulations if we are to build a recycling-oriented society
and continue developing economic society in a world with limited
resources. In addition, we remain aware of our relationship withthe environment in our various business activities and work hardat minimizing negative impact on the environment.
1. All DNP Group companies have environmental policies, setgoals and objectives, conduct regular reviews, continuously
improve, and strive to prevent pollution.
2. Before we build buildings or develop or install equipment,
we study, predict, and assess the probable impact on
the environment and give appropriate consideration toenvironmental protection. Also, we do our best to reuse wasteenergy and materials whenever possible.
3. When we research, develop, or plan products, we consider
the impact on the environment of every phase from material
procurement through production, distribution, use, and disposal,
giving particular attention to minimizing energy consumption
and the use of resources and harmful substances.
4. When purchasing raw materials, ofﬁce supplies, or equipment,
we choose products that help protect natural resources and areeasy to recycle.
5. When manufacturing products, it is a given that we observe
environmental laws and regulations, but we don’t stop there.
In addition to reducing output of substances that pollute theair, water, or soil, we are also very careful not to cause badodors, noise, vibration, or ground subsidence. We improve
our equipment, technology, and production processes in orderto prevent global warming, conserve resources, and reduce
industrial wastes.
6. We sort and collect waste materials produced through ourbusiness activities and recycle as much as possible to meet ourgoal of zero emissions.

82

Development and Sales of Eco-friendly Products
In order to minimize pressure on the environment
throughout each product’s lifecycle, the DNP Group has
adopted guidelines for developing and selling products thatare eco-friendly from the design stage. In order to realize asustainable society, we provide solutions tailored to eachbusiness ﬁeld for minimizing products’ environmental
impact.
In the year ended March 2009, our sales ofenvironmentally friendly products amounted to 308.1 billion
yen, compared to 315.4 billion yen the previous year. We
enjoyed increased sales of cards made of PET-G (which
does not contain vinyl chloride), and printed materials madefrom paper that is certiﬁed by the Forest StewardshipCouncil (FSC) as being derived from forests underecologically sound management.

DNP Annual Report 2009 ＞ Sustainable Development ＞ Environmental Protection

Assessment of Past Performance and Future Goals
Related to Environmental Protection
Based on our environmental policies, DNP has established environment-related goals that are appropriate for ourbusiness activities, and we have been steadily achieving these goals. The table below shows the goals that the DNP Group
Environment Committee adopted for the ﬁscal year ended March 2009, along with actual results.

Category

Goals

Global warming
prevention

Reduce greenhouse gas emissions by 10% from the year ended March 2006 level (by the year Compared to the year ended March 2006: down
through March 2021)
5.3% (Achieved)
Reduce carbon dioxide emissions (CO2 emissions volume/production volume) by 15% fromthe year ended March 1991 level (by the year through March 2011)

Reduce amount of fuel used for transportation and speciﬁc consumption by 1% each year;
Reduction ofenvironmental damage reduce fuel consumption in ﬁscal year through March 2011 by 4% from ﬁscal year ended
March 2007
from transportation
Volatile organic
compounds (VOCs)

Reduce amount of VOCs released into atmosphere group-wide by 70% from the year ended
March 2003 level (by the year through March 2009)

Reduction of industrial Reduce industrial waste output (volume of industrial waste/production value) by 50%
compared to the year ended March 2001 level (by the year through March 2011)
waste

Achievements

Compared to the year ended March 1991: up
2.0%
Compared to the year ended March 2007: down
14.4% (Achieved)
Compared to the year ended March 2003: down
50.4%
Compared to the year ended March 2001: down
46.8% (Achieved)

Reduce generation of general waste by 3% each year at all workspaces: reduce by 35%
compared to the year ended March 2001 (by the year through March 2011)

Compared to the year ended March 2001: down
24.3%

Achieve recycling rate (volume of waste recycled/total volume of general waste generated) of
98% by processing waste from main raw materials (by the year through March 2011)

Recycling rate in the year ended March 2009:
99.8% of paper and 99.3% of waste metals(Achieved); 95.9% of plastic waste and 65.1% ofglass waste

Achieve zero emissions throughout the DNP Group (by the year ended through 2011)

Final disposal site usage rate in the year ended
March 2009: 1.3% (Achieved)

Development andsale of eco-friendly
products

Increase net sales of eco-friendly products by 10% over previous year, to reach 300 billion yen(by the year ended through 2011)

Net sales of eco-friendly products in the year
ended March 2009: 308.1 billion yen (Achieved)

Green purchasing

Increase the ratio of “green” (per standards set by DNP purchasing headquarters) raw
materials costs relative to the cost of all raw materials purchased to 40% (by the year throughMarch 2011)

Green raw materials costs relative to the costof all raw materials purchased in the year ended
March 2009: 42.5% (Achieved)

Increase ratio of amount spent on products that are ofﬁcially recognized as being
environmentally friendly (Eco-mark products, etc.) relative to total amount spent for general
supplies (ofﬁce supplies and equipment, etc.) to 50% (by the year through March 2011)

Percentage of green materials and supplies
purchased in the year ended March 2009: 48.2%(Achieved)

Keep maximum concentration of gases subject to atmospheric emissions regulations to within
70% of legal limit

Achievement rate in the year ended March 2009:(relative to DNP’s own standard): 93% (Achieved)

Keep maximum concentration of substances subject to wastewater regulations to within 70%
of legal limit

Achievement rate in the year ended March 2009:(relative to DNP’s own standard): 93% (Achieved)

Keep maximum odor levels at production site boundaries within 70% of legal limit

Achievement rate in the year ended March 2009:(relative to DNP’s own standard): 93% (Achieved)

Keep maximum noise levels at production site boundaries within 95% of legal limit

Achievement rate in the year ended March 2009:(relative to DNP’s own standard): 65%

Keep maximum vibration levels at production site boundaries within 95% of legal limit

Achievement rate in the year ended March
2009: (relative to DNP’s own standard): 100%
(Achieved)

Ofﬁce environment

Collect at least 70% of used paper relative to general waste (every year)

Percentage of used paper sorted and collected in
the year ended March 2009: 73.1% (Achieved)

Environmental
management
systemConduct environmental audits at all workplaces

Conducted at all workplaces in the year ended
March 2009 (Achieved)

Environmental
preservation

83

Contributing to Society

Printing is based on the art of making reproductions, which DNP sees as a new kind of creative technology that can contributeto the development of art and culture. DNP is engaged in highly original cultural activities centered around supporting graphic arts.
Graphic design and graphic arts centers

Ginza Graphic Gallery (ggg)
URL http://www.dnp.co.jp/gallery/
ggg/

Ginza Graphic Gallery (ggg), ddd
Gallery, Center for Contemporary
Graphic Art (CCGA)In March 1986, DNP opened Japan’s ﬁrst gallery specializing
in graphic design, “ggg” or Ginza Graphic Gallery. Every monthfor more than 20 years, the gallery has held original exhibitions
introducing outstanding works and artists from Japan and abroad.
In 1991, DNP opened ddd Gallery in Osaka and in 1995, it opened
the Center for Contemporary Graphic Art (CCGA) in Sukagawa,
Fukushima Prefecture. In the ﬁscal year ended March 2009,
the three centers received a total of 82,500 visitors. From their
inception, they were visited by almost 1.25 million people.
ggg and ddd also host lectures by artists whose work they
exhibit. Students and working people listen eagerly to the words ofdesigners and art directors who work on the front lines of the graphic
arts world.
In order to make these kinds of activities more accessible tothe public and to secure their continuity, DNP established the
DNP Foundation for Cultural Promotion in July 2007, as part of
the Company’s 130th anniversary celebrations. Going forward,
in addition to continuing traditional exhibitions, DNP plans tofurther enhance its contribution to the arts through projects suchas archiving, educational and publicity activities, international
exchange, and support for research.

Opened in 1986
Number of exhibitions held: 12
Annual number of visitors: 65,000
Aggregate number of visitors: 936,000

ddd Gallery
URL: www.dnp.co.jp/gallery/ddd/
Opened in 1991
Number of exhibitions held: 8
Annual number of visitors: 15,000
Aggregate number of visitors: 245,000

The Center for Contemporary
Graphic Art
www.dnp.co.jp/gallery/ccga/
Opened in 1995
Number of exhibitions held: 3
Annual number of visitors: 2,500
Aggregate number of visitors: 64,000

Graphic design and graphic arts centers

Maison des Musées deFrance (MMF)
URL： http://www.museesdefrance.org/

Maison des Musees de France (MMF) provides its visitors withinformation about art museums and exhibitions in France. The
facility’s information center sponsors various types of seminars
and offers materials for browsing. The center’s specialized staff
is available to give advice or help with research. Each year, 2,000
people take advantage of this library-like venue, which is becoming
a well-known spot for adult learning.

Information Center
Total number of seminars given：14
Total number of seminar participants：330
Telephone：03-3574-2382

DNP Museum Information Japan artscape
URL: http://www.dnp.co.jp/artscape/Already familiar to art lovers, the artscape web site evolved out of Museum Information Japan,
which DNP established in 1995. Twice each month, artscape publishes news and information about
art museums, exhibitions, and related events in Japan. In 2006, DNP established an English version,“artscape international.” More than just a translation of the Japanese version, this monthly publication
also includes original material such as reviews of Japanese art museums and exhibitions by nonJapanese scholars and critics.

84

DNP Annual Report 2009 ＞ Sustainable Development ＞ Contributing to Society

A variety of discoveries and exchange through art

Louvre-DNP Museum Lab
http://www.museumlab.jp/

The Louvre-DNP Museum Lab is a joint project between the
Musée du Louvre and DNP, opened in October 2006 to explore new
ways of appreciating art. In the ﬁscal year through March 2009, we
employed DNP’s cutting-edge imaging and telecommunications
technologies to enable 12,000 visitors to experience and appreciate
artworks from the Louvre. Museum Lab’s exhibits have been
incorporated in curricula of educational institutions in Japan.
An additional 2,640 people participated in workshops or ﬁlm
screenings, etc. at the facility. Ofﬁcials from overseas museums
including France’s Centre Pompidou, The Boston Museum ofFine Arts in the US, and Germany’s Die Neue Sammlung - The
International Design Museum Munich, have come to see Museum
Lab and exchange views about new styles of art appreciation.

Visitors enjoying theMuseum Lab’s fifth
presentation

Number of exhibitions held: 2
Annual number of visitors: 12,000
Number of events held: 64
Total number of event participants：2,640
Telephone: 03-5435-0880

Students from Lycée
Franco-Japonais de Tokyo
visiting Museum Lab

KidZania Tokyo & KidZania Koshien

DNP’s “Printing Workshop” Pavilion
KidZania is an “edutainment town” where children can try theirhand at a type of work they always dreamed of doing and have fun
while learning how society works. KidZania Tokyo opened October
2006 in Koto Ward as Japan’s ﬁrst facility for teaching children
about the working world. KidZania Koshien opened March 2009
in Nishinomiya, Hyogo Prefecture. As an ofﬁcial sponsor of bothfacilities, DNP set up a “Printing Workshop” pavilion in each one.
At KidZania Tokyo, children experience the difﬁculties and the joyof “communicating information” through graphic design work. Theyuse computers to lay out text, photographs, and drawings to create aposter related to ecology, which they can print out and take home.
At KidZania Koshien, children use computers, rubber replicas of
movable type, and a letterpress printing machine to experience thework of a printing technician and the rich expressive power of printing
technology. After making a design on the computer, they print theirown postcard using rubber type and a resin plate.
By communicating the technology and expertise that DNP has
cultivated through printing, the expressive power of printing, andhow much fun it is to make things, DNP opens up possibilities forchildren’s futures and contributes broadly to society.

[KidZania Tokyo]
Northport 3F, Urban Dock LaLaPort Toyosu
2-4-9 Toyosu, Koto Ward, Tokyo

Choose one of two sessions daily: 9:00-15:00 or 16:00-21:00
Telephone：KidZania Tokyo Information Center 0570-06-4646[DNP Pavilion (Printing Workshop) information] http://www.dnp.co.jp/kidzania/[KidZania Official Website] http://www.kidzania.jp/[KIdZania Koshien]
LalaPort Koshien
1-100 Hachiban-cho, Koshien, Nishinomiya City, Hyogo

Choose one of two sessions daily: 9:00-15:00 or 16:00-21:00
Telephone：KidZania Koshien Information Center 0570-06-4343

85

86

DNP Annual Report 2009 ＞ Corporate GovernanceCorporate Governance

CONTENTS
88 Corporate Governance
93 Guiding Principles and Code of Conduct
94 Internal Control
95

Board of Directors, Statutory Auditors andCorporate Officers

87Corporate GovernanceCorporate Governance■ Fundamental Philosophy

DNP has established a management concept ofcontributing to the emergently evolving society of the
21st century, and recognizes that fulﬁlling its corporate
responsibilities to society as a Group and being trusted
by its shareholders, customers, consumers, employees
and other stakeholders is critical to improving thecompetitiveness of the Group. Toward this end, we
regard corporate governance, including an internal control
system, as a top management priority. We have strived
to establish and manage an organizational structure thatallows for precise managerial decision-making, prompt andappropriate execution based on the decisions made, andproper supervision and surveillance; strengthen educationand training to improve each employee’s awareness ofcompliance issues; and enhance our overall corporate
governance.
■ Progress on Corporate Governance Measures(1) Organizational details
DNP’s organization is designed to allow the directors
with specialized expertise and experience in a wide
range of business ﬁelds to participate in management
decisions, to take responsibility and authority as they
execute their work, and to supervise the work ofother directors. Also, so as to promptly make precise
management decisions, smoothly act based on thedecisions, and further strengthen proper supervisory
functions, corporate ofﬁcers named by the Board of
Directors execute the decisions made by the Board of
Directors, and have the responsibility and authority to
decide upon and carry out those matters delegated by
the Board. Working in close communication with thedirectors and in close proximity to the workplace, theirfunction is to ensure that the views of those on the front
lines are reﬂected in management.
At the general shareholders’ meeting held June 28,
2007, DNP revised the term of ofﬁce for the directors
from two years to one year, in order to have more
ﬂexibility to construct a management system best
suited to responding to the business environment;
to further clarify management responsibility for eachﬁscal year; and to increase opportunities to earn the
conﬁdence of shareholders.
The Board of Directors consists of 25 directors,
including one outside director. In principle, the Board
meets once a month. Based on the Company’s Board

88

of Directors Regulations, the directors ensure that
operations are appropriately run and mutually supervise
day-to-day operations. The directors hold executive
committee meetings once a month to exchange
information that is helpful for efﬁcient decisionmaking. To speed up the Company’s activities andmake them more efﬁcient, DNP has also establisheda Management Committee consisting of directors
at the senior managing director level and above. The
committee meets once a month, in principle, to review
and discuss management policies, strategies, andimportant business matters.
DNP has in place a Board of Statutory Auditors thatconsists of ﬁve auditors, including three outside auditors.
In accordance with auditors’ prescribed audit criteria andresponsibilities, the statutory auditors conduct audits ofthe directors’ management of day-to-day operations and,as necessary, seek information from the directors andemployees regarding business operations.
(2) Internal controls and auditing
In order to maintain a structure that allows for precise
management decision-making, appropriate and prompt
execution of business, and inspection and monitoringof these functions, the Corporate Ethics Committee,
as the body in charge of internal control, inspects andguides DNP’s operating units according to the DNPGroup’s Basic Compliance Management Regulations.
The Auditing Department (consisting of 19 employees)
ensures the propriety of operations by conducting
accounting and operational audits based on internal
audit regulations and by providing progress reports tothe statutory auditors and the accounting auditor.
The statutory auditors hold regular meetings of theBoard of Statutory Auditors, work with other statutory
auditors to perform their audit duties, and closelycooperate with the accounting auditors by receivingfrom them an explanation of the audit plan at the startof the ﬁscal year, assessing audit operations during theﬁscal year as appropriate, and receiving 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 (Continuous audit years)
Senior partner, managing partner
Atsushi Sasayama (7 years), Taichiro Hosoya (2 years)

DNP Annual Report 2009 ＞ Corporate Governance ＞ Corporate Governance(4) Progress on other corporate governance measures
By establishing in October 2007 the DNP Group Codeof Conduct, which expands on the Dai Nippon Printing
Group Corporate Pledge and the DNP Group Employee
Code of Conduct, DNP has set down codes of conduct
and speciﬁc guidelines for conduct for employees tofollow, so as to contribute to the prosperity and solid
development of society, promote fair and appropriate
corporate activity, protect the environment, contribute tosociety, and establish a free and lively corporate culture.
Among the stipulations is that DNP, as an emergently
evolving company that does not do business with antisocial elements, fulﬁll its corporate responsibilities
to society as a corporation, respect its shareholders,customers, consumers, employees and otherstakeholders, and act in a way that earns trust. The
DNP Group CSR Report 2009 details not only the DNPGroup’s business activities but also efforts to addresssocial issues and protect the environment, and aims
to enhance understanding and deepen conﬁdence andtrust through communication with various stakeholders.

Managing partner
Kazuhiko Terada (2 years), Junko Shima (2 years)● Audit firm
Meiji Audit Corporation● Number of accounting audit assistants
9 certiﬁed public accountants, 5 junior accountants,
2 others(3) Development of a risk management structure
To manage risks related to compliance, theenvironment, disasters, product safety, information
security and export management, the Corporate Ethics
Committee, other special committees, and other headofﬁce divisions develop rules and conduct training aspart of risk-related preemptive efforts, and respondpromptly to avert or minimize losses to the DNP Group.
Certain organizational units and directors are promptly
established and appointed for responding to risks thathave newly developed.

