ANNUAL RE PORT2014

CONTENTS
2

Synopsis of Performance

6

To Our Shareholders

12

Special Feature:“Today’s Innovation is Tomorrow’s Basic”
14 Making Use of Big Data
16 DNP’s Global Development
18 Creating Homes for the Future
20 Life Science Business Development

22

DNP’s Businesses

52

Corporate Governance

24 DNP at a Glance

54 Corporate Governance

26 Our Products and Services

61 Board of Directors, Statutory

Auditors and Corporate Officers

28 Evolution of DNP’s Businesses
30 Major Events of this Fiscal Year62

32 Information Communication
32
34
36

64 Management’s Discussion and Analysis

Business Strategies
Financial Results

74 Selected Financial Data

Presentation of Growth Businesses
and Strategic Businesses

76 Consolidated Financial Statements
98 Independent Auditor’s Report

40 Lifestyle and Industrial Supplies
40
42
44

Business Strategies
Financial Results
Presentation of Growth Businesses
and Strategic Businesses

46 Electronics
46
48
50

Financial Section

Business Strategies
Financial Results
Presentation of Growth Businesses
and Strategic Businesses

100

Appendix
100 Investor Information
102 Major Subsidiaries and Affiliates
104 Glossary
109 Sources of Information about DNPThis annual report is aimed at providing information about DNP’s businesses, management vision, and business results. Opinions and forecasts
contained in the report were based on the best judgment of management at the time the report was prepared, so we cannot guarantee that all
information contained in the report is completely infallible.
In this annual report, “DNP” refers to the entire DNP Group, and “we” refers to DNP or the DNP management team.
(In the section on Corporate Governance (pp 52-61), “DNP” refers to Dai Nippon Printing Co., Ltd.)Synopsis of Performance

Grand Summary of Financial Results

Dai Nippon Printing Co., Ltd. and Consolidated Subsidiaries

Years ended March 31

Dollars in thousands
except per share amounts

change

2014

2013

2012

2014

¥ 1,448,550¥ 1,446,607¥ 1,507,228$ 14,063,592

0.1%

Operating income

50,09935,78034,015486,398

40.0%

Ordinary income

53,28540,31836,843517,330

32.2%

Income before income taxes

48,60835,152

2,673

471,92238.3%

Net income (loss)

25,642

19,218(16,356)

248,951

33.4%

Statements of Operations (¥ million)
Net sales($ thousand)

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

914,213$ 9,479,466

4.2%

182,597

227,211229,664

1,772,786-19.6%

1,574,754

1,578,976

1,608,806

15,288,874-0.3%

976,385¥

937,055

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

2014/2013($ thousand)¥

120,109¥

100,498¥

108,603$

1,166,107

19.5%

Cash flow from investing activities(58,371)(72,588)(80,126)(566,709)–

Cash flow from financing activities(80,038)(36,236)(32,833)(777,068)–

Free cash flow*

61,73827,91028,477599,398

121.2%Per Share Data** (¥)
Net income (loss)($)¥(25.39)

0.39

33.4%

1,447.96

1,386.86

1,352.71

14.06

4.4%

32

32

32

0.31

–

Operating income margin

3.46

2.47

2.26

3.46

0.99

EBITDA margin

8.63

8.21

6.76

8.63

0.42

Net income (loss) to net sales

1.77

1.33

-1.09

1.77

0.44

ROE (%)

2.81

2.18

-1.84

2.81

0.63

ROA (%)

1.63

1.21

-1.00

1.63

0.42

20

25

26

20

–

18.47

11.27

10.95

18.47

–

24.84

29.70

–

24.84

–

PBR (times)

0.68

0.64

0.63

0.68

–

EV/EBITDA (times)

4.93

4.92

5.46

5.10

–

Net assets
Cash dividend

¥

39.82

¥

29.84

$

Profit Margins (%)

Financial Ratios

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

PCFR (times)

6.43

5.74

6.86

6.43

–

Dividend yield (%)

3.24

3.61

3.78

3.24

-0.37

Return to Shareholders
Value of shares repurchased (¥ million)
Dividend payout ratio (%)

–

–

–

–

–

80.4

107.2

–

80.4

–

AA

AA

AA

AA

–

24.41

21.12

23.20

24.41

–

OthersLong-term credit rating (R&I)
Foreign ownership (%)

U.S. dollar amounts have been translated from yen, for convenience only, at the rate of ¥103=U.S.$1, the approximate Tokyo foreign exchange market rate as of March 31, 2014.
* Free cash flow = Net cash from operating activities - net cash from investing activities

2** No diluting securities outstandingSynopsis of Performance
To Our Shareholders

Achieved income growth for second consecutive fiscal year
Major improvement in financial constitution
Growth in products such as decorative materials, thermal transfer media
for printing photographs, and optical films

Operating Income

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

2,000

150

80

1,500

1,583.4

1,589.460

120
1,507.2

1,446.6

DNP’s Businesses

Net Sales

Special Feature

Expansion of overseas production bases, especially in Southeast Asia

1,448.6

40
90
20

1,000

30

10

11

12

13

0

14

10

11

34.0

35.8

19.2

12

13

25.6

(16.4)

– 20

14

– 40

ROA

(%)

(%)

10

11

1.5

1.5

12

13

14

Financial Section

ROE

(¥)

4

7
6

80

3

5

60

4
3

40
36.13

39.82

38.86

2.6

2.7

2.2

2.8

1

(25.39)

0

–1

–20

–1

–2

10

11

12

13

1.6
1.2

1

2

0

0

2

Appendix

29.84

20

–40

25.0

0

Net Income (Loss) per Share
100

23.3

67.8
50.1

500

0

66.5

14

–3

Corporate Governance

60

–1.0

– 1.8

10

11

12

13

14

–2

10

11

12

13

14

3

Income Before Income Taxes

EBITDA(¥ billion)(¥ billion)

120

250

100

200

80
150

153.4

143.6

60
49.5

40

52.7
35.2
2.7

10

11

12

13

125.0

101.9

50

20
0

118.8

100

48.6

0

14

10

11

12

Total Net Assets

Net Assets per Share(¥ billion)

(¥)

1,200

2,000

13

14

1,000
956.9

952.4

800

914.2

937.1

976.4

600

1,500
1,422.3

1,410.4

1,352.7

1,386.9

1,448.0

10

11

12

13

14

1,618.9

1,649.8

1,608.8

1,579.0

1,574.8

10

11

12

13

14

1,000

400
500
200
0

10

11

12

13

14

0

Interest-bearing Debt

Total Assets(¥ billion)(¥ billion)

250

2,000
229.1

229.7

200

227.2
1,500
182.6

166.8

150

1,000
100
500

50

0

10

11

12

13

14

0

PER (Price Earnings Ratio)*

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

1.5

40
34.97
29.70

30

1.0
26.07

24.84

20

0.89

0.72

10

11

0.63

0.64

12

13

0.68

0.5
10

0

0

10

11

12

13

14

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

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

140

40

120

119.1

100

102.2

30

33.8

33.1

31.7

98.2

30.8

30.8

13

14

Synopsis of Performance

Capital Expenditures*

88.3

80

To Our Shareholders

20
60

63.5

40

10

20
0

10

11

12

13

0

14

10

11

12

*Figures include capital expenditures for intangible fixed assets.

