Year ended March 31, 2001

Shueisha, the predecessor of today's Dai Nippon Printing Co., Ltd. (DNP), wasfounded in 1876 as Japan's first full-scale printing company. Celebrating its 125th
year of being in business this October, the Company got its start in publication
printing but has since diversified its operations to include commercial printing,business forms, packaging, decorative materials, electronics and information media
supplies. Today, the DNP Group of companies has approximately 35,000
employees and is the world’s largest corporate group with comprehensive printing
operations. In Japan, the DNP Group maintains 17 division offices, 58 sales offices
and 33 plants in major cities, as well as 14 sales offices and seven plants overseas.
Amid growing demand for information, the DNP Group, backed by its position ofleadership in Japan’s information industry, is continuing to expand its businesses by
exploring new technological and marketing possibilities in the world of printing.

Contents
Consolidated Financial Highlights

1

President’s Message to Shareholders

2

DNP History

6

DNP’s Printing Operations at a Glance

8

Developments and Activities in this Fiscal Year
Information Media

10

Lifestyle Products

22Electronic Components & Information Media Supplies

28

Financial Section

33

Management’s Discussion and Analysis

34

Selected Financial Data (unaudited)48

Consolidated Financial Statements

50

Board of Directors

67

Major Subsidiaries and Affiliates

68

Investor Information

70

Consolidated Financial Highlights

Dai Nippon Printing Co., Ltd. and Consolidated Subsidiaries
Years ended March 31, 2001 and 2000
Dollars inthousands except
per share amounts

Yen in millions except per share amounts

2001

2000

% change

2001

2001/2000

4.3 %FOR THE YEAR
Net sales¥ 1,342,035¥ 1,286,703$ 10,822,863

Operating income

85,941

85,886

693,073

0.1

Income before income taxes

69,116

79,199557,387-12.7

Net income

33,40939,034269,428-14.4

Per share data:
Net income
Primary

¥

43.99

¥

51.40

$

0.35

-14.4 %

Fully diluted

43.45

50.47

0.35

-13.9

Cash dividends

18.00

18.00

0.15

0.0

AT YEAR-END
Stockholders’ equity
Total assets¥

939,441¥

1,489,871

916,253
1,442,307$

7,576,138

2.5 %12,015,089

3.3

Notes:
1. U.S. dollar amounts have been translated from yen, for convenience only, at the rate of ¥124=U.S.$1, the approximate Tokyo foreign exchange market rate as of March 31, 2001.
2. Following the adoption of a new accounting standard effective April 1, 2000, foreign currency translation adjustments were made in stockholders' equity; for comparison
purposes, such adjustments were also made to the figures for 2000.

Net Sales

Operating Income

Net Income(¥ Billion)(¥ Billion)(¥ Billion)

1,200

120

60

1,000

100

50

800

80

40

600

60

30

400

40

20

200

20

10

0

0

97

98

99

00

01

0

97

98

99

00

01

97

98

99

00

01

In October, your company will be marking its 125th year of being in business. That,
admittedly, is a remarkable feat in itself. As we report to you our performance for the fiscal
year ended March 31, 2001, however, you will see that our remarkable achievements do

Our Growth in the Printing Field
Despite the belief that the printing industry is a mature industry with little room for growth,
our printing operations continued to expand steadily, led by commercial printing and packaging
products.
We attribute our increased sales in commercial printing – a significant 8% over the previous

but also paint a clear picture of just why we are still growing strong in the 21st century,

fiscal year – to our aggressive efforts in proposing solutions for our clients. Especially effective indespite a myriad of adversities that faced us during the many years.

differentiating us from the competition were our proposals involving new media such as the

To be sure, the economic situation this fiscal year was certainly not easy. The JapaneseInternet. Sales were strong to clients in the communications industry, which saw a dramaticincrease in the number of advertisements for mobile phones, and in the financial and insurance

economy continued to stagnate due to slow consumer spending and a decline in private

industries in which companies reorganized and integrated. We received a steady flow of orders

capital investments. In addition, the U.S. economy also began to slow down in the latter half

for sales-promotion materials from both industries. One major order was for our Informationof the fiscal year with more signs of an economic recession. In the printing industry, theclimate continued to be difficult with dropping unit prices and decreasing demand.

Processing Service to handle direct-mail notices regarding the May introduction of MyLine, aservice for Japanese consumers to select telephone companies.
In our packaging business, we focused on developing environmentally friendly products and

DNP, however, was able to increase its consolidated net sales by ¥55.3 billion, or 4.3%,

achieved close to a 5% increase in sales. Again, this put us in a league of our own among

over the previous year to ¥1,342 billion, while also increasing its operating income by 0.1%

packaging companies because the food industry, for which the packaging is used, was in aover the previous year to ¥85.9 billion yen. This was due to our expertise and experience

Dai Nippon Printing Co., Ltd. Annual Report 2001

Dai Nippon Printing Co., Ltd. Annual Report 2001

not stop there. Our results not only show how Dai Nippon Printing Corporation is expanding,

PRESIDENT’S MESSAGE TO SHAREHOLDERSPRESIDENT’S MESSAGE TO SHAREHOLDERSPRESIDENT’S MESSAGE TOSHAREHOLDERS

slump due to slow consumer spending.
The packaging industry is traditionally made up of manufacturers specializing in glass

founded on our printing technology which was provided solutions for as many as 30,000

bottles, Styrofoam containers, cans and other containers. Although such manufacturers holdclients over the decades. Details of our successful strategies follow.

large shares of the market, we believe we can expand our share by being quick to respond to
the demands of society and by developing and providing consumer-oriented products using
DNP's superb technologies.
One such example is the paper cartons that many sake manufacturers are now using inplace of glass bottles. The traditional glass bottles were good containers, but too heavy andspace-consuming to be cost-effective in distribution. Proposals to use paper cartons were
accepted when it was made clear that they reduced distribution costs by being light andcompact, in addition to having less of an impact on the environment by being recyclable.
Given Japan's decline in population, aging society and low birthrate, we do not believe thatthe packaging industry, which mostly involves food products, will expand in the future.
Packaging, however, is closely involved in our lives. It is a steady business that will always exist
as long as people continue with their daily lives. We firmly believe that we can grow in this area
by developing and offering products and services that meet the needs of society and people.
Today, this means creating products out of concern for the environment. We already made it
happen with the glass bottles. We are currently promoting a switchover from cans and Styrofoam
containers to paper containers.

Yo s h i t o s h i K i t a j i m a
Chairman of the Board
President and Chief Executive Officer

2

3

Sales of our electronic products jumped by about 10% over the previous fiscal year.
Especially strong were sales of photomasks and color filters.
So successful were our photomask operations that we expanded our share of the worldwide
market yet again, remaining the solid in the manufacture of photomasks. The 30% sales
increase over the previous year was achieved despite the global slowdown in the latter half of thephotomask manufacturers who were badly affected by the recession was not only the steadyorders we secured last year from Hitachi and Toshiba, but also the increase in the number ofsales volume. We also aim to increase our competitiveness in the field of displays by allocating
our management resources to the new products such as the aforementioned color filters.
We therefore have the promising products for every phase in a product's lifecycle. No matter
what the shape of future displays is, we will be well-positioned to supply the essential parts forthe product.

Our Vision for the 21st Century
In today's rapidly changing world, it is becoming more and more difficult to accuratelyorders for our high value-added, cutting-edge products. The results of our superior technology

predict the course of our society. Our prediction, however, is that the advancement incame in the form of increased sales when our photomasks met the world's demand for highly

information technology will put our society in the 21st century in an "Emergent Evolution." We

advanced masks.

define a society undergoing an emergent evolution as a society in which a diversity of people

In our color filter operation, our foresight in building a new plant in our Mihara Plant inwith different values accept and stimulate each other to create new values.

Hiroshima paid off as price competition in the liquid crystal display market intensified. With our

In a society undergoing an emergent evolution, companies are also expected to go throughmonthly production capacity improving by about 60% to 1.3 million units in February 2001, we

an emergent evolution and generate a diversity of values. To do so, companies will focus theirincreased our sales by about 20% over the previous year and were able to make a profit despite

management resources on their strong areas and even create ties with other companies withfalling prices.

similar strengths to expedite business development and to gain a competitive edge.

We plan to further expand our color filter production capacity with a production system

Such a movement by companies will generate new issues for which the companies will havecompleted in Taiwan in July 2001. In anticipation of a color-filter demand in Taiwan, we haveto find solutions. This, we believe, will provide us with a tremendous business opportunity: We

licensed SinTek, a Taiwanese corporation, to supply us with 500,000 OEM units a month. This

have always been the solutions expert, offering measures that we have fostered and developed

will bring DNP's production capacity to a total of 1.8 million units a month, the most in the color

through our printing business.

filter industry.

All of our now diversified operations – from printing paper to manufacturing packaging

Color filters, even through a maturing industry, are expected to grow in sales for the shortproducts, decorative materials and electronic products – sprang from our printing technology

term and further increase in demand in the future. Our plan is to increase the ratio of high value-

and its applications and development. A good example is our early involvement with information

added products such as spacers with pillars and color filters for large monitors, which aretechnology. Beginning with our computerized typesetting system, our experience with new

expected to grow significantly in sales. We also have plans for plasma display panels (PDPs),

media, including the Internet, dates back 30 years. By ensuring deeply rooted growth in thewhose usage is currently spreading. By joining forces with Asahi Glass Co., Ltd., which is theprinting industry, we have evolved into a corporation with a solid management foundation

leading manufacturer of glass products for use in PDPs, we will establish DAP Technology Co.,

unparalleled in the world. This is because the application possibilities for our printing technology

Ltd. to supply back plates in time for the emergence of a full-scale PDP market. We believe Asahi

are endless.

Glass's expertise and our manufacturing technology are guaranteed to more than double the

Dai Nippon Printing Co., Ltd. Annual Report 2001

Dai Nippon Printing Co., Ltd. Annual Report 2001

fiscal year in the semiconductor industry, our client industry. What separated us from otherdigital TVs and flat TVs. The objective of our new strategy is to compensate for the decrease in

PRESIDENT’S MESSAGE TO SHAREHOLDERSPRESIDENT’S MESSAGE TO SHAREHOLDERS

Our Growth in the Electronics Field

DNP is a rare corporation that excels both in printing technology and information technology.

joint venture's competitiveness. Another promising product currently in the works is an organic

We are a company that can provide a diversity of solutions by organically combining printing

electroluminescent (EL) display, which has a future as a flat display. Using DNP's printing

technology fostered through many years of experience and information technology that we

technology, we have established a means to manufacture a paper-like full-color display. Ourdeveloped in anticipation of the digital age. Our aim is to be a company that offers solutions toorganic EL display is focused on as it presents a great potential for growth.

help society undergo an emergent evolution.

Meanwhile, sales of our leading electronic product, the shadowmask, have decreased by

In celebrating the 125th anniversary of the founding of DNP, we are currently focusing on aabout 10% compared to the previous year, affected by production adjustments following the

new vision for the 21st century. One thing, however, is clear: We will evolve to be fit for the 21st

decline of personal computer sales, as well as by the increasing popularity of the flat-panel

century, determined to continue in our steady growth.

display for the computer. We have determined that the shadowmask is already at a point in its
electronic-product lifecycle where its strategy must be reconsidered. Now that the demand forshadowmasks for use in personal computers is declining, we will target them for use in consumer

4

Yo s h i t o s h i K i t a j i m a
Chairman of the Board
President and Chief Executive Officer

5

DNP’s history goes back 125 years as Shueisha, the company that first printed the Japanese translation of “Self-Help,” a bestselling English book that served as a guidebook for many young Japanese as Japan opened itself to the West. Since then, DNP has

DNP HISTORYDNP HISTORYDNP HISTORY
applied its advanced printing technologies and intellectual infrastructures to expand printing. Diversifying into many fields has won
electronic components.

Dai Nippon Printing Co., Ltd. Annual Report 2001

Dai Nippon Printing Co., Ltd. Annual Report 2001

6

DNP its position as the world’s leading comprehensive printing company, which includes a role as a supplier of many fine7

DNP’S PRINTING OPERATIONS AT A GLANCE

DNP’S PRINTING OPERATIONS AT A GLANCE

DNP’S PRINTINGOPERATIONS AT A GLANCE
Information Media Division
Sales increased 3.8% for the division overall through operating

Sales*:¥635.9 billion

activities centered on total solution businesses as promoted by DNP.

Change*:(+3.8%)

Major factors were increases in commercial printing products, including% of net sales*:54.7%

sales promotional materials such as POP (point of purchase) andpremiums, pamphlets and flyers.
On the other hand, sales from books and publications decreased
in its fourth year of decreased sales.
While IPS (information processing service) business, as well as sharecertificate printing and personalized mail, had strong sales, sales ofBooks and Magazines

Commercial Printing

Business Forms

office-equipment-related products and credit cards decreased, resulting

Books, magazines, dictionaries,
textbooks, graphic collections,commemorative books and otherpublications

Catalogs, leaflets, pamphlets, posters,
calendars, point-of-purchase (POP)goods, promotional publications forevents and related services

Continuous preprinted forms for PC output, transfer slips for parcel
delivery and other companies, direct mail, stocks, bonds, gift certificates,bank notes, various kind of tickets, bank account passbooks, plastic cards,
smart cards, hologram products and Information Processing Service

in decreased income from business forms overall.

Lifestyle Products Division
Sales*:¥307.8 billion

Change*:(+2.9%)% of net sales*:26.5%

Dai Nippon Printing Co., Ltd. Annual Report 2001

Dai Nippon Printing Co., Ltd. Annual Report 2001

overall, affected by the prolonged slump in the publishing industry, now

Despite sales of paper cups for snacks decreasing, sales of papercontainer-related services, large-scale sterile beverage filling systems for
PET bottles, film packaging and liquid paper container for beverages,
were strong, resulting in increased income for the packaging business.
On the other hand, reflecting the 1.7% decline in domestic housing
start from the previous year, sales of decorative materials decreased
despite DNP's efforts to meet housing materials' rapid switchover into
environmentally friendly products.

Electronic Components &Information Media
Supplies Division
Sales*:¥218.5 billion

Change*:(+8.4%)% of net sales*:

18.8%

Packaging

Decorative Materials

Printed packages for confectioneries, foods, beverages, toiletries andpharmaceuticals, and functional films and materials for industrial use

Functional films and interior and exterior decorative materials for homes,
stores, offices, automobiles, electric appliances and furniture

Electronic Components

Information Media Supplies

Shadowmasks, color filters for LCDs, rear-projection television screens,photomasks, lead frames and related products

Sublimation transfer materials for color printers and ribbons for plain-paper
facsimile machines, barcode printers and other products, and electrodes forlithium-ion rechargeable batteries

Overall sales in this division remained strong with sales of single units
constituting 18.8%, up from the previous year's 18.1%, despite adecline in the sales volume towards the end of the fiscal year, affectedby some product inventory adjustments.
Significant sales increase among electronic components included thatof color filters, projection screens and photomasks, while sales
decreased for lead frames and shadowmasks.
Sales of information media supplies increased overall with ink ribbons
for color printers increasing in sales for ID photos, although there was aslight decrease in the sales of ink ribbons for plain-paper facsimiles.

8* Non-consolidated figures

9

INFORMATION MEDIA
Business for Civilization

In 1868, when the Shogunate Government of Edo ended its history, its national isolation policy that began in 1639 also

ended. The era was Meiji, when Japan opened its doors to a gush of modern and Western thoughts, cultures and social systems. DNP was foundedin the ninth year of such a chaotic era to help to distribute information more efficiently in an age of civilization and enlightenment.
At the time, Japan’s ambitious, young men who were the pillars of society were desperately seeking direction. They were brimming with energy, yetlost in confusion. Seeing that, Masanao Nakamura, a former shogunate vassal who had studied in London, translated England’s best-selling book,“SELF HELP” by Samuel Smiles, into Japanese. Published as “A Story of a Self-Made Western Nation,” the book became an instant hit among
Japan’s young, lost souls, whose hunger for guidance was finally satisfied. The book, which went down in publishing history as a classic, was printed
and bound by DNP.
In publishing this book, Nakamura asked to use only materials made in Japan, saying, “Japan has no hope of developing if she must always rely on
imported materials. This book for a self-made nation will be published using only domestic materials.” Moved by his determination, DNP, still in its
infancy, took up the challenging task of making Japan’s first paperboard for use in books, at a time when Japan’s main printing method was still
woodblock printing. Needless to say, no raw materials for such paperboard was readily available in Japan. The experiment was daunting. In the end,
however, DNP succeeded in binding “A Story of a Self-Made Western Nation,” revised with the first paperboard made in Japan.
Today, the information media are developing at an unprecedented rate, from books and newspapers to CD-ROM, satellite broadcasting, the Internet
and mobile phones. It is information that helps maintain civilization, while technology promotes its development. Throughout its history, however,
DNP’s public mission remains unchanged: to distribute information people want to convey, using the latest technology.

1877

Prints “Revised SELF HELP,” revised and published by Masanao Nakamura. The book becomes a best seller.

1882

Begins manufacturing and sales of type.

1925

Introduces a high-speed rotary press to accommodate orders for “King,” a monthly magazine with a phenomenal
circulation at the time.

1928

Begins Japan’s first full-scale primary-color gravure printing.

1946

Begins printing ¥1, ¥10 and ¥100 bills upon appointment by the Ministry of Finance.

1970

Develops a bankcard with a magnetic strip.

1972

Puts a computerized typesetting system to practical use, taking the first step toward digitization.

1985

Jointly develops the world’s first CD-ROM dictionary.

1995

Begins Media Galaxy, an experimental Web site for Internet operations.

1877
Prints “Revised SELF HELP,” revised
and published by Masanao
Nakamura. The book becomes a best
seller.

1882
Begins manufacturing and salesof type.

1925
Introduces a high-speed rotarypress to accommodate orders for“King,” a monthly magazine with aphenomenal circulation at the time.

1946
Begins printing ¥1, ¥10 and ¥100bills upon appointment by the
Ministry of Finance.

SA

1928

LE
MP

Begins Japan’s first full-scale
primary-color gravure printing.

1970
Develops a bankcard with amagnetic strip.

1972
Puts a computerized typesetting
system to practical use, taking thefirst step toward digitization.

1985
Jointly develops the world’s first CDROM dictionary.

1995
Begins Media Galaxy, an
experimental Web site for Internet
operations.

In September 2000, DNP announced the development of acontactless ID wristwatch. The system incorporates a contactlessdata correspondence function into a digital wristwatch, in which
personal ID recognition or data reading and rewriting is possible byholding the watch over an exclusive reader/writer. Contactless
wristwatch ID systems have been used for ski lift tickets, but DNP’s
newly developed contactless system is differentiated by the data
display capabilities that utilizes the liquid crystal display panel. Itsability to display a balance makes the system well suited forcashless settlements in recreational facilities.

Also in September 2000, DNP and Nippon Avionics Co., Ltd.
announced the co-development of the first proximity-typecontactless smart card conforming to ISO/IEC 15693. Unlike theproximity smart cards conforming to ISO/IEC 14443 Type A, thenewly developed card has the advantage of a longer functional
distance, and is beginning to gain nationwide popularity. DNP alsoannounced it will provide three PC software programs that increase
efficiency in smart card systems development: Smart Card Service
Provider for Standard-9, Multi-purpose Smart Card Driver for PC/SC
Reader/Writer, and PKCS#11 Driver for PC/SC Reader/Writer.
Beginning in September, DNP began providing Windows 95/98/
NT/2000 compatible software, for value, to SI (System Integrators)
along with organizations planning smart cards implementation. The
newly developed driver software, complying to PC/SC (Personal
Computer/ Smart Card) specifications, enables the execution of smart
card functions from a PC terminal, and is the de facto standard forsmart card-integrated personal computer systems.

In November 2000, DNP added international-credit-card andcustomer-loyalty-card functions to its display-capable card, making
the card also environmentally friendly, using PET-G as a basematerial. Kyushu Matsushita Electric. Co., Ltd. developed a newreader/writer to treat the card. The card and reader/writer are being
supplied to AEON Credit Service Co., Ltd. which plans to use themat all the domestic stores of The Body Shop, a natural cosmetics
store that is part of the AEON group.
In March 2001, DNP announced the finalization of a licensing
agreement with Sony Corp. to start manufacturing Sony contactless
smart cards for October delivery. In conjunction, DNP and SonyFinance International, Inc. are cooperating to examine application
developments for the new smart card.