(5) A diagram of the corporate governance structure illustrating points (1)-(4) above is shown below.
General Meeting of Shareholders
Audit

Audit
Board of Directors
Management Committee

Representative Directors

ReportingCorporate Ethics Committee
Open Door Room
ReportingInformation Disclosure Committee

Executive Directors
Audit

Audit

Group companies

Audit

Product Safety Committee
Environmental Committee
Complaint Handling Committee
Audit

Guidance
Training

Central Disaster Prevention Council

Auditing Department

Business divisions

Information Security Committee

Oversight of internal controls

Head office

Operating units

Accounting Auditors

Corporate officers

ReportingBoard of Statutory Auditors

Insider Trading Prevention Committee

Guidance
Assistance

Legal and other main divisions(Environmental Safety Division, Labor Division,
Technology Division, Accounting Division, Management
Division, IP Division, Legal Affairs Division, etc.)(Autonomous implementation, inspection,
review, improvement)

Audit
Reporting

Audit unit

Corporate Social Responsibility Committee

Guidance

Coordination89

(6) Compensation paid to directors and auditors
The details of compensation DNP paid to directors
and auditors in the ﬁscal year under review are as
follows:
NumberCompensation (¥ million)

Directors(Of which, outside
directors)

28
(1)

1,921
(26)

Auditors(Of which, outside
auditors)

5
(3)

144
(65)

Total

33

2,066

Notes: 1.The figures above include provisions for bonuses for directors andstatutory auditors (¥180 million for directors) for the fiscal year.
2.In addition to the above, bonuses of ¥17 million were paid to employee
directors.
3.There were 25 directors and five auditors as of the end of the fiscal year.

(7) Interests between DNP and its outside director andoutside statutory auditors
Neither the outside director nor the outside
statutory auditors have personal, ﬁnancial or business
relationships or other interests with DNP.
Outside director Tadao Tsukada owns 2,000 sharesof DNP, outside statutory auditor Kiyoshi Yuzawa 2,000
shares, and outside statutory auditor Yasuchika Negoro
3,000 shares.

Compensation Paid to Accounting Auditors(1) Compensation paid to accounting auditor(¥ million)
Previous fiscal year

Current fiscal year

Compensation
for audit
certification(¥ million)

Compensationfor otherservices(¥ million)

Compensation
for audit
certification(¥ million)

Compensationfor otherservices(¥ million)

Dai Nippon Printing
Co., Ltd.

–

–

91

–

Consolidated
subsidiaries

–

–

92

–

Total

–

–

183

–

(2) Other material compensation details
None(3) Compensation paid to accounting auditor forservices other than audit work provided to theCompanyNone(4) Determination of compensation for audit services
DNP’s compensation for audit services is determinedbased on a variety of factors, including the numberof expected days for the audit and the size of theCompany.

90

Measures for Enhancing DNP’s Corporate GovernanceIn accordance with a resolution by the Board of Directors
at a meeting on May 10, 2006, DNP has establishedarrangements based on the Corporate Law and the
Enforcement Regulations of the Corporate Law for
ensuring the propriety of operations. Based on subsequentdevelopments, the arrangements were revised as follows
and approved at a Board of Directors meeting held on
November 15, 2007.
1. Arrangements for ensuring that the execution ofoperations by the directors and employees complies
with the laws and the Articles of Incorporation(1) To deepen consideration of the DNP Group’s Vision
for the 21st Century on the 130th anniversary of theCompany’s founding, the DNP Group has establishedDNP Group Code of Conduct by revising and expanding
the Dai Nippon Printing Group Corporate Pledge and
DNP Group Employee Code of Conduct, the codeof conduct for all employees (including directors).
The Group provides all employees with a copy of theguidelines and conducts training to familiarize them withit.
(2) The Board of Directors meets once a month, inprinciple. Based on the Company’s Board of Directors
Regulations, the directors ensure that operations
are appropriately run and mutually supervise day-today operations. By naming outside directors with norelationships or interests with DNP, the Company has
established a way to ensure that the work of directors
is in compliance with the laws and the Articles ofIncorporation. In addition, directors with day-to-day
business responsibilities preempt acts in violation oflaws or the Articles of Incorporation by supervising the
conduct of the heads of the various operating units,
including corporate ofﬁcers.
DNP has in place a Board of Statutory Auditors thatconsists of auditors, including outside statutory auditors.
In accordance with auditors’ prescribed audit criteria andresponsibilities, the statutory auditors conduct audits ofthe directors’ management of day-to-day operations.
(3) The Corporate Ethics Committee, which consists ofthe directors in charge of each head ofﬁce division,
oversees the establishment and management of
arrangements for ensuring the propriety of operationsin the DNP Group according to the DNP Group’s Basic
Compliance Management Regulations.
(4) Under the oversight of the Corporate Ethics Committee,
the Information Disclosure Committee, Insider Trading
Prevention Committee, Information Security Committee,
Product Safety Committee, Environmental Committee,
Complaint Handling Committee, Central Disaster
Prevention Council, and each head ofﬁce division in
charge of speciﬁc laws and regulations conduct reviews,

DNP Annual Report 2009 ＞ Corporate Governance ＞ Corporate Governanceprovide guidance, and offer training for operating units
and Group companies in their areas of responsibility.
(5) The heads of the divisions autonomously determine,
implement, inspect, review and improve the required
arrangements and procedures for their divisions, basedon the DNP Group’s Basic Compliance Management
Regulations and in light of the speciﬁc operations ofeach division.
(6) Based on internal audit regulations, the Auditing
Department, which is independent of the operating
units, conducts internal audits and provides guidance
to the divisions and Group companies regarding theestablishment and management of arrangements for
ensuring the propriety of operations.
(7) The Open Door Room, a gateway for internal
notiﬁcations within the DNP Group established within
the Corporate Ethics Committee, receives and responds
to reports from Group employees concerning legal
violations.
2. Rules and other arrangements for managing thedangers of losses(1) To manage risks that could have a material impact
on business, such as those related to compliance,
the environment, disasters, product safety, insider
trading and export management, the Corporate Ethics
Committee, other special committees and other headofﬁce divisions develop rules and conduct training as
risk-related preemptive efforts, and respond promptly
when risks arise to avert or minimize losses to the DNPGroup.
(2) DNP regularly tries to manage information security risks
mainly through its Information Security Committee andby reviewing how personal information is managed,
establishing its Information Security Headquarters andexpanding the staff, expanding and revising rules andregulations, expanding training, controlling who comes
into and goes out of company property with biometricveriﬁcation systems, expanding the installed base of
surveillance cameras, and minimizing the number ofworkers.
(3) For managing ﬁnancial reporting-related risks (thedevelopment and management of internal controls
for ensuring the reliability of the Company’s ﬁnancial
reports), DNP has established an arrangement for thetimely and appropriate assessment and disclosure of theeffectiveness of internal controls. Speciﬁcally, necessary
adjustments with the auditor are made, and under theoversight of the Corporate Ethics Committee, businessprocesses with a material impact on the Company’s
consolidated ﬁnancial reports (sales, manufacturing,purchasing, asset management, and accounting) andrelated divisions (including consolidated subsidiaries)
are appropriately identiﬁed and selected based on
disclosed internal control development and evaluation

criteria. Rules for managing related operations, manuals,
and checklists are documented; self-inspections are
conducted on the divisions subject to evaluation; andinternal audit reports are compiled.
(4) Under the oversight of the Corporate Ethics Committee,risks are regularly inventoried. For any new risks that
could have a material impact on business, units anddirectors are designated to respond properly.
3. Arrangements for ensuring that the execution ofoperations by directors is efficient(1) The Board of Directors meets once a month and at othertimes as needed, as one fundamental arrangement for
ensuring that the execution of operations by directors
is efﬁcient. The Management Committee, consistingof directors at the senior managing director level andabove, meets once a month, in principle, to contributeto efﬁcient decision-making and to review and discuss
important business matters. In addition, the Executive
Committee meets once a month to share management
information among the directors.
(2) Those responsible for carrying out operations basedon decisions by the Board of Directors do so within
their authority and in accordance with organizational
regulations, position authority rules, collective decisionmaking rules, and other internal rules. Also, directors
with day-to-day business responsibilities try to do theirwork more efﬁciently by delegating appropriate authority
to corporate ofﬁcers.
4. Arrangements concerning the maintenance andmanagement of information relating to directors’
execution of operations
Information on the directors’ execution of operations
is registered or recorded in the form of minutes ofBoard of Directors’ meetings, minutes of various
committee meetings, approval documents andother documentation, or electronic documentation.
This information registered or recorded as paper orelectronic documents is appropriately and safely
retained and stored in easily searchable condition for atleast 10 years, in accordance with basic regulations on
information security, document management standards,
and electronic record-keeping standards.
5. Arrangements for ensuring proper business
operations in the Group, made up of the joint stock
corporation, the parent company, and subsidiaries(1) To ensure the propriety of its operations, the DNPGroup has established DNP Group Code of Conduct for
all employees (including the directors) and conducts
training to familiarize employees with them. The Group
has also established Basic Compliance Management
Regulations concerning the establishment andmanagement of arrangements for ensuring the propriety

91

of operations, and based on them, Group companies
implement the regulations.
(2) The Group companies autonomously determine,
implement, inspect, review, and improve the required
arrangements and procedures for their divisions, basedon the policies written in (1) above and in light of thedetails and scale of their businesses.
(3) The Auditing Department, the Corporate Ethics
Committee, other special committees, and other headofﬁce divisions audit or review, provide guidance, andoffer training on the progress made as speciﬁed in (1)and (2) above.
6. Arrangements concerning employees who assist
auditors with their work and matters related to the
independence of such employees from the directors(1) The Audit unit with a dedicated staff assists auditorswith their work.
(2) The Audit unit staff performs operations under the
direction of the statutory auditors. Reviews andreassignments of and disciplinary actions against staff
require the consent of the Board of Statutory Auditors.
7. Arrangements for directors’ and employees’ reports
to statutory auditors, arrangements regarding
reports to other auditors, and arrangements for
ensuring that statutory auditors conduct their audits
effectively(1) The statutory auditors may request reports on day-today operations from the directors and employees asnecessary, and DNP Group directors and employees are topromptly provide such reports when requested to do so.
(2) The directors are to promptly report to the statutory
auditors any facts that come to light that are in violationof laws or might seriously hurt the Group.
(3) The Auditing Department and the Corporate Ethics
Committee regularly report to the statutory auditors on
the establishment and management of arrangements
for ensuring the propriety of audits and operations.
(4) The Representative Director regularly exchanges views
with the Board of Statutory Auditors.

Summary of Limitation of Liability Contract
DNP and its outside director and outside statutory
auditors concluded an agreement that limits directors’
and auditors’ liability for damages within the parameters
set forth in Article 423, Paragraph 1 of Japan’s Corporate
Law, so long as they execute their duties in good faith andwithout serious negligence.

Number of Directors
DNP’s Articles of Incorporation specify that the numberof regular members on the Board of Directors shall be no
more than 25.

92

Requirements for Shareholder Approval of Director
Nominees
DNP’s Articles of Incorporation specify that the approvalof director nominees requires the attendance of at least
one third of shareholders with voting rights and a majorityof the votes of these shareholders, and does not depend
on cumulative votes.

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 theCompany may buy back its shares in the open market,
in accordance with Article 165, Paragraph 1 of Japan’s
Corporate Law, upon approval by the Board of Directors,in accordance with Article 165, Paragraph 2 of Japan’s
Corporate Law, to allow the Company to use capital
more efﬁciently and implement a ﬂexible capital structure
policy in response to changes in business conditions.
(2) Exemption of directors from liability
DNP’s Articles of Incorporation specify that directors(including former directors) may, by a resolution of theBoard of Directors, in accordance with Article 426,
Paragraph 1 of Japan’s Corporate Law, be exemptedfrom liabilities in Article 423, Paragraph 1 of Japan’s
Corporate Law so that the 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 aresolution of the Board of Directors, in accordance with
Article 426, Paragraph 1 of Japan’s Corporate Law, be
exempted from liabilities in Article 423, Paragraph 1 ofJapan’s Corporate Law so that the statutory auditors
can sufﬁciently carry out their expected responsibilities.
(4) Interim dividend
DNP’s Articles of Incorporation specify that theCompany may, by a resolution of the Board of Directors,
pay a monetary dividend stipulated in Article 454,
Paragraph 5 of Japan’s Corporate Law to shareholdersof record as of September 30 of each year andshareholders with actual stock certiﬁcates, so thatproﬁts can be ﬂexibly passed on to shareholders.

Requirements for Shareholder Approval of Special
Resolutions
DNP’s Articles of Incorporation specify that the approvalof special resolutions stipulated in Article 309, Paragraph
2 of Japan’s Corporate Law requires the attendance of atleast one third of shareholders with voting rights and at
least two thirds of the votes of these shareholders, so thatthe shareholders’ meetings can run smoothly.

DNP Annual Report 2009 ＞ Corporate Governance ＞ Corporate Governance / Guiding Principles and Code of Conduct

Guiding Principles and Code of Conduct
In order to realize our corporate vision of “P&I Solutions,” we have established Guiding Principles for our corporate
behavior. In addition, we have established a “DNP Group Code of Conduct” to be observed by all DNP Group employees
as a precondition for engaging in the various activities through which we realize our management concept.
We attach great importance to taiwa* with corporate customers and consumers. We start by listening to what the otherparty has to say, and we continue to talk until we develop a shared understanding, identify problems, and reach solutions.
Our aim is to contribute to society by creating new value through this process.

Guiding Principles
1. Engage in taiwa with all persons concerned
Through taiwa, we can identify the hopes and dreams
of consumers and corporate clients, as well as uncover
our own problems of which we had been unaware. By
pursuing taiwa on the identiﬁed problems and issues withvarious members of the company as well as people outside
the company, we will be able to ﬁnd solutions to these
problems and issues.
2. Work with an independent and collaborative mindset in order to solve problems
Acquiring specialized knowledge and skills, thereby
becoming independent, allows us to sharpen our sensitivity
for perceiving the problems and issues that surface within
taiwa. We should collaborate on these issues with othermembers while recognizing one another’s sense of values
and roles in order to propose solutions that will meet thesatisfaction of our clients.

DNP Group Code of Conduct
1. Contributing to the development of society
2. Social contribution as a good corporate citizen
3. Compliance with the law and social ethics
4. Respect for human dignity and diversity
5. Environmental conservation and the realizationof a recycling-oriented society
6. Realization of a ‘universal society’
7. Ensuring the safety and quality of our products
and services
8. Ensuring information security
9. Proper disclosure of information

3. Challenge courageously, even in the face of difficult
issuesAs professionals, the expectation and conﬁdence
entrusted upon us are proportionate to the level of difﬁcultyof a problem or issue. Therefore, we should approach
problems and issues with a spirit of challenge and courage,
which will enhance our professional skills all the more.

10. Realization of a safe and vibrant workplace

4. Act with integrity, fairness, and impartiality, at alltimes
We are, of course, obliged to abide by the law andconform to social codes. At the same time, we should
also be considerate of others, speak honestly, and act withintegrity. By conducting ourselves in this manner, we will
be able to win the sympathy and trust of society, which willin turn augment the ‘value’ that we provide to society.
5. Be responsible for your own decisions and conduct
Each of us should be responsible for our own decisions
and conduct. A strong sense of responsibility will not only
lead to our colleagues’ greater trust in us, but will alsoenable us to make objective and appropriate evaluationsof our own work processes, which will assist us in making
greater strides at our next opportunity.
*Taiwa is a process that entails identifying problems and ﬁnding
solutions through the exchange of viewpoints and ideas.

93Internal Control
Compliance with Internal Control Reporting Requirements
In compliance with Internal Control Reporting Requirements under the Financial Instruments and Exchange Act (internal
assessments and outside audits of internal controls on ﬁnancial reporting), DNP has been fulﬁlling its responsibilities ofaccountability to users of “Yuho” annual securities reports (stakeholders), an objective of the requirements. To further
strengthen the group’s management base, the Company has also consulted with outside auditors, documented thegroup’s internal controls, evaluated internal controls on its own, conducted independent evaluations, improved on any
inadequacies that have been found, and reported results to management regularly since the preparatory ﬁscal year.
Policies, framework, and plans regarding internal controls
Regularly(updated as necessary)

Basic policies

Basic plan

Updates every fiscal year
(generally in April, but in June or later foritems that cannot be finalized)

Basic policies

Board of Directors’
resolution(through a collective
decision-making
process)

Based on the Financial Services
Agency’s criteria on internal controls,
the Company has developed basic
guidelines, plans, and various types ofmanuals specifying the guidelines andprocedures, framework, scope, andschedule of the evaluations.

Basic plan (Year ended___)・Evaluation framework
・List of evaluation managers

Companywide internal
control assessment manual

・List of evaluation scope (locales)
・List of business processes to beevaluated (sub-processes)

Internal control assessment
manual for business processes

・List of systems to be evaluated・Outline of annual schedule

Internal report signees

President, CFO

Assessment manager(s)Director in charge of audit, head of Auditing Department

Assessment manager(s)Auditing Department staff

Headquarter process owner

Office process owner

Head of each headquarter division

The Company has establishedan evaluation framework involving
managers.
The evaluations rely heavily on
control self-assessments by thedivisions being evaluated to allow
for a broad scope of evaluations andpromote improvements in internal
controls.

Head of each business division, president of each subsidiary

Self-assessment manager(s) Assessment staff for each business division, subsidiary

Development of assessment tools for internal controls

For appropriate and effective internal
control assessments, specialized
information systems are used and thelarge amount of data on internal control
assessments is managed in database
form.
(The screenshot shows Oracle GRC Manager
Release 7.7.1.)