Free Cash Flow*(¥ billion)(¥ billion)

120

80

Special Feature

Depreciation Expense

100
80

91.7

98.0

60

95.8

61.7

57.5

80.2

73.5

60

40

40

0

10

11

12

13

0

14

28.5

27.9

12

13

DNP’s Businesses

20
20

19.9

10

11

14

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

Net Sales by Segment (Year ended March 31, 2014)

Operating Income by Segment (Year ended March 31, 2014)(¥ billion)(¥ billion)

Information
Communication

700.3

Lifestyle &Industrial Supplies

Electronics

171.3

Electronics

Beverages

54.8

Beverages

200

400

600

33.9

12.9

0.7
0

800

10

20

30

Capital Expenditures by Segment (Year ended March 31, 2014)

Employees by Segment (Year ended March 31, 2014)(¥ billion)(persons)
Beverages
987Electronics
3,779

23.7

Lifestyle &Industrial Supplies

26.3

Electronics

9.0

Others4.5
0Corporate
1,648

Information
Communication
19,671

Appendix

Information
Communication

40

Financial Section

0

11.9

Lifestyle &Industrial Supplies

533.6

Corporate Governance

Information
Communication

Lifestyle &Industrial Supplies
13,439

10

20

30

40

50

5

To Our Shareholders“Today’sInnovation isTomorrow’s Basic”
DNP Increases Corporate Value by
Contributing to Society’s Development“Today’s Innovation is Tomorrow’s Basic”—thisis how DNP expresses its firm commitment tocontinue contributing to the future developmentof society.
Contributing to society means solving social
problems in a variety of areas, including
environment and energy, education and trainingof the next generation, medical care and health,food and agriculture, and improving quality of life
in our aging society. DNP is already working on
the innovations that will allow us to accomplish
our mission.
Many of the problems that we face today
cannot be solved by existing methods, so if we
get caught up in old methods, we won’t be able
to find the answers we need.
We must first sharpen our awareness of thefact that we are the ones who must take theinitiative and actively take on the job of solving
problems. DNP has always tried to respond6

to the needs of its corporate clients. However,amid dramatic changes in the global businessenvironment and changes in consumers’
awareness, it has become more difficult forcompanies to identify for themselves the
problems that they need to solve. That is why
it has become important for us to take the leadand actively get a grasp of the status of society,organize its problems, analyze them, and chart a
course toward resolving them.
When we take the lead and set out to solve
society’s problems, it is important to be sure that
we are moving in the right direction. We must
always confirm that we are viewing things fromthe consumer’s point of view and from society’s
point of view. We must look within our own
country and outside as well, and always steer
DNP in the proper direction.
Information Communication, which includes
Books and Magazines and Commercial Printing,Synopsis of Performance
To Our Shareholders
Special Feature

feel they cannot live without. DNP’s Electronics
segment is now reaping the benefits of the cost
structure reforms it has been implementing forthe past few years. The segment will concentrateon technological innovation and more efficient
production, with a focus on developing new
products.

Financial Section
Appendix

As we ourselves also evolve, we will continue
to innovate “Tomorrow’s Basic.” By doing so,
we will contribute to the development of society,and we will do our very best to earn the trust of
our shareholders and other stakeholders.
We ask our shareholders for their continued
guidance and support as we move forward.

Corporate Governanceis the principal business in which we haveengaged since our founding. Amid a global
trend toward digitization, the information media
that consumers handle have undergone greatchanges. In response to these changes,
in July 2014 we will unify the Information
Communication segment’s sales, planning,and manufacturing units throughout Japan. We
intend to reconstruct this segment in order toincrease its efficiency and strengthen its revenue
base. DNP’s Lifestyle and Industrial Supplies
segment provides products and services thatare vital to consumers’ daily lives. In order topromote its global development, we will enhance
its manufacturing bases in Southeast Asia andNorth America. DNP already holds the top
share of world markets for many products. We
respond precisely to the needs of people in eachcountry and each region in order to offer themthings that they take for granted—things they

DNP’s Businesses

写真後送Yoshitoshi Kitajima
President

7

Management Interview

Increasing Corporate Value
through “Today’s Innovation isTomorrow’s Basic”

Q.

What do you mean by “Today’s
Innovation is Tomorrow’s Basic”?

President Yoshitoshi Kitajima: DNP’s management
concept is to contribute to the development of society.
When we think about social contribution, it means solving
society’s various problems. Consumers also want to haveproducts and services that solve their problems so readily
available that they can come to take them for granted.
They want to be able to count on finding books andmagazines on bookstore shelves, and to feel perfectly
secure using smart cards to pay for everyday purchases.
In addition to supplying hygienic, easy-to-use packaging,highly aesthetic wall coverings, soil-resistant, scratchresistant floor coverings, photo prints and albums, DNP
provides electronic components that are indispensable tothe manufacture of smartphones and tablet PCs.
We want to continue making products and services
that enrich people’s lives to the extent that they cannot
imagine life without them. That’s what we mean when we
say “Today’s Innovation is Tomorrow’s Basic.”Q.

Are you satisfied with the progress
you are making toward achievingthat goal?

Kitajima: That’s an interesting question. Since there are
innumerable issues to address, I don’t suppose we will
ever be able to say we have reached our goal. We are
currently implementing a variety of measures aimed atsetting ourselves on a track that will enable us to continue
creating “Tomorrow’s Basic.”
We have been reforming our business structure withan eye toward starting new businesses, and we are also
implementing cost structure reforms to strengthen ourrevenue base. These reforms are progressing nicely.

Q.

What are some of the specificmeasures you are taking?

Kitajima: Among the business structure and cost
structure reforms that we are implementing is theconstruction of a business base in the field of information
services. In order for a company to provide high-added
value products or services today, it must be able toreflect consumers’ opinions into what it has to offer.
It is extremely important to be able to safely use “bigdata,” including purchasing trends and characteristics ofmembers who are registered with a particular company,
etc., for marketing and other purposes. In December
2013, we opened the DNP Kashiwa Data Center to serveas our infrastructure for that purpose. We equipped
it with very strong protections against data leakage,earthquakes, and fire and adopted the cloud technologyof Nihon Unisys, Ltd., with whom we have capital ties. We
also connected the new data center to the existing data
centers of both DNP and Nihon Unisys, thereby creating
one of Japan's largest service networks.

Q.

What other new initiatives has
DNP begun?

Kitajima: In Lifestyle and Industrial Supplies, we havebeen focusing on strengthening our production frameworkwith an eye toward global markets. For example, in May
2013 we established a new packaging plant in Vietnam.
DNP’s Packaging Operations have focused on Indonesia
since we established a plant there in 1972. Today wehold the top share of that market for packaging products
in many fields, including food products and household
goods. We intend to take advantage of our track record inSoutheast Asia and our new production base in Vietnam—

8

Q.

It’s important to use management
resources effectively, isn’t it?