Dai Nippon Printing Co., Ltd. Annual Report 2001

Dai Nippon Printing Co., Ltd. Annual Report 2001

In March 2001, DNP started delivery of approximately 40,000
32bit CPU Java employee ID cards to NEC-Sumitomo VISA
Partnership. The newly developed smart card employee ID operates
on the Java Card Technology platform. The smart card employee ID
is the first card in Japan to integrate Java Card Technology with a
32bit CPU IC chip (manufactured by NEC). Superior processing
capacity and sufficient nonvolatile 32KB memory (EEPROM) makes
it possible to add or delete applications after the card is issued.
Furthermore, DNP Standard-9 compatible applets, conforming to
JICSAP Version 1.1 specifications, are pre-installed in a masked
ROM, enabling PKI application transmissions. Like traditional ID
cards, NEC’s employees are able to use the smart cards forestablishing access or cashless payments to corporate cafeteriasand stores. Moreover, NEC’s development achieves the securestoring of electronic certificates and private keys for each employee,
and trustworthy personal verification on network environments. Thisfunction allows employees to access the network from any network
PC, while preventing access by non-designated personnel. The
card also can be used as a Sumitomo VISA credit card. As the only
company in Japan to provide MULTOS, the multi-application
operating system card, Java Card, and Windows for Smart Cards
solutions, DNP will continue to aggressively develop smart card
solutions for a wide range of vertical markets.

In September 2000, DNP and Microsoft Co., Ltd. concluded alicensing agreement for the production and supplying of Microsoft®
Windows® for Smart Cards. This licensing agreement for the
production and issuance of Windows for Smart Cards was the first of
its kind in Japan. DNP will begin production of Windows for Smart
Cards, and provide various smart card security solutions based on
Microsoft’s technology. Microsoft will provide DNP with the latest
information and technical support, aiming to develop nextgeneration security system solutions using Windows for Smart Cards
and Windows 2000. The security systems also will be applied tostandardizing personal authentication in next-generation cellular
telephones.
In June 2000, DNP announced that it had become the firstcompany in Japan to develop a contactless smart card embeddedwith a data display panel. The card was developed by utilizing
several technologies: The magnetic capsuling method (DNP
Product: “I-messe®Card”) was incorporated in the data display
panels, while the contactless smart mechanism adapts the rapidly
growing Mifare technology (ISO14443 Type A Standard; 1 KB datacapacity). With the new cards, DNP was successful in developing an
extremely accurate embedding process stabilizing both functions
and enabling the production of a card size conforming to ISO
standards.
In July 2000, DNP and Hitachi, Ltd. announced the codevelopment and sales of “MultiPockets,” a point-of-service
software for “MULTOS,” multi-functional smart card software. This
software will greatly reduce the processing time of smart card-based
point-of-service systems at stores. Traditionally, handling smart
cards at the POS entailed information management and storetransactions that were conducted online through a central
processing center of the card-issuing company. The newly
developed “MultiPockets” enables off-line authentication, andmanages an individual’s points by data exchange between the instore terminal and the user’s smart card. The software also includes
a “pocket function” capable of housing many points services, and a“record file function” that automatically sets up the individual
identification.

INFORMATION MEDIAINFORMATION MEDIA12

DNP does not just manufacture them.
DNP's strength is in its world’s mostadvanced, ITSEC E6-compatible
security management expertise,
which includes developing OS andapplications

Developing security solutions using
smart cards
In March 2001, DNP developed smart card driver software toenhance network security in a fight against cyber terrorism. The
Windows-operated smart card driver software provides encryptionfunctions, such as public key pair generation, key management,
digital signature creation, hashing, and encoding/decoding. The
driver software launches encryption functions embedded in DNP’soriginal, high-function smart card DNP Standard-9, and iscompatible with Windows 95 OSR 2.1, 98, NT, 2000 and otherenvironments. Swift countermeasures against cyber terrorism areimperative for corporate networks; security measures incorporated
into Windows 2000 and utilizing encryption functions on a serverclient structure have proven to be promising countermeasures.
Using DNP Standard-9 and the newly developed driver software
further strengthens the network security of Windows 2000.

13

Developing a contactless IC tag, aneffective tool for store-chain
management, and its application
systems

In October 2000, DNP, along with Horei Limited and JetForm
Japan Co., Ltd., announced the launch of Japplic, a commercial,electronic form service portal that is the first to correspond to
Web/XML in Japan. By using the service, companies can develop
and produce online electronic forms for submission to administrative
agencies. The central government alone is said to handle
approximately 9,000 types of forms for various applications,declarations and reports. Japplic provides the service of digitizing awide variety of forms for online use. Individuals, corporations andagents can access this service 24 hours a day, 365 days a year, via
a web browser, for a low monthly fee. Horei Limited will produce andprovide the contents for the statutory forms. JetForm Japan will
provide its electronic form technology, XFA (XML Forms
Architecture), and direct web input interfacing capabilities. The XMLdata format allows compatibility with other systems and contributes
to the inevitable realization of online electronic forms. DNP will
operate the Japplic web site and design approximately 400
electronic forms based on XFA technology.
In September 2000, DNP, in cooperation with Jet Form Japan
Corp. and Baltimore Technologies Japan Co., Ltd., announced plans
to provide secure electronic form solutions by integrating identity
authentication and data integrity maintenance. In addition to the useof XML-based electronic form solutions, co-developed by Jet FormJapan and DNP, the partnership involves Baltimore Technologies
Japan’s PKI technology. The first project will include thedevelopment of a solution model that interfaces DNP’s smart cardwith Jet Form’s electronic form tool, “FormFlow99,” which has the
PKI function of Baltimore Technologies.
In March 2001, DNP and Hitachi Software agreed to provide
electronic form solutions for e-procurement systems. The key to thissolution lies in standardized data exchange and storing technology
called XML (eXtensible Markup Language). The XML data exchange
streamlines and automates internal administrative processes, suchas procurement applications, approvals, payments and ordering
processes, which until now have been conducted by using a paperbased, form process.

To suit your needs, DNP offers morein addition to smart cards for you tochoose fromIn November 2000, DNP and Sigma Koki Co., Ltd. announced
the co-development of a laser-thermal card that can be rewritten
4,000 times – approximately 10 times the capacity of existing cards.
Writing and erasing is conducted using a laser light instead of athermal head. The laser-thermal rewritable card is appropriate forsmart cards and contactless smart cards, including IC tags. Unlike
the conventional system, which uses thermal heads that require
periodic cleaning, the laser thermal rewritable card system ismaintenance free. Cost is also reduced by eliminating conveyancesystems that move the media inside a device by rollers, a fixture in
the old magnetic card system. Having completed trial production of
the laser thermal rewritable card system, DNP started production
and sales of the product, in conjunction with Sigma. Sales targets of
500 million yen are set for the next three years.
In September, DNP announced the development of the Clear
Design Card, a magnetic card that features elaborate designs inprint. Traditional magnetic card printing avoided the printing ofdesigns onto the magnetic portion to prevent loss in reading
effectiveness. But due to recent demand, cards using the entire
surface area as a design space have become mainstream, albeit
with limited printing thickness and colors. The newly developed
Clear Design Card makes it possible to thicken printing layers overthe magnetic stripe by 1.5 times, also eliminating the previous
problems of displaying incorrect colors. Moreover, the new magnetic
tape maintains resolution while its magnetic attributes are increased.
In April 2000, DNP began supplying JR East Japan with the
PET-G Card, an environmentally friendly card, for the railways’ View
Visa Card.
In September 2000, DNP announced that ALL IMAGE, its highquality, holographic, magnetic card, would be used by theinternational credit card brands MasterCard and JCB. DNP is
strengthening its product line by employing PET-G, instead of the
traditional vinyl chloride, as the environmentally friendly foundationmaterial.

Dai Nippon Printing Co., Ltd. Annual Report 2001

Dai Nippon Printing Co., Ltd. Annual Report 2001

In September 2000, DNP announced the development of an
original contactless IC tag called ACCUWAVE. Production began in
October, with plans to increase monthly production to 3 million units
in 2001. The main objectives of producing ACCUWAVE were toprovide contactless tags of suitable size, shape and function forvarious uses at low cost. The IC tags can be provided in various
shapes as labels and cards, or even directly inserted inside a
product. Both sheet and roll types also are possible media shapes.
Compared to other ID applications such as bar codes, contactless IC
tags have various advantages. Contactless IC tags can be rewritten,
simultaneously recognized, and are extremely durable. By adopting
contactless IC tags to automatically recognize humans or materials,
customers can expect to improve productivity, reduce costs, andimprove customer services.
In November, DNP developed an inventory and exhibition
management system for enterprises, libraries and museums. It is a
support system for efficiently storing, managing and exhibiting
materials by integrating the contactless IC tag ACCUWAVE and RP
System, an oxygen-free packaging system developed by Mitsubishi
Gas Chemical Company, Inc. After registering content informationsuch as text and images into a database, a contactless IC tag is
attached to an oxygen-free packaging system (RP System) airtightbag in which the content is sealed. By registering the database
digital information onto the IC tag, both the database informationand the actual content can be managed together.
In March 2001, DNP announced the development of the
ACCUWAVE card, the card version of the contactless IC tag. The
ACCUWAVE card integrates a thermo-rewriting site for displaying avariety of information. The card and laser reader/writer combination
enable both a thermo-rewrite display and IC chip data rewriting.
While the ACCUWAVE card costs approximately 120 yen per cardwith the purchase of 1 million cards, the laser reader/writer is also
reasonably priced, at around 200,000 yen per unit. The ACCUWAVE
card system is scheduled to go on sale this summer, and annual
sales are forecasted at 500 million yen within the next three years.

Developing electronic forms

INFORMATION MEDIAINFORMATION MEDIA14

In October 2000, DNP and Matsushita Graphic Communication
Systems Inc. announced the co-development of a smart card
security system supporting FreeBSD. The new security systemproduces and stores both public and private keys directly onto aStandard-9 IC card via a PKCS#11 Driver, a control program for
public keys. Traditionally, these keys were written and stored indevices such as PCs, making it difficult to maintain security
measures for public key theft or falsification. Moreover, the system iscompatible with various authentication security software used with
Internet browsers or networked electronic appliances. Expected
uses of the system include personal authentication for digital
shopping via mail over the Internet and BS digital TV, user accessfor copy machines and printers, and Internet telephones applications.
In September 2000, DNP formed a partnership with Baltimore
Technologies Japan Co., Ltd. and Mitsui & Co., Ltd. in the PKI(Public Key Infrastructure) business field. Baltimore Technologies
manages the largest CA (certificate authority) in Japan, and hasvarious accomplishments in this field including the development
and sales of UniCERT, private CA software. Mitsui adds its
international success in IT accomplishments within e-marketplaces,
e-commerce and SCM, and is presently focusing on the field of PKI
solutions.
Also in September, DNP announced its second multiapplication MULTOS product, MULTOS multi-purpose PKI
application, and its PKCS#11 Driver for MULTOS (Windows95/98)
for use in MULTOS multi-purpose PKI application integrated cards,
which provides a PKI solution. Both MULTOS multi-purpose PKI
application and its PKCS#11 Driver for MULTOS were developed tostore PKI data, including electronic certificates and private keys,
onto a MULTOS-integrated IC card. By installing the PKCS#11
Driver for MULTOS, users can copy certificates and private keys
onto the MULTOS card when needed. Since encryption and digital
signatures are managed within the card, the safety of the private
keys is maintained.
In March 2001, DNP became the first company in Japan toload Rijndael, a likely standard for the next-generation common key
encryptosystem, onto a smart card already in use. Rijndael is acommon key encryptosystem developed by Belgian researchers,
and the latest candidate in U.S. encryption standards. Rijndael is tobe widely used by the U.S. government, as it could replace DES and
Triple-DES to become an international standard.

15

In September 2000, DNP, in collaboration with ink makers,
established a technology using soybean oil ink that, for the first timein Japan, was free of VOC (Volatile Organic Compound) for use inhigh-grade commercial printing. DNP also began marketing printed
materials using this ink. Traditional ink for general printing is mainly
produced from oil solvents, but concerns about environmental
issues have increased demand for an environmentally friendly ink
substitute. Because soybean and reproduced vegetable oil inks
needed oil solvents to enhance drying characteristics, clients
dealing with environmental issues sought the development ofenvironmentally friendly and practical ink. DNP will proceed with
developing, planning and marketing environmentally friendly products
by combining the newly developed VOC-free soybean oil ink.
In May 2000, DNP developed environmentally friendly one-partdelivery sales slips. This slip is designed to peel off cleanly frompackages after delivery, allowing the undamaged boxes to be used
repeatedly. Unlike the traditional delivery sales slips that consistedof multiple carbon-copy slips, DNP’s new one-part delivery sales
slips take advantage of bar-code technology. They are a single tacklabel that DNP developed using its coating technology, adding
layers such as a release coating, plastic film, adhesive layer and aseparator. Expected sales for the delivery slips for the first year are
100 million yen.

Information Data Center for a moreadvanced network support
In April 2000, DNP announced plans to establish its "Internet
Data Center (IDC)," an infrastructure with an information distribution
focus, in September. It is a new Internet business to provide moreadvanced support for corporate networks. IDC features connections
with a high-speed Internet backbone, double system network circuits
and double power supplies to ensure non-stop service, 24 hours aday, 365 days a year. It also has a management/operation monitoring
system equipped with sophisticated security measures such as
finger-print authentication and smart cards.
In October 2000, DNP announced the completion of IDC. It is
the first facility in the printing industry to fully meet all infrastructure
requirements for future Internet businesses. These requirements
include enhanced physical facilities such as quake-resistancestructuring, fire resistance and disaster prevention. With the launchof IDC’s full-scale operation, DNP organized a special team for the
IDC business within the planning department. As well as fostering
already existing systems, integration will support corporate ecommerce, intranet and extranet structuring. DNP will integrate
Production DB Systems for catalog production, IPS and smart card
personal authentication systems, electronic settlements systems andpager services: providing a total solution for multiple media including
paper, packaging (for CD-ROM/DVD), cellular phones, and BS/CS
data broadcasting. Sales of 3 billion yen are projected for the firstyear.

E-management solutions & support
system for corporate e-businessissuesIn October 2000, DNP, in collaboration with Arthur Andersen,
announced the November launch of a total enterprise support
service in e-business consulting, systems development and systems
operations at DNP’s Internet Data Center (IDC). DNP will deploy its
know-how on systems structuring/operation and contents
planning/production in conjunction with Arthur Andersen’s superior
consulting strengths. The two companies will provide a highly
flexible total support service for every stage from consulting tosystem development and operations for clients who are examining
full-scale e-business operations at the IDC.
In May 2000, DNP announced the launch of IR Presenter, aservice that delivers footage of corporate financial statement
announcement meetings on DNP’s IR support Web site, Investor
Galaxy. IR Presenter delivers corporate financial statement
meetings’ video footage, sound, materials, DTPR and other data,
either in real time or on an on-demand basis. This will allow not only
institutional investors and analysts but also general investors togather information close to that delivered at actual financial
meetings.
Also in May, DNP developed the Presentation Support System
to support the sales promotion of housing facility and equipment.
This system allows housing facilities and equipment sales
companies and contractors to easily present products to clients, in amanner that is also easy to understand. Options in size, materials
and equipment for kitchens and bathrooms can now be shown
without complicated explanations using catalogues.
In February 2000, DNP began sales of its newly developed
attendee management system for corporate seminars and private
events. Guests receive invitations containing specific bar codes or
low-priced contactless IC tags recorded with a person-specific code.
On the day of the event, attendees are registered by extracting andsending the bar code or IC data to a server (installed backstage).
While an internal web browser can display attendee data, thesystem can also automatically notify the proper guidance or sales
staff of guest arrivals by cellular phone or pager. The system is
expected to ease the congestion of registration desks. In addition,
management can shift, direct or change on-site personnel byviewing and analyzing event attendance from a remote site.

Dai Nippon Printing Co., Ltd. Annual Report 2001

Dai Nippon Printing Co., Ltd. Annual Report 2001

In July 2000, DNP and NHK Spring Co., Ltd. developed a highsecurity optical hologram characterized by special visual effects.
Optical holograms are produced through an optic feature processthat captures the hologram onto a polymer layer. This processfacilitates visual authentication, and enables a mechanical reader(manufactured by NHK Spring) to discriminate between authentic
and counterfeit holographs.
In May 2000, DNP announced the development of Finegram, afaithful holographic reproduction of traditional anti-counterfeit
measures for printing securities, such as employing complicated,
hard-to-copy designs and using subtly changing dot patterns. In
addition, Finegram is significantly more secure than traditional
holograms, having realized highly luminous and detailed images aswell as images that move in sequence when seen from different
angles.
Also in May, DNP began sample shipments of products
featuring a technology to record variable information on holograms,
using laser lithography. ID and numerical information can now berecorded on holograms. This technology holds a basic patent; otherapplication patents are pending.

Developing Eco-related products

INFORMATION MEDIAINFORMATION MEDIA

16

Holograms for highly complicatedanti-counterfeit measures

17

In March 2001, DNP announced the June launch of
LoyaltyCube, a new ASP (application service provider) service thatboth manages customer data such as purchase histories, time andamount obtained through loyalty card introduction, and analyzes thedata and presents the information over a web browser. The
database server located at DNP’s Internet Data Center (IDC) uses anadvanced security management system, including double or triple
security systems, in which data transmissions between the IDC andstore are conducted over Virtual Private Networks. The service
realizes automatic database structuring, transmission, analysis andextracting for companies implementing loyalty card systems.
Extremely precise data obtained by this service will enable effective
sales promotion activities by applying and distributing customerspecific information in direct-mail advertising, catalogue and e-mailforms. DNP aims to achieve approximately 2 billion yen in sales
within the next two years, including revenues from reader/writersales and system user fees.
In February 2001, DNP announced the launch of Map On
Demand (http://www.map-ondemand.ne.jp), an ASP service
supporting area-based marketers. This service integrates geographicand demographic data used for market research in which users cancreate and view area-specific marketing data over the Internet. By
simply specifying an area and a demographic item, Map On
Demand users can utilize area market data to optimize direct maildistribution areas, new store openings and promotion plans. Map
On Demand allows users to access necessary information at areasonable price.
In November 2000, DNP announced the January launch of thetrial operation, Live Housing, an ASP business for the housing
industry. Live Housing compiles a product database from multiple
makers and supporting applications over the Internet, making iteasier for distributors, builders and designers to fully examine anddifferentiate products before making a recommendation toprospective clients. DNP aims to become a major ASP with datafrom hundreds of manufacturers, as many as 100,000 products
and a variety of users.

In January 2001, DNP Information Systems Co., Ltd.
announced the launch of “Connecting One,” a sales order support
system for marketing materials and custom-made office supplies.
Relevant products include catalogues, leaflets, POPs, exclusive
vouchers, sales materials and corporate stationery. By accessing theservice via the Internet, customers can place purchase orders(complete with item, amount, date and address specifications),
process payments and confirm orders. At the same time, allrelevant order information is processed and distributed toadministrative offices, suppliers, inventory and shipping
departments. Customers, headquarters, shipment sites andsuppliers are able to execute a series of processes by accessing asingle server. All parties are able to share the same information,such as product changes, by reviewing posted notices located at the
top of the screen.
Also in January 2001, DNP established OrderLine to support its
Media Galaxy and Internet Data Center’s integrated Internet services
clients. E-commerce sites require fault-tolerant systems that safely
and securely manage electronic transactions. OrderLine is a multipurpose back-end system that securely transfers onlinetransactions, saves initial costs and enables expedient deploymentof electronic settlement capabilities to enterprises.
OrderLine manages order information such as customer,transaction date, delivery location, order quantity and sales data.
This information can be downloaded and used to fulfill tasks, leading
to efficient order management on the Internet. DNP expects 100
OrderLine users and orders of 2 billion yen in the next three years.

DNP Contents Business takes
advantage of the latest information
processing technology

Also in April 2000, DNP and Keio University jointly launched theDigital Silk Road Project with the aim of building a new store ofknowledge using a communications network. Prior to this, DNP had
donated the DNP House in Keio University’s Shonan-Fujisawa
Campus to promote joint industrial and academic research. The
Digital Silk Road Project is the DNP House’s first project andenables anyone to experience the vision and space of the Silk Road
using a virtual 3-D globe and creating a digital Silk Road on theInternet. The Digital Silk Road Project will house an enormous
database of research written in multiple languages, just as the Silk
Road of yesteryear was home to a multitude of people
communicating in numerous languages.
In June 2000, DNP participated in the joint publication of “April
Snow,” a haiku collection in Swedish and Japanese. The company
joined the Sweden Haiku Association and “The Book and theComputer” editorial department, in cooperation with the Swedish
Embassy, to launch the first international on-demand joint
publishing project. The collection was compiled by using theInternet and on-demand printing technologies. Since November
1999, the editorial department of “The Book and the Computer’’ and
DNP have been conducting a pilot program centered on on-demand
publishing, called “HONCO on Demand,” but the idea of publishing“April Snow” began with Mr. Peter Kurman, a Swedish poet and ondemand publishing promoter. The compilation records 100 Swedishand 100 Japanese haiku in the form of “saijiki,” a glossary ofseasonal terms for haiku composers with illustrative verses. The
Japanese haiku were not selected from prominent haiku, but rather
attention was given to artistic characteristics. The Swedish
selections were chosen from pieces produced in the last 50 years,
written by 75 haiku poets considered to possess the “haiku spirit.”