The scope, criteria, procedures, and results of managers’ internal control assessments were compiled into Internal
Control Reports (assessment reference date: March 31, 2009), which were submitted along with the 115th “Yuho” annual
securities reports on June 26 to the Ministry of Finance’s Kanto Local Finance Bureau, upon approval by the Information
Disclosure Committee and the Board of Directors.
For details on the Internal Control Reports, please go to the Company website ▶http://www.dnp.co.jp/ir

94

DNP Annual Report 2009 ＞ Corporate Governance ＞ Internal Control / Board of Directors, Statutory Auditors and Corporate Ofﬁcers

Board of Directors, Statutory Auditors
and Corporate Officers(As of June 26, 2009)

President

Managing Directors

Standing Statutory Auditors

Corporate Ofﬁcers

Yoshitoshi Kitajima

Kazumasa Hiroki

Noriaki Nakamura

Akira Oguri

Tetsuji Morino

Minoru Yoneda

Masanori Akada

Executive Vice Presidents

Takashi Toida

Kiyoshi Yuzawa *Fujio Yamazaki

Koichi Takanami

Shigeru Kashiwabara

Satoshi Saruwatari

Kunikazu Akishige

Statutory Auditors

Shigemi Furuya

Masayoshi Yamada

Kenji Noguchi

Yasuchika Negoro *Katsuhisa Fudouta

Yoshinari Kitajima

Yoshiaki Nagano

Kuniaki Nomura *Yoshio Nishida

Takashi Saito

Motoharu Kitajima
Senior Managing Directors

Jun-ichi Tsuchiya

Takao Shimizu

Mitsuhiko Hakii

Senior Corporate Ofﬁcers

Kensuke Nakamura

Tatsuya Nishimura

Tokuji Kanda

Osamu TsuchidaDirectors

Tatsuro Kitayuguchi

Yoji Yamakawa

Teruomi Yoshino

Tatsuo Komaki

Koichi Hashimoto

Takashi Wada

Yujiro Kuroda

Akira Yokomizo

Ryuji Minemura

Masahiko Wada

Yoshiki Nozaka

Masato Koike

Masaki Tsukada

Masato Yamaguchi

Sakae Hikita

Yasuo Takeda

Tadao Tsukada *Jun-ichi Funatsu*Outside director or auditors

Masayoshi Yamada

Koichi Takanami

Yoshitoshi Kitajima

Satoshi Saruwatari

Morihiro Muramoto

Yoshinari Kitajima

95

DNP Annual Report 2009 ＞ Financial Section

Financial Section

CONTENTS
98 Management’s Discussion and Analysis
108 Selected Financial Data
110 Consolidated Financial Statements
115 Notes to Consolidated Financial Statements
127 Independent Auditors’ Report97Management’s Discussion and Analysis

OPERATING RESULTS
Business Environment
Japan’s economy went into a very serious downturn in the latter half of the ﬁscal
year, with corporate earnings and employment conditions worsening drastically, partly
because of the global ﬁnancial instability that originated with the US ﬁnancial crisis, aconsiderable decline in demand, and the yen’s sharp appreciation.
The business environment surrounding the printing industry remained harsh, due
to such factors as a slump in demand, material cost increases, and unit price declines
stemming from intensiﬁed competition.
The Information Communication segment faced challenging conditions. In thebooks and magazines market, estimated sales of publications in Japan in theyear ended March 2009 declined 3.3% year over year, extending a downtrendthat started in 1997. The magazine business slumped because a number of wellknown magazines were discontinued, owing to declines in publishing companies’
proﬁtability, and fewer new magazines were launched. In the commercial printing
market, advertising-related companies’ sales in the year ended March 2009 swung
to a decline of 9%. Online advertising spending grew again, by 8%, but spending on
advertising in the four major types of media that support printing demand – TV, radio,
newspapers, and magazines – fell because a deterioration in corporate earnings led
to cutbacks in advertising spending. The business forms market was weak overall.
Demand declined because ﬁnancial institutions’ earnings worsened and companies
cut advertising spending, and sales of smart cards were lower than in the previous
year because the number of new mobile phone subscribers was weak.
In the Lifestyle and Industrial Supplies segment, conditions were challenging again
for the packaging business because of an overall decline in consumer spending andhigher costs for wheat and other foodstuffs and ﬁlms and other packaging materials.
The lifestyle materials business sharply worsened because the number of housing
starts in Japan started declining in December on uncertainties for the economy’s
outlook, and even though demand rose for environmentally friendly products. In
the industrial supplies business, sales of back sheet ﬁlm for solar power systems,
ﬁlling material, and other battery materials increased with help from increased social
awareness of environmental issues, but demand for LCD optical ﬁlms, which wasstrong up through the previous ﬁscal year, decreased sharply owing to drastic
cutbacks by LCD panel manufacturers.
Key factors for the Electronics segment included year-over-year increases in total
2008 global output of LCD TVs (by 34% to 106 million), PCs (by 10.9% to 302.2
million), and mobile phones (by 3.5% to 1.18 billion). However, circumstanceschanged drastically in the fall of 2008. Manufacturers around the world sharply cut
output and output volume started declining. In October–December 2008, global
output of LCD and other types of TVs declined 5% year over year and global output
of mobile phones dropped 12.6%. Output of PCs increased 1.1% over the full year
but declined 7.1% in January–March 2009. In light of these conditions, the market
environment was very challenging in the second half of the ﬁscal year.

98

DNP Annual Report 2009 ＞ Financial Section

Overview
The DNP Group has been developing its business and providing
products and services that meet customer needs, based on a
corporate vision of P&I Solutions (P&I stands for “printing
technologies” and “information technologies”). In addition, DNP
has made groupwide efforts through its “Production 21” activities
to establish a solid production structure in terms of quality, cost,
and turnaround times, and has worked hard to maintain positive
performance. DNP’s consolidated sales and proﬁts were in line with
its original forecasts through the second quarter of the ﬁscal year,
but all segments suffered starting in the third quarter, as businessconditions sharply deteriorated. As a result, consolidated sales
declined 1.9% from the previous ﬁscal year. Overall sales in the
Information Communication segment increased 5.7%. Sales were
weaker than in the previous ﬁscal year for Books and Magazines,
Commercial Printing, and Business Forms, but this weakness wasmore than offset by the inclusion of sales of consolidated subsidiaries
in the educational publications distribution business. Sales in theLifestyle and Industrial Supplies segment slipped 0.7%. Sales in the
Packaging business division increased thanks to ﬂexible packaging,
paper cups, and large aseptic ﬁlling systems, but sales of Lifestyle
Materials and Industrial Supplies decreased. Sales in the Electronics
segment dropped by a substantial 20.6% because of a sharp slump indemand and price declines. Sales in the Beverages segment slipped
2.4%.
Consolidated operating income declined 47% and ordinary
income fell 45.2% because of higher costs of petrochemical-based
products, paper, and other materials; price declines in all segments;a sharp deterioration in proﬁts for LCD color ﬁlters, anti-glare ﬁlm,
semiconductor photomasks, and other core products; and weakness
in other businesses.
Operating income margin slipped 2.5 percentage points to 2.9%.
As can be seen from the above, this ﬁscal year’s results reﬂect very
challenging conditions. Net losses totaled 20.9 billion yen, reﬂecting
impairment losses mainly on electronics production equipment andvaluation losses on investment securities.
2009.3
Net sales (¥ million)¥ 1,584,844

2008.32007.3¥ 1,616,053¥ 1,557,802

16.4 %

17.8 %

18.6%

Operating income margin (%)

2.9 %

5.4 %

6.2%

Net income margin (%)-1.3 %

2.8 %

3.5%

Gross proﬁt margin (%)

Net income (loss) per share (¥)¥(32.35) ¥

67.08

¥

78.10

99

Net Sales
Net sales in the ﬁscal year declined 1.9%, or 31.2 billion yen,
to 1,584.8 billion yen partly because business conditions sharply
worsened starting around the third quarter. Unit prices declined due
to intensiﬁed competition and persistently strong demands for pricereductions, but the impact of the unit price declines improved by 12billion yen from the previous ﬁscal year thanks to the pass-through ofsharply higher material costs to product prices.
In the Information Communication segment, sales from thepublishing of books increased, but sales from the publishing ofmagazines declined and sales from the publishing of free newspapers
and magazines, mainly related to housing information, were weak.
In the commercial printing business, demand for store design/
construction and event planning increased, but sales of catalogs,
ﬂyers, and pamphlets declined. In the Business Forms business, sales

Net Sales by Consolidated Segment(year ended March 2009)

declined. Overall sales in the Information Communication segmentrose with help from the inclusion of sales of consolidated subsidiaries

Beverages
4.5%
Electronics
16.0%

of IPS (information processing services), smart cards, and ledgers

in the educational publications distribution business.
Information
Communication
45.0%

In the Lifestyle and Industrial Supplies segment, sales of ﬂexible
packaging, paper containers, paper cups, and aseptic ﬁlling systems
for PET plastic bottles increased despite a decline in sales ofpreformed bottles (primary products for making PET plastic bottles).
In the lifestyle materials business, sales of environmentally friendly

Lifestyle andIndustrial Supplies
34.5%

products declined, and North American sales of decorative laminates
for furniture and automotive interior materials substantially worsened.
In the industrial supplies business, sales of back sheet ﬁlm for solar
power systems, ﬁlling material, and other battery materials increased,
but sales of anti-glare ﬁlm for LCDs declined considerably, and salesof color and monochrome ink ribbons were weak.
In the Electronics segment, LCD color ﬁlter demand weakened
drastically after LCD panel manufacturers sharply cut output startingin September. In addition, sales of photomasks, etched products forhard drive suspensions and other applications, and high-density buildup circuit boards decreased.

100

DNP Annual Report 2009 ＞ Financial Section

Cost of Sales
DNP’s cost of sales decreased by 0.3%, or 3.3 billion yen, overthe previous ﬁscal year to 1,324.5 billion yen. The gross margin
worsened 1.4 percentage points from 17.8% to 16.4%.
Prices of raw materials, such as petrochemicals and printing

Gross Profit Margin

paper, rose this ﬁscal year, as they did last ﬁscal year. As a result,(%)

our costs increased by roughly 13.2 billion yen. Compared to the

25

21.3

impact of material cost increases in the previous year, this year’s
effect was bigger by 1.4 billion yen, or 12%.
In order to offset the impact of material cost increases, DNP has

20.3
18.6

20

17.8
16.4

15

been focusing groupwide since April 2002 on “Production 21” costcutting measures, such as improving process efﬁciency, improving

10

yields, reducing material losses, and shortening preparation and5lead times. This ﬁscal year, we successfully applied measureshorizontally throughout the Group, and strove to raise standards

005

for the manufacturing division as a whole. Thanks to these efforts,

06

07

08

09

this ﬁscal year we reduced production costs by 35.5 billion yen, 1.5
billion yen more than the 34.0 billion yen in the previous ﬁscal year.

Selling, General and Administrative Expenses
Selling, general and administrative expenses this ﬁscal year
increased by 6.5%, or 13.1 billion yen, to 214.1 billion yen.

SGA Expenses to Net Sales(%)
15

Our continued efforts at containing costs by using information
technology to boost operational efﬁciency and by managing

12.9

13.5
12.3

12.4

12.4

06

07

08

12

budgets better resulted in 1 billion yen worth of savings, but the9number of consolidated subsidiaries and marketing costs increased.
The percentage of these expenses relative to net sales was 13.5%,

6

1.1 percentage points higher than in the previous ﬁscal year.
30Operating Income

05

09This ﬁscal year, DNP’s operating income was strongly affectedby lower unit prices and increased raw material costs. Operating
income declined by 47.0%, or 40.9 billion yen, to 46.2 billion yen.
We were able to pass on to customers about 70% of the raw
material cost increases, but the remainder took a signiﬁcant biteout of our income because of manufacturing costs. As a result, ourOperating Income Margin(%)

operating income margin dropped from 5.4% in the previous ﬁscal
year to 2.9%.
By segment, operating income from Information Communication

10

8.5
8.0
8

declined 26.4%, or 11.4 billion yen, to 31.7 billion yen. In Lifestyleand Industrial Supplies, it declined 37.5%, or 11.9 billion yen, to

6.2
6

5.4

19.9 billion yen. In Electronics, operating income decreased 87.0%,
or 17.2 billion yen, to 2.6 billion yen. In Beverages, it fell 75.7%, or
1.0 billion yen, to 322 million yen.

4

2.9

2

0

05

06

07

08

09

101

Nonoperating Income (Expenses) and Extraordinary
Income (Losses)
This ﬁscal year, nonoperating income totaled 11.6 billion yen, up
16.2%, or 1.6 billion yen, and nonoperating expenses 10.4 billion yen,down 1.8%, or 195 million yen, from the previous year. As a result,net nonoperating income totaled 1.2 billion yen, up 1.8 billion yen
from the previous year.
Extraordinary gains totaled 1.1 billion yen, down 94.3%, or 18.6
billion yen, and extraordinary losses 76.4 billion yen, up 331.0%, or
58.6 billion yen. As a result, net extraordinary losses totaled 75.2
billion yen, versus net extraordinary gains in the previous ﬁscal year ofalmost 2 billion yen.
The main reasons for this turnaround were 50.7 billion yen of
impairment losses, based on estimates of future cash ﬂow andincluding impairment losses on production equipment following a
sharp downturn in conditions for the Electronics segment, and 13.6
billion yen of valuation losses on investment securities in connection
with the stock market’s correction.
As a result of the above, loss before income taxes and minority

ROE
(%)

interests totaled 27.8 billion yen.
8

6.0

6.3

6

Net Income (Losses)

5.1
4.4

Net losses totaled 20.9 billion yen, or 32.35 yen per share.

4

2

0

-2.2
–2

–4

05

102

06

07

08

09

DNP Annual Report 2009 ＞ Financial Section

LIQUIDITY AND CAPITAL RESOURCES
In order to expand our business, DNP’s management believes
that it is important to steadily expand cash ﬂow generated throughaggressive operating activities and to concentrate investments instrategic areas. In addition, we believe that ﬁnancial strength isindispensable to stable growth in the medium and long terms, so wehave worked hard to enhance our ﬁnancial position.
2009.3
Cash ﬂows from operating activities ¥Cash ﬂows from investing activities
Free cash ﬂow

131,569

2008.3¥

157,283

2007.3¥123,011（ 100,726 ）（ 122,523 ）（ 150,717 ）

30,84334,760（ 27,706 ）（ ¥ million ）This ﬁscal year, cash ﬂow generated by operating activities
decreased by 16.3%, or 25.7 billion yen, from 157.3 billion yen theprevious ﬁscal year to 131.6 billion yen. The main reason for thedecrease was a deterioration from income before income taxes andminority interests of 88.5 billion yen the previous ﬁscal year to losses

Interest-bearing Debt to Cash Flow Ratio(times)1.0

0.9

before income taxes and minority interests of 27.8 billion yen.
Cash ﬂow used in investing activities decreased by 17.8%, or 21.8

0.8

billion yen, from 122.5 billion yen the previous ﬁscal year to 100.7
billion yen.
Cash ﬂow used in ﬁnancing activities decreased by 54.0%, or 39.8

0.6
0.6

0.5

0.5
0.4

0.4

billion yen, from 73.7 billion yen the previous ﬁscal year to almost 34
billion yen partly because expenditures for share buybacks decreased

0.2from 58.6 billion yen the previous ﬁscal year to 27.4 billion yen.
As a result of these activities, DNP’s cash and cash equivalents at

0

05

06

07

08

09

the end of the ﬁscal year amounted to 117.2 billion yen, down 10.3%,
or 13.5 billion yen from a year earlier.
This ﬁscal year, free cash ﬂow – i.e. cash ﬂow generated byoperating activities minus cash ﬂow used in investing activities –was 30.8 billion yen, down 3.9 billion yen from 34.8 billion yen in theprevious ﬁscal year.

103

Capital Expenditures, Research and Development
Expenditures, etc.
Capital Expenditures and Free Cash Flow(¥ billion)
200

162.9
150

136.1
116.1

100

96.2
86.1
52.1

50

34.8

30.8

08

09

0

-10.1
-27.7
-50

05

06

Capital expenditures

07

Free cash flow

DNP has focused its capital expenditures mainly on strategicareas, so as to gain a competitive edge, and on improvements
to existing plants and equipment. This ﬁscal year, we invested
primarily in the strategic LCD color ﬁlter business and on
automation and labor-saving improvements in other businesses.
However, capital expenditures amounted to 96.2 billion yen,down 17.2%, or 20 billion yen, following changes in plans
because of trends in various markets and earnings conditions.
Key capital investments during the ﬁscal year included
expansions of an 8th-generation inkjet line that started up in
August 2008 at the LCD color ﬁlter plant in Kurosaki (in Kita
Kyushu); a 6th-generation line at the same plant in September
2008; and offset and gravure printing machines in the older
printing business.
By segment, capital expenditures for Information
Communication increased 1.4 billion yen over the previous year
to 28.0 billion yen, or 29% of overall capital expenditures. Capital
expenditures for Lifestyle and Industrial Supplies decreased
2.1 billion yen over the previous year to 29.7 billion yen, or
31% of the total. For Electronics, we invested 34.3 billion yen,a decrease of 11.7 billion yen and 36% of the total. Capital
expenditures for other businesses fell 7.6 billion yen from theprevious year to 4.1 billion yen, or 4% of the total.
Research and development expenditures totaled 34.1 billion
yen, a decrease of 4.1%, or 1.4 billion yen, from the previous
ﬁscal year.

The Balance Sheet
Since our mission is to increase DNP’s corporate value, we try tomaintain the liquidity that we need while increasing capital efﬁciency
in order to implement our business strategies in a ﬂexible manner andpromptly adapt to changes in the business environment.

Current Ratio

2009.32008.32007.3¥ 1,601,193¥ 1,700,250(%)

Total assets (¥ million)
200

186

178
166

¥ 1,536,557
144 %

157 %

166%

Working capital-to-net sales (%)

13 %

16 %

20%

Debt-to-equity ratio

14 %

8%

6%

Current ratio (%)
157
144

150

100

Book value per share (yen)¥1,393.91¥ 1,516.35¥

1,544.02

50

DNP’s total assets at the end of this ﬁscal year amounted to 1,536.6
billion yen, representing a decrease of 4.0%, or 64.6 billion yen, from
0

05

06

07

08

09

the previous ﬁscal year.
Among current assets, cash and cash equivalents decreased by104

DNP Annual Report 2009 ＞ Financial Section

5.7%, or 7.5 billion yen, from the previous ﬁscal year to 123.6 billion
yen. Trade receivables decreased by 11.2%, or 51.1 billion yen, to405.9 billion yen. Marketable securities holdings decreased 99.9%, or
11.1 billion yen, to 9 million yen, and inventories of ﬁnished products,
work in process, raw materials, and supplies increased 24.3 billion
yen to 120.6 billion yen. As a result, total current assets decreased by
5.4%, or 38.8 billion yen, to 676.2 billion yen.
Total long-term assets decreased by 3.0%, or 26.5 billion yen, to859.7 billion yen. Property, plant and equipment decreased by 5.4%,

Equity Ratio*(%)
80

or 34.4 billion yen, to 604.9 billion yen. Intangible assets increased by
38.0%, or 13.4 billion yen, to 48.9 billion yen. Investments and other

63.0

64.0

63.0

05

06

07

62.6

58.5

60

assets decreased 2.6%, or 5.6 billion yen, to 205.9 billion yen.
Current liabilities increased by 3.4%, or 15.4 billion yen, to 469.8

40billion yen. Trade payables decreased by nearly 27 billion yen to 290.9
billion yen, but short-term bank loans increased by 37.9 billion yen to20

59.9 billion yen.
Long-term liabilities increased by 18.7%, or nearly 20 billion yen, to126.7 billion yen.
As a result, total liabilities increased by 6.3%, or 35.4 billion yen, to

0

08

09

* Figures for 2005 and 2006 are calculated using total stockholders' equity.