Corporate Governance
Financial Section
Appendix

Kitajima: Absolutely. The entire DNP Group is currently
working on overall optimization. This includes optimal
placement of human resources and reviewing ourorganizational structure.
As an example, in April 2014 we merged the business
unit in charge of products like display components andsemiconductor photomasks with the business unit incharge of surface films and other optical films used inliquid crystal displays. Both of these business units serve
the same main markets, such as electronic devices. Now
that they can combine their technologies and expertise,
we plan to accelerate the development of touch panelrelated products and other new products.
Here is another example, concerning commercial
printing, business forms, and packaging. In responseto changes in consumers’ values and lifestyles and to
globalization and progress in information technology, we
implemented a nationwide organizational restructuringin July 2014 with two goals: to provide the same level ofservice to customers throughout Japan without limitation
by time or space, and to improve profitability and capitalefficiency.

DNP’s Businesses

Kitajima: As I’ve said before, we believe that generating
the innovations that will become “Tomorrow’s Basic”
will lead to medium- and long-term growth. In order toachieve that, we analyzed problems from society’s point ofview and identified four areas in which DNP can make useof its strengths to offer solutions. DNP has already begun
actively engaging in business activities in these areas,
which are: information distribution, health and medicalcare, environment and energy, and comfortable living.
However, we must not let ourselves be caught up in
our existing business framework as we approach these
themes. DNP’s printing business contains three segmentsthat engage in different types of business. They have allwithstood dramatic changes in their business environment
and managed to achieve stable growth by expanding on
their various areas of specialization. In the future, however,they will have to reach beyond the boundaries of each unit
and combine their various strengths in order to make useof their collective capabilities.

Kitajima: Earlier I mentioned the new DNP Kashiwa
Data Center. Since it serves as a basis for providing
information services, you might think that it belongs only
to the Information Communication segment. But it also
addresses the need for better communication between
consumers and companies in all kinds of industries. In all
likelihood our Lifestyle and Industrial Supplies segment will
be using the data center to provide services for customers
who manufacture foods, beverages, decorative materials
or residential facilities, and for customers involved in photo
printing. The same is true for our Electronics segment,
which is closely related to electronic device manufacturers.
Of course, DNP’s Business Process Outsourcing (BPO)
operations also serve clients in a wide variety of industries,
so we expect the data center to be useful in a wide variety
of ways.

Special FeatureQ.

DNP is involved in a wide varietyof businesses. Please explain yourstrategies for future growth.

Could you give an example?

To Our Shareholders

By Combining the Strengths of
Our Various Businesses, We Will
Generate Even More Value

Q.

Synopsis of Performancea location that is attracting attention as a logistics basefor the Indochina Peninsula—to provide high-added value
solutions for Japanese-affiliated companies expanding
overseas and for other global companies.
In Imaging Communication, we completed constructionof a factory in Malaysia in December 2013, in order toproduce dye-sublimation thermal transfer printing media(color ink ribbons and receiver paper) to meet growing
Southeast Asian demand for printing ID photos andother pictures. In the US, we responded to growth in themarket for barcodes used in manufacturing and logistics
by augmenting the production equipment at our thermal
resin-type transfer printing media plant in Pittsburgh in
May 2013.
Our Electronics segment has been working to improve
revenues amid a dramatically changing market byreviewing its product lineup, consolidating manufacturingbases, and reconstructing its organizational framework.

9Q.

What kinds of new products,
new services, or new businesses
are you developing?

Kitajima: In the development of new products andservices, too, it is most important that we generate newstrengths by combining our various existing strengths.
We should be able to respond to future demand for smart
houses and smart cities by combining products andtechnologies from various fields—perhaps components ofphotovoltaic cells and lithium-ion rechargeable batteries
from our energy-related business with optical films orresidential interior or exterior materials, for example.
Aside from that, in July 2013 DNP Fine Chemicals
Utsunomiya Co., Ltd. completed construction of its newplant, where it is manufacturing products like active
pharmaceutical ingredients and functional materials thatuse organic synthesis technologies, which represents a
new area of challenge for DNP. These functional materials
transcend the boundaries of our existing business units
since they are used for both environment and energy
applications, and as electronic materials for the display
components field. Regarding DNP’s existing production ofactive pharmaceutical ingredients and intermediate agents,
we intend to build highly reliable production facilities
that meet the quality assurance standards of all thecountries where we do business and to improve our costcompetitiveness by optimizing chemosynthetic processes.
In the life science arena, also, we aim to use our image
processing technologies to offer cell movement tracking
and the world’s first analysis of 3D MRI images, and to
apply technologies like patterning and mass production tooffer new products and services in the field of regenerative
medicine.

We Will Increase the Precisionof Our Solutions by Adopting theConsumer’s Point of View andSociety’s Point of View.

Q.

It seems that DNP has become
more active in the “B to C” (businessto consumer) sector.

Kitajima: Our society is now undergoing enormouschanges. These changes are occurring quickly and ona global scale, which makes it difficult to discern what10

problems need to be solved. Rather than continuing to
respond only to our corporate clients’ needs, i.e. as a “Bto B” (business to business) enterprise, we have to havea solid awareness of the consumer who is our corporateclients’ client. That is why each member of DNP works
hard to “take the consumer’s point of view” and respondproactively, with sensitivity to social changes.
We are also focusing on actively developing our own “Bto C” enterprises through which we interact directly with
consumers, like our “honto” hybrid bookstore network,“Elne” online customer loyalty point service, “Receipi!”
household budget-tracking application and “DreamPages”
photo print production service.

Q.

Isn’t it difficult to take theconsumer’s point of view?

Kitajima: We ourselves are consumers who live everyday
lives, so we can look at DNP’s business from a variety ofperspectives.
In order to get a better grasp of consumers’ pointof view, in 2013 we established two venues for directcommunication with consumers, one in eastern Japanand one in western Japan.
In January 2013, we established Communication Plaza“dot DNP”, our experiential showroom in Tokyo’s Ichigaya
district, to enable visitors to experience reading electronic
books and to become familiar with products like digital
photos and digital picture books. Now we have manyfans coming back for repeat visits, and we have received
a great deal of feedback regarding electronic books andother topics.
In April 2013, we opened a communication cafe
called “The Lab. CAFE Lab.” within Knowledge Capital,a core facility of Grand Front Osaka. Knowledge Capitalis a cross disciplinary facility where many corporations,academic institutions, and other entities pursue joint
research that transcends any one particular area. As
one of the supporters of Knowledge Capital, DNP is
working hard to generate new products and services incollaboration with other industries.

Q.

Many people are talking about
the importance of “ESG”—
environmental, social, and corporate
governance-related issues.

Kitajima: Concerning the environment and society, it
is certainly important to create a sustainable societythat exists in harmony with nature. DNP built its own
environmental management system. We work actively at

Special Feature
DNP’s Businesses
Corporate GovernanceKitajima: We view corporate governance as animportant management policy. At our June 2014
general shareholders’ meeting, we reduced the number

To Our Shareholders

Q.