Dai Nippon Printing Co., Ltd. Annual Report 2001

Dai Nippon Printing Co., Ltd. Annual Report 2001

In June 2000, DNP announced that it will commence
production support of digital data broadcasting programs inconjunction with the December 2000 launch of BS digital databroadcasting. DNP’s position is to develop digital data broadcasting
as one of its multiple media tools which include printed media,
Internet media and packaging media. To provide comprehensive
services to the interactive medium of BS digital broadcasting, DNP
will incorporate three of its strong points: customer services, ondemand printing and database marketing. The services provided will
be most effective in industries involving mail order, travel, electrichousehold appliances, real estate, cosmetics, finance, automobiles,
distribution and beverages. DNP Digitalcom Co., Ltd. will lead theprogram support.
In July 2000, BS Fuji, a Fuji Television BS (Broadcasting
Satellite) digital broadcasting company, is jointly developing with
DNP a two-way service for BS data broadcasting to be launched in
December.
The companies established BS Fuji Bit Link (tentative name), a
joint project with total working expenses of 1 billion yen. They will
jointly build and operate a client database and data-processing
system not only for data broadcasting but also for expanding
services for the Internet and mobile phones.
Another future project is an Internet site with features to allow
people to participate in programs on BS Fuji from the Internet and isscheduled to be established around October. Content for two-way
commercials and programs will be provided in collaboration withDNP Digital.com, a DNP subsidiary that provides production andsupport services for data broadcasting content, among other things.

DNP developed an application service
provider (ASP) service andmarketplace that collects the voicesof customers for an efficient service

INFORMATION MEDIAINFORMATION MEDIA

18

Starting a BS digital broadcasting
business

In April 2000, DNP and Nihon Tsushin Kyoiku Renmei (Japan
Correspondence Education Association) announced a plan to jointlyplan, produce and sell original visual contents. Their first project was"Buddha Statue’s Prayers," a video production focusing on statuesof Buddha designated as national treasures or important cultural
assets in Kyoto, Nara and other temples. The video content,
produced using high-definition technology, aired from April to
September in 26 episodes. DNP and NTKR plan to continue
producing high-quality visual content featuring global historical sites,
architecture, art, cultural assets and nature.

19

In October 2000, DNP Archives.com Co., Ltd., a subsidiary of
DNP that runs its Internet content businesses, announced thelimited sales of illustrated books and catalogues produced bynationwide art galleries and museums. As well as opening new
distribution routes, the objective of “The First Online Catalogue Fair”
was to provide art lovers with illustrated books and catalogues
unavailable in general bookstores. DNP Archives.com sold the
products at the “DNP Museum Information Japan ARTSCAPE,”
DNP’s art information web site with over 600,000 accesses permonth. About 300 illustrated books and catalogues fromapproximately 40 galleries and museums nationwide went on sale.

Promoting network businesses as amain player, not merely as aninvisible player providing support forsolutions
MyPoint.com links client companies and consumers throughnetwork communication
In June 2000, DNP announced that it will establish
MyPoint.com Japan Co., Ltd. jointly with MyPoints.com, Inc. of theUnited States. The new company began its incentive marketingbusiness upon its launch in July 2000. In December 2000, it
announced the launch of its incentive service for Internet users.
MyPoint.com Japan will provide free services to registeredusers. Members can earn reward points by reading and responding
to relevant email offers, visiting web sites, and making purchases. In
MyPoint Web (http://www.mypoint.com/), readers earn points byviewing banner advertisements, participating in online surveys,
making purchases, and referring the site to new users. Several
prominent companies signed up as incentive partners, including thepost office, Wacoal, HMV Japan, Eddie Bauer Japan, Inc.,
Johshuya, Daiei, McDonald’s, UC card, JTB, Pia, national libraries(national book coupons/cards), national recreation parks, national
fitness clubs, children’s gift certificates, JF Gourmet Card and QUO
Card. MyPoint.com plans to acquire 1 million members by the endof 2001. In March 2001, MyPoint.com Japan Co., Ltd. announced
that its services topped 100,000 members. Members can exchange
their acquired points for products, gift certificates and prepaid cards
provided by incentive partners.

Dai Nippon Printing Co., Ltd. Annual Report 2001

Dai Nippon Printing Co., Ltd. Annual Report 2001

Working on DNP Archives.com todevelop system media involving
digital archives

In July 2000, DNP Archives.com, a subsidiary of DNP,
announced the establishment of the Japanese Artist and Art
Database Center to further promote the digitization of artworks
representing modern Japan. The database collection contains about
40,000 text and art pieces that DNP has acquired through coverageor photographs, over the past 40 years. Also included will be artist
profiles, genre, motif, size and year of completion. Visitors canconduct a network search and view artworks via the database. The
project launched with the introduction of artworks by Japaneseartists, all in the forefront of their field. Recent masterpieces in many
genres are scheduled to be introduced on the database by using
precise digitization methods. DNP forecasts 100 million yen in sales
for the first year.
In July 2000, DNP Archives.com announced the opening of“Rakuchu Rakugai,’’ an online art shop retailing high-quality
replicas and various museum goods. Some of the available goods
include canvas replicas, Mona Lisa motif holograms and etchings,
and books of magnum postcards. As the DNP Group’s first projecttargeting sales of general consumer goods via electronic
settlements, it aims to become a major shopping portal with thethemes of art and lifestyle. Plans have been made to appropriate
the abundant contents of “RMN Image Archive,” a digital image
licensing firm jointly conducted by the DNP and Réunion desMusées Nationaux (RMN). Combined sales of contents and goods
are expected to reach 100 million yen in sales for the first year, and
600 million yen by the second year of operation.
In January 2001, DNP Archives.com announced theestablishment of its Art Copyright Business Department. DNP
Archives.com will expand its image licensing business by consulting
and conducting copyright authorization processes of Western andJapanese artworks. In recent years, copyrighted artworks have been
in increased demand for use in reproductions or digital contents.
Gaining access to artworks under copyright protection over theInternet is said to be difficult due to troublesome procedures. DNP
Archives.com decided to establish this special department as a
response to business user demands for a simple and unified
copyright authorization process.
In December 2000, DNP Archives.com, in collaboration with
Tokyo-based United Media, the copyright holder of Peanuts,
announced the release of the standard Windows version of “Snoopy
E-mail.”This software is the second version of the popularized Snoopy Email (50th anniversary version), which was sold over the Internet on
a limited basis. Snoopy is the general desktop mascot, but users canenjoy various characters, such as Woodstock for mail receipt
confirmation, as well as a Snoopy alarm.

INFORMATION MEDIAINFORMATION MEDIA

20

In September 2000, DNP began sales of Archive Bankbooks
and Archive Bankcards. These bankbooks and cards will carry
reproductions of world-renowned paintings held by the Réunion desMusées Nationaux. The cards are a response to a full-scaletransition to debit cards and smart cards. They were produced inconjuction with a subsidiary, DNP Archives Com. By using animage archive site or CD-ROM, customers can choose paintings fortheir Archive Bankbook or Archive Card from approximately
500,000 world-famous works. Consisting of masterpieces such as“The Gleaners” by Jean Millet and “Tahitian Women” by Paul
Gauguin, account holders have new choices for a fresh, stylish
bankbook or card. DNP plans to expand sales of the Archive
Bankbook and Archive Card to nationwide city banks, local banks
and credit unions. Combined sales of both products are expected at
200 million yen for the first year.
Also in September 2000, DNP launched a mobile telephone
contents service, Professional Baseball News Flash, in cooperation
with Tokyo Broadcasting Systems, Inc. The service delivers a fullseason worth of baseball data to cellular phone terminals. The freeversion of the Professional Baseball Flash News was provided fromthe first game of the season, but the contents have been enriched toprovide game results and developments, season forecasts, rankings,
batting average rankings, winning percentages, etc. The number ofusers has steadily increased due to avid professional baseball fans
who seek timely information about game results, especially toward
the playoff period in the latter half of the season. Delivery as a pay
service started in September at 200 yen per month. DNP and Tokyo
Broadcasting System, Inc. adopted a revenue sharing method forthe co-delivery of contents.
In February 2001, DNP announced the full-scale launch of
Mobile Galaxy, a hosting service supporting mobile phone
information content businesses. While focusing on server hosting,
DNP will produce and prepare contents corresponding to wirelessprotocols, i-mode, EZweb and J-SKY.
In December 2000, DNP announced it would provide thecontents of wine, spirits and bars to BAR style, managed by NEC
Corporation’s BIGLOBE (Japanese site only). BAR style is part ofNEC’s ISP service and one of BIGLOBE’s Cyber Plaza sites. BAR

style provides practical and informative information about wines,
spirits and bars to all levels of enthusiasts. NEC will be in charge ofdeveloping the site, while DNP will manage content production andediting. Information about hotels and events, bars and lounges, top
bartenders and much more is featured in BAR style.
In January 2001, Sound Shelf Co., Ltd., a voice contents
distribution service company co-funded by DNP and the publisher
Shinchosha Co., Ltd., announced the launch of sales on the Internetof recitation and lecture CDs
Sound Shelf provides Internet-based distribution of recitations,lectures, comic monologues, sermons and interviews. Initially,
Sound Shelf will provide approximately 300 titles of literary CDs andcassettes, originally distributed by Shinchosha. With a price range of
1,800 to 5,000 yen, Sound Shelf intends to expand its product line
by introducing products from various companies. While payments
are only accepted via credit card, non-members will be able topurchase products with delivery in approximately 10 days after the
online order. Sound Shelf forecasts annual sales of 50 million yen
during its initial year, and 300 million yen in the next three years.
In March 2001, DNP established a “web library” to sellelectronic books and on-demand books through its e-commercesite. Electronic books transform content into digital data and are sold
via online downloads, while with on-demand books, DNP delivers
custom orders received over the Internet. DNP plans to establish aninternal infrastructure to provide readers with a system for smoothsales, charging, settlement and distribution, as well as providing
publishers with a suitable system for data production. In its initialstage, DNP will provide approximately 360 titles, focusing on novels
that are hard to find over the counter. DNP will expand titles to
1,000 within a year, and will include technical books, practicalbooks and dictionaries.

Establishing famima.com to support a new convenience-storefranchise system
In May 2000, DNP, along with FamilyMart Co., Ltd., ITOCHU
Corporation, NTT Data Co., Ltd., Toyota Motor Corporation, JTB
Corp. and PIA Corporation, agreed to establish famima.com Co.,
Ltd., a joint venture promoted by FamilyMart to support a newconvenience-store-franchise system to meet the demands of the ecommerce era. famima.com, based on the world’s first ecommerce franchise system (patent pending since March 2000 by
FamilyMart), provides support in creating the "Super Convenience
Store," a new format of the convenience store in the 21st century.
Specifically, famima.com in October launched an Internet shoppingsite to expand on the products and services provided byconvenience stores. In addition, it will befit every FamilyMart store in
Japan with a satellite multimedia information terminal by July 2001
to offer new digital contents and network services to shoppers.
Famima.com has a sales goal of 120 billion yen in the fiscal year
ending March 2004.

21

LIFESTYLE PRODUCTS

Expanding Printing to Contribute to Society After World War II ended in 1945, the Japanese economy began to emerge from its confused state. To
restore order to the company, the DNP management devised a five-year restructuring plan in 1951. It was the first time in DNP’s 75-year history
involving mainly books, magazines and newspapers that a plan called for an expansion from printing.
The expansion plan was the result of two events. First, soon after the war, Glico, a growing Japanese candy maker, was looking for a manufacturer
who could produce red paper boxes for its caramel candies. DNP quickly accepted the challenge, produced boxes using what little experience it had,and successfully delivered them. Second, the year before the restructuring plan was formed, Orie Kitajima, then a director and later the president andchairman of DNP, had visited the United States to study the country’s supermarkets. The extensive lineup of products, all uniquely packaged to attract
the shopper’s attention, left a lasting impression on Kitajima, who saw DNP’s future in them. The confidence DNP had established in making the Glicocandy boxes and the state of supermarkets he saw in America led to his determination: Restructure DNP by adding on a full-scale paper-container
operation. After a few years, major manufacturers in the food, pharmaceutical and cosmetic industries started to place sizable orders with DNP.
Eventually, DNP also began working on printing on cellophane, and then on vinyl, which led to DNP’s expansion into printing decorative materials.
Such new ventures bore fruit for DNP’s extended branches as Japan’s economy grew at an unprecedented rate. Since then, DNP has continued tocontribute to society as its corporate domain expanded printing. As a result, DNP’s products – from books, magazines and calendars to posters,
catalogs, packaging and decorative sheets on furniture and walls – are now used in every aspect of people’s lives.

1950

1957
1961
1962

Orie Kitajima, Managing Director (later President and Chairman), goes on a study tour of the United Statesand predicts Japan’s distribution revolution.
Begins packaging operations mostly with paper containers, and decorative materials operations
with wood-grain decorative prints.
Advances into the film-packaging field at full scale.
Builds a plant specializing in the molding, printing and processing of plastic containers.
Develops a technology to directly print on steel plates.

1968
1970

Develops laminated-tube technology.
Develops retort-packaging technology.

1978

Develops multi-color, curved-surface printing technology.

1994

Begins sales of an inline form sterile filling system for PET bottles.

1951

1950
Orie Kitajima, Managing Director(later President and Chairman),goes on a study tour of the UnitedStates and predicts Japan’s
distribution revolution.

1951
Begins packaging operations mostly
with paper containers, anddecorative materials operations withwood-grain decorative prints.

1957
Advances into the film-packaging
field at full scale.

1961
Builds a plant specializing in themolding, printing and processing ofplastic containers.

1962
Develops a technology to directly
print on steel plate.

1970

1968

Develops retort-packaging
technology.

Develops laminated-tube
technology.

1978

1994

Develops multi-color, curvedsurface printing technology.

Begins sales of an inline form sterile
filling system for PET bottles.

In March 2001, DNP announced the development of a retort
pouch with Braille, a universal-design packaging material. Although
Braille has been integrated to medical product packages (paper
cartons), DNP is the first to apply Braille to a retort pouch. Threesides of the two-layer resin film retort pouch is heat-sealed before a
product (peeled sweet roasted chestnuts) is enclosed via the single
opening; and Braille is embossed by applying a Braille mold whenheat-sealing one of the three sides. Recent social trends havechanged the packaging industry. While the basic function of
packages is to protect and preserve the contents, recent needs toprotect the environment with reusable, recyclable and cleanly
burnable materials have greatly increased. Furthermore, society is
focusing on barrier-free and universal-design environments to
support the elderly or visually impaired. DNP has already delivered
to the market Braille-embossed, daily product packages forcellophane wrap and plastic bottles, and has been focusing on
barrier-free and universal design components to commercialize
easy-to-open and easy-to-carry packages.

In June 2000, DNP announced plans to build an Internet
Electronic Data Exchange (EDI) Procurement System jointly with
Mitsui & Co. DNP's goal is to optimize supply chain management
not only within itself but also with other materials manufacturers.
Procurement of films and other film packaging materials began inJune, using a stock point warehouse jointly established in Takatsuki
City, Osaka, near DNP's Kyoto Plant, with a materials provider, andoperated by Mitsui & Co.'s subsidiary with an expertise in joint
warehousing. The Internet EDI makes procurement faster, moreaccurate and more efficient. By the summer of 2001, DNP plans to
expand Internet EDI procurement to all of its transactions with morethan 70 companies from which materials are procured. DNP hopes
to expand the application to the field of commercial printing and the
3,000 some companies it procures its products from as part of
DNP's efforts to implement supply management. In the future, DNP
aims to create an electronic market place with its clients andproviders as part of its e-procurement activities.

Environmentally friendly decorative
materials
In July 2000, DNP announced the development of anenvironment friendly, glazed-steel plate of superior design called“Clerio,” manufactured by Dai Nippon Elio K.K. DNP and Nippon
Steel Corp. Recent concerns about sodium vinyl, used in mostplates up to now, has raised environmental and health issues, andthe demand for a review of sodium vinyl products has led to thedevelopment of the new glazed steel plate. Clerio is both
environmentally friendly and corrosion resistant. Special printing
methods have been applied that allow for remarkable freedom indesign and variation. Clerio uses an environmentally friendly
polyester resin, and best meets the needs for corrosion resistanceand superior design, for usages such as the walls of modular
bathrooms.

In August 2000, DNP announced that its Group secured ISO
14001 certification, the International Organization forStandardization’s environmental management standards, at theconstruction materials Okayama Plant through the Japan Gas
Appliances Inspection Association’s JIA-QA Center. The plantdesigns and manufactures decorative surfaces, including thinpapers, titanium papers and chemical product films used forprinting papers. This certification was DNP’s fourth plant to comply
with ISO’s environmental management standards. By conforming toan already existing, DNP-developed, environmental management
system, the Okayama Plant had actively worked on saving energy,
and reducing and effectively utilizing wastes. But to further
implement measures for global environmental protection, the plant
initiated preparations to acquire ISO 14001 certification in July 1999.
In March 2001, DNP, along with Kumagai Gumi Co., Ltd.,
Yoshino Gypsum Co., Ltd. and the Department of ElectricEngineering, School of Engineering, Tokai University, announced
the development of Tiger ES Board, an interior foundation material
for electromagnetic shielding. The new Tiger ES Board takes
advantage of DNP's highly advanced printing technology, applying it
to a special cardboard to maintain all the features of theconventional ES board but to cut back the material price by 40%.
Because the new Tiger ES Board comes in the same basic size as
general gypsum boards, the construction process improved with a
50% reduction in construction time. Building an electromagnetic
shield space is now affordable.

Dai Nippon Printing Co., Ltd. Annual Report 2001

Dai Nippon Printing Co., Ltd. Annual Report 2001

Building an Internet EDI Procurement
System using a joint warehouse witha packaging materials manufacturer

LIFESTYLE PRODUCTS

LIFESTYLE PRODUCTS

24

Package development and proposing
management systems for packagematerials makers

25Lifestyle products
Most of our lifestyle products are closely related to people’s
everyday lives, some literally touching people. As consumers’ awarenessof the environment rises, so has interest in DNP’s productdevelopments. This has prompted the sales of our lifestyle products toincrease. At DNP, we develop our products in accordance with oureight-point guidelines as we propose ways to protect the environment.
The following are some of the products that we developed following
the guidelines:

U 1. Reducing substances that contaminate the environment

Pre Armor is an environmentally friendly decorative sheet that
contains no VOC12 substance that generates the “sick-house”
syndrome found in newly built houses. It also features our uniquecoating technology, the EB finish technology, to harden thesurface to protect it from scratches. Our other product, IB Film, isa chlorine-resin-free barrier film for packaging, developed as ameasure against dioxin problems. The film has already been usedin many small bags for containing food, soup, seasonings andother liquid products that need the IB film’s barrier characteristic.

Pre Armor

U 3. Recovering sustainable resources

DNP’s P-DISH is a container for ready-to-eat dishes andfrozen foods. Printable both inside and outside the container, thepaper tray features more attractive prints than plastic containers.
After use, the tray can be reduced in volume, and can also berecycled. It is also microwavable.

Dai Nippon Printing Co., Ltd. Annual Report 2001

Dai Nippon Printing Co., Ltd. Annual Report 2001

The DNP Group manufactures an array of products including books, commercial printing, packaging, decorative materials, cards andsecurities, electronic components, and information media supplies. These products are produced for a variety of industries and serve many
uses in people’s daily lives.
When we therefore make efforts to protect the environment, we keep all factors in mind. We focus not only on reducing environmental
impacts in the manufacturing process, but also on producing environmentally friendly products.
In particular, having established an LCA (life cycle assessment) evaluation method in the packaging field in November 1997, we use themethod to help create environmentally friendly products. The method can numerically represent energy use, CO 2 emissions and toxic
substance releases involved in producing raw materials, as well as in manufacturing, distributing, using and recycling (or discarding) products.
The DNP Group continues to take wide-ranging measures to protect the environment, such as planning and developing environmentallyfriendly products in all DNP’s product fields, even in their production process. Such an effort has paid off in the form of conventional products
being replaced by environmentally friendly products we have proposed. Markets, previously not opened to us, have become markets in which
we can become a key player. We can even create new markets.