596.5 billion yen.
DNP has been repurchasing its shares since February 2003. Thisﬁscal year, we purchased 16,656,000 shares for 26.6 billion yen,bringing the cumulative totals to 112,869,000 shares and 188.0
billion yen. However, we did not retire any of the shares, leaving the
cumulative totals of retired shares at 59 million shares and 96.8 billion
yen.
As a result, this ﬁscal year’s outstanding amount of treasury stockincreased by nearly 27.3 billion yen over the previous year’s 66.6
billion yen to 93.9 billion yen, which was a factor that reduced net
assets. Retained earnings decreased by 5.7%, or 45.4 billion yen, to751.9 billion yen. This decline also reduced net assets.
As a result of the above factors, DNP’s total net assets at the endof the ﬁscal year decreased by 9.6%, or 100.1 billion yen, to 940.1
billion yen.

105

Business Risks
The performance and the results of the DNP Group 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 theirpotential effects.
The followings are the major factors that the DNP management views as risks.
The Japanese Economy and Consumption Trends
The DNP Group engages in a wide range of businesses with an extremely large
number of customers. We conduct our business so as not to be overly dependent
on speciﬁc customers. The primary market where we do business is centeredon the Japanese domestic market, whereas our overseas sales constitute about
13% of net sales. Nevertheless, if consumer spending and other components ofdomestic demand slump, owing to domestic economic weakness in sympathy
with global economic trends, declines in order volume and unit prices may affectearnings.
Changes in the Electronics Market
We expect our Electronics segment to be highly proﬁtable and we believe it
has good growth potential.
We position it as a strategic sector which we aim to expand in the future.
We intend to secure steady proﬁts from it by focusing on building businessstrategies based on a careful compilation of information and the development ofhighly competitive, high-added-value products. However, the market for display
components and semiconductor products is subject to sudden changes. It is
possible that the segment’s performance could be affected by sudden changes
affecting products that we handle, such as dramatic ﬂuctuations in demand or aplunge in unit prices.
Fluctuations in Raw Material Procurement
We procure raw materials such as printing paper and ﬁlm from multiple
suppliers in Japan and overseas. We work hard to secure stable supplies
and maintain optimal prices. However, there is some potential for temporary
imbalances between supply and demand due to factors like spikes in petroleum
prices or sudden surges in demand from emerging markets. We intend to copewith such instances by negotiating with our customers. However, if it should
become extremely difﬁcult to secure supplies, or if prices rise markedly, it ispossible that DNP’s corporate performance could be affected.
Development of New Products and Technologies and Services
The DNP Group uses its printing and information technologies to develop andprovide a broad range of industries products, technologies, and services thatmeet the needs of corporate clients and consumers.
In recent years, the pace of technological innovation in these areas has
become faster than ever, and customers’ needs have been rapidly diversifying.
We believe that in the future, competition in the area of product development will

106

DNP Annual Report 2009 ＞ Financial Section

become more intense than ever before, and it is possible that DNP’s performance
could ﬂuctuate signiﬁcantly due to unforeseeable changes in market trends or ashortening of product life cycles.
Currency Fluctuations
Particularly in ﬁelds as Electronics, and Lifestyle and Industrial Supplies, we are
expanding our dealings in products and services with customers, suppliers andothers overseas. Because we expect the effects of currency rates to gradually
become more important, we use such means as foreign exchange forward
contracts to hedge the risks of currency ﬂuctuations. Nevertheless, it is possiblethat radical swings in currency values could have a more serious effect on our
corporate performance.
Legal Regulations, etc.
We conduct our business based on strict compliance with the law and social
ethics. Wherever we operate, in Japan or overseas, we are subject to a wide
variety of legal regulations and restrictions, including laws related to productliability, environmental protection and recycling, monopoly prohibitions, theprotection of personal information, patents, taxes, imports and exports, etc.
We can imagine that in the future such regulations could become even more
restrictive. If that should occur, it is possible that DNP’s business performance
could be affected by limitations on its business activities or increased costs.
Information System Security
With computer networks and information systems playing an ever-greater role,
protecting data and personal information has become crucial for keeping businessactivity going. The risks of information system malfunctions, breaches of personal
information, and other events, owing to software and hardware problems andviruses, have risen in recent years. The DNP Group regards the protection ofdata and personal information as a top priority. It is doing all it can to protect
and maintain systems and data by strengthening its organization and training
employees, but if problems arise in these areas, then business activity could be
affected.
Disasters
We take steps to protect our production equipment and other major facilities
from being damaged by disasters such as ﬁres or earthquakes. In addition,
we divide our work among multiple production bases and make every effort
to prevent disasters from causing production stoppages or disturbances in ourability to supply products. We also use various types of insurance to transfer risk.
Nevertheless, if major earthquakes, terrorist attacks, communicable diseases
such as new types of inﬂuenza, or other unexpected developments arise andlead to production stoppages or major damage or interference with the social
infrastructure, then earnings could be substantially affected.

107

Selected Financial Data (unaudited)

2009

2008

2007

2006

Statements of Operations Data (¥ million)
Net sales¥

1,584,844¥

1,616,053¥

1,557,802¥

1,507,506

Cost of sales

1,324,522

1,327,872

1,268,072

1,202,160

Gross profit

260,322

288,181289,730

305,346

Selling and administrative expenses

214,145

201,077

193,585

184,676

Operating income

46,177

87,104

96,145

120,670

Ordinary income

47,39086,502

101,348

124,715

Income (loss) before income taxes and minority interests(27,842)

88,46998,950114,640

Net income (loss)(20,933)

45,172

54,842

65,188

Balance Sheet Data (¥ million)
Total assets¥

1,536,557¥

1,601,193¥

1,700,250¥

1,662,377

Property, plant and equipment ̶ net

604,904

639,343635,784

568,966

Long-term liabilities

126,671

106,691

118,437

118,287

Total liabilities

596,471

561,058

600,811571,170–––

1,063,309

Stockholders’ equity

917,348

990,122

1,027,475–

Total net assets

940,086

1,040,135

1,099,439–

Total stockholders’ equity

Other Selected Data (¥ million)
Capital expenditures¥

96,156¥116,139¥

162,886¥

136,059

Depreciation expenses

106,883

109,902100,161

87,264R&D expenditures

34,11235,55630,113

28,692

Common Share Data (¥, shares)
Earnings (loss) per share ̶ primary
Earnings (loss) per share ̶ fully diluted
Dividends paid per share
Book value per share
No. of common shares outstanding ̶ primary¥(32.35)

¥

67.08

¥

78.10

¥

91.23

–

–

–

–

32.00

36.00

32.00

26.00

1,393.91

1,516.35

1,544.02

1,507.90

644,357,076

661,366,377

694,226,171

704,972,101

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

108

Gross profit

16.43%

17.83%

18.60%

20.26%

Selling, general and administrative expenses

13.51

12.44

12.43

12.25

Operating income

2.91

5.39

6.17

8.00

Income (loss) before income taxes and minority interests

-1.76

5.47

6.35

7.60

Net income (loss)

-1.32

2.80

3.52

4.32

Return on equity

-2.20

4.35

5.14

6.29

Current ratio

144

157

166

178

Debt-to-equity ratio

14

8

6

6

DNP Annual Report 2009 ＞ Financial Section

2005

¥

¥

¥

¥

1,424,943

2004¥

1,354,101

2003¥

1,309,002

2002

¥

2001

1,311,934¥

1,342,035

2000¥

1,286,703

1,121,374

1,073,118

1,043,456

1,071,163

1,091,386

1,039,006

303,569

280,983

265,546

240,771

250,649

247,697

183,041

178,545

175,665

168,529

164,708

161,811

120,528

102,438

89,881

72,242

85,941

85,886

120,485

97,276

88,177

74,77592,34987,976

107,686

93,13742,244

26,15069,116

79,19959,93752,971

28,774

15,60933,40939,0341,600,129¥

1,513,734¥

1,450,027¥

1,432,458¥

1,489,871¥

1,451,700

528,009513,175

540,874

543,962

561,017561,898

115,801

119,277

66,82179,01386,012

77,637566,796

510,970

484,581460,691

522,105

495,541

1,007,944

978,736

942,083

946,998

939,441925,646

–

–

–

–

–

–

–

–

–

–

–

–

86,057¥

69,834¥73,789¥85,096¥103,050¥

113,858

80,44085,182

89,23994,87094,312

94,58826,386

26,05024,09723,367

24,664

23,571

82.56

¥

71.49

¥

37.80

¥

20.55

¥

43.99

¥

51.40

–

–

37.67

20.53

43.45

50.47

24.00

21.00

19.00

18.00

18.00

18.00

1,409.18

1,348.40

1,270.81

1,246.99

1,236.96

1,218.79

715,076,830

725,677,422

741,161,150

759,480,693

759,480,693

759,480,693

21.30%

20.75%

20.29%

18.35%

18.68%

19.25%

12.85

13.19

13.42

12.85

12.27

12.58

8.46

7.57

6.87

5.51

6.40

6.67

7.56

6.88

3.23

1.99

5.15

6.16

4.21

3.91

2.20

1.19

2.49

3.03

6.03

5.52

3.02

1.65

3.58

4.28

186

197

171

181

165

160

7

7

6

7

8

9

109

Consolidated Balance Sheets
Consolidated Financial Statements

Thousands of U.S. dollars(Note 3)

Millions of yen

2009

Dai Nippon Printing Co., Ltd. and Consolidated Subsidiaries March 31, 2009 and 2008

2008

2009

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

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

Property, plant and equipment, at cost (Notes 7 and 14):Land
Buildings
Machinery and equipment
Other
Construction in progress
Total
Accumulated depreciation
Net property, plant and equipment
Other assets (Notes 7, 13 and 14)

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

110¥

117,200
6,370
9
405,877(5,280)120,647
31,327676,150¥

130,695
363
11,103456,932(5,284)96,393
24,775714,977$

1,195,918
65,00092
4,141,602(53,878)
1,231,092
319,664
6,899,490

11,396
107,975
1,547
120,918

20,059135,726
1,676
157,461

116,286
1,101,786
15,785
1,233,857

132,889
491,603
1,016,535
10,06157,756
1,708,844(1,103,940)
604,904

130,655484,578
1,062,499–
35,413
1,713,145(1,073,802)
639,343

1,356,010
5,016,357
10,372,806
102,663589,348
17,437,184(11,264,694)
6,172,490

134,585

89,412

1,373,316

1,536,557¥

1,601,193$

15,679,153

DNP Annual Report 2009 ＞ Financial Section

Thousands of U.S. dollars(Note 3)

Millions of yen

2009

Dai Nippon Printing Co., Ltd. and Consolidated Subsidiaries March 31, 2009 and 2008

2008

2009

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

Long-term liabilities:
Long-term debt (Note 7)
Liability for retirement benefits (Note 8)
Other long-term liabilities (Notes 7 and 13)
Total long-term liabilities

59,876
2,999
290,871
34,715
7,892
73,447
469,800¥

21,9693,286
317,856
39,26916,91255,075454,367$

610,980
30,602
2,968,071
354,235
80,531
749,459
4,793,878

61,491
41,452
23,728
126,671

54,95040,34911,392
106,691

627,459
422,980
242,122
1,292,561

114,464
144,898
751,870

114,464
144,898
797,317

1,168,000
1,478,551
7,672,143(93,884)
917,348(66,557)
990,122(958,000)
9,360,694(3,883)(5)(15,285)(19,173)
41,911
940,086

10,6107
2,121
12,73837,275
1,040,135(39,622)(51)(155,970)(195,643)
427,663
9,592,714

Contingent liabilities (Note 17)
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
56,123,617 shares in 2009 and 39,114,316 shares in 2008 (Note 9)
Total stockholders’ equity
Valuation and translation adjustments
Net unrealized gains (losses) on available-for-sale securities
Net deferred gains (losses) on derivatives
Foreign currency translation adjustments
Total valuation and translation adjustments
Minority interests
Total net assets

Total liabilities and net assets¥

1,536,557¥

1,601,193$

15,679,153

111

Consolidated Statements of Operations
Consolidated Financial Statements

Thousands of U.S. dollars(Note 3)

Millions of yen

2009

Dai Nippon Printing Co., Ltd. and Consolidated Subsidiaries Years ended March 31, 2009 and 2008

Net sales (Note 18)
Cost of sales (Notes 11, 15 and 18)
Gross profit¥

Selling, general and administrative expenses (Notes 11, 15 and 18)
Operating income
Other income (expenses) (Note 12):Interest and dividend income
Interest expenses
Equity in losses of associated companies
Foreign exchange transaction loss
Net loss on disposal of property, plant and equipment
Net gain on sales of marketable securities and investment securities
Gain on contribution of investment securities to pension trust (Note 8)
Gain (loss) on revision of retirement benefits plan (Note 8)
Directors’ retirement benefits
Loss on devaluation of investment securities
Compensation for damage losses
Provision for directors’ retirement benefits
Impairment loss on fixed assets (Note 14)
Amortization of consolidation goodwill
Other
Income (loss) before income taxes and minority interests
Income taxes (Note 13):
Current
Deferred

Minority interests
Net income (loss)

¥

2008
¥

1,584,844
1,324,522
260,322

1,616,053
1,327,872
288,181$

16,171,878
13,515,531
2,656,347

214,145
46,177201,077
87,1042,185,153
471,194

4,164(1,666)(1,247)(2,003)(6,740)
370
–
(144)
–
(13,947)––(50,690)(1,859)(257)(74,019)(27,842)

4,646(1,310)(1,441)(1,528)(3,419)
8,537
7,311
2,787
(6,554)(1,757)(697)(1,397)(3,300)
–
(513)
1,365
88,46942,490(17,000)(12,724)(20,439)(68,776)
3,776–(1,469)–(142,316)––(517,245)(18,969)(2,624)(755,296)(284,102)

15,375(20,857)(5,482)(22,360)

31,791
10,10341,894
46,575

156,888(212,827)(55,939)(228,163)

1,427(20,933)¥(1,403)45,172

Yen$

14,561(213,602)

U.S. dollars (Note 3)

2009

2009

2008

Net assets per common share¥

1,393.91¥

1,516.35$

14.22

Net income (loss) per common shareprimary¥(32.35)

¥

67.08

$

(0.33)

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

112

2009

DNP Annual Report 2009 ＞ Financial Section

Consolidated Statements of Changes in Net Assets
Consolidated Financial Statements
Millions of yen

Dai Nippon Printing Co., Ltd. and Consolidated
Subsidiaries
Years ended March 31, 2009 and 2008

Balance at March 31, 2007
Changes of items during the period
Net income
Cash dividends paid
Net increase resulting from changes of fiscal
year end in consolidated subsidiaries
Purchases of treasury stock
Disposal of treasury stock
Retirement of treasury stock
Changes in unrealized losses on availablefor-sale securities
Changes in deferred gains on derivatives
Changes in foreign currency translation
adjustments
Changes in minority interests
Total changes of items during the period
Balance at March 31, 2008
Changes of items during the period
Net loss
Cash dividends paid
Net increase resulting from changes of fiscal
year end in consolidated subsidiaries
Purchases of treasury stock
Disposal of treasury stock
Retirement of treasury stock
Changes in unrealized losses on availablefor-sale securities
Changes in deferred losses on derivatives
Changes in foreign currency translation
adjustments
Changes in minority interests
Other
Total changes of items during the period
Balance at March 31, 2009

Stockholders’ equity

Valuation and translation adjustments

Number ofsharesissued (inthousands)

Commonstock

CapitalsurplusRetainedearnings

Treasurystock,
at cost730,480

114,464

144,898

828,708(60,595)

41,332

–
–

–
–

–
–

45,172(23,931)

–
–

–
–
–
(30,000)

–
–
–
–

–
–
–
–

17
–
(2)
(52,647)

–
–

–
–

–
–

–
–
(30,000)
700,480–––
114,464––

Net unrealized
Net deferredgains (losses) on
gains (losses)
available-for-saleon derivatives
securities

Foreigncurrencytranslation
adjustmentsinterests

(4)

3,094

27,542

–
–

–
–

–
–

–
–

–
(58,643)
34
52,647

–
–
–
–

–
–
–
–

–
–
–
–

–
–
–
–

–
–

–
–

(30,722)
–

–
11

–
–

–
–

–
–
–
144,898––(31,391)
797,317––(5,962)(66,557)––(30,722)
10,610

–
–
11
7

(973)
–
(973)
2,121

–
9,733
9,733
37,275––––(20,933)(24,849)

–
–

–
–

–
–

–
–

–
–

–
–
–
–

–
–
–
–

–
–
–
–

–
–
(28)
–

–
(27,425)
90
–

–
–
–
–

–
–
–
–

–
–
–
–

–
–
–
–

–
–

–
–

–
–

–
–

–
–

(14,493)
–

–
(12)

–
–

–
–

–
–
–
–
700,480––––
114,464––––
144,898––363(45,447)
751,870––8(27,327)(93,884)–––(14,493)(3,883)

–
–
–
(12)
(5)

(17,406)––(17,406)(15,285)

–
4,636
–
4,636
41,911

MinorityThousands of U.S. dollars (Note 3)
Stockholders’ equity

Balance at March 31, 2008
Changes of items during the period
Net loss
Cash dividends paid
Net increase resulting from changes of fiscal
year end in consolidated subsidiaries
Purchases of treasury stock
Disposal of treasury stock
Retirement of treasury stock
Changes in unrealized losses on availablefor-sale securities
Changes in deferred losses on derivatives
Changes in foreign currency translation
adjustments
Changes in minority interests
Other
Total changes of items during the period
Balance at March 31, 2009

Valuation and translation adjustments

Number ofsharesissued (inthousands)

Commonstock

CapitalsurplusRetainedearnings

Treasurystock,
at cost700,480

1,168,000

1,478,551

8,135,888(679,153)

108,265

–
–

–
–

–
–

(213,602)(253,561)

–
–

–
–
–
–

–
–
–
–

–
–
–
–

–
–
– (279,847)
(286)
918
–
–

–
–

–
–

–
–

–
–
–
–
700,480––––
1,168,000––––
1,478,551––

Net unrealized
Net deferredgains (losses) on
gains (losses)
available-for-saleon derivatives
securities––