Lastly, what are your views
regarding corporate governanceand returns to shareholders?

of members on our Board of Directors from 20 to 18
and increased the number of independent outside
directors from one to two. In the future, we intend toenhance our corporate governance so as to build an
adequate supervisory framework and continue to employ
appropriate monitoring systems in order to support
prompt decision-making and business execution.
Of course, returning profits to our shareholders is
another important management responsibility. Ourbasic approach is to distribute profits to shareholders
through stable dividend payments, with consideration forbusiness performance, dividend payout ratio, and otherrelevant factors. At the same time, we support futurebusiness development by applying retained earnings
to the enhancement of our financial constitution andstrengthening of our management base. We allocate
retained earnings primarily to investment in research anddevelopment of new technologies and businesses, capitalspending, and strategic alliances and M&As. We believethat these types of investments help build corporate value
in the medium and long term, and ultimately help us return
profits to shareholders.
Because DNP values taiwa (dialogue) with all of ourvarious stakeholders, we disclose appropriate information
in a timely fashion and work hard to achieve accountability.
In order to earn the trust of our shareholders and allother stakeholders, the management of DNP will continue
to increase DNP’s corporate value through our businessactivities.

Synopsis of Performance

initiatives like preventing global warming, aiming for zero
emissions, preserving biodiversity, exercising strict caution
in the handling of volatile organic solvents and otherchemical substances, and green purchasing.
In the fiscal year ended March 2014, DNP calculated
its Scope 3 emissions, including not only emissions fromour own manufacturing processes, but also indirect
greenhouse gas emissions occurring throughout our
supply chain—both domestic and overseas—and began
taking action to reduce greenhouse gas emissions on a
global scale. We also established goals for water usage
in our own manufacturing processes and began taking
initiatives aimed at using less water. The use of paper for
printing has a major impact on the Earth’s ecosystems.
DNP established paper procurement guidelines aimed atpreserving sustainable forest resources, and we intend tocontinue to work with suppliers to achieve that goal.
Our approach to diversity is another important issue.
We are also concentrating on initiatives that change theway we work in order to support women in taking more
active roles.

Financial Section
Appendix11

Special
Feature“Today’sInnovation isTomorrow’s
Basic”

12

At DNP, we take an active approach to business, based on our awareness that
“Today’s Innovation is Tomorrow’s Basic.” We work hard to expand ourbusinesses in the medium and long terms.
As societies around the world undergo major changes, including changes to
consumers’ lifestyles, the problems we need to solve are becoming more complex
and more diverse. Especially in Japan, there is increasing demand for better
quality of life in our “ultra-aging” society, for the nurturing of children who will
carry future generations, and for answers to problems such as how to find ample
supplies of clean, renewable energy and how to preserve our global environment.
This situation presents an opportunity to lead the world in addressing these
problems and offering solutions for them.
DNP intends to make the most of this opportunity. We will combine our printing
technologies and other strengths in seeking solutions to these problems, and wewill generate many products and services that consumers will want to have nearat hand as “basic” aspects of their daily lives. We aim to help create a pleasant,abundant future in which the world’s many problems have been solved.

CONTENTS

14

Making Use of Big Data
New cutting-edge data center allows secure and reliable use of
personal information and other sensitive data

16

DNP’s Global Development

18

Creating Homes for the Future

20Life Science Business Development

Working to solve a variety of problems for the whole world

Contributing to healthy and comfortable living

For a healthier tomorrow“DNPenguin” is an original character formed from the letters “D, N, and P.” We make use of this characterto introduce DNP’s products, services, and corporate activities in ways that are easy for the public tounderstand: in our showrooms, in newspaper and television advertising, on our websites and at
exhibitions, etc. “DNPenguin” was born in May 2012, in order to add a point of contact between DNP andconsumers, and to increase our corporate brand value.

13

Special Feature: “Today’s Innovation is Tomorrow’s Basic”

Making Use of Big Data
New cutting-edge data center allows secure and reliable use of personal information and other sensitive data

By making use of big data withstrong information security

Enhance services
for consumers

In December 2013, we began operating our new DNPKashiwa Data Center as the basis for safe and reliable
operation of our consumer-oriented services, suchas our e-book stores, electronic library services, andphoto book production services, as well as services
aimed at DNP's corporate customers. The new centeris equipped with strong protections against dataleakage, earthquakes, and fire.
By adopting the cloud technology of Nihon Unisys,Ltd., we intend to use this new facility to appropriately
manage “big data,” including consumers’ service
usage and purchasing histories, in order to increase
the business value of DNP’s information services.

Corporate clientsO2O customer
acquisition support/
Loyalty point services
Collaboration withprint media to support
digitization

Online outsourced
services*Market size: Economic impact of big data usage on*MarketEconomic
impactof bigretailing size:
estimated
at roughly
1 trillion
yendata usage on
estimated
at roughly
in theretailingfiscal year
through March
20171 trillion yen
in thetofiscal
year thethrough
March 2017(according
data from
Development
Bank of Japan)(according to data from the Development Bank of Japan)

Users (consumers)
Cloud solutions

Original DNP
IT services

Business process
outsourcing (BPO)

Online printing ofphoto books

Electronic flyers anddigital signage

Direct mailpromotions

Outsourced
settlement services

Housing andcloud services

E-books/
Electronic libraries

DNP Kashiwa Development, operationand maintenance ofData Center
SI systems

DNP’s electronic library service improves convenience forboth libraries and their users
In April 2014, DNP began offering—in collaboration with Nihon
Unisys, Ltd., Toshokan Ryutsu Center Co., Ltd. (TRC), andMaruzen Co., Ltd.—a cloud-based electronic library service thatmakes use of its new data center.
The service provides public and university libraries withe-books and the system tools they need in order to constructand operate electronic libraries. By using our data center with
its high degree of information security and flexible expandability,
DNP can identify the preferences of each library user basedon stored borrowing histories, and use that information torecommend electronic books.
We can provide about 10,000 titles from a variety of fields
including art and literature, business, language learning, and14

specialized fields, and we are continuing to expand our lineup.
Because DNP handles everything from content transmission
to purchasing management, we can lighten the management
burden on libraries and sell e-books at the same time.
DNP planned and designed the overall electronic libraryservice, while Nihon Unisys handles design and developmentof the necessary systems and provides the cloud environment.
Mobilebook.jp Inc., a DNP group company, procures most of
the e-books. TRC provides the service to public libraries while
Maruzen provides it to university libraries. We will continue toenhance the service in line with requests from consumers andlibrary operators as we aim to sign up 300 libraries within five
years.

DNP’s Businesses

Store-brand O2O smartphone applications

Appendix

Recently we have seen an increase in smartphone-based O2O (Online to Offline) services
that send customers to stores or encourage them to buy. DNP has developed a cloudbased O2O service called “PASSMART,” which it began providing in November 2013.
Companies can use “PASSMART” to quickly build their own smartphone application for
consumers to use. The companies can update the news, coupons, membership cards andonline flyers that they distribute through their application at any time, making it easier for
consumers to keep track of these benefits. The service includes usage logs and functions
that help measure the effectiveness of sales promotions.
“PASSMART” is being used by a variety of industries, including supermarkets, drug
stores, specialty shops and other retail businesses. In the future, we intend to form links
with other services—both inside and outside DNP—and expand this service to serve as amode of interactive communication between companies and consumers.