LIFESTYLE PRODUCTS

LIFESTYLE PRODUCTS

Developing environmentallyfriendly products

Paper Dishes

U 4. Durable

As a rule, all DNP products are developed with durability inmind. In particular, we make sure that our decorative materials forconstruction are durable.

U 5. Reusable

DNP’s Stand Pouch is a refillable pouch that allows the mainunit bottle to be reused. After use, its volume also can be reduced.

Stand Pouch Refills

U 6. Recyclable

Paper cartons for holding liquid greatly cut back ontransportation energy when compared with glass bottles. They arealso good for recycling. Lines could also be printed on thecontainer to help fold it to reduce volume.
Paper Cartons

U 7. Using recycled materials

HI-Cup insulated paper cups are double-structured. In someof them, recycled paper is used for the outer layer.

Heat-insulated Paper Cups

U 2. Conserving resources and energy
PET Bottles

Sterile Filling System Line26

Pre-forms

Spouch ®

Ordinarily, the PET plastic bottles for soft drinks are shipped tosoft-drink manufacturers to be bottled, only after they have been
formed at the bottle manufacturers. DNP’s Inline Form Sterile
Filling System for PET Bottles, on the other hand, was developed
from an LCA perspective to ship the bottles in their pre-form
phase to soft-drink manufacturers, who will then form the bottles
upon filling them. This method conserves resources and energy
by dramatically cutting back on the energy used for shipping, andby reducing carbon dioxide and nitrogen oxide emissions. In
addition, we developed Spouch®, which has a re-closable spout. It
is a life-cycle-assessed, environmentally friendly container whose
volume can be reduced after use.

U 8. Easy to handle and dispose ofContainers called BIB and BIC combine plastic inner bagswith outer paper cartons. The two parts can be separated andfolded before and after use to dramatically save on storage space.
DNP also offers the adhesive-free Stretch Label that can easily bepeeled off and discarded after use. With no trace of the oldaddress label, envelopes and packages can be recycled for
repeated uses.

Bag-in-box (left), Bag-in-carton (right)

Stretch Labels

27

ELECTRONIC COMPONENTS AND
INFORMATION MEDIA SUPPLIES
Printing technology’s possibilities are endless In Japan, TV broadcasting began as a test in 1950 by the government-run broadcasting station, NHK.
It was not until 1956, however, that the absence of Japan-made color TVs prompted the then-Ministry of International Trade and Industry to spearhead
efforts to make the nation’s own color TVs. The color-TV development team, made mostly of MITI members, began by trying to understand themechanism of a color TV. The team took apart a Braun tube from an American color TV, which was by far the most advanced TV at the time.
Inside the tube, the team discovered a shadowmask, an essential component for controlling the Braun tube’s phosphor colors. It was a steel board only
0.15-mm thick, with 0.25-mm holes lined up at 0.65-mm intervals. The number of the pin-sized holes was as many as 250,000 for a 19-inch monitor,
arranged under strict conditions. It seemed like an impossible product to reproduce. The team members did not know what to do. Then, they obtained
a piece of information: In America, a printing company produced the shadowmasks.
As the only printing company in Japan to have established a research center at the time, DNP, whose forte was special printing, was called upon to
tackle the task of developing shadowmasks. The year was 1957. Within the next year, DNP had applied its photoengraving technology to successfully
produce shadowmasks. The news was announced in newspapers, featuring a female DNP employee holding a shadowmask sample. For days, DNP’sstock price closed at limit-highs.
Eventually, Japanese color TVs began to dominate the world. Behind the Japanese brands that have become household names worldwide are DNP and
its printing technology. And this shadowmask was only the beginning. DNP continued to develop other display-related products, including high-precisioncolor filters for liquid-crystal displays, projection TV screens and back plates for PDP. The printing technology’s possibilities, indeed, are endless.

1958
1959

Completes test manufacturing of shadowmasks for color TVs.
Completes test manufacturing of semiconductor photomasks.

1965

Begins producing lead frames.

1981
1984
1986
1988

Develops high-precision shadowmasks.
Develops projection screens.
Begins manufacturing thermal-transfer ribbons.
Begins manufacturing color filters for liquid-crystal displays.

1998
1999

Begins work on electrodes for lithium-ion rechargeable batteries.
Begins the build-up board business.

1958

1959

Completes test manufacturing of
shadowmasks for color TVs.

Completes test manufacturing ofsemiconductor photomasks.

1981

1965

Develops high-precision
shadowmasks.

Begins producing lead frames.

1984
Develops projection screens.

1998
Begins work on electrodes forlithium-ion rechargeable batteries.

1986

1988

Begins manufacturing thermaltransfer ribbons.

Begins manufacturing color filters
for liquid-crystal displays.

1999
Begins the build-up board business.

Trends in display-related businesses

In February 2001, DNP announced that it would start
construction of an Okayama Plant extension. Located in theprefectural Mitsu Industrial Park of Oaza, Ujigaki, Mitsu-cho, Mitsugun, Okayama Prefecture, the new building will be used to increase
the production output of various display films. Completion of theplant extension is scheduled for October, after which a polarizing
plate film used in liquid crystal displays, CRT film and touch panel
film are to be produced starting November.

Trends in semi-conductor-related
businesses

Dai Nippon Printing Co., Ltd. Annual Report 2001

Dai Nippon Printing Co., Ltd. Annual Report 2001

In May 2000, DNP and Fujitsu Ltd. entered into a basic
agreement to collaborate in the field of semiconductor photomasks.
In accordance with the agreement, the two companies plan toconcentrate their management sources in the field of photomasks,
jointly develop next-generation photomask technologies and discuss
manufacturing most-advanced photomasks at competitive prices.
For the time being, photomask development will take place at
Fujitsu's Mie Plant while DNP, already the biggest manufacturer ofphotomasks in the world, further enhances its production capacity.
In December 2000, DNP and Taiwan-based United
Microelectronics Corp., a major semiconductor foundry company,
announced an agreement to form a business partnership in stable
photomask supplies. DNP will secure UMC’s orders in state-of-theart photomasks of 0.15µm and 0.13µm. By stabilizing supplies in a
rapidly expanding semiconductor market, UMC aims to acquire
more market share. Both companies also will conduct joint researchon optimizing UMC photomask specification requirements forphotomasks smaller than 0.10 µm, said to be the next generation insemiconductor process technology. Photomask development has
accelerated in conjunction with rapid growth in the semiconductor
market. The current mainstream demand for 0.18 µm has beensteadily shifting to 0.15 and 0.13 µm, and there is also increased
demand for state-of-the-art, high-quality Optical Proximity Correction
and Phase Shift Masks. DNP’s semiconductor-related businessdevelopments include the purchase of Hitachi’s photomask divisionin October 1999, and the establishment of a Toshiba joint venture insemiconductor photomask production in March 2000. In addition,
in January, DNP started the joint development of next-generation
photomasks with Intel, and has been expanding its photomask
businesses through a business partnership agreement with Fujitsu

in May. The business partnership with UMC is part of DNP’sstrategic alliances with top semiconductor makers. By retaining its
technological edge and integrating DNP photomasks in UMC
products, which serve global semiconductor demands, DNP
expects to acquire market share gains and customer loyalty.
In October 2000, DNP and Toshiba Corporation established
D.T. Circuit Technology Co., Ltd., a joint venture that began
operations in November to develop, produce and market build-up
boards and functional circuit modules. The agreement saw Toshibatransfer part of the assets and human resources of its present PCB
operation to Toshiba Circuit Technology Corporation, a Toshiba
Group company engaged in the design, development, manufactureand sales and marketing of PCBs, that became the core of the joint
venture. Toshiba subsequently increased Toshiba Circuit
Technology's capital and DNP acquired a stake in the company toestablish the joint venture. By combining Toshiba's B2it technology
for high-density, multi-layer printed boards with DNP's advanced
fine pitch wiring technology, the joint-venture company will provide
the market with highly competitive products. Through a close focus
on its core business in build-up boards, D.T. Circuit Technology
Co., Ltd. aims to reach annual sales of 25 billion yen in the next
three years.
In February 2001, DNP announced plans to construct anextension to its Kyoto Plant to meet an increase in demand for nextgeneration photomasks. As the photomask market leader, DNP
provides photomasks to both domestic and foreign markets at theKamifukuoka Plant, in Saitama, and the Kyoto Plant. DNP will
enrich production capacity in the two plants while integrating anefficient production system by hedging risk and shifting production
in response to changing market trends. The three-floor facility at the
Kyoto Plant was completed in August 2001. DNP is planning to
introduce two electron beam mask writing systems and theirautomatic exterior inspection equipment, process management
system, and a processing facility complying to next-generation,
chemically amplified resist standards. DNP will also reinforce
photomask supplies for semiconductors fabricated to the 0.13
micron design rule, demand for which is expected to be most active
after next year. With the adoption of a mini-environment system andcost-effective, clean- room layout structuring, DNP expects quality
improvement and cost reduction. Infrastructure and equipment
investments for the facility are expected to reach 5 billion yen, as
DNP positions to efficiently and effectively handle growing sales
expectations.

ELECTRONIC COMPONENTS AND INFORMATION MEDIA SUPPLIESELECTRONIC COMPONENTS AND INFORMATION MEDIA SUPPLIES30In April 2001, DNP announced that it succeeded in enhancing
the flexibility of organic electroluminescent (EL) displays. Currently,
thinner and lighter luminous displays are the focus of attention, and
DNP has succeeded in developing an efficient manufacturing
technology for multi-color luminous layers by applying printing
technology. This technology enables mass production of low-priced,
extremely thin, curved surface displays, and can be applied to awide range of areas including mobile devices such as PDAs,
electronic books and luminous POP/posters.
DNP developed the new color-flexible, organic EL display by
applying barrier film packaging technologies. Green and red
luminous materials were integrated in the trial product, but red,green and blue luminous materials can be utilized at intervals of 100
microns, producing a full-color display. DNP plans to embed massproduction technology for commercialization by 2003, as well to
improve functions of the barrier film substrate and organic EL ink.
In May 2000, DNP concluded an agreement with SinTek Co.,
Ltd, a Taiwanese manufacturer of color displays for liquid crystal
displays, to license DNP's technology related to color-filter
manufacturing. With this agreement, DNP will be the first Japanesecolor-filter manufacturer to supply locally produced color filters of its
own-brand to the Taiwanese market.
In June 2000, DNP announced that it had acquired aholographic patent portfolio, consisting of Hughes Aircraft Co.
patents. The bulk purchase included about 150 patents, and werepurchased from the U.S. military equipment manufacturer Raytheon
Co. DNP and Raytheon also entered into a licensing agreement
involving about 30 other holographic patents. The newly acquired
patents have become part of DNP’s roughly 1,200 different
holography-related patents, the largest volume owned by a single
corporation. The patents obtained by DNP are essential inproducing a full range of holography
products including optics related
holographic color filters, heads-up-display
systems, holographic screens, andholographic reflectors.
Raytheon had originally purchased
the patents from the Hughes Aircraft Co.
of the United States. A pioneer inholographic technology, Hughes developed and acquired various
holographic patents, and the Hughes patents have become wellknown throughout the holography and optics industries.
In October 2000, DNP announced the extension and full-scale
operations of its Mihara Plant (Mihara-shi, Hiroshima) for state-ofthe-art shadowmask production. With demand for multimedia
devices expected to soar, the newly extended production line will
manufacture shadowmasks for all-in-one PC/TV units.
In addition to the growing trend of enlarging and flattening
Braun tubes, demand for multi-media devices such as an all-in-one
PC/TV is predicted to increase. Demand for high-specification
shadowmasks, crucial components for display systems, also are
forecasted to increase. To meet the high-end specifications of thenext-generation display systems, shadowmasks must meet highintensity, high-definition and rigid strength requirements. The
advanced production line in the newly extended Mihara plant iscapable of effectively producing shadowmasks that meet all suchdemands and requirements.
In December 2000, DNP announced the establishment of awholly owned subsidiary, Dai Nippon Printing Co. (Korea) Ltd.,making it the company’s second Asian subsidiary after the one in
Taiwan. The new company was founded in response to theincreasing demand for electronics-related materials in Korea.
Operations began in January 2001, and DNP plans to expand its
business in the near future.

31

ELECTRONIC COMPONENTS AND INFORMATION MEDIA SUPPLIES
Dai Nippon Printing Co., Ltd. Annual Report 2001

32

Trends in information-media-supplyrelated businesses
In November 2000, DNP, in collaboration with Sigma Koki Co.
Ltd., announced the co-development of Dippo, a Braille printing
system. The device is simple to operate and produces easy-to-read
output materials. The Braille system mostly has been limited tobooks and newspapers, but DNP’s development expects to improve
lifestyles for the visually impaired by on-demand outputting.
Application fields include public service, such as medicine bags for
hospitals; guidance in infrastructure, such as hotels; and receipts
for terminals, such as ATM or POS. DNP believes that this productwill greatly improve the application fields of the traditional Braillesystem. The newly developed system allows for simultaneous
printing of Braille and traditional characters (katakana, kana,English and symbols), is compact in size and sells in the reasonable
range of 300,000 yen. The system has a wide range of uses, otherthan Braille.

In October 2000, DNP announced the launch of an informative
Internet site, “Digicamates,” to promote the enjoyment of printing
digital images at home. Recently, the popularity of digital cameras
has sprung up, and it is estimated that annual domestic andinternational shipments exceed 10 million units. Moreover, withadded features such as various design frames and print-size
selections, digital cameras are becoming fully integrated with home
printers. Thus, the printing of high-definition images can be easily
enjoyed at home. The new site contains the latest information on
new products and digital camera printer events, concrete examples
of digital printer application methods, instructions for printing digital
camera images at or out of the home, and more. By launching thisweb site, DNP aims to promote the sales expansion of digital
cameras and printers, and to increase sales of DNP’s sublimationtransfer materials.

Financial Section

Unless otherwise noted, all financial information contained in this section is based on the consolidated financial statements of Dai
Nippon Printing Co., Ltd. and its consolidated subsidiaries, hereinafter referred to as DNP, included in this annual report. The
consolidated financial statements were prepared in accordance with generally accepted accounting principles in Japan.

Our BusinessAlthough we are involved in the soft-drink manufacturing operation in Hokkaido, all of ourstrategic operations are centered around our printing technology and are part of our printing
operations, which is a consolidated segment. The printing operations are categorized into threedivisions: information media, lifestyle products, and electronic components and information media
supplies. We are also the No.1 printing company in the world in terms of sales.
Our information media operations are involved mainly in the printing of books and magazines,
commercial materials such as catalogs and flyers, as well as a wide range of other printing products
such as securities and business forms. In addition, we have applied our printing technology to cards

Our Principle
As the DNP management, our mission is to maximize our shareholder value. And to accomplish
this, we will implement plans to further develop all the businesses in which we are involved, andsuch as smart cards to advance into new fields. Presently, we are proud of having the highest market
share and sales in Japan’s printing industry.
Meanwhile, in our lifestyle products operations, we apply our printing technology to packaging

increase DNP’s corporate value. We believe that these are in line with plans to maximize DNP’s long-and materials other than paper such as decorative materials. Praised for our advanced technology,

term cash flow, maintain our strong financial position through a sound capital structure and financial

we have also secured ourselves a position as a company pioneering in this field.

strategies, keep an eye on our cost of capital, and invest strategically in highly profitable areas.

Our electronic components and information media supplies operations are involved in the

To accomplish such goals, we should follow our basic action guideline that has been the

manufacturing of a variety of products applying our advanced platemaking and printing technologies.

backbone of DNP for the past 125 years: develop outstanding technology that is useful to society,

The products include electronics-related products such as shadowmasks and color filters, thermal

provide original products and services, and aim to steadily expand our corporation by contributing tomaterials for facsimile and electrodes for lithium-ion rechargeable batteries. Many of our productssocial prosperity and the happiness of all the people with whom we are involved. We firmly believe

enjoy a top market share in the world.

Dai Nippon Printing Co., Ltd. Annual Report 2001

Dai Nippon Printing Co., Ltd. Annual Report 2001

INTRODUCTION

MANAGEMENT'S DISCUSSION AND ANALYSISMANAGEMENT'S DISCUSSION AND ANALYSISMANAGEMENT’SDISCUSSION AND ANALYSIS

that the best means to create new values for all with a stake in DNP, as well as the only way to
expand DNP’s corporate value and shareholders’ profit, is to keep putting relentless efforts into being
the leader in the new information culture in our strategic business fields. Such strategic business

Forward-Looking Statements
Words such as “believe,” “anticipate,” “estimate,” “expect” that are used in this annual report,

fields are where we can fully utilize our core competence to create, from a global perspective,

as well as all numbers for future earnings, are forward-looking statements that make use of all

information needed by society and to develop technologies to improve the quality of that information.

information available to the management at the time of the creation of this annual report andmanagement’s best judgment. The statements are non-historical. It is possible that our actual

DNP
DNP’s concept is to expand on printing fields. Our foundation is our printing technology, which

earnings in the future may differ greatly from these estimates and forecasts due to uncertainties inthe environment and various risks that are mentioned later in this annual report.

we apply to packaging, decorative materials and other operations. We also apply our advanced plate-

The management deemed these forward-looking statements reasonable at the time of the

making technology to manufacturing electronics products such as photomasks. Currently engaged increation of this annual report. Sufficient caution must be exercised in making investment decisions

a wide range of operations stemming from conveying information, we lead the world as aon the basis of these statements. In addition, we have no responsibility to update information relating

comprehensive printing company, boasting of having the top market share in a number of fields.

to these forward-looking statements in the future with the newest information or by publicly

When we use the terms “we” and “our” in this annual report, we mean Dai Nippon Printing Co.,announcing revisions.

Ltd. and its consolidated subsidiaries, unless otherwise specified.
Net Sales by Consolidated
Segments(%)
Beverage
5.5 %DNP’s consolidated segment consists of printing operations and a soft-drink manufacturing
operation. All of our operations involving printing technology and its applications are part of theprinting operations. Our other operation, soft-drink manufacturing operation at Hokkaido Coca-Cola
Bottling Co., Ltd., widely differs in content from the printing operations. The operation, however, hasplayed an important role in providing our printing division with useful market information for building
new strategies. The management therefore is not reexamining the status of the soft-drinks

Printing
94.5 %

manufacturing operation. This fiscal year, the printing operations accounted for 94.5% of the sales
while the soft-drink manufacturing operation accounted for 5.5%.
Our consolidated statement this fiscal year includes 51 consolidated subsidiaries and 9 affiliated34

companies.

35

MANAGEMENT'S DISCUSSION AND ANALYSISMANAGEMENT'S DISCUSSION AND ANALYSISRESULTS OF OPERATIONSNet Sales
This fiscal year, our net sales increased 4.3%, or ¥55.33 billion, over the previous fiscal year to

Net Sales¥1,342.03 billion.

Business Environment(¥ Billion)

1,400

1,200

800

With order prices continuing to fall, our operations this fiscal year experienced split results: ones

investment, show signs of hope in the first half of the year. In the latter half of the fiscal year, however,that secured increased income through vigorous sales activities and proposals that met the needs of

the U.S. economy slowdown and Japan’s bad debt problems, among other factors, caused thesociety and clients, and ones whose income decreased compared with the previous year due to a

Japanese economy to gradually slow down. Market environment did not improve with looming fears

decline in demand.

of unemployment and stumped growth in individual incomes. Consumer spending refused to recoverOf the operations that contributed to our increase in income, the biggest contribution was madewhile prices dropped and competition intensified. The business environment, overall, was very harsh.

by our commercial printing operations with POP (point of purchase) and pamphlet printing leading

In our strategic business field of printing operations as well, lower order prices and smaller order

600

400

200

Dai Nippon Printing Co., Ltd. Annual Report 2001

Dai Nippon Printing Co., Ltd. Annual Report 2001

1,000

The Japanese economy this fiscal year had some indexes, including corporate income and capital

among the overall favorable sales, reflecting a 7.2% increase over the previous year in Japan’slots were the overall trend. In the latter half of the fiscal year, a world-scale adjustment in theadvertisement expenses. Other major contributions were made by electronics-related products suchproduction of computers and other related products triggered by the slowdown of the U.S. economy

as color filters and photomasks, both of which sold particularly well, and by packaging-related

began to show its effects.

products that showed an overall growth mainly with paper containers and film packaging.
On the other hand, the biggest factor in the decrease in net sales among operations whose

0

97

98

99

00

01

income decreased this fiscal year was our soft-drink manufacturing operation that was badly affected

Overview
To meet the challenges posed by such a harsh business environment and to respond to rapid

by the ailing Hokkaido economy. Another operation that decreased in income was our business-changes taking place in the world, the DNP management has been working aggressively since theform-related operations whose card business decreased, despite favorable sales among its

previous fiscal year on reforming the company’s business structure and cost structure. This fiscal

securities-related and IPS (Information Processing Service) businesses.
We estimate that the effect the falling order prices had on net sales throughout the fiscal year

year, we continued on our company-wide efforts to implement two reforms.
First, to reform our business structure, in our aim to concentrate our resources in growth fields,

was about ¥32.2 billion.

we rearranged and integrated our production system to respond to market trends. In each of ourfields, we strove to expand our operations into the future by building an infrastructure for a network

Cost of Sales
Cost of sales this fiscal year increased 5% to ¥1,091.39 billion while the percentage to net sales

business, developing environmentally friendly products, and building a new color filter plant toenhance our production ability. To reform our cost structure, we strove to improve management

increased from the previous year’s 80.7% to 81.3%.