Foreigncurrencytranslation
adjustmentsinterests

71

21,643

380,357

–
–

–
–

–
–

–
–

–
–
–
–

–
–
–
–

–
–
–
–

–
–
–
–

(147,887)
–

–
(122)

–
–

–
–

–
–
–
–
–
–
3,704
82
–
(463,745) (278,847) (147,887)
7,672,143 (958,000) (39,622)

Minority– (177,613)–––
47,306–––(122) (177,613)
47,306(51) (155,970) 427,663

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

113

Consolidated Statements of Cash Flows
Consolidated Financial Statements

Thousands of U.S. dollars(Note 3)

Millions of yen

2009

Dai Nippon Printing Co., Ltd. and Consolidated Subsidiaries Years ended March 31, 2009 and 2008

Cash flows from operating activities:
Income (loss) 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)Provision for retirement benefits (net)
Equity in losses of associated companies
Amortization of consolidation goodwill (net)
Interest and dividend income
Interest expenses
Net gain on sales of marketable securities and investment
securities
Loss on devaluation of investment securities
Net loss on disposal of property, plant and equipment
Decrease in trade receivables
Decrease in inventories
Decrease in trade payables
Other
Sub-total
Payments of income taxes
Net cash provided by operating activities
Cash flows from investing activities:
Net decrease (increase) in time deposits
Proceeds from sales of marketable securities
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
Interest and dividend received
Other
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
Interest paid
Dividend paid
Payments for purchases of treasury stocks
Other
Net cash used in financing activities
Effect of exchange rate changes on cash and cash equivalents
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year

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

114

¥

¥

(27,842)

2008¥

88,4692009$(284,102)

106,883
50,690(522)(3,111)
1,247
6,407(4,164)
1,666

109,9023,300(69)(16,823)
1,441
2,050
(4,646)1,310

1,090,643
517,245(5,327)(31,745)
12,72465,378(42,490)
17,000(373)
13,947
6,740
56,8274,370(42,200)(4,038)
166,527(34,958)
131,569(8,537)
1,745
3,419
26,965
2,989(27,496)
6,929
190,948(33,665)
157,283(3,806)142,316
68,776
579,867
44,592(430,612)(41,204)
1,699,255(356,714)
1,342,541(14)
10,980(95,556)
3,307(8,201)
1,388
4,173(16,803)(100,726)

24,90410,000(124,128)
1,901(32,706)
18,412
4,679(25,585)(122,523)(143)
112,041(975,061)
33,745(83,684)
14,16342,582(171,459)(1,027,816)

23,324
4,961(6,664)(1,650)(25,253)(27,435)(1,235)(33,952)(10,386)(13,495)
130,695
117,200

12,535
1,254(3,479)(1,310)(24,346)(58,647)
265(73,728)(825)(39,793)
170,488
130,695

238,000
50,622(68,000)(16,837)(257,684)(279,949)(12,601)(346,449)(105,980)(137,704)
1,333,622
1,195,918¥$

DNP Annual Report 2009 ＞ Financial Section

Notes to Consolidated Financial Statements

Dai Nippon Printing Co., Ltd. and Consolidated Subsidiaries March 31, 2009 and 2008

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 and prepare
their financial statements in conformity with accounting principles and practices generally accepted in Japan, and its foreign subsidiaries inconformity with the Company’s group accounting policies based on International Financial Reporting Standards (“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 Law of Japan. Certain reclassifications of accounts andmodifications have been made in the accompanying consolidated financial statements to facilitate understanding by readers outside Japan.
Certain reclassifications have also been made in the 2008 financial statements to conform with current classifications. In addition, the notes tothe consolidated financial statements include additional information which is also not required for disclosure under accounting principles andpractices 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.
The fiscal year-end of the consolidated subsidiaries is the same as that of the Company except for thirty subsidiaries whose fiscal years end
December 31 and six subsidiaries whose fiscal years end January 31. Significant transactions between their fiscal year end 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 is judged to beother 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 orother long-term liabilities and are principally amortized over a period of 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 yenat the exchange rates at the balance sheet date. Revenues and expenses denominated in foreign currencies are translated at the exchange 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 for consolidation
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,” which is shown as a separate
component of valuation and translation adjustments 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 of changes ininterest rates.
Inventories
Inventories are stated at cost which is determined substantially by the average method for 2009 and 2008 and written-down to reflect the declineof profitability for 2009.
Marketable securities and investment securities
Marketable and investment securities are classified and accounted for, depending on management’s intent, as follows: i) held-to-maturity debt
securities, which are expected to be held to maturity with the positive intent and ability to hold to maturity, are reported at amortized cost andii) available-for-sale securities are reported at fair value, with unrealized gains and losses, net of applicable taxes, reported in a separate
component of valuation and translation adjustments.
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.

115

Property, plant and equipment and depreciation
Property, plant and equipment are carried at cost. Major renewals and additions are capitalized, while minor renewals, maintenance and repairs
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 estimated useful lives.
However, depreciation of buildings acquired on or after April 1, 1998 is computed by the straight-line method.
The estimated useful lives for depreciation purposes range as follows:
Buildings
Machinery and equipment

3 to 50 years
2 to 13 years

Assets with an acquisition cost of ¥100,000 ($1,020) or more per unit and less than ¥200,000 ($2,041) per unit, acquired on or after April 1, 1998,
are depreciated over three years on a straight-line basis, whereby one-third of such acquisition cost may be taken as depreciation expense eachyear.
Leased assets
Finance leases which do not transfer ownership were accounted for as operating leases for 2008 but are capitalized for 2009. Depreciation forleased assets for 2009 is computed on a straight-line basis over the lease period with a residual value of zero.
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 development costs for internal use included in intangible assets are amortized by the straight-line method over
five years.
Impairment of fixed assets
The Company and its subsidiaries review fixed assets for impairment whenever events or changes in circumstance indicate the carrying amountof an asset or asset group may not be recoverable. An impairment loss would be recognized if the carrying amount of an asset or asset groupexceeds 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, whichis the higher of the discounted cash flows from the continued use and eventual disposition of the asset or the net selling price at disposition.
Liability for retirement benefits
The Company and several 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. Prior service cost is being
amortized as incurred by the straight-line method over the period within the average remaining service periods 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 of the eligible employees.
Research and development expenses
Research and development expenses are charged to income as incurred.
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.
Income taxes on undistributed earnings have been provided for foreign subsidiaries, but not for domestic companies, as such earnings, if
distributed in the form of dividends, are not taxable under the current Japanese tax laws.
Derivatives and hedging activities
The Company and certain consolidated subsidiaries use derivative financial instruments (“derivatives”) for foreign currency forward contracts,
interest rate options and interest rate swaps to manage the risk arising from fluctuation in foreign currency exchange rates and interest rates. The
Company and its subsidiaries do not enter into derivatives contracts for speculative purposes.
Derivatives are carried at fair value with change in unrealized gains or losses charged or credited to operations, except for those which meet thecriteria for deferral hedge accounting under which an unrealized gain or loss is deferred as an asset or a liability.
The trade accounts receivable and payable denominated in foreign currencies of the Company and domestic subsidiaries which are individually
covered by foreign currency forward contracts are translated at the contracted rates because such treatment is also allowed to be elected under
the accounting standard if the forward contracts qualify for hedge accounting.
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, 2009 and2008, respectively.
Primary amounts of net income per share were computed on the average number of shares of common stock outstanding after deducting
treasury stocks during each year. Fully diluted net income per share is not disclosed because the Company has not issued any dilutive securities.

116

DNP Annual Report 2009 ＞ Financial Section

Change in accounting policies
Accounting standard for inventories“Accounting Standard for Measurement of Inventories” (Accounting Standards Board of Japan (the “ASBJ”) Statement No.9 issued on July 5,2006) was adopted effective this fiscal year. Under this accounting standard, inventories held for sale in the ordinary course of business of theCompany and its domestic subsidiaries are measured at cost using substantially by the average method being written-down to reflect the declineof profitability. The effect of this change for the year ended March 31, 2009 was not material.
Practical solution on unification of accounting policies applied to foreign subsidiaries for consolidated financial statements“Practical Solution on Unification of Accounting Policies Applied to Foreign Subsidiaries for Consolidated Financial Statements” (ASBJ
Practical Issues Task Force (PITF) No.18, issued on May 17, 2006) was adopted effective this fiscal year, and the necessary adjustments to theconsolidated financial statements have been made. The effect of this change for the year ended March 31, 2009 was not material.
Accounting standard for lease transactions
Finance lease transactions without ownership transfer were formerly accounted for as operating lease. The Company and its domestic
subsidiaries adopted “Accounting Standard for Lease Transactions” (ASBJ Statement No.13: originally issued on June 17, 1993, and revised on
March 30, 2007) and “Guidance on Accounting Standards for Lease Transactions” (ASBJ Guidance No.16: originally issued on January 18, 1994,
and revised on March 30, 2007) effective this fiscal year. Under these accounting standards, all finance lease transactions are capitalized. The
effect of this change for the year ended March 31, 2009 was not material.

3. Basis of Translating Financial Statements
The consolidated financial statements are expressed in Japanese yen in accordance with accounting principles and practices generally acceptedin Japan. The Japanese yen amounts have been translated into U.S. dollar amounts, solely for the convenience of the reader, at the rate of¥98=U.S. $1, the approximate exchange rate on the Tokyo Foreign Exchange Market at March 31, 2009. 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, 2009 and 2008 were comprised of the following:Thousands of U.S. dollars(Note 3)

Millions of yen

2009
Cash and deposits(excluding time deposits with a maturity over three months)

¥

2008

117,200¥

130,695

2009$

1,195,918

5. Marketable Securities and Investment Securities
The acquisition cost and aggregate fair value of marketable and investment securities classified as available-for-sale securities as of March 31,
2009 and 2008 were as follows:
Millions of yen

March 31, 2009

Acquisition cost

Unrealized gains

Unrealized losses

StocksOthers
Total

¥

¥

¥

March 31, 2009

Acquisition cost

Unrealized gains

Unrealized losses

StocksOthers
Total

$

$

$

March 31, 2008

Acquisition cost

Unrealized gains

Unrealized losses

StocksOthers
Total

¥

¥

¥

¥

78,367
14,011
92,378

¥

9,816
–
9,816

¥

13,272
182
13,454

Fair value¥¥

74,911
13,82988,740Thousands of U.S. dollars (Note 3)$

799,664
142,969
942,633$

100,163–
100,163$

135,429
1,857
137,286

Fair value$$

764,398
141,112905,510

Millions of yen¥

84,60324,024
108,627¥

25,600525,605

¥

7,450
137
7,587

Fair value¥¥

102,753
23,892
126,645

117

The proceeds from sales of available-for-sale securities for the years ended March 31, 2009 and 2008 were ¥1,185 million ($12,092 thousand)and ¥12,283 million, respectively. The gross realized gains on these sales for the years ended March 31, 2009 and 2008 were ¥374 million ($3,816
thousand) and ¥8,737 million, respectively, and the gross realized losses on these sales for the years ended March 31, 2009 and 2008 were
¥1 million ($10 thousand) and ¥200 million, respectively.
The following summarized carrying amounts of securities with no fair value as of March 31, 2009 and 2008:
Thousands of U.S. dollars(Note 3)

Millions of yen

2009
Held-to-maturity debt securities
Corporate bonds
Available-for-sale securities
Non-listed equity securities
Corporate bonds
Others

2008

2009

¥

–

¥

14

$

–

¥

18,965–278¥

18,797
180
1,191

$

193,520–
2,837

The redemption schedules for securities with maturities classified as held-to-maturity debt securities and other securities at March 31, 2009 and2008 were as follows:
Millions of yen

Due in one
year or lessMarch 31, 2009

Corporate bonds
Other bonds¥

Due after one year Due after five years
through five years through ten years
–
–
–

¥

¥

150
–
150

¥

¥
¥

30
9,000
9,030

Thousands of U.S. dollars (Note 3)

Due in one
year or lessMarch 31, 2009

Corporate bonds
Other bonds$

Due after one year Due after five years
through five years through ten years
–
–
–

$

$
$

1,531
–
1,531

$
$

306
91,837
92,143

Millions of yen

Due in one
year or lessMarch 31, 2008

Government bonds
Corporate bonds
Other bonds¥¥

10,013––
10,013Due after one year Due after five years
through five years through ten years
¥

–
164
–
164

¥

¥

¥

–
30
9,000
9,030

6. Inventories
Inventories at March 31, 2009 and 2008 consisted of the following:Thousands of U.S. dollars(Note 3)

Millions of yen

2009
Finished products
Work in process
Raw materials

¥

¥

118

73,37329,70817,566
120,647

2008¥¥

40,49936,66919,22596,393

2009$$748,704
303,143
179,245
1,231,092

DNP Annual Report 2009 ＞ Financial Section

7. Short-term Bank Loans and Long-term Debt
Short-term bank loans at March 31, 2009 and 2008 were represented by bank loans and bank overdrafts, etc. bearing interest at an average rateof 1.27% per annum for 2009 and 1.97% per annum for 2008.
Long-term debt at March 31, 2009 and 2008 consisted of the following:Thousands of U.S. dollars(Note 3)

Millions of yen

2009
Unsecured debentures
1.67% due 2014
1.04% due 2012
0.96% due 2010
0.50% due 2009¥

Mortgage loans, maturing 2009-2024
Unsecured loans, maturing 2009-2014
Current portion of long-term debt¥

50,000
1,000
100
–
3,117
10,27364,490(2,999)61,491

2008¥¥

50,000
–
100
100
3,176
4,860
58,236(3,286)54,9502009$$

510,204
10,204
1,021–
31,806
104,826
658,061(30,602)627,459

Mortgage loans were secured by property, plant and equipment and other assets amounting to ¥7,350 million ($75,000 thousand) and ¥6,912
million at March 31, 2009 and 2008, respectively.
With minor exceptions, interest rates on mortgage loans ranged from 2.72% to 3.02% per annum for 2009 and ranged from 2.87% to 5.67%
per annum for 2008, while interest rates on unsecured loans ranged from 0.77% to 2.07% per annum for 2009 and from 0.44% to 1.90% perannum for 2008.
The aggregate annual maturities of long-term debt after March 31, 2009 were as follows:
Years ending March 31
2010
2011
2012
2013
2014
2015 and thereafter

Millions of yen

¥

¥

2,999
3,066
6,491
776
50,378780
64,490Thousands of U.S. dollars(Note 3)$$30,602
31,286
66,235
7,918
514,061
7,959
658,061

Finance lease obligations at March 31, 2009 which are included in other long-term liabilities consisted of the following:

Finance lease obligations
Current portion of lease obligations¥¥

Millions of yen

Thousands of U.S. dollars(Note 3)

2009

2009

8,686
(2,282)
6,404$$

88,633(23,286)
65,347

The aggregate annual maturities of finance lease obligations after March 31, 2009 were as follows:
Years ending March 31
2010
2011
2012
2013
2014
2015 and thereafter

Millions of yen

¥

¥

2,282
2,990
1,491
791
459
673
8,686

Thousands of U.S. dollars(Note 3)$$23,28630,51015,214
8,072
4,684
6,867
88,633

8. Retirement Benefits
The Company and its domestic subsidiaries have several defined benefit retirement plans covering all of their employees, i.e. corporate pension
plan, tax-qualified non-contributory 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 entitledto lump-sum payments based on the current rate of pay, length of services and accumulated number of points determined based on theemployment services.

119Under the Defined Benefit Pension Plan Law, the Company established new defined benefit pension plans on March 1, 2005, under which ninety
percent of the retirement benefit liability of the Company is covered by the employees’ pension fund.
In December 2008, one of the domestic consolidated subsidiaries made a change in the retirement benefit plan for employees from a taxqualified non-contributory pension plan to a defined contribution pension plan. The Company accounted for this change in accordance with the
ASBJ Guidance No.1, Accounting for Transfer between Retirement Benefit Plans. The effect of this change was to increase loss before income
taxes and minority interests for the year ended March 31, 2009 by ¥144 million ($1,469 thousand).
The liability for employees’ retirement benefits at March 31, 2009 and 2008 consisted of the following:Thousands of U.S. dollars(Note 3)

Millions of yen

2009
Projected benefit obligation
Fair value of plan assets
Unrecognized actuarial gain/loss
Unrecognized prior service cost
Prepaid pension cost
Net liability

¥

2008

171,672(94,009)(36,694)(4,523)
5,006
41,452¥¥¥

158,731(106,268)(10,280)(6,866)
5,032
40,3492009$$

1,751,755(959,275)(374,429)(46,153)
51,082422,980

The components of net periodic benefit costs were as follows:
Thousands of U.S. dollars(Note 3)

Millions of yen

2009Service cost
Interest cost
Expected return on plan assets
Actuarial gain/loss
Amortization of prior service cost
Gain on contribution of investment securities to pension trust
Gain/loss on revision of retirement benefit plan
Other
Net periodic benefit costs

¥

¥

9,613
3,897
(2,498)
1,931
2,322
–
144
89
15,498

2008
¥

¥

9,440
3,753
(2,274)(977)
2,294(7,311)(2,787)
–
2,138

2009
$

$

98,092
39,765(25,490)
19,704
23,694–
1,470
908
158,143

Assumptions used for the years ended March 31, 2009 and 2008 were set forth as follows:

Attribution method of estimated benefits to periods of services
Discount rate
Expected rate of return on plan assets
Recognition period of actuarial gain/loss
Amortization period of prior service cost

2009

2008

Straight-line method
2.5%
2.5%
9 years
6 years

Straight-line method
2.5%
2.5%
9 years
6 years

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 termby 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 ofincorporation 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 andadditional requirements.
Semiannual interim dividends may also be paid once a year upon resolution by the Board of Directors if the articles of incorporation of thecompany so stipulate. The Companies Act provides certain limitations on the amounts available for dividends or the purchase of treasury 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 ¥14.00 ($0.1) per share, aggregating ¥9,028 million ($92,122 thousand) were approved at the general stockholders’ meeting
held in June 2009 with respect to the year ended March 31, 2009.