Financial Section

In March 2014, we used our “Receipi!” technology to release
an application called “Recepre” that enables users to respondto special offers simply by using their smartphone to scan theirsales receipt. The application makes it easy to apply for prizes
offered only to purchasers of a specific product, unlike in thepast when consumers had to affix their receipt to a postcard andsend it in by mail. The system has already been adopted by major
food manufacturers and sporting goods makers, and its use isspreading.

Corporate Governance“Receipi!” is DNP’s original household budget-tracking application,
which allows users to easily create a record of household
expenses by simply photographing cash register receipts witha smartphone. Not only does “Receipi! ” allow users to manage
their daily expenses, but it proposes recipes that use the foods
they purchase and distributes information about discounts, etc.,
tailored to each user’s purchasing information. We are working
on developing new communication services that link consumers
with distributors and manufacturers, for example through a data
tie-up between “Receipi! ” and the e-receipt system developedby Toshiba Tec Corporation. During the year from July 2013,
when we began distributing the application, to June 2014, theapplication was downloaded more than 800,000 times and 20
million receipts were registered, indicating that many consumers
are using the application on a daily basis.
The core idea of “Receipi!” is a sales promotion model that
follows consumers’ buying habits, and we plan to continue
developing it in tandem with the Orikomio! e-flyer service that
we started in 2001. DNP’s idea of web-based sales promotion is
not mass distribution of the same information to a large numberof consumers indiscriminately, but rather to customize the mostappropriate information and provide it in accordance with each
person’s buying history. Going forward, we will continue torespond in detail to consumers’ specific needs.

Special Feature

Building new infrastructure for communicating with consumers

To Our Shareholders

DNP helps consumers enjoy pleasant and satisfying shopping experiences by providing optimized information services based onunderstanding each consumer’s individual lifestyle through product search histories and purchase histories, etc. DNP makes shopping
more convenient for consumers and supports the sales promotion efforts of corporate clients by offering devices that make consumers
want to go to certain stores, incentives that induce them to purchase once in the store, and services that increase communication with
consumers in a variety of venues.

Synopsis of Performance

Total support for pleasant shopping experiences

15

Special Feature: “Today’s Innovation is Tomorrow’s Basic”

DNP’s Global Development
Working to solve a variety of problems for the whole world

By using DNP’s strengths
to solve problems

Develop businesson a global scale

Today, the whole world seeks solutions to social
issues like minimizing the burdens that humans placeon the environment, using energy efficiently, ensuring
the safety and reliability of food, clothing and shelter,
and adopting universal design. DNP looks beyond
Japan to the entire world as we seek to “make thebest use of our strengths” in our thorough responses
to problems shared by the whole world as well as toproblems specific to certain regions.
Ever since we opened a Hong Kong officein 1964—half a century ago—we have actively
developed our overseas business and expanded ouroperating locations in Europe, Asia, North America,
Australia and elsewhere. Lifestyles of people in the
ASEAN countries are changing especially rapidly
today, giving rise to higher expectations for DNP
goods and services that are needed for comfortableliving and that deliver outstanding functionality.
Below are some examples of global initiatives weundertook in the year ended March 2014 in responseto the needs of these markets.

*Market size: Average GDP growth in Asia in 2015 forecast at +6.4%(according to the Asian Development Bank’s “Asian Economic
Outlook 2014,” covering 45 Asia-Pacific countries and regions
excluding Japan, Australia and New Zealand)

Packaging

Increasing production capacity, mainly in Southeast Asia

In 1972, DNP perceived a business opportunity amid the lifestylechanges and social changes that were taking place in Indonesia.
Aiming to spread Japan’s “packaging culture,” we established PT
DNP Indonesia that year. By firmly establishing ourselves in theregion and providing high-quality, cost-competitive products andservices that meet diverse needs, we built solid relationships oftrust with manufacturers that do business worldwide, and withother corporate clients. Especially in the area of high-added value
film packages, including barrier films for wrapping foods andhousehold items, we captured more than half of the Indonesianmarket.
In May 2013, we commenced operation of a new film
packaging plant in Vietnam, where economic growth remains
strong. By improving packaging functionality and reducing
environmental burdens at the same time, we expect this plant topost 5.0 billion yen in sales in the fiscal year through March 2017.
DNP aims to be a packaging manufacturer that plays an integral

16role in the region by having the new plant and PT DNP Indonesia
cooperate to develop products and services that are suited to theclimate and lifestyles of the Indochina and surrounding countries.

Examples of DNP packages made outside Japan

Using DNP’s global make-up systems
to actively develop businessmedia is related to printing barcodes, which are used mainly in
manufacturing and logistics control. More than 40% of worldwide
demand for these products comes from North, Central andSouth America. In order to strengthen our supply framework tomeet this demand, in May 2013 we augmented the production
equipment at our Pittsburgh thermal resin-type media plant inorder to greatly reduce lead time and expand our business.

Special Feature
DNP’s Businesses

Malaysian plant

Barcodes printed with thermal
resin-type printing media

Financial Section

related technological abilities, and will provide smart cards to thewhole world with a focus on Southeast Asia. Also, as Vietnamesedemand for BPO services is expected to increase, DNP will
use the expertise it has cultivated in Japan to accelerate BPO
development in Vietnam.

Corporate GovernanceDye-sublimation thermal transfer printing
media

Boosting the competitiveness of DNP’s smart card businessin Southeast Asia

Appendix

In 1981, DNP became of one the first companies in Japan to
manufacture, issue, and develop software for smart cards. Ever
since, we have continued to lead the Japanese market as we
provide smart card-related solutions in a variety of fields including
finance, communications, distribution, and transportation.
Recent years have seen soaring smart card usage in Southeast
Asia, for applications such as credit cards, prepaid cards, SIM
cards for mobile phones, transport tickets and electronic tollcollection (ETC). In response to this growth in demand, DNP
agreed to form a business and capital tie up with MK Smart
Joint Stock Company (MKS), Vietnam’s leading company inmanufacturing and sales of smart cards, and in March 2014 weacquired shares in MKS.
MKS is the only company in Vietnam that is authorized to
manufacture and issue global brand prepaid cards, and it
supplies all types of smart cards as Vietnam’s top manufacturer.
In the future, DNP and MKS will increase their competitiveness inthe world market by making use of DNP’s advanced smart card-

To Our Shareholders

In the 1980s, DNP applied coating and other technologies
cultivated through its printing business to the development of
two types of thermal transfer printing media: dye-sublimation andthermal resin. Today, DNP is among the top suppliers of both ofthese types of products worldwide.
In recent years, there has been a worldwide shift in the photo
printing market from using wet methods involving developing
solutions to dry methods that do not require liquids developers.
Among the dry methods, dye-sublimation systems have won
praise for producing virtually instantaneous prints, and because
the necessary equipment costs less and is easier to maintaincompared to wet methods.
Demand for ID photos, souvenir photos at tourist destinations,and other instant photo printing is growing especially quickly inSoutheast Asia. In December 2013, DNP completed constructionof a plant in Malaysia to produce dye-sublimation materials
for photo printing in order to meet this demand, particularly inemerging countries. The new plant uses an integrated production
system to perform every process from coating to packaging inhouse, in order to better respond to customers requirements
and deadlines. We aim for net sales of about 4.0 billion yen in thefiscal year through March 2017. Going forward, we will use ourcapacity for developing printing systems and software, in addition
to development and production of print media, in order to provide
convenient products and services for consumers’ enjoyment.
Meanwhile, most growth in demand for thermal resin-type