Gross Profit Margin

This fiscal year, we implemented cost cutbacks particularly among electronics-related operations,efficiency by stressing the importance of cash flow, and worked aggressively to introduce new
equipment to streamline our operations, integrate production lines and to downsize personnel.

integrating and streamlining production lines and reexamining flows between processes. Despite

As a result, the extremely harsh business environment caused by falling order prices

such efforts, the cost percentage, which initially decreased during the first half of the fiscal year,

notwithstanding, our advancement into growth fields bore fruit this fiscal year in the form of a 4.3%

increased in the latter half of the year due mainly to the drop in order prices that affected all of ourincrease in net sales to ¥1,342,035 million. We also managed to maintain our operating income atdivisions. The effect of the drop in order prices was felt throughout the fiscal year in almost all of our

the previous year’s level at ¥85,941 million, a 0.1% increase.

operations, although the downward trend turned moderate during the latter half of the year. As

Due to changes in Japan’s accounting standards this fiscal year, we employed retirement benefit

25

20

15

previously noted, we estimate that the demand for unit price reductions resulted in a ¥32.2 billion

accounting and posted expenses for amortizing the difference at the time of introducing the new

decrease in net sales. This was a factor in the 1.9% increase in our cost percentage which, due toaccounting standards. The resulting increase in other expenses led to a 14.4% decrease in net

our cost structure reform, should have decreased instead for the second consecutive year.
Another factor that resulted in raising our cost percentage this fiscal year was the price of printing

income this fiscal year to ¥33,409 million.

(%)

10

5

paper that rose on the average 3.5% over the price of the previous year. Because one of our core0

Net sales

March 2000

March 1999

¥ 1,342,035¥ 1,286,703¥ 1,269,543

operations, printing on paper, involves a major business, commercial printing, the price of paper

18.7%

19.3%

18.6%

printed products we provide our clients. Upon holding negotiations with our clients from theOperating income margin

6.4%

6.7%

5.5%

beginning of the fiscal year, we were able to pass on about half of the increase in the price of paper

Net income
EPS¥

69,11633,409¥79,19939,034¥77,703to the sales price of our products. However, because we could not pass on the entire increased

30,493amount, we have posted about ¥2.8 billion as our increase in costs.

–– primary

43.99

51.40

40.15

–– fully diluted

43.45

50.47

39.54
(Yen in millions, except EPS)

97

98

99

00

01

purchased by DNP affects us in that the paper-purchasing price is included in the price of theGross profit margin
Income before income taxes

36

March 2001

37

Selling, general and administrative expenses this fiscal year increased ¥2.9 billion, or 1.8%, overthe previous fiscal year to ¥164.7 billion. Their percentage of net sales, however, improved from(%)

12.6% to 12.3%.

14

Our company-wide efforts to cut back on costs have resulted in reducing the percentage for the

Net Income

MANAGEMENT'S DISCUSSION AND ANALYSISMANAGEMENT'S DISCUSSION AND ANALYSIS

Selling, General and Administrative Expenses
SGA Expenses to
Net Sales

ROE(%)

As a result of the above, our net income decreased 14.4% over the previous year to ¥33.41
billion, This also lead to a decline in our ROE from 4.21% to 3.55%.
Our net income per share also decreased from ¥51.40 in the previous fiscal year to ¥43.99, and76fully diluted net income per share also decreased from ¥50.47 to ¥43.45.

12second consecutive year. As with the previous year, the greatest contributing factor to the reduction
this fiscal year was the cutback in personnel expenses. Due primarily to this factor, our salaries and8compensation dropped 1.8% to ¥42.08 billion.

5

SEGMENT INFORMATION

4

3
6

Operating Income4

Our operating income rose 0.1% to ¥85.94 billion, while our operating income margin fell from2

6.7% to 6.4%.

0

97

98

99

00

01

Other Income (Expenses)
This fiscal year, we recorded net other expenses of ¥16.83 billion. The amount of expenses
increased ¥10.14 billion over the previous year.

Operating Income
MarginThe largest factor contributing to the increase in other expenses was the adoption of a new(%)

accounting standard for employees’ retirement benefits, following the changes in Japan’s accounting

10

standards. At the beginning of this fiscal year, we had a shortfall of ¥45.48 billion as a transitional
obligation. The new standard demands that this transitional obligation be amortized over a voluntary

8

period of 15 years or less. Although we initially considered writing off the entire amount this fiscal
year, we have decided to amortize the amount evenly over a five-year period to maintain the stability

6of our shareholders’ equity and income. Following the introduction of this retirement benefit
4

Our consolidated segments consist of 1) printing operations in which we conduct printing and a2

contingent businesses, as well as applying printing technology to develop and manufacture products1

and 2) soft-drink manufacturing operation in which we manufacture and sell soft drinks in Hokkaido
0

in northern Japan.

97

98

99

00

01

The printing operations consist of three divisions according to products: information media,
lifestyle products, and electronic components and information media supplies.

Printing Operation
Printing
Net sales
Operating income

Dai Nippon Printing Co., Ltd. Annual Report 2001

Dai Nippon Printing Co., Ltd. Annual Report 2001

10

Sales in Printing
Operations
March 2001

March 2000

March 1999

¥ 1,268,415¥ 1,210,028¥ 1,194,729

82,546

79,931

63,450(¥ Million)

1,400

1,200

Operating income margin

6.5%

6.6%

5.3%
(Yen in millions)

1,000

accounting this fiscal year, we contributed shares owned by DNP to set up a retirement benefit trust.
Thus, ¥15.43 billion in creating the trust was posted as an extraordinary expense, which, added to2

the shortfall amortization expense of ¥6.06 billion for this fiscal year, totals ¥21.49 billion in expenses
posted. Meanwhile, since we realized profits of ¥11.32 billion between the book values and fair

0

97

98

99

00

01

values of the contributed marketable securities, our net losses accompanying the introduction ofretirement benefit accounting this fiscal year came to ¥10.17 billion. Over a period of four years
starting the next fiscal year, we will be posting ¥6.05 billion in other expenses every year as anannual amortization amount for the transitional obligation.
Also introduced this fiscal year was the current-value accounting of securities. Following thischange, we posted ¥5.31 billion in valuation losses in investment securities, stocks of affiliatedcompanies, and others.
Due to the above factors, our income before income taxes this fiscal year decreased 12.7%
compared with the previous year to ¥69.12 billion.

800

This fiscal year, the overall business environment for our printing operation was harsh. Intensified
600

competition among companies resulted in a drop in order-unit prices and the size of lots shrinking.
Our consolidated net sales, however, grew 4.8% to ¥1,268.41 billion due primarily to strong sales in

400

commercial printing, packaging-related printing and electronic components and information media

200

supplies. Our operating income also increased 3.3% to ¥82.54 billion, while the operating income
margin decreased slightly from 6.6% to 6.5%.

0

97

98

99

00

01

The printing operations are a segment that comprises 94.5% of net sales and 96% of operating
income in DNP’s consolidated statement this fiscal year. The printing operations include three
independent operation divisions. Because we do not compile consolidated figures for these
operational divisions, we can only disclose non-consolidated figures. However, the difference
between the non-consolidated figures and the consolidated figures of the divisions in the printing
operation is minimal.

Income Taxes
Our income taxes for this fiscal year dropped by 9.9%compared with the previous fiscal year to¥34.29 billion. The effective tax rate, on the other hand, increased from 48.1% to 49.6%.
The main reason behind the increase is that during this fiscal year, posting losses at ourconsolidated subsidiaries caused our effective tax rate to increase by 7.4 percentage points while in the38

previous year, losses at subsidiaries caused the effective tax rate to increase by 4.6 percentage points.

39

Sales by Division*

the previous year in the sales of sales-promotion products such as POP (point of purchase) andInformation Media Division, the Lifestyle Products Division and the Electronic Components andpremiums, as well as of pamphlets. Although income from catalog printing decreased, income

the Information Media Supplies Division – is non-consolidated, Dai Nippon Printing Co., Ltd.

from flyers increased.

(%)

information and is provided as a supplementary material for our readers.
Electronic
Components
andInformation
Media Supplies
18.8 %
Information
Media
54.7 %

Information Media Division
Amid the stagnating Japanese economy, our business environment this fiscal year was
significantly harsh with no signs of improved consumer spending, dropping order prices and* Non-consolidated figures

shrinking order-lot sizes. Our commercial printing, however, did remarkably well in sales, raising
the overall net sales of the Information Media Division by 3.8% to ¥635.90 billion.
This division is divided into three groups according to products on which printing is
implemented: books and publications; commercial printing; and business forms. Books andmagazines accounted for 29% of the division’s sales this fiscal year while commercial printing
and business forms accounted for 56% and 15%, respectively.
To reform the business structure of the Information Media Division, we worked on several
specific measures this fiscal year. One such measure was to position network business as ourfield of importance and enhance our infrastructure, establishing a C&I Solution Square and an
Internet Data Center equipped with an advanced security system to expand our Internet business.
■

Books and magazines
This fiscal year, the sales of books and magazines in Japan’s publishing industry dropped

2.3% and 2.8%, respectively, continuing on its fourth consecutive year of shrinking sales. This

Business forms
Net sales this fiscal year in business-forms printing operations decreased about 3%

compared with the previous year. Lulled by a slight recovery in the stock market, however, there
was an increase in additional investments and in the number of companies making initial public
offerings. Orders also increased along with mergers and corporate name changes. Additionally,
our IPS operation experienced a steady growth in the demand for bill-issuing services forindividuals and personalized direct mail, with our pool of clients expanding with communications
companies, financial and securities companies and travel agencies.
On the other hand, the number of orders we received for credit cards dropped this fiscal
year, along with their unit prices, as a reaction to the previous year’s concentrated demand for
credit cards following the conclusion of the Year 2000 compliance effort during which credit
card issuers refrained from issuing cards. Thus, our net sales this fiscal year decreased. We

Dai Nippon Printing Co., Ltd. Annual Report 2001

Dai Nippon Printing Co., Ltd. Annual Report 2001

Lifestyle
Products
26.5 %■MANAGEMENT'S DISCUSSION AND ANALYSISMANAGEMENT'S DISCUSSION AND ANALYSIS

All of the following information on the three divisions of our printing operations – thebelieve that the effect of the Year 2000 problem on the number of credit card orders will havecompleted its cycle this fiscal year; we anticipate a recovery in demand starting from the next
fiscal year.
We also received new orders for smart cards, such as the ETC, the highway card in Japan. It
is anticipated that credit cards and debit cards will rapidly be replaced with smart cards from thefiscal year ending March 2004. To meet that demand, we intend to continue to maintain asystem that can appropriately handle increased demands in the future.

also affected our books and publications printing operations. Despite maintaining the level of theprevious year’s sales in book printing sales, we saw a drop in the sales of our publications

Lifestyle Products Division

printing. In addition, factors such as demands to reduce unit prices drove our overall sales down
Sales of our lifestyle products increased by 2.9% over the previous fiscal year to ¥307.8

by about 0.5% from the previous fiscal year.
The number of new magazines published this fiscal year was 205, an increase of 40

billion. The division consists of two groups of products: packaging, which is mainly packages formagazines over the previous year’s 165. We received orders for 59 of the new magazines.

snacks and beverages, and decorative materials, which are printed construction-related

Meanwhile, the number of magazines discontinued this fiscal year was 92, of which 30 were ourmaterials. During this fiscal year, the packaging accounted for 73% of the division’s sales whileaccounts.

the decorative materials accounted for 27%.

For the time being, we believe that we cannot anticipate a sudden recovery in the publishingindustry. Despite this situation inhibits our operation’s sales from growing, we intend to secure
our income by promoting our cost cutback efforts.

■

PackagingThis fiscal year, sales of our packaging products increased about 5%. The sales increase

was due to our focusing on developing and marketing environmentally friendly products that are■

Commercial printing

recyclable or compliant with environmental preservation needs. Thus, despite decreased sales

This fiscal year, advertising expenses in Japan increased by 7.2% to a total of ¥6,110.2

of paper containers and cups for snacks and yogurt, sales of large-scale sterile filling systems forbillion. There was a boost in companies’ advertising activities which led to a significant increase

beverages, film packaging such as shrink film, liquid paper containers for alcohol beverages,

in the volume of our orders. Consequently, our sales in commercial printing increased by about

and IB films steadily increased.

8%. On the other hand, the situation for our income was difficult, with competition for securing
orders intensifying and the price of printing paper increasing.

40

We experienced an overall increase in income particularly with a double-digit growth overWe anticipate a further increase in demand for environmentally friendly products in the
future, and will continue to strive to develop new products that meet the needs of society.

41Decorative Materials

Sales of projection screens also increased by about 20% as they did the previous fiscal year.

Housing starts for the fiscal year ended March 2001 decreased by 1.7% due to Japan’s

We expect their sales to continue to grow by double-digits in the next fiscal year.

unstable employment situation and fears of assets deflation. Net sales decreased by about 2%

Another product that sold well this fiscal year was photomasks. This was due to Hitachi andcompared with the previous year due not only to a declining demand but also to a drop in orderToshiba – who used to manufacture their own photomasks – now placing their orders with us forprices.

photomasks to be used in semiconductor-related products. With increased demand also for our
cutting-edge masks, our sales increased by about 30%. For the next fiscal year, we haveestablished a new agreement with Fujitsu to receive orders for the photomasks it had been

products such as decorative sheets that do not contain vinyl chloride.

manufacturing on its own. As we anticipate a steady growth in the demand for value-added,
cutting-edge masks, this fiscal year, we also have concluded an agreement involving theprovision of a steady supply of photomasks with UMC, a major semiconductor consignment

Electronic Components and Information Media Supplies Division

manufacturer in Taiwan.

Despite drops in the sales volume and the prices of some products, sales of electronic
components and information media supplies this fiscal year increased 8.4% over the previous
year to ¥218.5 billion, supported by an overall boost in demand. The sales of electronic
components accounted for 80% of this division, while sales of information media supplies
accounted for the remaining 20%.
■

Product

Shadowmask*
Color filter

panels using LCD monitors. Thus, we will be producing more shadowmasks for consumer TVs,
switching from our prior priority of producing them for personal computers. In addition, we haveart production line in our Mihara Plant in Hiroshima Prefecture while shutting down an aging
plant. Concentrating production on our new, efficient production line has lowered costs.

Global Market Share (%)
FY ended March 2001

CDT+CPT (Excluding house-manufactured products)
CDT (Excluding house-manufactured products)

48
58

Excluding house-manufactured products

27

Projection screen

demand for shadowmasks as more personal computer displays are being replaced by flat

worked to cut back on costs this fiscal year in our production system by building a state-of-the-Electronic components
DNP’s Global Market Share in Electronics Operations

On the other hand, sales of shadowmasks decreased by about 9% due to the drop in orderprices and inventory adjustment of personal computers. We anticipate a further drop in the

Dai Nippon Printing Co., Ltd. Annual Report 2001

Dai Nippon Printing Co., Ltd. Annual Report 2001

Demand for environmentally friendly products also grew in this field. Because we expect thistrend to continue in the future, we plan to put our efforts into developing environmentally friendly

MANAGEMENT'S DISCUSSION AND ANALYSISMANAGEMENT'S DISCUSSION AND ANALYSIS■

53

Photomask

Excluding house-manufactured products

26

Leadframe

Etching type30

* CDT= Masks for PCs; CPT= Masks for TVs

Sales of lead frames also decreased by about 3% this fiscal year, affected by the slump in
the semiconductor industry in the latter half of the fiscal year. We expect the semiconductor
industry slump to continue to affect us seriously for some time to come. This fiscal year, in ourefforts to enter a new field and expand our semiconductor business, we, along with Toshiba,
jointly established DT Circuit Technology, a new company that handles multilevel circuit boards.
■

Information media supplies
This fiscal year, sales of our information media supplies grew about 3% with increased sales

in sublimation transfer ribbons for use with ID photos and other purposes, despite a slightdecrease in the sales of liquid-thermal transfer ribbons for plain-paper facsimile. Sales of bothtypes of ribbons are expected to continue to grow, along with the use of electrodes for lithium-This fiscal year, sales of electronic components increased about 10% buoyed by a significant

ion rechargeable batteries moving mainstream. DNP has the technology to produce lithium-ion

increase in the sales of color filters, projection screens and photomasks, among others. Due to aelectrodes at 10 times the speed of conventional methods. We plan to take full advantage of thisslump in the semiconductor industry and inventory adjustment of personal computers in thetechnology to increase our orders.

latter half of the fiscal year, however, sales of lead frames and shadowmasks decreased.
Although the unit price of color filters continued to fall, their sales volume increased
significantly by about 30% as did sales by about 20%, due to the rapidly growing popularity of
LCD screens and diverse mobile products. Demand for color filters is expected to growcontinuously and considerably along with the growing popularity of mobile telephones and PDA,
in addition to computer displays. Thus, even when keeping the factor of dropping prices in mind,
we expect a huge increase in sales. This fiscal year, to enhance our ability to supply products
and to cut back on costs, we established a new plant in Hiroshima. In Taiwan, where demand forcolor filters is expected to expand, we licensed Sintek Corporation, a local Taiwanese company,

42

to use our technology. We intend to build a supply system of DNP-brand products in the area.

43Research andDevelopment
Expendituresto ¥116.73 billion. This was because of the increase in accounts receivables with settlements carried
25

March 2001

Net sales(¥ Billion, %)over to the next year due to the last day of this fiscal year having fallen on a weekend. We estimate

Beverage¥

Operating income

73,620March 2000

¥

3,395

Operating income margin

76,675

March 1999¥

74,814

Cash we used in our investing activities increased by 7.7% over the previous fiscal year to6,159¥118.56 billion. This increase was due primarily to the increase of our time-deposit balance.

5,956

4.6%

this to have had an effect of about ¥4.0 billion.

7.8%

8.2%

debentures. Because of these activities and the ¥498 million in cash from the newly consolidated

before with intense competition, Hokkaido’s ailing economy, and a drop in tourist demand caused bysubsidiaries, our cash and cash equivalents at the end of the fiscal year decreased by 16.1% tothe eruption of Mt. Usu. To counter the situation, we introduced new products and strove to¥157.07 billion. When the aforementioned factor of the last day of the fiscal year falling on a banking

aggressively expand sales through various promotions as the official soft-drink maker for the Sydney

holiday and its effect of about ¥20 billion is taken into consideration, the balance at the end of the

Olympics. We also improved productivity and conserved energy by renovating our facilities for our

fiscal year would be a decrease of 5.5% compared with the same period the previous year.
strategies in a flexible manner and to respond to changes in our business environment. We generally

income also decreased 43% to ¥3.39 billion.

try to retain cash at hand for an amount equivalent to two months of our monthly sales. We are aware

however, intend on expanding consumer demand by building a streamlined, efficient corporate

1.5

10

1.0

5

0.5

0

0

97

98

99

00

01

% to net sales (right scale)We, the management, make certain we maintain sufficient liquidity to implement our businessbeverages decreased by 4% compared with the previous fiscal year to ¥73.62 billion. Operating
The sales competition in this industry is expected to intensify further into the future. We,

15

the previous fiscal year to ¥29.64 billion, due primarily to the ¥19.89 billion redemption of convertible

The business environment for our soft-drink manufacturing operation was harsher than ever

diversified products and by reexamining our personnel configurations. Despite such efforts, sales of

2.0

Dai Nippon Printing Co., Ltd. Annual Report 2001

Dai Nippon Printing Co., Ltd. Annual Report 2001

(Yen in millions)

Meanwhile, total net cash we used in our financing activities this fiscal year increased 78% over

20

MANAGEMENT'S DISCUSSION AND ANALYSISMANAGEMENT'S DISCUSSION AND ANALYSISThis fiscal year, cash flows from operating activities decreased 5% from the previous fiscal year

Beveragethat maintaining liquidity is particularly important in light of the instability of today’s financial
institutions and the trend of the primary market of corporate bonds.

system to quickly meet the needs of the market, setup more vending machines and promote sales
through campaigns and other means.