120

DNP Annual Report 2009 ＞ Financial Section(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 of retained
earnings) or as additional paid-in capital (a component of capital surplus) depending on the equity account charged upon the payment of such
dividends until the total of aggregate amount of legal reserve and additional paid-in capital equals 25% of the common stock. Under theCompanies 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 and retained earnings can be transferred among theaccounts 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 the Board of
Directors. The amount of treasury stock purchased cannot exceed the amount available for distribution to the stockholders which is determinedby specific formula.
Under the Companies Act, stock acquisition rights, which were previously presented as a liability, are now presented as a separate componentof net assets.
The Companies Act also provides that companies can purchase both treasury stock acquisition rights and treasury stock. Such treasury stockacquisition rights are presented as a separate component of net assets or deducted directly from stock acquisition rights. At present, theCompany has not issued such stock acquisition rights.
Upon approval by the resolution of the Board of Directors, the Company purchased 17,231 thousand shares of common stocks at aggregate
cost of ¥27,425 million ($279,847 thousand) and 32,771 thousand shares at ¥58,454 million during the years ended March 31, 2009 and 2008,
respectively. Furthermore the Company retired 30,000 thousand shares at ¥52,647 million during the year ended March 31 2008.

10. Accounts with Non-consolidated Subsidiaries and Associated Companies
Account balances with non-consolidated subsidiaries and associated companies as of March 31, 2009 and 2008 were summarized as follows:
Thousands of U.S. dollars(Note 3)

Millions of yen

2009
Trade receivables
Other current assets
Investment securities (stock)
Long-term loans
Other investments
Trade payables
Accrued expenses
Other current liabilities

¥

2008

5,082
236
5,474
5,647
275
433
195
604

¥

2009

9,568
503
14,331
5,501
226
298
396
620

$

51,8572,408
55,85757,622
2,806
4,418
1,990
6,163

11. Selling, General and Administrative Expenses
Selling, general and administrative expenses for the years ended March 31, 2009 and 2008 consisted of the following:Thousands of U.S. dollars(Note 3)

Millions of yen

2009
Transportation expenses
Salaries and allowances
Accrued bonuses
Provision for retirement benefits
Provision for doubtful receivables
Depreciation
Research and development expenses
Other

¥

¥

2008

19,02359,578
5,516
4,010
1,068
10,15931,097
83,694
214,145

¥

¥

2009

21,704
53,129
6,494
2,614
–
10,06632,84074,230201,077$$

194,112607,939
56,28640,918
10,898103,663
317,316854,0212,185,153

Total research and development expenses (including manufacturing costs) amounted to ¥34,112 million ($348,082 thousand) and ¥35,556 million
for 2009 and 2008, respectively.
12. Other Income
The following types of income from non-consolidated subsidiaries and associated companies were included in other income.
Thousands of U.S. dollars(Note 3)

Millions of yen

2009
Interest and dividend income
Leasing fees

¥

2008
112
178

¥

2009
67
253

$

1,143
1,816

121

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 40.7% for the years ended March 31, 2009 and 2008, respectively.
The actual effective tax rate reflected in the accompanying consolidated statements of income 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 foreignsubsidiaries, etc.
The following is a reconciliation of the difference between the normal effective statutory tax rate and the actual effective tax rate for the year
ended March 31, 2008, although no reconciliation for 2009 was shown because of loss before income taxes and minority interests.
2008
Normal effective statutory tax rate
Expenses not deductible for income tax purposes
Change in valuation allowance
Amortization of consolidation goodwill
Undistributed earnings of foreign subsidiaries
Special tax credit
Other
Actual effective tax rate

40.7%
1.3
6.7
1.2
0.5
(3.3)
0.3
47.4%

Net deferred tax assets at March 31, 2009 and 2008, resulting from temporary differences between the carrying amounts and the tax bases ofassets and liabilities, were reflected on the accompanying consolidated balance sheets under the following captions:Thousands of U.S. dollars(Note 3)

Millions of yen

2009

2008

2009

Prepaid expenses and other current assets
Other assets¥

10,27950,015¥

12,99318,601$

104,888
510,357

Other current liabilities
Other long-term liabilities
Net deferred tax assets¥(11)(3,352)56,931¥(19)(2,799)28,776$(112)(34,204)
580,929¥¥$

Significant components of deferred tax assets at March 31, 2009 and 2008 were as follows:
Thousands of U.S. dollars(Note 3)

Millions of yen

2009
Deferred tax assets:
Excess provision for retirement benefits
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
Unrealized loss on available-for-sale securities
Other
Total deferred tax assets
Less: valuation allowance
Total
Deferred tax liabilities:
Unrealized gain on available-for-sale securities
Undistributed earnings of subsidiaries
Other
Total
Net deferred tax assets:

122

¥

2008

19,356
4,873
5,691
6,431
1,045
31,267
24,342
1,505
10,983
105,493(43,307)62,186¥¥¥–(1,190)(4,065)(5,255)¥56,931¥¥

2009

17,151
14,917
5,620
7,272
594
8,904
3,394
–
11,07968,931(21,808)
47,123$$¥(7,318)(9,520)(1,509)(18,347)$–(12,143)(41,479)(53,622)¥

28,776$580,929¥$

197,51049,72458,071
65,622
10,663319,051
248,388
15,357
112,073
1,076,459(441,908)
634,551

DNP Annual Report 2009 ＞ Financial Section

14. Impairment Loss on Fixed Assets
The Company and its consolidated subsidiaries reviewed the fixed assets for impairment for the years ended March 31, 2009 and 2008. Fixed
assets were, in principle, grouped at the business unit for impairment testing purposes. Idle assets were grouped in each asset. Loss on
impairment of fixed assets for the year ended March 31, 2009 was recognized in the amount of ¥50,690 million ($517,245 thousand) due to asignificant decline in profitability. The recoverable amount of the business assets was measured at their value in use which was calculated bydiscounting future cash flow. The discount rate was mainly 10%. The recoverable amount of the idle assets was measured at the net selling
value which was mainly calculated based on the real estate appraisal value. The losses on impairment of fixed assets for the years ended March
31, 2009 and 2008 were as follows:
Thousands of U.S. dollars(Note 3)

Millions of yen

2009
Land
Machinery and equipment
Buildings
Construction in progress
Goodwill and others
Total

¥

¥

2008

4
25,243
11,992
10,9692,482
50,690

¥

¥

46
1,554
653
–
1,047
3,300

2009
$

$

41
257,582
122,367
111,929
25,326517,245

15. 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. Pro forma information such as acquisition cost, accumulated depreciation and net book value of theleased properties for such finance lease transactions was as follows:
Thousands of U.S. dollars(Note 3)

Millions of yen

2009
Acquisition cost
Accumulated depreciation
Accumulated impairment losses
Net book value

¥

¥

2008

46,882(28,233)(1,305)
17,344¥¥46,882(23,226)–
23,656

2009$$

478,388(288,092)(13,316)
176,980

Lease expenses on finance lease contracts without ownership-transfer amounted to ¥11,724 million ($119,633 thousand) and ¥11,415 million
for the years ended March 31, 2009 and 2008, respectively, and lease impairment losses for the year ended March 31, 2009 was ¥1,102 million($11,245 thousand).
The amounts of outstanding future payments under such finance leases due on March 31, 2009 and 2008, including the portion of interest
thereon, were summarized as follows:
Thousands of U.S. dollars(Note 3)

Millions of yen

2009
Future lease payments:
One year or lessMore than one year¥¥

10,578
8,111
18,689

2008

¥
¥

9,758
13,89823,656

2009$$

107,939
82,765
190,704123Operating leases
The amounts of outstanding future payments under non-cancelable operating leases due on March 31, 2009 and 2008 were also summarized asfollows:
Thousands of U.S. dollars(Note 3)

Millions of yen

2009
Future lease payments:
One year or lessMore than one year

¥
¥

2,656
16,89919,555

2008

¥
¥

2009

706
2,539
3,245

$
$

27,102
172,439
199,541

16. Derivative Financial Instruments
Nature of derivative financial instruments:
The Company and certain consolidated subsidiaries enter into derivative financial instruments (“derivatives”) for foreign currency forward
contracts, interest rate options and interest rate swaps to manage the risk arising from fluctuation in foreign currency exchange rates andinterest rates. Foreign currency forward contracts are utilized to hedge foreign exchange risks associated with certain accounts receivable andaccounts payable, including forecasted transactions, denominated in foreign currencies. Interest rate options and interest rate swaps are utilized
to hedge interest rate risks on interest-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 basic policies for the use ofderivatives are established in the Company’s internal regulations and the execution and control of derivatives are controlled by the Accounting
Department.
Fair value of derivative financial instruments:
The contracted amount and fair value of derivatives for foreign currency forward contracts and interest rate swaps at March 31, 2009 and 2008
were as follows:
Millions of yen

Contracted
amountMarch 31, 2009

Foreign currency forward contracts
Receivables:
U.S.dollars
Euro

Interest rate swaps
Receive floating and pay fixed¥

Fair value

¥

¥

5,250
1,698
6,948

¥

13,800

Unrealized loss

¥

¥

5,494
1,780
7,274

¥

244
82
326

¥

(76)

¥

76

Thousands of U.S. dollars (Note 3)

Contracted
amountMarch 31, 2009

Foreign currency forward contracts
Receivables:
U.S.dollars
Euro

Interest rate swaps
Receive floating and pay fixed124$

Fair value$$

53,571
17,32770,898$140,816

Unrealized loss$$

56,061
18,164
74,225

$

2,490
837
3,327

$

(776)

$

776

DNP Annual Report 2009 ＞ Financial Section

Millions of yen

Contracted
amountMarch 31, 2008

Foreign currency forward contracts
Receivables:
U.S.dollars
Euro

¥
¥

4,927
367
5,294

Fair value¥¥

Unrealized gain

4,679
367
5,046

¥
¥

248
0
248

Fair value of derivatives were, in principle, determined based on the market rates. Foreign currency forward contracts which qualified for hedge
accounting for the years ended March 31, 2009 and 2008 and were assigned to the associated assets and liabilities or deferred until completionof the forecasted transactions were excluded from disclosure of the above fair value information.

17. Contingent Liabilities
The Company and its consolidated subsidiaries were guarantor of bank loans of other companies, amounting to approximately ¥93 million ($949
thousand) and ¥91 million at March 31, 2009 and 2008, respectively. It is common practice in Japan for companies, in the ordinary course ofbusiness, to receive promissory notes in settlement of trade accounts receivable and to subsequently discount such notes at banks. At March
31, 2009 and 2008, the Company and its consolidated subsidiaries were contingently liable on trade notes discounted in the amount of ¥670
million ($6,837 thousand) and ¥820 million, respectively. Notes discounted were accounted for as sales. One of the consolidated domestic
subsidiaries securitized deposits for its leased property and sold them to third parties for ¥370 million ($3,776 thousand) at March 31, 2009.

18. Business Segment Information
Industry segments:
The Company and its consolidated subsidiaries’ primary business industries principally consist of Printing and Beverages operations. The Printing
business includes three segments: Information Communication, Lifestyle and Industrial Supplies, and Electronics.
The following tables present certain financial information, including net sales, costs and expenses, operating income, assets, depreciation,
impairment loss and capital expenditures regarding the Company’s industry segments at March 31, 2009 and 2008 and for the years thenended.
Millions of yen

Printing

For 2009:
Net sales:
Outside customers
Inter-segment
Total
Costs and expenses
Operating income

Information
Communication¥

Lifestyle andIndustrial
Supplies

Electronics

Beverages

Total

Elimination
and/orcorporate

Consolidated¥

711,276 ¥
7,150
718,426
686,736
31,690 ¥545,916 ¥
5,906
551,822531,905
19,917 ¥255,967 ¥8
255,975
253,398
2,577 ¥

71,685 ¥ 1,584,844 ¥
46
13,11071,731
1,597,954
71,4081,543,447
323 ¥
54,507 ¥– ¥ 1,584,844(13,110)–(13,110)
1,584,844(4,780)1,538,667(8,330) ¥46,177

Assets, depreciation, impairment loss andcapital expenditures:
Assets¥Depreciation
Impairment loss
Capital expenditures

619,080 ¥25,204
1,799
27,988513,092 ¥
29,51348
29,718329,042 ¥46,03948,692
34,271

43,394 ¥ 1,504,608 ¥
3,507
104,263
151
50,6902,835
94,812

31,949 ¥ 1,536,557
2,620
106,883–
50,6901,344
96,156125

Thousands of U.S. dollars (Note 3)

Printing
Lifestyle andIndustrial
Supplies

Information
Communication

For 2009:
Net sales:
Outside customers
Inter-segment
Total
Costs and expenses
Operating income

Beverages

Electronics$ 7,257,918 $ 5,570,572 $ 2,611,908 $
72,95960,26582
7,330,877
5,630,837
2,611,990
7,007,510
5,427,602
2,585,694$
323,367 $
203,235 $
26,296 $Assets, depreciation, impairment loss andcapital expenditures:
Assets$ 6,317,143
Depreciation
257,183
Impairment loss
18,357
Capital expenditures
285,592$ 5,235,633 $ 3,357,571 $
301,153469,786490
496,857
303,245
349,704

Elimination
and/orcorporate

Total

Consolidated

731,480 $ 16,171,878 $
470
133,776
731,950
16,305,654
728,654
15,749,460
3,296 $
556,194 $– $ 16,171,878(133,776)–(133,776) 16,171,878(48,776) 15,700,684(85,000) $471,194442,796 $ 15,353,143 $
35,786
1,063,908
1,541
517,245
28,928967,469

326,010 $ 15,679,153
26,735
1,090,643–
517,245
13,715
981,184

Millions of yen

Printing
Information
Communication

For 2008:
Net sales:
Outside customers
Inter-segment
Total
Costs and expenses
Operating income¥

Lifestyle andIndustrial
Supplies

Beverages

Electronics

Elimination
and/orcorporate

Total

Consolidated¥

672,772 ¥
7,125
679,897
636,82143,076 ¥547,567 ¥8,225
555,792
523,929
31,863 ¥322,264 ¥48
322,312302,494
19,818 ¥73,450 ¥ 1,616,053 ¥
45
15,44373,495
1,631,496
72,169
1,535,413
1,326 ¥
96,083 ¥– ¥ 1,616,053(15,443)–(15,443)
1,616,053(6,464)
1,528,949(8,979) ¥87,104

Assets, depreciation, impairment loss andcapital expenditures:
Assets¥Depreciation
Impairment loss
Capital expenditures

557,532 ¥23,27953
26,539532,230 ¥
28,5881,051
31,819427,402 ¥51,7172,153
45,98444,335 ¥ 1,561,499 ¥
3,665
107,249
43
3,300
3,692
108,034

39,694 ¥ 1,601,193
2,653
109,902
–
3,300
8,105
116,139

Information by geographic area:
Disclosure of information by geographic area was not required as domestic sales and assets exceeded 90% of consolidated sales and assets,
respectively, before elimination, for all segments for the years ended March 31, 2009 and 2008.
Overseas sales:
Overseas sales of the Company and its consolidated subsidiaries for the years ended March 31, 2009 and 2008 were as follows:
Thousands of U.S. dollars(Note 3)

Millions of yen

2009
Amount126

Overseas sales
Asia
Other
Total

(a)

Consolidated net sales

(b)

¥
¥

134,108
76,303
210,411¥

1,584,844

2008
Ratio:(a)/(b)

8.5%
4.8%
13.3%

Amount¥¥195,093
84,445279,538¥

1,616,053

2009
Ratio:(a)/(b)

12.1%
5.2%
17.3%

$
$

1,368,449
778,6022,147,051$

16,171,878

DNP Annual Report 2009 ＞ Financial Section

Independent Auditors’ Report
To the Board of Directors of
Dai Nippon Printing Co., Ltd.
We have audited the accompanying consolidated balance sheets (expressed in Japanese yen) of Dai Nippon Printing
Co., Ltd. and consolidated subsidiaries as of March 31, 2009 and 2008, and the related consolidated statements ofoperations, changes in net assets, and cash flows for the years then ended. These consolidated financial statements
are the responsibility of the Company’s management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in Japan. Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial
statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting theamounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, thefinancial position of Dai Nippon Printing Co., Ltd. and consolidated subsidiaries as of March 31, 2009 and 2008, andthe results of their operations and cash flows for the years then ended in conformity with accounting principles
generally accepted in Japan.
We have also audited the management’s report on internal control over financial reporting of Dai Nippon Printing
Co., Ltd. as of March 31, 2009. The Company’s management is responsible for designing and operating effective
internal control over financial reporting and for preparing its report on internal control over financial reporting. Our
responsibility is to express an opinion on the management’s report on internal control over financial reporting basedon our audit. There is a possibility that material weakness may not be completely prevented or detected by internal
control over financial reporting.
We conducted our internal control audit in accordance with auditing standards for internal control over financial
reporting generally accepted in Japan. Those standards require that we plan and perform the audit to obtainreasonable assurance about whether the management’s report on internal control over financial reporting is free ofmaterial misstatement. An internal control audit includes examining, on a test basis, representation 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 over financial reporting. We believethat our audit provides a reasonable basis for our opinion.
In our opinion, the management report on internal control referred to above, which represents the internal control
over financial reporting of Dai Nippon Printing Co., Ltd. as of March 31, 2009 is effectively maintained presents fairly,
in all material respects, the assessment of internal control over financial reporting in conformity with assessment
standards for internal control over financial reporting generally accepted in Japan.
Our audits 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 for the convenience of readers outside Japan.

MEIJI AUDIT CORPORATIONTokyo, Japan
June 26, 2009127

Appendix
Printing Process and its Basic Technologies

Printing can be defined as a generic term for techniques of transferring ink
from an image on a form plate to another object in order to reproduce theoriginal image. It entails five main processes 1) planning, 2) film making,3) plate making, 4) printing and 5) binding/post-processing. Through these fivemain processes, we have cultivated a truly wide range of skills and expertise.
First, planning: this requires an amalgamation of knowledge and skills
related to various fields, including marketing, media selection, planningand the collection, editing and processing of information. The preparationof form plates, including film making and plate making, requires skills likesophisticated digital image processing, color management, optics and micro-

processing. The actual printing process entails skills and knowledge related
to paper, film or other material to be printed, ink and a wide range of othermaterials, application techniques for fixing ink, and the mechanical skills
required for the smooth operation of printing presses. Binding and postprocessing involves skills needed to finish a variety of printed products,
including bound-in sleeves, CD-ROM and DVD bindings, packaging material
productions, and the formation of cups and PET plastic bottles.
As the reader can see, printing is a complex process with both soft and hard
aspects. It requires the integration of content, all types of media, materials andcontrol of mechanical systems.

Technologies that Support Expansion Printing
Application and development of PT and IT, technologies based on printing processes – these are the strengths that allowed us to expand DNP's business.