Smart Cards

Synopsis of Performance

Imaging
Communication

MK Smart’s Hanoi plant

17

Special Feature: “Today’s Innovation is Tomorrow’s Basic”

Creating Homes for the Future
Contributing to healthy and comfortable living

To help people live comfortable lives
amid changing lifestyles

Offer a variety of“living space”
solutionsRegardless of how times change, consumers’ persistentdesire for healthy, fulfilling and comfortable lifestyles
continues to present major business opportunities.
In our view, one of the most important elements of acomfortable life is a home.
Home is where we spend a great deal of our time.
When we buy a home, it is a major purchase. Most
people probably choose their home with an eye toward
the future; for example they consider how it will affecttheir children’s growth, their family life, work, and life
after retirement. Thinking about one’s home means
thinking about one’s future.
In 1951, DNP became the first company in Japanto succeed at continuous printing of wood-grain
decorative materials which could be installed with highlyinconspicuous seams. Ever since, we have continued
to provide a variety of products that lend color toresidential spaces. Allow us to introduce DNP solutions
that contribute to comfortable living so that homes canremain comfortable even as times change in the future.

*Market size: The Japanese government’s goal for the existing home distribution and renovation market by 2020: 20 trillion yen(from the “Comprehensive Plan for Existing Housing and Renovation” by Japan’s Ministry of Land, Infrastructure, Transport and Tourism)“Living Space” solutions centered around EB technologies
DNP views homes, offices, medical and nursing care facilities,
automobiles, railroad passenger cars and anywhere else where
humans spend time as “living spaces.” We develop and provide
many types of products and services aimed at the various “living
spaces-related” companies that are our clients. As we develop
our business, we keep in mind a number of concepts that are
indispensable to the development of living spaces, including
environmental and energy conservation, safety and reliability,
health and comfort, and compatibility with an aging society,smart homes, and smart cities.
Electron beam (EB) technology is the core proprietary
technology that supports DNP’s comprehensive “living spacesolutions.” DNP has applied for more than 1,000 patents
related to this technology. By incorporating EB exposure in the
manufacturing processes of all kinds of surface materials suchas floor, wall and door coverings, the functionality of the surface
is instantly increased. Not only does the product become moreresistant to abrasion, deterioration and fading, it also becomeseasier to maintain since dirt can be easily wiped away. Compared
to conventional methods using thermosetting, EB technologybased manufacturing processes use less energy, entail lessemission of greenhouse gases, and do not involve any of the 13
substances regulated by the Japanese Ministry of Health, Laborand Welfare as causes of sick house syndrome. In other words,
EB technology is a next-generation technology that is friendly to18

consumers and to the environment.
In Japan, growth in the home renovation market is expected
to outpace growth in new home construction as existing homes
become outdated while family composition and lifestyles continue
to change. This being the case, we expect to see increasing
demand for interior and exterior materials that are outstandingly
durable and functional, friendly to both inhabitants and theenvironment, beautiful and comfortable to live with.
DNP offers total solutions encompassing everything from materials
development to space design, coordination, installation andconstruction method development. Our aim is to create living spaces
for a future in which consumers can enjoy comfortable lifestyles
based on “functional value” mainly provided by EB technology, and“emotional value” mainly resulting from good design.

Conceptual illustration of electron beam (EB) technology

Synopsis of Performance

Broadening our lineup of Ellio products
made by coating and printing directly on steel plates

Special Featurerefrigerators and other electric appliances.
In 2012, we developed “High-reflective, Light-diffusing Ellio,”
which effectively reflects natural and artificial light, thereby
brightening the space where it is installed by diffusing indirect
light into every corner. Using this material on walls and ceilings
helps reduce the amount of energy required to light the space. In
addition to making efficient use of solar light and heat and othernatural energy sources, DNP will continue to focus on developing
eco-friendly lifestyle materials that provide excellent thermal
insulation and light-blocking functions.

To Our Shareholders

Products in DNP’s Ellio series, developed in cooperation with
Nippon Steel & Sumitomo Metal Corporation, are made bydirectly coating and printing on steel plate, stainless steel,aluminum or other metal base materials developed by Nippon
Steel & Sumitomo Metal. These products combine the fire
resistance and other benefits of metal with authentic-feeling,
luxurious textures. They are used in a wide range of applications
including front entrance doors, bathroom unit wall panels, hoteland office building exteriors, elevator interiors and train car
interiors (overseas as well as in Japan), and exterior panels for

DNP’s Businesses

Ellio exterior product on a train platform waiting room

Ellio in a hotel interior application

Ellio applied to the exterior wall of a condominium
building

Corporate Governance

EB Solutions for Living Spaces
Kitchen and washroom cabinet doors

Room partitions and joinery

PIAFORTE

Safmalle(EB mirror paneling)●●(EB olefin-based decorative sheet)

Fingerprint resistance
Soil resistance●●

Scratch resistance
Soil resistance

Clean Eagos (EB coated paper)EB® cloth●●●

Soil resistanceGood resource productivity

Abrasion resistance●

Soil resistance

Financial Section

Furniture and storage

Wall coverings

Floors and stairways

EB® Floor
Automobile interiors

●

●
●

●
●

Scratch resistanceGood resource productivity

Impact resistanceCaster resistanceSlip resistancePartitions and closet doors

AppendixEB® Insert

EB® GrandMirror
Front entrance door

Exteriors

Ultra-weatherproof EB®
●●●

Weatherability
Steel plate processing suitability
Good resource productivity

Ultra-weatherproof EB®
●●●(EB mirror-surface decorative sheet)●

Soil resistance

Weatherability
Durability
Good resource productivity

19

Special Feature: “Today’s Innovation is Tomorrow’s Basic”

Life Science Business Development
For a healthier tomorrow

To help solve
health and medical issues intoday’s aging society

Contribute through
DNP’s Life Sciencebusiness*Market size: Global market for industries related to*Marketmedicine
size: Global
markettoforreachindustries
relatedregenerative
is expected
1.1 trillion
yen into2020
regenerative
to reach and
1.1 industrialization
trillion yen in 2020(according medicine
to a reportisonexpected
commercializationof(accordingmedicine
to a reporton commercializationand industrializationofregenerativeby Japan’s
Ministry of Economy,
Trade and Industry)
regenerative medicine by Japan’s Ministry of Economy, Trade and Industry)

As populations age in many countries around theworld, people are looking for better quality of life
as well as for solutions related to medical careand pharmaceuticals. DNP views these types ofbusiness as part of its “Life Science” field, where
it is concentrating on generating businesses thatmake use of its strengths in printing and information
technologies.
In 1985, DNP applied its technology for making
ink out of enzymes and technology for preciselytranscribing minute patterns to the productionof products such as urine testing paper. In 2004,
in collaboration with Tokyo Medical and Dental
University, we succeeded in forming capillary
patterns on substrates. Building on this success,in 2008 we launched CytoGraphTM, the world’s firstcommercial cell culture substrates that enable thecultivation of cells in a variety of patterns and sizes.
Meanwhile, DNP has cultivated color management
and 3-D image processing as basic printing
techniques, along with information technologies
including database system construction andmanagement. These technologies are being used ina wide variety of fields, including cell evaluation forregenerative medicine and diagnostic support.
We intend to develop the field of life science into a
new mainstay business for DNP.