The Balance Sheet

LIQUIDITY AND CAPITAL RESOURCES

structure to suit the business environment and to minimize our cost of capital.

For DNP to increase its corporate value, we, the management, always arrange our capital

We believe that the foundation of our financial strength and an important factor in enhancing our
Capital Expenditure(¥ Billion)

140

Total assets¥ 1,489,871¥ 1,442,307

continue investing in growth areas. We, the management, remain convinced that in the fiscal year

Current ratio

1.65 x1.60 xending March 2002, we will continue to secure sufficient liquidity needed for DNP to maintain andWorking capital-to-net sales

0.21 x0.20 xexpand its business.

Debt/equity ratio

0.09 x0.08 xLeverage ratio

1.59 x1.56 xBook value per share (yen)Cash Flow
Free cash flow is cash flow that we, the management, can invest freely in fields that contribute to80

DNP’s advancement. It is also a source of corporate value. This fiscal year, we were able to generate

60

March 2000*

value as a corporation is our ability to generate cash from our operating activities to enable us to

120

100

March 2001

a free cash flow of ¥43.84 billion.

¥

1,237.0¥(¥ Billion, %)

1,000

65

800

60

600

55

400

50

200

45

1,206.4(Yen in millions except book value per share)

DNP’s total assets at the end of this fiscal year increased 3.3% over the previous year to¥1,489.87 billion.

40

Stockholders' Equity
and Equity Ratio*

0

40

97

98

99

00

01

% equity ratio (right scale)

Mainly because the aforementioned factor of the last day of the fiscal year falling on a banking

20

March 2001

Cash flows provided by operations

0

97

98

99

00*

01*

* The figure for the years ended
March 2000 and 2001
includes capital expenditures forintangible assets¥

116,728

March 2000¥

122,809

Business reinvestment(72,879)(108,058)

Free cash flow

43,84914,751(Yen in million)

holiday and settlement dates moved into the following fiscal year, trade receivables among current
assets increased by 9.3% over the previous fiscal year to ¥433.41 billion. This also caused cash andcash equivalents at the end of this fiscal year to decrease by 16.1% to ¥157.07 billion. Note thatinventory assets increased by 11.1% to ¥85.93 billion due primarily to the 16.9% increase in work inprocess to ¥35.81 billion, caused by increased sales. Because of the above factors, total current
assets increased by 7.8% over the previous year to ¥721.34 billion.

44* Following the adoption of a new accounting standard effective April 1, 2000, foreign currency translation adjustments were made in stockholders’equity; for comparison purposes, such adjustments were also made to the figures for 2000.

45

(¥ Billion)

1,500

these transactions are not at all for investment purposes or short-term trading purposes. All

from the establishment of a retirement benefit trust, among others.

exposures from any transactions of derivative financial instruments that we engage in are offset by

Property, plant and equipment remained nearly the same as at the end of the previous fiscal
year, decreasing by 0.2% to ¥561.01 billion. The total figure at the end of this fiscal year remained

1,250

1,000

every year in property, plant and equipment mainly in growth fields.

control and execute methods and limits of transactions related to all our derivative transactions within
the range set forth in our internal rules.
In addition, because all of our derivative transactions are over-the-counter transactions, they are

equipment – to increase. The 32.1% increase of short-term bank loans to ¥16.87 billion was due

accompanied by the credit risks of the banks involved. However, all transactions we engage in are

primarily to subsidiaries such as Tien Wah Press in Singapore and DNP Hong Kong increasing loans

with banks of high credit standing. Hence we are assuming that we run a negligible risk of bearing

to meet rising demands for operating funds.

losses from such credit risks.

0

97

98

99

00

01

This fiscal year, ¥32.6 billion in net liabilities for employees’ retirement benefits was posted as

Besides such risks, we may be exposed to non-financial or imponderable risks during our day-to-

long-term liabilities on our balance sheet, following the introduction of retirement benefits

day operations. These risks include country risks, credit risks and legal risks. Because they areaccounting. Our total long-term liabilities increased by 10.8% over the previous year to ¥86.01

unpredictable, we did not describe them in this Annual Report. As for legal actions, we did not havebillion, mainly because of this. Total liabilities at the end of this fiscal year also increased 5.4% toany pending as of the end of the fiscal year under review.

Dai Nippon Printing Co., Ltd. Annual Report 2001

Dai Nippon Printing Co., Ltd. Annual Report 2001

250

We also maintain a strict control system in which it is necessary to obtain our company director’sprior approval to engage in transactions of the said instruments. Our Accounting Division and others

previous year to ¥436.09 billion. This was caused by other liabilities – namely, accrued liabilities for500

reciprocal risks of assets or liabilities held by our balance sheet.

hardly unchanged because DNP continues to steadily invest a total of ¥90 billion to ¥100 billion
Among liabilities, our current liabilities at the end of this fiscal year increased by 4.4% over the750

We do not enter into derivative transactions for purposes other than to avoid such risks. Thus,

The decrease was due primarily to the ¥5.54 billion decrease in investment securities that resulted

MANAGEMENT'S DISCUSSION AND ANALYSISMANAGEMENT'S DISCUSSION AND ANALYSIS

Investments and advances at the end of this fiscal year decreased by 3.8% to ¥154.85 billion.

Total Assets*¥522.10 billion.
Current Ratio

Meanwhile, our stockholders’ equity at the end of this fiscal year increased by 2.5% to ¥939.44(Times)ENVIRONMENTAL PROTECTION

billion due primarily to our net income this fiscal year.
1.8

We address global environmental issues on a group-wide basis under our Environmental

1.6

Currently, the only long-term debentures DNP has outstanding are convertible debentures to be

Declaration: “We will make every effort to protect the prosperity and future of the human race by

1.4

redeemed by the fiscal year ending March 2004. DNP’s capital structure and financial strategies arepreserving the environment and using resources effectively.” In 1995, we received the “Global

1.2

rated as follows by rating agencies.

Environment Award” from the Minister of International Trade & Industry.

1.0

In 1993, we introduced our own environmental management system, the Eco Report System, to

0.8
0.6

Rating & Investment Information, Inc

Moody’sAAA

Aa1

Convertible debentures maturing in Sep. 2003

help preserve the environment. Further, in 1999, we employed our environmental accounting system
to measure, among other things, environmental capital expenditures, the volume and value of energy

0.4

consumption, waste emissions, expenses for contracting out disposals and proceeds from the
0.2

recycling sale of valuable materials. Through this accounting system, we evaluate and confirm the
0

97

98

99

00

01

RISK MANAGEMENT

effectiveness of our environmental management and determine the priority of the issues to beaddressed. Before the end of 2001, we plan to publish our environmental accounting statements.

Under the normal course of business, we are exposed to various market risks arising from

We are now working to obtain ISO 14001 certification and have already obtained it at five sites.

fluctuations in foreign exchange rates, interest rates and stock markets. For example, this fiscal year,

We also plan to lead the industry in complying with all environmental standards. It is our belief thatabout 10.5% of our net sales consisted of overseas sales, and to that extent, we were exposed to thethese activities will not have a major negative impact on our financial position.

risks of currency market fluctuations. To totally eliminate or reduce some of the risks from foreignexchange rates, we mainly use forward exchange contracts.
For interest risks arising from our investing and day-to-day cash management activities, however,
we do not enter into hedging transactions as these risks have only a minor impact on the balance
sheet of the DNP Group. Also, although we hold various listed and unlisted stocks for strategic
holding and investment purposes, and thus are exposed to stock price fluctuation risks, we do nothedge these equity positions.

46* Following the adoption of a new accounting standard effective April 1, 2000, foreign currency translation adjustments were made in stockholders’equity; for comparison purposes, such adjustments were also made to the figures for 2000.

47

Dai Nippon Printing Co., Ltd. and Consolidated Subsidiaries

1994

1995

1996

1997

1998

1999

2000*

2000

2001
Income Statement Data (¥ million)
Net sales¥

1,342,035¥¥

1,286,703

1,269,543¥

1,336,604¥

1,310,100¥

1,245,300¥

1,192,827¥

1,145,535

1,091,386

1,039,006

1,033,926

1,056,962

1,028,614

983,301

945,570918,386

Gross profit

250,649

247,697

235,617279,642

281,486

261,999

247,257

227,149

Selling and administrative expenses

164,708

161,811

166,008

172,824

170,298

161,609

156,536

147,180

Operating income

85,941

85,886

69,609106,818

111,188

100,390

90,721

79,969

Income before income taxes and minority interests

69,116

79,19977,703

100,634

107,394

98,103

101,542

82,980Net income

33,40939,03430,49356,53956,16552,97449,20040,808

Balance Sheet Data (¥ million)
Total assets¥

1,489,871¥

1,442,307¥

1,451,700¥

1,445,293¥

1,450,709¥

1,410,138¥

1,336,689¥

1,274,581¥

1,213,125

Property, plant and equipment-net

561,017561,898

570,860

536,364

501,622461,158434,809417,868

Long-term liabilities

86,012

77,637

100,695

100,214

97,340106,792

113,295

118,029

Total liabilities

522,105

495,541

518,323

538,113553,172

532,451

514,117494,544

Stockholders' equity

939,441916,253

898,646

885,507831,262

780,484

738,243

699,860

93.65

n.a.

n.a.

925,646

Dai Nippon Printing Co., Ltd. Annual Report 2001

Dai Nippon Printing Co., Ltd. Annual Report 2001

Cost of sales

SELECTED FINANCIAL DATA (UNAUDITED)

SELECTED FINANCIAL DATA (UNAUDITED)

Selected Financial Data (unaudited)

Other Selected Data (¥ billion)
Capital expenditures¥

103.05¥¥113.86119.37¥111.34¥113.66¥R&D expenditures

24.66

23.60

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

Depreciation expenses

94.31

94.59

82.80

73.91

67.58

62.42

n.a.

n.a.

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

¥

43.99

¥

51.40

¥

¥

40.15

¥

74.49

¥

74.52

¥

70.63

¥

65.63

¥

54.45

Earnings per share - fully diluted

43.45

50.47

39.54

72.53

72.15

68.19

n.a.

n.a.

Dividends paid per share

18.00

18.00

18.00

18.00

17.00

16.00

15.00

14.00

1,236.96

1,206.42

1,183.24

1,165.94

1,102.56

1,040.49

984.61

933.63

759,480,693

759,480,693

759,480,693

759,480,693

753,940,533

750,110,275

749,779,633

749,613,920

Book value per share
No. of common shares outstanding - primary

1,218.79

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

48

Gross profit

18.68%

19.25%

18.56%

20.92%

21.49%

21.04%

20.73%

19.83%

Selling, general and administrative expenses

12.27

12.58

13.08

12.93

13.00

12.98

13.12

12.85

Operating income

6.40

6.67

5.48

7.99

8.49

8.06

7.61

6.98

Income before income taxes and minority interests

5.15

6.16

6.12

7.53

8.20

7.88

8.51

7.24

Net income

2.49

3.03

2.40

4.23

4.29

4.25

4.12

3.56

Return on equity

3.60

4.30

3.42

6.59

6.97

6.98

6.84

5.96

Current ratio

1.65x

1.60x

1.59x

1.65x

1.60x

1.62x

1.65x

1.62x

Debt-to-equity ratio

0.06x

0.06x

0.08x

0.08x

0.09x

0.11x

0.12x

0.14x

* These year 2000 figures are figures before foreign currency adjustments were made in this annual report for comparison purposes.

4.28%

0.06x

49

Consolidated Balance Sheets

Thousands of
U.S. dollars (Note 3)

Millions of yen

Dai Nippon Printing Co., Ltd. and Consolidated Subsidiaries: March 31, 2001 and 2000

2001

2000

2001

Dai Nippon Printing Co., and Consolidated Subsidiaries: March 31, 2001 and 2000

Liabilities and Stockholders' Equity

Current assets:

Current liabilities:¥

157,078
32,3802,020
433,417(5,806)85,931
16,327
721,347¥

187,321 $ 1,266,758
261,129
1,726
16,290275
3,495,298
396,467(46,822)(6,901)
692,992
77,340131,669
13,097
5,817,314
669,325

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.................................................................................................
Total current liabilities............................................................................................

2001

¥

16,8701,101
295,707
34,53022,27865,607436,093

2000¥

12,766
20,749291,756
32,122
22,481
38,030417,904

2001$

136,048
8,879
2,384,734
278,468
179,661
529,089
3,516,879

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

10,486
142,804
1,568
154,858

10,874
148,345
1,783
161,00284,565
1,151,645
12,645
1,248,855

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

53,34032,605
67
86,012

51,34725,987
303
77,637430,161
262,944540
693,645

Minority interests .................................................................................................

28,32530,513

228,427

Common stock, ¥50 par value Authorized : 1,200,000,000 shares;
Issued and outstanding : 759,480,693 shares in 2001 and 2000 (Notes 7 and 9) ..
Capital surplus (Note 9) ...............................................................................................
Retained earnings (Note 9) ..........................................................................................
Foreign currency translation adjustments .....................................................................
Treasury stock, at cost .................................................................................................
Total stockholders' equity.......................................................................................

114,464
144,898
685,760(5,678)(3)
939,441

114,464
144,898
666,287(9,393)(3)
916,253923,097
1,168,532
5,530,323(45,790)(24)
7,576,138

Total liabilities, minority interests and stockholders' equity .............

¥ 1,489,871¥ 1,442,307$12,015,089

Dai Nippon Printing Co., Ltd. Annual Report 2001

Dai Nippon Printing Co., Ltd. Annual Report 2001

AssetsCash and cash equivalents (Note 4).............................................................................
Time deposits .............................................................................................................
Securities ...................................................................................................................
Trade receivables (Note 10).........................................................................................
Allowance for doubtful receivables ...............................................................................
Inventories (Note 6) .....................................................................................................
Prepaid expenses and other current assets (Notes 10 and 13) .....................................
Total current assets ...............................................................................................

Thousands of
U.S. dollars (Note 3)

Millions of yen

FINANCIAL STATEMENTS

FINANCIAL STATEMENTS

Financial Statements

Contingent liabilities (Note 16)
Property, plant and equipment, at cost (Note 7):
Stockholders' equity:

50

Land............................................................................................................................
Buildings .....................................................................................................................
Machinery and equipment ...........................................................................................
Construction in progress ..............................................................................................
Total......................................................................................................................
Accumulated depreciation ...........................................................................................
Net property, plant and equipment ........................................................................

105,176
391,616
866,836
6,873
1,370,501(809,484)
561,017

102,175
377,687
828,398
7,277
1,315,537(753,639)
561,898

848,194
3,158,194
6,990,613
55,427
11,052,428(6,528,097)
4,524,331

Other assets (Note 13)...................................................................................................

52,64950,082424,589

Total assets ..............................................................................................

¥ 1,489,871¥ 1,442,307$ 12,015,089

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

51

Thousands of
U.S. dollars (Note 3)

Millions of yen

Thousands of
U.S. dollars (Note 3)

Millions of yen

2001

2000

2001

Dai Nippon Printing Co., Ltd. and Consolidated Subsidiaries Years ended March 31, 2001 and 2000

2001

2000

Net sales (Note 17) .......................................................................................................
Cost of sales (Notes 11, 14 and 17) .............................................................................
Gross profit...............................................................................................................

¥ 1,342,035
1,091,386
250,649¥ 1,286,703
1,039,006
247,697$10,822,863
8,801,500
2,021,363

Common stock:
Balance at beginning of year........................................................................................
Balance at end of year .................................................................................................

¥ 114,464¥ 114,464¥ 114,464¥ 114,464$$

Selling, general and administrative expenses (Notes 11, 14 and 17) ...........................
Operating income .....................................................................................................

164,708
85,941

161,81185,886

1,328,290
693,073

Capital surplus:
Balance at beginning of year........................................................................................
Balance at end of year .................................................................................................

¥ 144,898¥ 144,898¥ 144,898¥ 144,898$ 1,168,532$ 1,168,532

Retained earnings:
Balance at beginning of year........................................................................................
Net income..................................................................................................................
Cash dividends (Note 9) ..............................................................................................
Bonuses to directors ....................................................................................................
Decrease resulting from change in consolidation scope ..............................................
Increase resulting from change in consolidation scope ................................................
Increase resulting from change in scope of equity accounting .....................................
Balance at end of year .................................................................................................

¥ 666,287
33,409(13,670)
(230)
(49)
13
¥ 685,760¥ 639,287
39,034(13,670)
(231)
1,867
¥ 666,287$ 5,373,282
269,428(110,242)(1,855)(395)
105$ 5,530,323

Other income (expenses ) (Note 12)
Interest and dividends income .....................................................................................
Interest expenses.........................................................................................................
Equity in earnings of associated companies..................................................................
Net loss on disposal of property, plant and equipment................................................
Net gain on sales of marketable securities and investment securities ...........................
Loss on devaluation of investment securities ................................................................
Payments of special retirement benefits ......................................................................
Loss on liquidation of subsidiaries ................................................................................
Special pension costs ..................................................................................................
Gains on contributions of securities to employees' retirement benefits trust (Note 8)..................
Amortization of transitional obligation for retirement benefits (Note 8) ...........................
Contribution of securities to employees' retirement benefits trust (Note 8).....................
Loss on devaluation of inventories ................................................................................
Other ..........................................................................................................................

Income taxes (Note 13):
Current........................................................................................................................
Deferred ......................................................................................................................

Minority interests ...........................................................................................................
Net income...............................................................................................................

¥

3,103
(1,499)128(5,897)430(3,372)(684)(2,526)
11,317(6,058)(15,432)(3,222)
6,887(16,825)

2,882(1,691)
17(4,972)
12,794(4,738)(3,985)(1,455)(1,676)(2,191)(1,672)(6,687)25,024(12,089)
1,032(47,556)
3,468(27,194)(5,516)(20,371)
91,267(48,855)(124,452)(25,984)
55,540(135,686)

69,116

79,199557,387

37,077(2,784)34,29334,82340,509(2,435)38,074
41,125

299,008(22,452)
276,556
280,831(1,414)33,409 ¥(2,091)
39,034 $(11,403)
269,428

Yen

Net assets per common share ...........................................................................

¥ 1,236.96

Net income per common share:
Primary ...........................................................................................................
Fully diluted ....................................................................................................

43.99
43.45

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

¥

2001

923,097923,097

Dai Nippon Printing Co., Ltd. Annual Report 2001

Dai Nippon Printing Co., Ltd. Annual Report 2001

Dai Nippon Printing Co., Ltd. and Consolidated Subsidiaries Years ended March 31, 2001 and 2000

Income before income taxes and minority interests ...................................................

52

Consolidated Statements of Stockholders' Equity

FINANCIAL STATEMENTS

FINANCIAL STATEMENTS

Consolidated Statements of Income

U.S. dollars (Note 3)

1,218.79

51.40
50.47

$

9.98

0.35
0.35

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

53

Dai Nippon Printing Co., Ltd. and Consolidated Subsidiaries Years ended March 31, 2001 and 2000

Cash flows from operating activities:
Income before income taxes and minority interests ......................................................

Thousands of
U.S. dollars (Note 3)

Millions of yen

2001

2000

2001

Notes to Consolidated Financial Statements
Dai Nippon Printing Co., Ltd. and Consolidated Subsidiaries March 31, 2001 and 2000

1. Basis of Presenting the Consolidated Financial Statements¥

69,116¥

79,199$Dai Nippon Printing Co., Ltd. (hereinafter referred to as the “Company”) and its domestic subsidiaries maintain their books ofaccount and prepare their financial statements in conformity with accounting principles and practices generally accepted inJapan, and its foreign subsidiaries in conformity with those of the countries of their domicile.
The accompanying consolidated financial statements have been compiled from the consolidated financial statements filed with
the Minister of Finance of Japan as required by the Securities and Exchange Law of Japan. Certain reclassifications of accounts
and modifications have been made in the accompanying consolidated financial statements to facilitate understanding byreaders outside Japan. Certain reclassifications have also been made in 2000 financial statements to conform with current
classifications. In addition, the notes to consolidated financial statements include additional information which is also not
required for disclosure under accounting principles and practices generally accepted in Japan.