Printing Technologies (PT)Materials Technologies

Patterning Technologies

Converting Technologies

Printing Process
Manuscript

Data processing

Texts, graphics,
animations,audios, etc.

Data entry, digitization,compilation,
processing, etc.

Data Processing
Technologies

FilmmakingPlate making

Printing

Processing

Distribution

HMI Technologies(Human Media Interaction)

Information Security
Technologies

Information Technologies (IT)■ PT = Printing Technologies• Materials technologies:
technologies for synthesizing new materials, and for dispersing or mixing materials. Used with inks, adhesives,
etc.
• Patterning technologies:
formation of letters or images etc. on a base material. Includes making printing plates, lithography, and inkjet
technologies.
• Converting technologies:
processing technologies that change a material’s shape or compound materials etc. Includes technologies forbookbinding, film formation, coating, copying, etc.

128

■ IT = Information Technologies• Data processing technologies: technologies for the input, output, conversion, synthesis, accumulation ortransmission of data. Includes editing of text or images, database creation, and networking technologies.
• Human Media Interaction (HMI) technologies: technologies related to interaction between humans andinformation. Includes font design, color matching, and natural language processing technologies.
• Information security technologies: technologies for assuring that information is accurately transmitted tothe correct target and properly stored without allowing improper usage. Includes encrypting technologies,
personal information processing and management technologies, and biometric technologies, etc.

Technologies and Their Applications

Information Processing Technologies

Treating Text and Images as Information and Processing Them Flexibly to Suit Various Media
Before we begin to actually print something, there are preparatory steps inwhich we process the text, photos, illustrations or other material. As part ofthis prepress process, we consider the printing method, size, materials andmethods of expression that will convey the material clearly, legibly and mosteffectively. We then process the material according to the most effectivemode of expression. Our job includes organizing and storing the processed
information so that it can be revised and re-used in the future, as is often donewith dictionaries, contact lists and product catalogues.
DNP’s information processing skills are not limited to the domain of paper
printing, but have evolved to include all kinds of media. The range of fields
that we deal with expanded particularly suddenly in the 1970s, with thedigitalization of printing processes.
Information processing technologies include image processing techniques,
such as those aimed at optimizing the colors, outline, contrast or coloration
used in an image, data conversion techniques (e.g. converting the language,
format, or size of a data file to fit paper, CD-ROM and DVD, the Internet,
digital broadcasting or other media), and databasing techniques for organizing,storing, and managing information.

We expanded into such businesses as information processing services(integrated data input, printing and shipping) that support products likepersonalized mail; digital archiving, which entails creating digital versionsof cultural assets like paintings and other art works and organizing theminto databases that can be searched and used in other novel ways; andoperation of data centers that offer a high-security environment, including theinfrastructure to maintain security.
Most recently, in light of the new demand for personal data protection, anticounterfeit and product traceability, DNP’s information processing technology
has become more advanced than ever. The information that our customers
ask us to print is valuable material. Thanks to a corporate climate that allows
us to take good care of that information, and thanks to our track record fortaking good care of highly confidential printed matter such as bankbooks, bankcards and stock certificates, we have earned a high degree of trust from ourcustomers. By combining hardware in the form of smart cards and IC tags with
software applications, we are expanding into areas of information processingthat other industries have not entered.

Examples of Information Processing Technology Applications
DNP has used its digital information processing expertise to address a variety of electronic media, including CD-ROM and DVD, the Internet and broadcasting.
We have expanded our business to prepare for a full-fledged ubiquitous society — in which necessary information is accessible anywhere, anytime — and to meetthe demand for personal data protection.

Application Example 1

Application Example 2

Development of User-Oriented MediaWith the rapid progress of computerization, information interfaces between
consumers and corporations are becoming more and more diverse. In order
to transmit information more effectively, it is important to understand how
a target group of consumers uses information, and to develop media that ismost suited to their information usage style.
DNP set about computerizing its typesetting operations in the 1970s. This
included digitizing the original font, Shueitai, that we developed in the early
1900s. In 1985, we produced the world’s first electronic dictionary on CDROM, after which we were quick to begin Internet (via PCs and cell phones)
and digital broadcasting. In 2005, we made our Shueitai font compatible with
JIS standards 3 and 4, and adapted it for use in word processing software.
In 2006, we developed a version of Shueitai that is easier to read on digital
displays.
DNP has refined its information processing technologies in order to makeinformation easy to read and easy to communicate. Going forward, we intend
to continue expanding our business along with developments in information
media.

Gothic typeface

Shuei Yokobuto
Ming-cho typeface

Responding to the Need for Advanced Information
Security
Demand for information security is rapidly increasing, due partly to thepassage of Japan’s Personal Information Protection Act and Law Concerning
Electronic Signatures and Certification Services, as well as measures aimed atpreventing corporate data leakage. There is especially strong demand for thereinforcement of systems that protect and manage important information.
Since its founding, DNP has carefully guarded the information that it received
from corporate clients. Through this careful handling, we honed our information
security technologies. We developed technologies for organizing information
into databases, for efficiently reusing information, and for building more secure
network systems and products with improved anti-counterfeiting functions.
Recently, we have been building systems with such functions as a smart
card-controlled computer boot-up, data encoding, restricted device accessrequiring personal authentication, and room entry/exit control. DNP also serves
as the secretariat for Shared Security Formats Cooperation (SSFC), a corporate
alliance aimed at creating standards for office security. These are some of theways in which DNP is responding increasingly broadly to today’s demand forsophisticated information security.

Ming-cho typeface

The Shueitai character in the center combines the best characteristics of both Gothic andMincho fonts and is processed/designed for easy reading on electronic displays

129Appendix
Technologies and Their Applications

Patterning Technologies

Exposure, Development and Etching: the Principles are the Same whether the Product is Text or Semiconductors
Patterning is the art of making images on form plates to be used in the film
making process that is part of the overall printing process. The image to becreated on the form plate may consist of text, pictures or illustrations.
Before the advent of full digitalization, the process of film making involved
photographing camera-ready masters or original photos and exposing theimages onto film to make positive film or negative film. Color photographs wereseparated into four colors: with tiny dots of yellow, magenta, cyan and black
fixed onto four sheets of film.
An image that is microscopically etched onto the film using patterningtechnology is then burned onto a printing plate, consisting of a plate made of resinor metal, etc. Specifically, the image on the form plate was exposed onto a plate(usually made of resin or metal) that was coated with a photosensitizing agent.
This is called photolithography. After exposing only the necessary parts of theresin or metal, a corrosive agent like acid was used to engrave the image. This wasthen washed off to make a gravure plate. This process is called etching.
As we refined this technology to the point that we now possess the mostprecise printing technology in the world, DNP developed its own production

equipment and systems. Today, each dot in high-quality printing is just over one
hundredth of a millimeter in diameter.
DNP took the ultra-fine patterning, photolithography and etching skills that weaccumulated in our printing work and began applying these micro-processing
technologies to the manufacture of electronic components. The first electronicsrelated product that we addressed was shadowmasks. Shadowmasks guideelectron beams to a luminant; they are essential for giving color to TV images. A
shadowmask is a thin steel plate, only 0.2 mm thick, containing millions of ultramicroscopic holes. It is said to be impossible to achieve the necessary precisionby punching, but it is possible to quickly mass-produce shadowmasks using
advanced printing technology.
DNP has already refined its patterning technologies to accommodate therealm of nanotechnology necessary for manufacturing photomasks, which
serve as original plates in the manufacture of semiconductors. We have built arecord of success in the techniques that are indispensable to the pursuit of ultraminiaturization, and the industry looks to us to build on this record in the future.

Examples of Applications for Patterning Technologies
DNP has continued to hold the world’s largest share of the shadowmask market, and has gone on to claim winning positions in other global markets such as
photomasks, which serve as original plates for making semiconductor circuits, and color filters used in LCDs (liquid crystal displays).

Application Example 1

130

Application Example 2

Display Components / Color Filters for LCDs

Electronic Devices / Photomasks

An LCD color filter consists of the three primary colors in light — red, green
and blue — arranged in an orderly array on a glass substrate. Light from abacklight passes through the liquid crystals, and when it passes through thecolor filter, it creates a variety of colors. Color filter quality is determined by
the formation of millions of pixels precisely in predetermined locations. Thisrequires extremely sophisticated patterning technology.
In 2006, we developed a multi-primary color filter with yellow and cyan(bright blue) added to the three primary light colors, thereby enhancing thequality of color reproduction.

Photomasks consist of highly precise circuit patterns, of a submicron or
nanometer order, formed on a glass substrate. They are essential to the
manufacture of LSIs and ICs because they are the original plates used forprinting circuits onto the surface of silicone wafers. In recent years, as
semiconductors have become increasingly highly integrated and larger incapacity, the line width required for high-end products has become smaller andsmaller. Already, mass production is underway for products with 65 nm lines,
and developers are working on ultra-advanced products with a line width of 45
to 32 nm.
Ever since DNP began producing photomasks, we have always worked at theleading edge of micro-processing technology and have remained at the forefrontof technological development.

Technologies and Their Applications

Coatings / Transferring Technologies

Technologies for Applying Functional Coatings and Transferring Images
Coating technologies are used to apply and fix ink from the image on a form
plate to a material like paper or film. In other words, coating means transferring
ink to the object that is to be printed. This is the process of printing in a narrow
sense. It goes without saying that DNP has developed basic technologies for
improving image reproduction and accuracy by adjusting the amount of ink
and printing pressure. We have also found ways to improve functions likecoloration and durability by coating the paper surface with varnish or pigments,and have gone on to develop transfer technologies that support embossing,decorative printing and other types of texturing, as well as foil printing andother techniques that enhance the aesthetic effect of the end product.
With these types of technologies as a basis, we have expanded ourbusiness field to include printing on film used for packaging, magnetic tapeused in bankbooks and cash cards, and various lifestyle materials suchas floor and wall coverings, wood-grain printing and automotive interiors. By
giving these products a wide range of functions such as friction or abrasion
resistance, lubrication, electrical conductivity control, static or heat resistance,and heat shielding or photocatalytic properties, we increased their market
value. With the expansion of the market for displays in recent years, there has
been a big jump in demand for functional films that reduce glare or reflection,and electromagnetic interference shielding film for use in plasma display
panels (PDPs). These developments have also created new business fields
that present opportunities for DNP.
Rather than printing directly onto the target material, there are otherimportant transferring technologies whereby ink is first applied to film or someother material and then transferred to the material to be printed by using heator other means. Beginning with ink ribbons for fax machines, thermal transfer
materials were later used in the instant photo-sticker booths that became
wildly popular among young Japanese from the early 1990s. Demand forthese materials soared, as did demand for thermal transfer fax receiving paper.
The market for these materials is still growing, with the focus now on ink
ribbons for digital photo printers.

Examples of Post-Processing Technology Applications
Having cultivated coating technologies over the years, DNP began to apply them to the production of sophisticated, commercial-use printed products likemagnetic tape coatings for cash cards and functional optical films, and to a wide range of products including film packaging used in everyday life, and lifestylematerials like floor and wall coverings. We hold a large share of all of these markets.
We also make use of our transferring technologies in the ink ribbons used in instant photo-sticker booths and digital photo printers, as well as in our unique“Curlfit” technology, which uses water pressure to transfer patterns for printing on curved surfaces such as automotive interiors or molded plastic products.

Application Example 1

Application Example 2

High-function Optical Film

Ink Ribbons for Digital Photo Printers

The surface of the polarizing plate at the very front of an LCD is covered witha special, functional film, called anti-reflection film. This film makes it easier to
see the images on the screen by protecting the surface from scratches and bylimiting the reflection of incident light such as fluorescent lights. A special antiglare film and electromagnetic film are also used for PDPs.
By making the most of the coating technologies that are among our core
printing technologies and providing optical films that facilitate viewing andprevent eyestrain, DNP has captured an overwhelming share of the market forsurface functional films.

Ink ribbons used for digital photo printers consist of a base film coated withyellow, magenta, cyan and black inks to precisely controlled thicknesses. A
certain amount of each color of ink is sublimated and transferred onto special
receiving paper, depending on the amount of energy in the printer’s thermalhead. This method makes it possible to express very subtle variations in color
and to produce prints that are very close to the quality obtained with silver halide
photography.
As digital cameras and mobile phones with built-in cameras have rapidly
gained popularity, there has been increasing demand for printing photos takenwith these devices. In addition to the demand for supplying home-use printers,
there has also been a surge in commercial demand, including printing services
at major mass retail shops.

131Appendix
Technologies and their Applications

Post-Processing Technologies

Refining the Final Shape and Making a Convenient Product: in Pursuit of Greater Usability
Even after printing has been completed, our job is not yet finished. In thecase of books and magazines, it’s only after we have completed the binding
processes — folding the printed pages, fixing them together, cutting off
unnecessary parts and cleaning up the edges — that we have a finishedproduct.
The single word “bookbinding” comprises a large number of types oftechnologies that we do in order to create a finished product. Depending on
the number of pages and the purpose for which a document is to be used, we
may use an expensive type of binding that yields a product with a luxurious
feel or a less expensive method suited to high-volume products: options
include saddle-stitching, side-stitching, burst binding and “perfect binding.”
Ever since DNP’s founding, we have kept coming up with ideas forprocessing our final products so that they meet our customers’ specific needs.
In the early 1950s, with our entry into the packaging business, we began
developing one post-processing technology after another. We started withthe three-dimensional processing of paper containers and went on to develop

processes like sealing film packages and forming plastic. Eventually, we ended
up developing and improving forming technologies for a variety of materials,
including laminated tubes and PET plastic bottles.
In these processes, we must pay as much attention to the functionality ofthe end product as we do to the aesthetics of the printing. We must think notonly about durability and other types of strength, but also about the ease ofuse. When we are binding a very thick book like a computer manual, we mustbind it very firmly. At the same time, we find a way to allow the manual tostay open at the desired page even when the reader has both hands on thecomputer. Because we seek maximum functionality in the arena of daily life,
our post-processing technologies must also reflect consideration for aspects
like environmental impact and universality of design.
The products that we make by applying these post-processing technologies
are the result of matching DNP’s technological strengths with what it is that
our customers want.

Examples of Post-Processing Technology Applications
The development of our post-processing technologies began with bookbinding. In recent years, regulations governing magazine supplements have been easedso that today we encounter supplements like clothing, cosmetic samples, accessories and other items that did not exist in the past. Because of this trend, DNP’sdevelopment of new post-processing techniques has proceeded very rapidly. Our post-processing technology must always anticipate changes in the social
environment and in consumers’ desires, and respond quickly.
In the packaging business, which we entered in the 1950s, we are currently responding not only to changes in demand for functions like convenience anddurability, but also to changes related to a growing concern for the environment and Japan’s aging society.

Application Example 1

Designing in Functionality and Comfort
A large amount of packaging material is used in everyday life. It is developed
according to design principles calling for minimal environmental impact andmaximum functionality. For example, consumers do not see how muchthought was given behind the scenes to designing the aluminum lid of a yogurt
cup, which must be attached firmly enough to completely prevent leakage but
not so firmly that people with little strength have trouble opening it. As anotherexample, we considered the user’s comfort in our design of cups for cup
noodles, making it double-sided so that the outside will not be hot to the toucheven when the cup is filled with hot water. We are also working on making
thinner, lighter drinking cups.

132

Application Example 2

Aseptic Filling System that Does Not Harm Delicate
Flavors
DNP established its aseptic filling technology in 1976 with the developmentof containers that can preserve their contents at room temperature for a long
period of time. These containers are used as portion packs for coffee cream andas packaging for prepared foods like stew or pasta sauce. In recent years, DNP
has also won high praise for its bottle filling system, which makes use of thissame aseptic filling technology for packaging a variety of beverages.
Under this system, bottles are filled in an aseptic environment, so thecontents are not damaged by thermal sterilization. This makes it possible toseal in the delicate flavors of beverages like Japanese green tea or black tea.
Also, we provide parisons, or test-tube-like primary formed products. These areformed into bottles only immediately before filling, so their transportation entails
less cost and less emission of CO2. In recognition of how effective this system
is at reducing the negative impact on the environment, DNP received an award
from the LCA (Life Cycle Assessment) Japan Forum in December 2004.

Sources of Information about DNPWeb Site (English: http://www.dnp.co.jp/index_e.html)
We are renewing our web site in the fiscal year through March 2010 in order toprovide our stakeholders with the information they need. We aim to make theweb site easier to use – for example by adding a search function to aid in locating
information about products and services – and to facilitate greater understanding of
DNP, by introducing our Management Concept and Business Vision.

Publications■Annual Report (Japanese, English)
Near the end of July every year, we release a Japanese version and an English
version. In addition to consolidated financial statements, the report contains amessage from the president, business strategies, summaries of financial results,
news from each business sector, financial analysis, etc.
■Data Book (bilingual: Japanese and English)
Issued near the end of July every year, the Data Book contains values from financial
statements of the past 10 years, financial analysis values presented in the form oftables and graphs, etc. Financial statement values are taken from securities reports.
■“DNP Report” Report to Shareholders (Japanese)
This report is issued quarterly, in September, December, March and June, and is
mailed to shareholders. Examples of its content include summaries of financial
results, interviews with management, information about new businesses, andinformation about shares.
■DNP Group CSR Report (Japanese and English versions available as PDF file on
our web site)
Each year around the end of June, we issue a yearly report about DNP’s corporatesocial responsibilities. We also have been issuing an annual “Eco-Report” since thefirst issue appeared in 1998.
■Corporate Information (Japanese, English)
It introduces each operations and addresses aspects like products, services, sales,planning, research and development, production facilities, company history, and asummary of our activities.

Reports■“Yuho” Annual Securities Report (Japanese)
Submitted quarterly to the Finance Ministry in accordance with Article 24 of the
Securities Exchange Law. These are broad ranging reports including consolidated
financial statements with auditing reports attached, parent company financial
statements, performance reviews, information about shares and corporate directors,
etc.
■“Tanshin” Earnings Release (Japanese, English)
In accordance with Tokyo Stock Exchange rules, we prepare earnings releases foreach quarter. In addition to consolidated and non-consolidated financial statements,
we report on the status of sales, etc.

133Appendix

Major Subsidiaries and Affiliates

Printing
DNP Hokkaido Co., Ltd.
DNP Tohoku Co., Ltd.
DNP Tokai Co., Ltd.
DNP Nishinippon Co., Ltd.
DNP Shikoku Co., Ltd.