Development of the world’s first eye-shaped diagnostic system
based on 3D MRI image analysis
Nearsightednesshasbeenused
generally
believedbe
3D MRI image (myopia)
of an eye
globe
in thisrecenttostudy
caused when the eye’s crystalline lens fails to focus correctly,
A normal eye globe looks good from any angle.
but recent research has shown that one reason for this failure is
distortion of the eye globe.
In myopia involving this type of distortion, called “pathologicalmyopia,” distortion of the eye globe itself affects structures
such as the retina or optic nerve. It can also lead to problems
that make it difficult to correct vision through eyeglasses orcontact lenses, such as retinal detachment, glaucoma, or optic
nerve damage. Pathological myopia is the number five cause ofblindness. Since some 5% of people over 40 years old develop
the disease, the number of cases will likely increase in the future.
Eye globe viewed from below

20

Eye globe viewed from nose side

Four patterns of eye globe deformity commonly foundamong Japanese with pathological myopia
There are four types of eye globe deformities associated with pathologicalmyopia. (All of the images below are of the right eye globe viewed from below.)
1. Tapered in back, right-left symmetrical (called drop spindle or strawberry
type)
2. Blunted edges, right-left symmetrical (barrel type)
3. Asymmetrical between right and left, with protrusion on the side facing thenose (nasal protrusion type)
4. Asymmetrical between right and left, with protrusion on the side facing thetemple (temporal protrusion type)

Normal eye

Drop spindle
type

Barrel type

Nasal
protrusion
type

Temporalprotrusion
type

1

2

3

4

3D MRI image of an eye globe used in this recent study
A normal eye globe looks good from any angle.

Synopsis of Performance

Four patteamo

There are four types
myopia. (All of the im
To Our Shareholders

1. Tapered in back,type)

2. Blunted edges, r

3. Asymmetrical benose (nasal protr

4. Asymmetrical be
temple (temporal

Eye globe viewed from below

Eye globe viewed from nose side

Normal eye

Special Feature

DNP collaborated with Tokyo Medical and Dental University
on research into the causes of pathological myopia anddevelopment of technologies that can lead to early discovery andtreatment. As a result, we developed the world’s first eye globe
shaped diagnostic system based on 3D MRI image analysis. Thissystem, which was introduced at an academic conference in2012, makes it possible to get a three-dimensional view of an eye
globe and ascertain when distortion entails a high risk of leading
to pathological myopia.
The diagnostic system makes it possible to accurately grasp
the shape of an eye globe to allow more precise diagnosis. We
expect this ability to lead to the development of a completely new
treatment method whereby patients at high risk of developing
pathological myopia will be detected early on so that the courseof the disease can be curbed.

Marketing of embryo culture dishes to fertility clinics

New productCulture Embryo
mediumOil

Droplet culture method
Individual
embryos

Multipleembryos○○×Group culture

○

×

○

Ease of control

○

△

△

Financial Section

Individual
management

Corporate Governancecurrently used for in-vitro fertilization. Based on the dish’s good
performance in terms of embryonic development and blastocyst
production, DNP decided to start full-scale marketing of the dishto fertility clinics.
The “WOW Culture Dish” makes it possible to individually
manage embryos while cultivating them as a group by placing
each embryo in its own minute depression, or micro-well. DNP
began marketing it to fertility clinics in October 2013.

DNP’s Businesses

More than 240,000 in-vitro fertilizations were performed in Japan
in 2010, as the procedure is becoming an increasingly common
treatment for infertility. However it remains expensive, and thesuccess rate declines as the age of the prospective motherincreases, giving rise to demand for improved technologies forcultivating embryos fertilized outside the womb.
In 2011, while working with the University of Tokyo and the
National Livestock Breeding Center on a collaborative study
aimed at determining whether or not individual embryos weregrowing normally, DNP developed a culture dish with microwells for tracking individual embryos separately from others inthe same dish. The dish was brought to market after thoroughly
verifying its usefulness through testing using livestock embryos.
Based on the expertise that we gained through this project,
we designed a new version for use by fertility clinics andsucceeded in producing a dish that increases the likelihoodof successful impregnation. After testing for various safetyissues, including controls against bacteria and endotoxins, we
completed development of the “WOW (Well-of-the-Well) Culture
Dish” that makes it easier to observe and manipulate individual
embryos within a group at fertility clinics. In cooperation with
MM Yume Clinic, a fertility clinic in Yokohama, DNP tested theperformance of its dish against that of the droplet culture method

Appendix

21

D

DNP’s Businesses
CONTENTS

24

DNP at a Glance

26

Our Products and Services

28

Evolution of DNP’s Businesses

30

Major Events of this Fiscal Year

32

Information Communication

32 Business Strategies
34 Financial Resultsof Growth Businesses
36 Presentationand Strategic Businesses

40

Lifestyle and Industrial Supplies

40 Business Strategies
42 Financial Resultsof Growth Businesses
44 Presentationand Strategic Businesses

46

Electronics

46 Business Strategies
48 Financial Resultsof Growth Businesses
50 Presentationand Strategic Businesses

DNP at a Glance

ProfileBusiness Portfolio

A comprehensive printing company that creates“Tomorrow’s Basic” based on strengths resulting
from the fusion of printing and information
technologies

A well-balanced business portfolio from thestandpoints of stability, profitability, growthpotential and risk

DNP is one of the largest comprehensive printing companies
in the world. We provide a variety of products and services in awide range of business fields to consumers and some 30,000
corporate clients in Japan and around the globe. DNP’s mainstrengths are the printing and information technologies that it
has cultivated since its founding in 1876. The Company has
branched out from publishing and commercial printing into
diverse fields including packaging, decorative materials, display
components, and electronic devices. DNP has even grown tobe the world’s largest supplier of many products in these areas,
and we continue to take on the challenge of expanding into new
business fields, such as environment, energy, and life sciences.
From early in its development, DNP set about boosting theefficiency of the overall Group’s management through measures
including overall optimization, boosting profitability, and making
effective use of management resources. We work hard to
manage the company efficiently, for example by concentrating
functions such as planning, sales, and research anddevelopment in our head office while positioning manufacturing
divisions and specific technology development divisions withinGroup companies.
As of March 31, 2014, the DNP Group employed about 39,524
people. The Group has 46 sales bases and 58 production
plants in Japan, 24 sales offices in 15 countries and a region
and 13 overseas production plants in 10 countries and a region.
Overseas sales contributed 14.9% of the Group’s overall net
sales in the fiscal year ended March 2014.