Adjustments to reconcile income before income taxes
and minority interests to net cash provided by operating activities:
Depreciation .............................................................................................................
Provision for doubtful receivables (net)......................................................................
Provision for retirement benefits (net)........................................................................
Equity in earnings of associated companies...............................................................
Amortization of goodwill ............................................................................................
Interest and dividends 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...............................................
Contribution of the securities to employees' retirement benefits trust, at cost ............
Decrease (increase) in trade receivables ...................................................................
Increase in inventories ..............................................................................................
Increase (decrease) in trade payables .......................................................................
Other........................................................................................................................
Sub-total..............................................................................................................
Payments of special retirement benefits ....................................................................
Payments for income taxes ......................................................................................
Net cash provided by operating activities................................................................

94,312(2,380)
6,618
(128)
55
(3,103)
1,499
(430)
3,372
5,897
4,115
(36,266)(8,454)
3,035
17,434
154,692(684)(37,280)
116,728

94,588880(3,194)(17)309(2,806)
1,691(12,794)
4,738
4,972
890
(9,745)(662)
12,183
170,232(3,985)(43,438)
122,809760,581(19,194)
53,371(1,032)444(25,024)
12,089(3,468)27,19447,55633,185(292,468)(68,177)
24,475140,597
1,247,516(5,516)(300,645)
941,355

Cash flows from investing activities:
Net increase of time deposits .......................................................................................
Payments for purchases of marketable securities .........................................................
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 dividends received....................................................................................
Other ..........................................................................................................................
Net cash used in investing activities .......................................................................

(30,642)(220)275(74,225)
1,346(7,225)
1,776
2,117(11,762)(118,560)(1,229)(454)
5,927(109,789)
1,731(18,518)
20,101
2,825(10,680)(110,086)(247,113)(1,774)2,218(598,589)
10,855(58,266)
14,323
17,072(94,855)(956,129)

Cash flows from financing activities:
Net increase in short-term bank loans..........................................................................
Proceeds from long-term debt......................................................................................
Repayments of long-term debt .....................................................................................
Redemption of convertible debentures .........................................................................
Interest paid ................................................................................................................
Dividends paid.............................................................................................................
Other ..........................................................................................................................
Net cash used in financing activities ......................................................................

3,674
3,754
(1,549)(19,896)(1,493)(14,137)
4(29,643)474
293(1,594)(1,691)(14,129)(4)(16,651)

29,62930,274(12,492)(160,451)(12,040)(114,008)
32(239,056)

Effect of exchange rate changes on cash and cash equivalents.....................................
Net decrease in cash and cash equivalents............................................................

734(30,741)(1,633)(5,561)

5,919(247,911)

Cash and cash equivalents at beginning of year ............................................................
Cash and cash equivalents of newly consolidated subsidiaries ......................................
Cash and cash equivalents of subsidiaries excluded from consolidation .......................
Cash and cash equivalents at end of year .....................................................................

187,321498¥ 157,078

193,12887(333)¥ 187,321

1,510,653
4,016$ 1,266,758

Dai Nippon Printing Co., Ltd. Annual Report 2001

Dai Nippon Printing Co., Ltd. Annual Report 2001

557,387

FINANCIAL STATEMENTS

FINANCIAL STATEMENTS

Consolidated Statements of Cash Flows

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 eight subsidiaries whose
fiscal years end December 31. Significant transactions between December 31 and March 31 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 be other than temporary.
Investments in 20% to 50% associated companies are accounted for by the equity method.
The excess of cost over underlying net assets at the date of investment in consolidated subsidiaries is included in other assets
and is amortized over a period not exceeding ten years.
Translation of foreign currency accounts
Current monetary assets and current monetary liabilities denominated in foreign currencies of the Company and its domestic
subsidiaries are translated into Japanese yen at the exchange rates at the balance sheet date. Other foreign currency
denominated assets and liabilities are translated at historical exchange rates. 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 madefor 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 ofstockholders’ equity 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, thatare readily convertible to known amounts of cash and are so near maturities that they present insignificant risk of changes invalue because of changes in interest rates.

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

54

55

Inventories are stated at cost which is determined substantially by the average method.

Effective April 1, 2000, the Company and its domestic subsidiaries adopted a new accounting standard for financial instruments
and applied it to the accounting and reporting for the marketable and investment securities, except for the valuation ofavailable-for-sale securities at fair value which shall be applied effective April 1, 2001.
The standard requires the Company to classify securities depending on the purpose for holdings securities into three
categories and account for the securities as follows: i) trading securities, which are held for the purpose of earning capital gains
in the short term, be stated at fair value, and related unrealized gains and losses be included in the income statement, ii) heldto-maturity debt securities, which are held to maturity with the positive intent and ability to hold to maturity, be stated atamortized cost and iii) available-for-sale securities, which are not classified as either of the aforementioned securities, be stated
at fair value, with unrealized gains and losses, net of applicable taxes, reported in a separate component of stockholders’ equity.
The Company reviewed the purpose of holding securities at the beginning of the year and classified those into held-to-maturity
debt securities and available-for-sale securities which have been presented as either “securities” in current assets or“investment securities” in investments and advances.
Held-to-maturity debt securities are carried at amortized cost. Available-for-sale securities are carried at cost or less if thedecline in market value is judged to be other than temporary. Cost is determined by the average method.

Research and development expenses
Research and development expenses are charged to income as incurred.
Accounting for leases
Finance leases other than those, which are deemed to transfer the ownership of the leased assets to lessees, are accounted forin the same manner as operating leases under generally accepted accounting principles in Japan.

Dai Nippon Printing Co., Ltd. Annual Report 2001

Dai Nippon Printing Co., Ltd. Annual Report 2001

Marketable securities and investment securities

The transitional obligation determined as of the beginning of the year was being amortized over 5 years. The transitional
obligation was a net amount after deducting the contributed securities to the employees’ retirement benefits trust from the grossamount of transitional projected benefits obligation determined as of April 1, 2000. As a result, this change increased the net
periodic benefit costs by ¥22,606 million ($182,306 thousand) and decreased income before income taxes by ¥22,572 million($182,032 thousand) as compared with the prior method.

FINANCIAL STATEMENTS

FINANCIAL STATEMENTS

Inventories

Income taxes
The asset and liability approach is used to recognize deferred tax assets and liabilities for the expected future tax consequencesof temporary differences between the carrying amounts and the bases of assets and liabilities. Deferred taxes are measured byapplying currently enacted tax laws to the temporary differences.
Income taxes on undistributed earnings have been provided for as to foreign subsidiaries, but not as to domestic companies,
as such earnings, if distributed in the form of dividends, are not taxable under current Japanese tax laws.

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 theconstruction 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.

Net assets and income per common share
Net assets per common share were computed based on the number of shares outstanding at March 31, 2001 and 2000,
respectively. Primary amounts of net income per share were computed on the average number of shares of common stock
outstanding during each year. Fully diluted amounts of net income per share were based on the assumption that all convertible
bonds were converted into common stock at the beginning of the year.

The estimated useful lives for depreciation purposes range as follows:
Buildings

3 to 50 years

Machinery and equipment

2 to 13 years

Assets with an acquisition cost of ¥100,000 ($806) or more per unit and less than ¥200,000 ($1,613) per unit, acquired on orafter April 1, 1998, are depreciated over three years on a straight-line basis, whereby one-third of such acquisition cost may betaken as depreciation expense each year.
Intangible assets
Intangible assets included in other assets are carried at cost less accumulated amortization calculated by the straight-line
method over their estimated useful lives. Software development costs for internal use included in intangible assets areamortized by the straight-line method over 5 years.
Liability for retirement benefits
Prior to April 1, 2000, the liability for employees’ retirement benefits was stated at the amount which would be required if all
employees terminated their employment voluntarily at the balance sheet date, less related benefits provided by the pension
plan.

3. Basis of Translating Financial Statements
The consolidated financial statements are expressed in Japanese yen in accordance with accounting principles and practices
generally accepted in Japan. Supplementally, however, the Japanese yen amounts have been translated into U.S. dollar
amounts, solely for the convenience of the reader, at the rate of ¥124=U.S. $1, the approximate exchange rate on the Tokyo
Foreign Exchange Market at March 31, 2001. These translations should not be construed as representations that the yenamounts actually represent, or have been or could be converted into U.S. dollars.

4. Cash and Cash Equivalents
Cash and cash equivalents as of March 31, 2001 and 2000 comprised the following:Thousands of
U.S. dollars (Note 3)

Millions of yen

Cash and deposits(excluding time deposits with a maturity over three months)..............................
Marketable securities .........................................................................................
Other short-term investment ...............................................................................

2001

2000

2001

¥ 155,079
1,999¥ 157,078¥ 185,021
1,300
1,000
¥ 187,321$ 1,250,637
16,121$ 1,266,758

Effective April 1, 2000, the Company and several domestic significant consolidated subsidiaries adopted a new accounting
standard for employees’ retirement benefits and accounted for the liability for retirement benefits based on projected benefit
obligations and plan assets at the balance sheet date.

56

57

With minor exceptions, interest rates on mortgage loans ranged from 1.01% to 3.30% per annum for 2001 and from 1.25% to4.70% per annum for 2000, while interest rates on unsecured loans ranged from 1.68% to 8.60% per annum for 2001 andfrom 1.25% to 8.60% per annum for 2000.

The market value of marketable securities and investment securities at March 31, 2001 was as follows:
Thousands of
U.S. dollars (Note 3)

2001

2001

¥ 113,920
121,428
7,508(3,153)
(88)
¥
4,267

$ 918,710
979,258
60,548(25,427)(710)$ 34,411

The aggregate annual maturities of long-term debt after March 31, 2001 were as follows:

Thousands of
U.S. dollars (Note 3)

Millions of yen

Year ending March 31
2002 ..........................................................................................................................................
2003 ..........................................................................................................................................
2004 ..........................................................................................................................................
2005 ..........................................................................................................................................

¥

¥

1,101
19,951
33,230159
54,441$

8,879
160,895
267,984
1,282$ 439,040

The above convertible debentures were currently convertible into approximately 20,541,783 shares of common stock.
The difference between the above carrying value and the amounts shown in the accompanying consolidated balance sheets
principally consists of non-marketable equity and debt securities for which there is no readily-available market from which toobtain or calculate the market value thereof.

6. Inventories
Inventories at March 31, 2001 and 2000 consisted of the following:Thousands of
U.S. dollars (Note 3)

Millions of yen

2001

Finished products ..............................................................................................
Work in process .................................................................................................
Raw materials ....................................................................................................

¥

¥

2000

34,27935,812
15,84085,931¥¥

33,91230,643
12,78577,3402001$ 276,444
288,806
127,742$ 692,992

7. Short-term Bank Loans and Long-term Debt
Short-term bank loans at March 31, 2001 and 2000 were represented by bank loans and bank overdrafts, etc. bearing interest
at an average rate of 3.50% per annum for 2001 and 2.39% per annum for 2000.

Dai Nippon Printing Co., Ltd. Annual Report 2001

Dai Nippon Printing Co., Ltd. Annual Report 2001

Carrying value.............................................................................................................................
Market value...............................................................................................................................
Unrealized gains.........................................................................................................................
Deferred income taxes ................................................................................................................
Minority interests ........................................................................................................................
Net unrealized gains ...................................................................................................................

Millions of yen

FINANCIAL STATEMENTS

FINANCIAL STATEMENTS

5. Marketable Securities and Investment Securities

8. Retirement Benefits
The Company and one of its domestic subsidiaries have contributory defined benefits retirement plans covering substantially allof their employees. Most of other domestic subsidiaries have non-contributory defined benefits retirement plans. Upon
retirement or termination of employment for reasons other than the cause of dismissal, employees are entitled to lump-sum
payments based on the current rate of pay and length of services. Thirty percent of the retirement benefit liability of theCompany and the total of such liability of one of the domestic subsidiaries are covered by the employees pension fund which isestablished in accordance with the Welfare Pension Law.
The employees’ pension fund also includes the portion representing the governmental social security welfare pension which isfunded equally by employees and employers in accordance with the welfare pension regulations.
The liability for employees’ retirement benefits at March 31, 2001 consisted of the following:
Projected benefits obligation ...........................................................................................................
Fair value of plan assets..................................................................................................................
Unrecognized transitional obligation................................................................................................
Unrecognized actuarial loss ............................................................................................................
Prepaid pension cost ......................................................................................................................
Net liability .....................................................................................................................................

Millions of yen

Thousands of
U.S. dollars (Note 3)¥ 186,593(106,494)(24,232)(23,285)23¥ 32,605$ 1,504,782(858,822)(195,419)(187,782)
185$ 262,944

Millions of yen

Thousands of
U.S. dollars (Note 3)Long-term debt at March 31, 2001 and 2000 consisted of the following:
Yen

Conversion priceUnsecured convertible debentures
1.5% due 2003..................................................................... ¥ 2,027.00
1.8% due 2004.....................................................................
2,677.40
1.8% due 2001.....................................................................
2,677.40

Thousands of
U.S. dollars (Note 3)

Millions of yen

2001

¥

Mortgage loans, maturing 2001-2005............................................
Unsecured loans, maturing 2001-2005 .........................................
Current portion of long-term debt...........................................
¥

2000

The components of net periodic benefits costs were as follows:

2001

19,181
29,663-¥

19,181
29,66319,896$ 154,685
239,218
-

3,564
2,033
54,441(1,101)
53,3402,582
774
72,096(20,749)¥ 51,347

28,742
16,395439,040(8,879)$ 430,161

Mortgage loans were secured by property, plant and equipment amounting to ¥1,880 million ($15,161 thousand) and ¥1,989
million at March 31, 2001 and 2000, respectively.

Service cost ....................................................................................................................................
Interest cost....................................................................................................................................
Expected return on plan assets .......................................................................................................
Amortization of transitional projected benefits obligation ..................................................................
Contribution to plan assets by marketable securities........................................................................
Net periodic benefits costs..............................................................................................................

¥

¥

7,879
5,818
(3,799)6,058
15,432
31,388$$63,54046,919(30,637)
48,855
124,452
253,129

Assumption used for the year ended March 31, 2001 was set forth as follows:
Discount rate ..........................................................................................................................................................
Expected rate of return on plan assets.....................................................................................................................
Recognition period of actuarial gain/loss..................................................................................................................
Amortization period of transitional obligation............................................................................................................

3.5%
3.4%
11 years
5 years

In September 2000, the Company contributed certain marketable securities with a fair value of ¥15,432 million ($124,452
thousand) to the employees’ retirement benefits trust for the contributory pension plans and recognized a non-cash gain of¥11,317 million ($91,267 thousand). The securities held in this trust were qualified as plan assets.

58

59

Cash dividends and appropriations to legal reserve charged to retained earnings during the years ended March 31, 2001 and2000 represented dividends paid out during those periods and related appropriations to this reserve. The accompanying
consolidated financial statements did not include the semi-annual dividend of ¥9.0 ($0.07) per share, aggregating ¥6,835
million ($55,121 thousand) and the related appropriation to legal reserve of the Company, which were approved at the generalstockholders’ meeting held in June 2001 with respect to the year ended March 31, 2001.
During the years ended March 31, 2001 and 2000, there were no issuance of common stocks by the Company in connection
with conversion of debentures.

10. Accounts with Non-consolidated Subsidiaries and Associated Companies
Account balances with non-consolidated subsidiaries and associated companies as of March 31, 2001 and 2000 wereThousands ofsummarized as follows:
Millions of yen
U.S. dollars (Note 3)
2001

¥

2000

5,479
441
5,954
4,255
277
6,296
3,110

¥

4,193
2,672
5,755
4,775
344
4,410
2,823

The following types of income from non-consolidated subsidiaries and associated companies were included in other income.
2001

Interest and dividends income.................................................................................
Leasing fees ............................................................................................................

¥

2000

108
1,431

¥

93
2,254

2001

$

871
11,54013. Income Taxes
The Company and its domestic consolidated subsidiaries are subject to a number of different taxes based on income, which, inthe aggregate, resulted in a normal effective statutory tax rate of approximately 42% for the years ended March 31, 2001 and
2000, 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 of subsidiaries
and different tax rates applicable to foreign subsidiaries, etc.
Reconciliation of the differences between the normal effective statutory tax rate and the actual effective tax rate was as follows:

2001

$

44,185
3,556
48,01634,3152,234
50,77425,081

2001

Normal effective statutory tax rate ...................................................................................................
Expenses not deductible for income tax purposes ........................................................................
Current operating losses of subsidiaries........................................................................................
Other...........................................................................................................................................
Actual effective tax rate...................................................................................................................

2000

42.0%
0.9
7.4
(0.7)
49.6%

42.0%
0.5
4.6
1.0
48.1%

Net deferred tax assets and liabilities at March 31, 2001 and 2000, resulting from temporary differences between the carrying
amounts and the tax bases of assets and liabilities, were reflected on the accompanying consolidated balance sheets under thefollowing captions:Thousands of

11. Selling, General and Administrative Expenses

Millions of yen

Selling, general and administrative expenses for the years ended March 31, 2001 and 2000 consisted of the following:
2001¥

15,832
1,750
42,087
9,703
5,304
3,815
11,65855
19,86554,639¥ 164,708

2000

¥

2001

Thousands of
U.S. dollars (Note 3)

Millions of yen

Transportation expenses..........................................................................................
Provision for doubtful receivables ............................................................................
Salaries and allowances...........................................................................................
Bonuses paid ..........................................................................................................
Accrued bonuses ....................................................................................................
Provision for retirement benefits ..............................................................................
Depreciation............................................................................................................
Amortization of goodwill...........................................................................................
Research and development expenses......................................................................
Other ......................................................................................................................

Thousands of
U.S. dollars (Note 3)

Millions of yen

Dai Nippon Printing Co., Ltd. Annual Report 2001

Dai Nippon Printing Co., Ltd. Annual Report 2001

The Japanese Commercial Code provides that an amount equal to at least 10% of appropriations paid in cash dividends andbonuses to directors be appropriated as legal reserve until such reserve equals 25% of stated capital. This reserve may be used
to reduce a deficit or transferred to stated capital. In the consolidated balance sheets and the consolidated statements ofstockholders’ equity as at March 31, 2001 and 2000, the legal reserves of the Company and its consolidated subsidiaries were
accounted for as retained earnings.

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

FINANCIAL STATEMENTS

FINANCIAL STATEMENTS

12. Other Income

9. Stockholders’ Equity

15,405
1,678
42,869
9,308
5,448
970
10,697309
19,68255,445¥ 161,811

2001

127,677
14,113
339,41178,25042,77430,766
94,016444
160,202440,637$ 1,328,290

Prepaid expenses and other current assets....................................................
Other assets ..................................................................................................

$

Other long-term liabilities...............................................................................

¥
¥
¥

9,048
14,38823,436
67

U.S. dollars (Note 3)

2000

¥
¥
¥

5,822
15,061
20,883
303

2001

$

72,968116,032$ 189,000$
540

Total research and development expenses (including manufacturing costs) amounted to ¥24,664 million ($198,903 thousand)and ¥23,571 million for 2001 and 2000, respectively.

60

61

Thousands of
U.S. dollars (Note 3)

Millions of yen

The amounts of outstanding future payments under operating leases due on March 31, 2001 and 2000 were also summarized
Thousands ofas follows:
Millions of yen

2001

¥

¥

1,573
2,731
2,601
2,143
9,048

¥

¥

1,526
1,168
488
1,674
966
5,822

2001

$

$

12,68522,024
20,976
17,28372,9682001

Future lease payments:
One year or less ...................................................................................................
More than one year ..............................................................................................

¥¥

U.S. dollars (Note 3)

2000

323
665
988

¥

286
644
930

¥

2001

$
$

2,605
5,363
7,968

15. Derivative Financial Instruments
Non-current:
Excess provision for retirement benefits ................................................................
Excess provision for doubtful receivables ..............................................................
Eliminations of intercompany profits .....................................................................
Loss on devaluation of investment securities .........................................................
Other ...................................................................................................................
Total .................................................................................................................