Photoengraving, printing, bookbinding; production and sale of packaging
Photoengraving, printing, bookbinding; production and sale of packaging
Photoengraving, printing, bookbinding; and production of packaging
Photoengraving, printing, bookbinding; production and sale of packaging
Photoengraving, printing, bookbinding; production and sale of packaging

Capital(¥ million)

Ownership ratio
(%)

350
350
120
400
50

100.0
100.0
100.0
100.0
97.0

350
200
180
100
80
50
(S$1,000)
4,600

100.0
100.0
100.0
100.0
100.0
100.0
100.0

200
100
100
100
50

100.0
100.0
100.0
100.0
100.0

100
100
80
25
20
(Euro 1,000)
37

100.0
100.0
100.0
100.0
100.0
100.0

100
100
340
300
50
50
40
30
30
10

100.0
100.0
69.5
100.0
100.0
100.0
92.5
95.0
95.0
83.0

100.0
100.0
100.0
100.0
100.0
90.0
100.0
100.0
100.0
51.0

Information Communication
Books and Magazines

DNP Seihon Co., Ltd.
DNP Offset Co., Ltd.
DNP Media Art Co., Ltd.
DNP Total Process Maebashi Co., Ltd.
DNP Uniprocess Co., Ltd.
DNP Total Process Nagaoka Co., Ltd.
Tien Wah Press (Pte.) Ltd.

Bookbinding
Offset printing
Photoengraving
Photoengraving
Photoengraving
Photoengraving
Photoengraving, printing and bookbinding

Commercial Printing

DNP Media Create Kansai Co., Ltd.
DNP Graphica Co., Ltd.
DNP Media Create Co., Ltd.
DNP Multi Print Co., Ltd.
DNP Butsuryu Systems Shouin Co., Ltd.

Planning, production, photoengraving, printing and bookbinding
Printing and bookbinding
Planning, designing and photoengraving
Photoengraving, printing and bookbinding
Packaging, loading and warehousing

Business Forms

DNP Data Techno Co., Ltd.
DNP Data Techno Kansai Co., Ltd.
DNP Total Process Warabi Co., Ltd.
NexantiS Corporation*
DNP Techtas Warabi Co., Ltd.
DNP France SAS*

Production of plastic cards
Production of business forms and plastic cards
Photoengraving and machine plate activities
Sale of smart card related software and products
Processing, packaging and loading of printed materials
Smart card and security business research

Others (Planning, production and venture businesses, etc.)
DNP AV Center Co., Ltd.
DNP Digitalcom Co., Ltd.
am3* Inc.
DNP Art Communications Co., Ltd.
DNP Corporate History Center Co., Ltd.
YouToo Co., Ltd.*CP Design Consulting Co., Ltd.*
M’s Communicate Co., Ltd.*At Table Co., Ltd.*
MyPoint.com Japan Co., Ltd.

Planning, production and sale of TV programs, movies and video soft wares
Website planning, production and delivery
Planning, production and sale of images, contents, etc.
Planning, production and sale of artistic images and videos
Planning, editing and production of history archives for corporations and groups
Provision of information over the Internet and mobile phones
Consultation for privacy protection and crisis management
Consultation and mediation for customer relationship management
Research, consulting and planning for sales promotions for grocery supermarkets
Direct marketing services

Lifestyle and Industrial Supplies
Packaging

DNP Technopack Tokai Co., Ltd.
DNP Techno Film Co., Ltd.
DNP Technopack Co., Ltd.
DNP Technopack Yokohama Co., Ltd.
DNP Technopack Kansai Co., Ltd.
Sagami Yoki Co., Ltd.
Aseptic Systems Co., Ltd.
DNP Techno Polymer Co., Ltd.
DNP Hoso Co., Ltd.
PT DNP Indonesia

Production, printing and processing of packaging
Production and processing of composite resins
Production, printing and processing of packaging
Production, printing and processing of packaging
Production, printing and processing of packaging
Production of laminated tubes
Productions, sale and consultation for aseptic systems for beverages
Molding, processing and printing of plastic containers
Filling and processing of packages
Production and sale of packaging products

430
380
300
280
200
200
100
100
80
(US$1,000)

DNP Plastic Molding (Shanghai) Co., Ltd.

Molding, printing, processing and sale of plastic containers(US$1,000)

26,000

100.0

6,350
Lifestyle Materials

DNP Lifestyle Materials Marketing Co., Ltd.
DNP Ellio Co., Ltd.
DNP Lifestyle Materials Co., Ltd.

Sale of lifestyle products
Printing and processing of steel and other metal plates
Photoengraving and production of lifestyle products

300
300
200

100.0
50.0
100.0

9,680
300
100
100
100
450
60

100.0
100.0
100.0
100.0
100.0 (100.0)
100.0 (33.3)
100.0 (100.0)

Opto-Materials/Industrial Supplies

DNP Photo Imaging Co., Ltd.
DNP IMS Odawara Co., Ltd.
DNP IMS Co., Ltd.
DNP OptoMaterials Co., Ltd.
DNP Fine Chemical Co., Ltd.
DNP Fotolusio Co., Ltd.
DNP ID System Co., Ltd.

134

Holding company
Production and sale of photographic materials
Production of TTRs and ST materials
Manufacturing of optical products for displays
Production and sales of chemicals for photography
ID photo business and sale of photo materials and accessories
Sale of equipment for making driver licenses and ID photos

Capital(¥ million)

DNP Denmark A/S

Manufacturing and sale of precision electronic components

DNP Electronics America, LLC

Manufacturing and sale of precision electronic components

DNP Photo Imaging America Corporation

Sale of digital photo printing systems and photographic materials

DNP Photo Imaging Corporation SAS

Holding company

DNP Photo Imaging Europe SAS

Sale of photo-related products

DNP IMS America Corporation

Production and sale of TTRs and ST materials

Compagnie de Découpe de l’Ouest·CDO SAS

Production and sale of TTRs and ST materials

DNP IMS France SAS*

Sale of TTRs and ST materials

DNP IMS Netherlands B.V.

Production and sale of TTRs and ST materials(Dkr1,000)
135,000(US$1,000)
15,045(US$1,000)
45,898(Euro 1,000)
50(Euro 1,000)
2,422(US$1,000)
71,980(Euro 1,000)
3,040(Euro 1,000)
300(Euro 1,000)
1,000

Ownership ratio
(%)

100.0
(100.0)100.0(99.9)
99.9(66.0)
66.0(100.0)100.0(100.0)
100.0
23.4
100.0
100.0

Electronics
Display Components

DNP Color Techno Kameyama Co., Ltd.
DNP Precision Devices Co., Ltd.
DNP Color Techno Sakai Co., Ltd.
DNP Display Technology Taiwan Co., Ltd.

Production and sale of color filters for LCDs
Production of display related components
Production of color filters for LCDs
Sale of display components and technological consultation

2,500
450
400
(NT$1,000)
30,000

100.0
100.0
100.0
(99.0)
100.0

DT Fine Electronics Co., Ltd.
DNP Fine Electronics Co., Ltd.
DNP LSI Design Co., Ltd.
DNP Fine Electronics Sagamihara Co., Ltd.
DNP Micro Technica Co., Ltd.
DNP Photomask Europe S.p.A.

Production and sale of components for manufacturing of semiconductor components
Production of components for manufacturing of semiconductor components
Planning and production of drawings used in semiconductor production
Manufacturing of electronics precision parts
Inspection, processing and loading of precision electronic parts
Manufacturing and sale of photomasks

65.0
100.0
100.0
100.0
100.0
80.6

DNP Photomask Technology Taiwan Co., Ltd.

Manufacturing and sale of photomasks

490
300
100
100
40
(Euro 1,000)
47,200(NT$1,000)
5,170,117
2,000
5,821
626
480
266
100
100
96
80
60
39

83.4
51.3
100.0
100.0
50.3
100.0
94.3
55.0
100.0
48.3
51.0

360

100.0

100
90
33
30
20

100.0
100.0
88.8
100.0
100.0

(US$1,000)
100(US$1,000)
62,164(US$1,000)
100(Euro 1,000)
92( £1,000)
120(A$1,000)
70(S$1,000)
350(Krw1,000)
500,000(NT$1,000)
10,000(US$1,000)
2,000(100.0)
100.0
(7.2)
100.0
(100.0)
100.0
100.0

2,935

(5.1)
58.3

Electronic Devices

(0.3)
100.0

OthersThe Inctec Inc.
Maruzen Co., Ltd.
DNP Logistics Co., Ltd.
Waseda Management Publishing Co., Ltd.
TRC, Inc.
D.N.K. Co., Ltd.
DNP Trading Co., Ltd.
Direc Co., Ltd.
DNP SP Tech Co., Ltd.
Kyoiku Shuppan Co., Ltd.
Junkudo Co., Ltd.

Development and sale of ink, varnish, pigments and dyes
Sale of books, magazines and stationaries
Packing, shipping operations and warehouse management
Operation of private cramming school
Sale of books and creation of data
Manufacturing, sale and repair of printing equipment and machine tools
Sale of paper and other products
Sale of publishing and educational equipment
Planning and production of promotional material
Editing and sales of textbooks and educational materials
Sale of books

Personnel Welfare, Facility Service and Others

DNP Facility Services Co., Ltd.
DNP Information Systems Co., Ltd.
DNP Human Services Co., Ltd.
Uzumine Country Club Co., Ltd.*DNP Accounting Services Co., Ltd.
DNP Techno Research Co., Ltd.*

Building management, cleaning and security; operation of public health andrecreation facilities
Design, development and maintenance of information systems; production and sale of software
Planning and management related to personnel plans
Management of golf courses
Accounting and consulting services
Studies related to patents and the preparation of contracts

Overseas Sales

DNP America, LLC

Sale of printing materiais, electronic precision parts, and lifestyle materials

DNP Corporation USA

Holding company

DNP Holding USA Corporation

Holding company

DNP Europa GmbH*

Sale of electronic precision parts and lifestyle materials

DNP UK Co., Ltd.*Sale of lifestyle materials

Dai Nippon Printing Co. (Australia) Pty. Ltd.*Sale of printed materials and lifestyle materials

DNP Singapore Pte. Ltd.*Sale of electronic precision parts and lifestyle materials

DNP Korea Co., Ltd.*Sale of electronic precision parts

DNP Taiwan Co., Ltd.

Sale of electronic precision parts

DNP International Trading (Shanghai) Co., Ltd.*Sale of printing solutions and packaging products

100.0
100.0
100.0
100.0
100.0
100.0

Beverages
Beverages

Hokkaido Coca-Cola Bottling Co., Ltd.

Manufacturing and sale of soft drinks

Notes: 1. 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.

135

Appendix

Glossary
From General Terms, Product and Service Names
Inkjet method
A method of printing by spraying ink directly
onto the printed surface through nozzles
with very small holes.
Augmented Reality (AR)A system in which a webcam or mobile
phone-mounted camera reads printed
images, 2-D code or other markers, and/or images from the camera’s actual
environment, synthesizes those images
and/or code with related, pre-registered
3-D computer graphics, and displays theresulting combination in real time.
LCD color filter
A component used to colorize liquid crystal
displays. It consists of colorization layers withpigments in the three primary colors – RGB
or red, green, and blue -- arrayed in particularpatterns on substrates; colored images are
displayed when light is passed through.
SSFC(Shared Security Formats Cooperation)
A consortium of companies founded in 2005,
aimed at realizing highly secure corporate
environments wherein each employee
uses a single smart card to access various
locations or functions. SSFC created smart
card data formats and other standards thatenable uniform management of functions
such as office entry and exit, computerlogon, and printer usage. As of March 2009,
SSFC has 175 member companies, including
office equipment manufacturers and system
integrators, and its data formats is adopted
by some 200 companies.
CRM(Customer Relationship Management)
A method of building positive, long-term
relationships with customers by providing
goods and services that meet their
particular needs based on each customer’s
preferences and characteristics.
CGM (Consumer Generated Media)
Content that is generated by consumers anduploaded to a blog, social networking site, orother electronic forum where it is enhanced
by being linked to additional information or
opinion exchange.
SIM (subscriber identification module)
Card
A smart card issued by a mobile phoneservice provider, containing subscriber
information; it is inserted in a mobile
telephone, enabling the phone to connect tothe provider's network.

136

Dye-sublimation thermal transfer
recording media
Consists of ink ribbon containing three
primary colors of ink (Y,M,C – yellow,
magenta, and cyan) and special receiverpaper. Heat from thermal heads transfers ink
to the receiver paper to form color images.
Ability to express smooth color tones makes
this media good for photo printing, among
other applications.
Solar battery filling material
Adhesive, protective sheet for securing solar
cells and their peripheral wiring; it securely
fastens the solar cell’s glass and back sheet.
Solar battery back sheet
Weather-proof film that protects a solar
battery module from external elements,
preventing precipitation from entering thecell. Because it is used outdoors for a long
period of time, it must be highly durable,
moisture-proof, and have electrical insulating
properties.
Digital signage
A network-linked system for displaying
updateable images and information in
public places, such as outdoors or in public
transportation vehicles, stores, offices, andpublic facilities.
Semiconductor photomask
An original plate used for forming circuits
on semiconductor elements/devices. A
circuit pattern drawn on the photomask’s
glass substrate is transferred to a photosensitive film applied to the surface of asemiconductor wafer, generally by meansof light, after which etching or a similar
process is used to form the desired patternon the wafer.
PIM (Product Information Management)
A method of information management thatorganizes and integrates product information
so that it can be used in a coordinated way.
The system provides uniform managementof product information that is dispersed
among the various processes of the value
chain, and creates an environment for
distributing information that customers need-- in appropriate amounts, of appropriatequality, and at appropriate times.
BPO (Business Process Outsourcing)
Contracting out some of a company's
business processes to an outside company
that has specialized technology andexpertise.

Photolithography
Technology for forming a pattern by
exposing the surface of a plate coated witha photosensitizing agent to light. Exposed
areas and unexposed areas form the desired
pattern.
Anti-glare film (AR film)
Film that is attached to the surface of thedisplay in devices such as computers andtelevisions, in order to prevent outside lightor interior light from causing glare on thescreen.
Aseptic filling system
A system for filling PET plastic bottles orother containers with sterilized beverages
or food in an aseptic environment at room
temperature.
MEMS(Micro Electro Mechanical Systems)
Devices that integrate tiny components
made with semiconductor micro-processing
technology.
Organic EL (electroluminescent) display
A display using an organic
electroluminescent compound, i.e. a
compound that emits light when electricity
is passed through it; superior to other typesof displays in various ways, for example, byoffering a wider range of viewing angles andgreater contrast.
Lead frame
A metal component within a semiconductor
package; supports the semiconductor chip (s)and transmits electric signals.
Roll to Roll
A technique for printing on rolled paper orother printing media and re-rolling the media
immediately after printing. This method iswell-suited to mass production because it
reduces the number of times that materialmust be supplied, and enables high-speed
production with stable quality.

DNP Product and Service Names
IPS Information Processing Services
A service that handles a wide variety ofoperations, from inputting large amounts ofdata (including personal information), editing
and processing, to printing, production andmailing of bills and statements – all whileproviding a high level of information security.
IB Film Innovative Barrier Film
Highly transparent, highly heat-resistantfilm that is highly impermeable to water
vapor and oxygen, used mainly as wrapping
material for foods, pharmaceuticals, andmedical supplies.
EB Electron Beam coating technology
A technique for hardening resin by exposing
it to an electron beam, which causes
the molecules to polymerize. EB coatedproducts display greater surface hardness
than products coated with urethane or UV
resin. The technique also makes it possible
to provide products with superior soil
resistance, photo-resistance, durability, andstability. Also, this next-generation, ecofriendly manufacturing process uses lessenergy, generates less carbon dioxide, anddoes not require the use of solvents.

“Expansion Printing” and“P&I Solutions”“Expansion Printing” is one of DNP’s key
phrases; it describes how we have appliedand developed the printing technologies
that we have cultivated since our founding
in order to expand into a variety of businessfields. “P&I Solutions” is the name of thecorporate vision that we first revealed in the“DNP Group 21st Century Vision” madepublic in 2001. It expresses our intention
to combine printing and information
technologies in order to discover and solve
problems faced by our customers andsociety as a whole.
Under the banner of “Expansion Printing,”
DNP entered the packaging and building
materials fields in 1951. We then entered
the electronics arena after successfully
developing shadow masks in 1958 andphotomasks in 1959.
Since 2001, we have been solving problems
for a variety of customers by applying “P&I
Solutions,” while actively developing new
business fields such as energy and life
science.

Contrast improvement film
A film applied to the front glass substrateof a plasma display panel (PDP) to improvecolor tone and other qualities.
CDMS (Card Data Management Service)
A service launched in 2004 that provides
comprehensive, online management of
information entered on smart cards. CDMS
enables immediate smart card issuanceat customer service counters, password
revision at ATMs, “mobile bureau”
distribution of applications and personal
data to mobile phone chips, and identity
authentication for online shopping, etc.
B2it (B-square-it)
DNP’s original technology for connecting thelayers on a buildup board (a printed board
made by piling up insulating layers andwiring layers) by using bumps (conductive
paste used for electrically connecting theboard’s layers) formed using screen printing
technology.
“Monozukuri 21” Activities(Production 21 Activities)
Activities that create a framework
for responding flexibly and rapidly tocustomers’ requirements by returning to ourmanufacturing roots and making continuous
improvements aimed at eliminating
waste, increasing quality and efficiency,
and lowering costs. Based on TPM (Total
Productive Maintenance).

■ About the Cover of This Annual Report
Designer’s Profile

Kenjiro Sano, Art Director

Message in the CoverDoes advertising design, character design, and product development
in Japan and abroad. Major projects include “The Collagen” promotion
for cosmetics manufacturer Shiseido Co., Ltd., “LISMO” promotion
for telecommunications carrier KDDI Inc., package design for food
manufacturer Mizkan Group Corp.’s “Torotto” brand of fermented
soybeans (natto), and Rolling Stones T-shirt design.

”These days when we look at a newspaper and all we see isgloomy news about economic recession, it’s enough to makeone sad. But the whole point of our work is to provide technology
and products that make the world a more convenient and happy
place. DNP is a corporation that represents Japan, so I thought
its annual report should have a smiling face.” Kenjiro Sanowww.mr-design.jp*Trademarks of DNP products or services that appear in this Annual Report are registered only in Japan.
137