¥¥

12,048
1,791
549
14,388

¥

¥

6,764
1,397
713
1,836
4,351
15,061$

97,161
14,4444,427$ 116,032

14. Leases

The Company and certain consolidated subsidiaries enter into derivative financial instruments (“derivatives”) for foreign
currency forward contracts to hedge foreign exchange risks associated with certain accounts receivable and accounts payable,
including forecasted transactions, denominated in foreign currencies. The Company and 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 majorinternational financial institutions, the Company and its subsidiaries do not anticipate any losses arising from credit risks. The
basic policies for the use of derivatives are established in the internal regulations and the execution and control of derivatives
are controlled by the Accounting Department.
Market value of Derivative Financial Instruments:

Where finance leases do not transfer ownership of the leased property to the lessee during the lease terms, the leased property
is not capitalized and the related lease expenses are charged to income in the period incurred, as per the statement issued by
the Business Accounting Deliberation Council of Japan.
Pro forma information such as acquisition costs, accumulated depreciation and net book value of the leased properties forsuch finance lease purposes was as follows:
Thousands of
U.S. dollars (Note 3)

Millions of yen

2001

Acquisition costs .....................................................................................................
Accumulated depreciation.......................................................................................
Net book value ........................................................................................................

Nature of Derivative Financial Instruments:

Dai Nippon Printing Co., Ltd. Annual Report 2001

Dai Nippon Printing Co., Ltd. Annual Report 2001

Current:
Enterprise tax payable ..........................................................................................
Excess provision for doubtful receivables ..............................................................
Loss on devaluation of inventories.........................................................................
Excess accrued expenses.....................................................................................
Other ...................................................................................................................
Total .................................................................................................................

2000

FINANCIAL STATEMENTS

FINANCIAL STATEMENTS

Significant components of deferred tax assets at March 31, 2001 and 2000 were as follows:¥

53,331(31,108)¥ 22,223

2000

2001

53,342(30,950)¥ 22,392$ 430,089(250,871)$ 179,218¥

The market value of derivative for foreign currency forward contracts at March 31, 2001 was as follows:
Millions of yen

Contracted
amountReceivables:
U.S.dollars .......................................................................................................
Deutsche mark.................................................................................................
Payables:U.S.dollars .......................................................................................................

¥¥

Marketvalue

12,2544¥(57)
12,201¥

13,0745(58)
13,021

Unrealized(gain)/loss

¥

¥

(820)
(1)
1
(820)

Thousands of U.S. dollars (Note 3)

Lease expenses on finance lease contracts without ownership-transfer amounted to ¥10,648 million ($ 85,871 thousand) and ¥9,180 million for the years ended March 31, 2001 and 2000, respectively.
The amounts of outstanding future payments under finance leases due on March 31, 2001 and 2000, including the portion ofinterest thereon, were summarized as follows:
Thousands of
U.S. dollars (Note 3)

Millions of yen

2001

Future lease payments:
One year or less ...................................................................................................
More than one year ..............................................................................................

2001

Receivables:
U.S.dollars .......................................................................................................
Deutsche mark.................................................................................................
Payables:U.S.dollars .......................................................................................................

$

$
¥
¥

62

2000

Contracted
amount9,237
12,98622,223¥¥

7,205
15,18722,39274,492
104,726$ 179,218

Marketvalue

98,82332$ 105,436
40(460)
98,395(468)$ 105,008

Unrealized(gain)/loss$$(6,613)(8)
8(6,613)$Market value was determined based on the foreign currency forward exchange market rates. Foreign currency forward contracts
which qualified for hedge accounting for the year ended March 31, 2001 and were assigned to the associated assets andliabilities or deferred until completion of the forecasted transactions were excluded from disclosure of the above market value
information.

63

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, 2001 and 2000.
Overseas sales:
Overseas sales of the Company and its consolidated subsidiaries for the year ended March 31, 2001 were as follows:
Millions of yen

Overseas sales
Consolidated net sales
Ratio

17. Business Segment Information
Industry segments:
The Company's primary business industries consist of printing and beverage operations. The following tables presented certain
financial information, including net sales, costs and expenses, operating income, assets, depreciation and capital expenditures
regarding the Company's industry segments at March 31, 2001 and 2000 and for the years then ended.

(a)........................................................................................
(b) .......................................................................................
(a)/(b) ..................................................................................

Thousands of
U.S. dollars (Note 3)¥ 140,810$ 1,135,565
1,342,035
10,822,863
10.5%
10.5%

Overseas sales ratio for the year ended March 31, 2000 was less than 10% of consolidated net sales and, accordingly, disclosure
information on overseas sales was not required.

Dai Nippon Printing Co., Ltd. Annual Report 2001

Dai Nippon Printing Co., Ltd. Annual Report 2001

The Company and one of its foreign consolidated subsidiaries were guarantors of loans of one of the non-consolidated
subsidiaries and another company, amounting to approximately ¥106 million ($855 thousand). It is common practice in Japanfor companies, in the ordinary course of business, to receive promissory notes in settlement of trade accounts receivable and to
subsequently discount such notes at banks. At March 31, 2001 and 2000, the Company and its consolidated subsidiaries were
contingently liable on trade notes discounted in the amount of ¥1,690 million ($13,629 thousand) and ¥1,690 million,
respectively. Notes discounted were accounted for as sales.

FINANCIAL STATEMENTS

FINANCIAL STATEMENTS

16. Contingent Liabilities

Millions of yen

For 2001 :Printing

Net sales:
Outside customers ................................................ ¥ 1,268,415
Inter-segment .......................................................
592
Total ................................................................
1,269,007
Costs and expenses ..............................................
1,186,461
Operating income ............................................ ¥82,546
Assets, depreciation and capital expenditures:
Assets .................................................................. ¥ 1,437,308
Depreciation ......................................................... ¥90,611
Capital expenditures ............................................. ¥99,352

Beverage

Total

Elimination

¥

(592)
(592)
(592)
-

¥ 1,342,035
1,342,035
1,256,094¥
85,941

¥
¥
¥

(87)
-

¥ 1,489,871¥
94,312¥103,050¥ 1,342,035
592
1,342,627
1,256,686¥
85,941¥¥

73,62073,62070,225
3,395

¥
¥
¥

52,6503,701
3,698¥ 1,489,958¥
94,312¥103,050¥

Consolidated

Thousands of U.S. dollars (Note 3)

Printing

Beverage

Total$ 10,822,863
4,774
10,827,637
10,134,564$
693,073$$ 12,015,790$
760,581$
831,048

Net sales:
Outside customers ................................................ $10,229,153
Inter-segment .......................................................
4,774
Total ................................................................ 10,233,927
Costs and expenses ..............................................
9,568,233
Operating income ............................................ $665,694$593,710593,710566,331
27,379Assets, depreciation and capital expenditures:
Assets .................................................................. $11,591,193
Depreciation ......................................................... $730,734
Capital expenditures ............................................. $801,226$$$

424,597
29,847
29,822$Elimination

Consolidated$(4,774)(4,774)(4,774)-$ 10,822,863
10,822,863
10,129,790$
693,073

$
$
$

(701)
-

$ 12,015,089$
760,581$
831,048

Millions of yen

For 2000 :64

Printing

Net sales:
Outside customers ................................................ ¥ 1,210,028
Inter-segment .......................................................
544
Total ................................................................
1,210,572
Costs and expenses ..............................................
1,130,641
Operating income ............................................ ¥79,931
Assets, depreciation and capital expenditures:
Assets .................................................................. ¥ 1,389,530
Depreciation ......................................................... ¥90,963
Capital expenditures ............................................. ¥115,005

Beverage

Total

Elimination

¥

(544)
(544)
(543)
(1)

¥ 1,286,703
1,286,703
1,200,817¥
85,886

¥
¥
¥

(102)
-

¥ 1,442,307¥
94,588¥
119,076¥ 1,286,703
544¥ 1,287,247¥ 1,201,360¥
85,887¥¥76,67576,67570,719
5,956

¥
¥
¥

52,8793,625
4,071¥ 1,442,409¥
94,588¥
119,076¥

Consolidated

65

FINANCIAL STATEMENTS

Report of Independent Certified Public Accountants
To the Board of Directors of
Dai Nippon Printing Co., Ltd.

Dai Nippon Printing Co., Ltd. Annual Report 2001

We have audited the accompanying consolidated balance sheets (expressed in Japanese yen) of Dai Nippon Printing Co.,
Ltd. and its consolidated subsidiaries as of March 31, 2001 and 2000 and the related consolidated statements of income,stockholders’ equity, and cash flows for the years then ended. These consolidated financial statements are the responsibilityof the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements basedon our audits.
We conducted our audits in accordance with auditing standards generally accepted in Japan. Those standards require thatwe plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are freeof material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts 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 present fairly, in all material respects, the financial position of Dai
Nippon Printing Co., Ltd. and its consolidated subsidiaries at March 31, 2001 and 2000, and the results of their operations
and their cash flows for the years then ended in conformity with accounting principles generally accepted in Japan.
As discussed in Note 2, effective April 1, 2000, the consolidated financial statements have been prepared in accordancewith new accounting standards for employees’ retirement benefits and for financial instruments and a revised accounting
standard for foreign currency transactions.
Our audits also comprehended the translation of Japanese yen amounts into U.S. dollar amounts and, in our opinion, suchtranslation has been made in conformity with the basis stated in Note 3. Such U.S. dollar amounts are presented solely forthe convenience of readers outside Japan.

Tokyo, Japan
June 28, 2001

66

MEIJI AUDIT CORPORATIONBOARD OF DIRECTORS

Board of Directors(As of July 1, 2001)

Ryozo Kitami

Kenichi Nakamura

Taira Takahashi

Koichi Takanami

Chairman of the Board
President and Chief Executive
Officer

Senior Managing Director

Senior Managing Director

Senior Managing Director

Senior Managing Director

Minoru Suzuki

Satoshi Saruwatari

Masayoshi Yamada

Shigeru Kanda

Masakazu Sato

Senior Managing Director

Senior Managing Director

Senior Managing Director

Managing Director

Managing Director

Kuniaki Kamei

Mitsuhiko Hakii

Osamu Tsuchida

Noriaki Nakamura

Teruomi Yoshino

Managing Director

Managing Director

Managing Director

Managing Director

Managing Director

Directors

Standing Statutory Auditors

Hiromitsu Ikeda

Hidenori Nokubo

Yukio Togano

Jitsuo Okauchi

Kazuyasu Uchiyama

Tadashi Okubo

Junjiro Inoue

Minoru Yoneda

Hironori Kato

Yoshiyuki Nakagawa

Kazumasa Hiroki

Shizen Sasaki

Kenzo Isumi

Kosaku Mori

Yujiro Kuroda

Toshio Kawada

Chugen Kakuno

Tatsuya Nishimura

Makoto Isshiki

Takao Suzuki

Yoshinari Kitajima

Dai Nippon Printing Co., Ltd. Annual Report 2001

Yoshitoshi Kitajima

Statutory Auditor

Akira Fujishima

67

Ownership ratio(%)

Dai Nippon Art Co., Ltd.

Production of drafts for photoengraving

80

100.0

DNP Graphica Co., Ltd.

Printing and bookbinding

100

100.0

Dai Nippon Cup Co., Ltd.

Molding and processing of paper containers

80

100.0

Dai Nippon Ellio Co., Ltd.

Printing and processing of steel and other metal plates

300

50.0

Dai Nippon Hoso Co., Ltd.

Filling and processing of packages

80

100.0

DAI Nippon Printing Information Systems Co., Ltd.*

Capital(Millions of yen)

Ownership ratio(%)

Planning, design and creation of shops, exhibition booths
and other commercial spaces

100

100.0

DNP Techno Research Co., Ltd.*

Studies related to patents and preparation of contracts

20

100.0

D-Square Inc.*

Event planning and operation

80

80.1

MyPoint.com Japan Co., Ltd.*

Marketing system planning and operation for internet advertisement

700

80.1

Dai Nippon Printing Kenzai Co., Ltd.

Photoengraving, printing and processing

200

100.0

Printing
DNP Space Design Co., Ltd.*

Planning, designing, development, management,
and operations of information systems

100

100.0

I.M.S. Dai Nippon Co., Ltd.

Printing of TTRs and ST materials

100

100.0

Dai Nippon ISD Co., Ltd.*

Software production and system development

80

100.0

Kyoiku Shuppan Co., Ltd.*

Publishing

60

48.3

Dainippon Jushi Co., Ltd.

Production and processing of composite resins

380

100.0

Hokkaido Dai Nippon Printing Co., Ltd.

Dai Nippon Kaihatsu Co., Ltd.

Real estate sales

250

100.0

Photoengraving, printing, bookbinding and production related
to packaging

93

96.9

Dai Nippon LSI Design Co., Ltd.*

Logical circuit designs for ICs and LSIs and layout designs

100

100.0

Photoengraving, printing, bookbinding and production related
to packaging

82

99.7

DNP Data Techno Co., Ltd.

Production and sales of plastic cards with magnetic stripes,
IC chips and others

100

100.0

Tokai Dai Nippon Printing Co., Ltd.

Photoengraving, printing, bookbinding and production related
to packaging

120

100.0

Dai Nippon Offset Co., Ltd.

Offset printing

200

100.0

Kyushu Dai Nippon Printing Co., Ltd.

Dai Nippon Polymer Co., Ltd.

Molding, processing and printing of plastic containers

100

100.0

Photoengraving, printing, bookbinding and production related
to packaging

380

100.0

Dai Nippon Printing Accounting System Co., Ltd.*

Accounting and consulting services

30

100.0

Shikoku Dai Nippon Printing Co., Ltd.

Photoengraving, printing and production related to packaging

50

97.0

Dai Nippon Printing Fine Electronics Co., Ltd.

Production of high-precision components

300

100.0

Multi Print Co., Ltd.

Photoengraving, printing and bookbinding

100

100.0

Dai Nippon Printing Precision Device Co., Ltd.

Production of high-precision components

300

100.0

Sagami Yoki Co., Ltd.

Production of laminated tubes

200

90.0

DT Fine Electronics Co., Ltd.

Production and sales of semiconductor related components

490

65.0

Shiobara Green Village Co., Ltd.*Management of leisure facilities

200

99.6

D.T.Circuit Technology Co., Ltd.*

Development and production of semiconductor related components

1000

51.0

SP Dai Nippon Co., Ltd.

Planning and production of promotional materials

80

100.0

F.D.P. Dai Nippon Co., Ltd.

Manufacturing related to components for displays

100

100.0

Spom Japan Co., Ltd.*

Production and sales of IC cards and related products

100

35.0

DNP Corporate History Center Co., Ltd.*

Planning and production of corporate hisotory archives

50

100.0

The Inctec Inc.

Production and sales of ink, varnish, pigments and dyes

2,000

59.8

Dai Nippon Printing Technopack Co., Ltd.

Photoengraving, printing and binding

300

100.0

Trans Art Inc.*

Procurement and sales of art objects

50

100.0

Dai Nippon Printing Technopack Kansai Co., Ltd.

Photoengraving, printing and binding

200

100.0

DNP Archives.com Co., Ltd.*

Planning, producing and sales of art objects and contents

200

100.0

Dai Nippon Printing Technopack Yokohama Co., Ltd.

Photoengraving, printing and binding

200

100.0

Uzumine Country Club Co., Ltd.*Management of golf courses

33

88.8

Dai Nippon Seihon Co., Ltd.

Bookbinding

200

100.0

Dai Nippon Printing Co., (Hong Kong) Ltd.

Photoengraving, printing and bookbinding

DNP Facility Service Co., Ltd.

Management and operations of buildings and welfare facilities

100

100.0

(HK$1,000)
150,000

(3.7)
99.3

Dainippon Shoji Co., Ltd.

Sales of paper and other products

100

94.3

DNP (America), INC.

Sales of publications and precision electronic
components, decorative interiors(US$1,000)
100(100.0)100.0

Dai Nippon Techtas Ichigaya Co., Ltd.

Bookbinding

80

100.0

DNP Denmark A/S

Dai Nippon Total Process BF Co., Ltd.

Photoengraving and machine plate activities

80

100.0

Manufacturing and sales of precisionelectronic components(DKr1,000)
135,000

100.0

Dai Nippon Total Process Ichigaya Co., Ltd.

Photoengraving

100

100.0

P.T. Dai Nippon Printing Indonesia

Dai Nippon Uni Process Co., Ltd.

Photoengraving

80

100.0

Photoengraving, printing, bookbinding andproduction related to packaging and sales(US$1,000)
25,100

51.0

Tien Wah Press (Pte.) Ltd.

Photoengraving, printing and bookbinding(S$1,000)
4,600

84.6

DNP Logistics Co., Ltd.

Packaging and shipping operations

570

100.0

Dai Nippon Soko Co., Ltd.

Warehouse management and parcel handling100(44.7)
100.0

Direc Co., Ltd.

Sales of publishing and educational equipment

96

55.0

D.N.K. Co., Ltd.

Manufacturing and sales of printing equipment and machine tools

100

100.0

DNP AV Center Co., Ltd.*

Planning, production, editing and sales of movies

100

100.0

DNP Digitalcom Co., Ltd.

Planning and production of digital media contents

100

100.0

DNP Human Service Co., Ltd.*

Planning, management and data processing activities related
to personnel plans

30

100.0

DNP Media Create Co., Ltd.

Planning, production, photoengraving and machine plate activities

100

100.0

DNP Media Create Kansai Co., Ltd.

Planning, production, photoengraving and machine plate activities

200

100.0

Tohoku Dai Nippon Printing Co., Ltd.

DNP Corporation USA

Holding company(US$1,000)
24,000(15.4)
100.0

DNP Holding (USA) Corporation

Holding company(US$1,000)
100(100.0)100.0

Dai Nippon IMS (America) Corp.

Processing of TTRs

(US$1,000)
20,000(100.0)100.0

Dai Nippon Printing Co., Ltd. Annual Report 2001

Dai Nippon Printing Co., Ltd. Annual Report 2001

68

Capital(Millions of yen)

Printing

MAJOR SUBSIDIARIES AND AFFILIATESMAJOR SUBSIDIARIES AND AFFILIATES

Major Subsidiaries and Affiliates

Beverage
Hokkaido Coca-Cola Bottling Co., Ltd.

Manufacturing and sales of soft drinks

2,935

56.2

*Non-consolidated subsidiary or affiliate

69

INVESTOR INFORMATION

Investor Information (as of March 31, 2001)
Dai Nippon Printing Co., Ltd.

Head Office:Stock Exchange Listings:

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

Tokyo, Osaka, Nagoya, Luxembourg, Amsterdam

Dai Nippon Printing Co., Ltd. Annual Report 2001

162-8001, Japan
Tr a n s f e r A g e n t :Established:

Misuho Trust & Banking Co., Ltd.

1876

6-2, Marunouchi 1-chome, Chiyoda-ku, Tokyo,
100-0005, Japan

Number of Employees:

Phone: +813-3240-7000

34,094
Annual Meeting of Shareholders:
Paid-in Capital:

The annual meeting of shareholders of DNP is normallyheld in June each year in Tokyo, Japan.

¥114,464 million

Investor Relations:

Number of Common Stocks:
Authorized 1,200,000,000 shares

Dai Nippon Printing Co., Ltd.

IssuedPress and Public Relations

759,480,693 shares

1-1, Ichigaya Kagacho 1-chome, Shinjuku-ku, Tokyo
Number of Shareholders:

162-8001, Japan.

(more than 1,000 shares)

Phone:+813-5225-8220

Facsimile:+813-5225-8239

E-mail:info@mail.dnp.co.jp

27,024
Major Shareholders:

Web Site Address:
The Dai-Ichi Mutual Life Insurance Co.

5.07%

The Fuji Bank, Limited

4.93

Japan Trustee Services Bank, Ltd.

4.87

The Industrial Bank of Japan, Limited

4.72

Nippon Life Insurance Co.

3.36

The Mitsubishi Trust & Banking Corporation

2.54

The Sumitomo Bank, Ltd.

1.79

State Street Bank and Trust Company

1.62

Employee shareholder Association

1.34

The Yasuda Trust and Banking Co., Ltd.

1.28

http://www.dnp.co.jp/

C o m m o n S t o c k P r i c e R a n g e ( To k y o S t o c k E x c h a n g e )(For the years ended March 31, 1999, 2000 and 2001)
1999

70

2000

2001

High

Low

High

Low

High

Low

1st Quarter¥2,360¥2,065¥2,030¥1,765¥1,970¥1,690

2nd Quarter

2,390

1,704

2,130

1,820

1,935

1,605

3rd Quarter

1,948

1,599

2,120

1,630

1,750

1,535

4th Quarterx

1,852

1,506

1,920

1,586

1,731

1,315

Common Stock Price Range (Tokyo Stock Exchange)

Dai Nippon Printing Co Ltd Annual Report 2001
Printed on 100% recycled paper and wood-free paper with soy-oil-based inks in Japan