Three Well-Balanced
Strategic Segments(Effective April 2014)

DNP has two main businesses: Printing, which contributes about
96% of consolidated net sales, and Beverages, which generates
about 4% of the Group’s sales through Hokkaido Coca-Cola
Bottling Co., Ltd. Armed with this business portfolio, DNP aims
to expand its overall business and increase its corporate value by
striving to solve problems for corporate clients and consumers.
Printing consists of an assortment of businesses throughwhich DNP applies and develops printing and information
technologies in order to solve problems for consumers, and forclient companies who operate in all types of business fields andin diverse formats. We divide our Printing business into threesegments: (1) Information Communication, which includes thebooks and magazines and commercial printing businesses where
DNP got its start, (2) Lifestyle and Industrial Supplies, which
supplies a wide range of products including packaging products,
decorative materials, optical films* and ink ribbons, and energyrelated components, and (3) Electronics, which supplies display
components and electronic devices, among other products.
These three segments cooperate with each other and form abusiness portfolio that is well-balanced from the standpoints ofstability, profitability, growth potential, and risk.
Our Beverages business takes advantage of the Coca-Colabrand strength while also developing original DNP products.
We are working on bolstering our beverages business base, forexample by promoting production and procurement in liaison
with bottlers in other parts of Japan.
* Effective April 2014, Optical Films operations were transferred to
the Electronics segment.

Information Communication
Books and Magazines

Commercial Printing

Business Forms

Education and Publications Distribution

The Three
Segments of
DNP’s Printing
Business

Lifestyle and Industrial Supplies
Packaging

24

Lifestyle Materials

Industrial Supplies

Electronics
Display Components

Optical Films

Electronic Devices

Net Sales
by Segment (Year ended March 31, 2014)
Beverages
3.8%Electronics
11.7%

Information Communication
Information
Communication
48.0%

Net
Net Sales
Sales
Net
Sales

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

800
800
800

600
600
600

120
120
120

714.6
714.6
714.6

704.7
704.7
704.7

100
100
100

700.3
700.3
700.3

80
80
80
60
60
60

400
400
400

Lifestyle andIndustrial Supplies
36.5%

40
40
40

200
200
200
0
0
0

Operating Income
by Segment (Year ended March 31, 2014)
Beverages
1.1%

13
13
13

14
14
14

Net
Net Sales
Sales
Net
Sales
(Net
(Net sales)
sales)(Net sales)(Operating(Operating income)income)(Operating income)

800
800
800

400
400
400

120
120
120

100
100
100

522.8
522.8
522.8

200
200
200

Lifestyle andIndustrial Supplies
57.1%

Beverages
Operating Income (¥ billion)(Operating income)

80

2

28.0
28.0
28.0

13
13
13

60
60
60

33.9
33.9
33.9

14
14
14

Net
Net Sales
Sales
Net
Sales

56.3

54.8
1

40

0.5

12

20
20
20
0
0
0

(¥ billion)(¥ billion)(Operating(Operating income)income)(Operating income)

800
800
800

120
120
120

100
100
100

13

0
0
0

14

0

80
80
80

400
400
400
200
200
200

0.7

20

40
40
40

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

600
600
600

60

1.3

(Depreciation)(Depreciation)(Depreciation)

800
800
800

600
600
600

120
120
120

620.6
620.6
620.6

100
100
100

629.8
629.8
629.8

606.6
606.6
606.6

80
80
80
60
60
60

400
400
400

40
40
40

200
200
200

24.0
24.0
24.0

0
0
0

12
12
12

22.3
22.3
22.3

13
13
13

22.0
22.0
22.0

20
20
20
0
0
0

14
14
14

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

800
800
800

600
600
600

120
120
120

100
100
100

599.9
599.9
599.9

583.1
583.1
583.1

565.4
565.4
565.4

80
80
80
60
60
60

400
400
400

40
40
40

200
200
200
0
0
0

25.5
25.5
25.5

12
12
12

26.5
26.5
26.5

13
13
13

25.5
25.5
25.5

20
20
20
0
0
0

14
14
14

Electronics(Net sales)

0

12
12
12

80
80
80

533.6
533.6
533.6

521.4
521.4
521.4

31.8
31.8
31.8

0
0
0

57.1

0
0
0

OperatingOperating Income
Income (¥(¥(¥ billion)
billion)Operating
Incomebillion)

600
600
600

Net Sales

20
20
20

Depreciation
Depreciation (¥(¥(¥ billion)
billion)Depreciation
billion)Lifestyle and Industrial Supplies
Information
Communication
20.0%

Electronics
21.8%

12
12
12

11.9
11.9
11.9

15.9
15.9
15.9

15.5
15.5
15.5

AssetsAssetsAssets(Assets)(Assets)(Assets)

60
60
60
40
40
40

224.8
224.8
224.8

180.5
180.5
180.5

(4.6)
(4.6)
(4.6)

12
12
12

171.3
12.9
171.3 12.9
171.3 12.9

0
0
0

(0.3)
(0.3)
(0.3)

13
13
13

20
20
20

14
14
14

–– 20
20
– 20

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

800
800
800

120
120
120

100
100
100

600
600
600

80
80
80
60
60
60

400
400
400
200
200
200
0
0
0

288.0
288.0 40.4
40.4
288.0 40.4

12
12
12

238.8
238.8
238.8 26.0
26.0
26.0

13
13
13

229.3
229.3
229.3

40
40
40

20.6
20.6
20.6

14
14
14

20
20
20
0
0
0

25

Our Products and Services

Information Communication
●

［1］

［2］

［3］

［8］

［9］

［10］

［16］

［17］

［18］

［24］

［25］

［26］

［32］

［33］

［34］

［40］

［41］

［42］

Books and Magazines[1] Books and magazines [2] Dictionaries [3] E-books[4] Hybrid bookstore network “honto” loyalty point card (left);“My Bookshelf” display (right)●

Commercial Printing[5] Catalogs, calendars [6] Augmented reality (AR)[7] Orikomio! e-flyer service[8] Screen shot of “Receipi!” household budget application[9] “Will Smart” touch-screen digital signage[10] Personalized mail●Business Forms[11] Smart cards [12] SIM card
[13] Lippmann hologram [14] IC tags
● Education and Publications Distribution[15] Maruzen & Junkudo Bookstore in Shibuya (Tokyo)

Lifestyle and Industrial Supplies●

Packaging[16] Packaging for foods [17] Packaging for toiletries andpharmaceutical products [18] Universal design products[19] Packages made of IB film [20] PET plastic bottles and preform[21] Aseptic filling systems for PET plastic bottle●

Lifestyle Materials[22] Residential interior materials [23] Exterior materials for buildings[24] Automotive interior materials [25] Interior coverings for railway
cars (Tohoku Shinkansen Hayabusa Reserved “Green” Car)●

Industrial Supplies[26] Bus line sheet used in photovoltaic cells[27] Soft pack for lithium-ion battery[28] Dye-sublimation thermal transfer printing media[29] Digital photo printer [30] Barcode labels made using thermal
resin-type transfer printing media[31] Self print terminal “PrintRush”

Electronics●

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

Optical Films*[35] Optical films used for displays[36] Projection screen [37] Transparent screen[38] Moth-eye ® anti-reflection film (left side of the glass)●Electronic Devices[39] Semiconductor photomask[40] Master template for nano-imprinting[41] Hard disk drive suspension[42] Lead frame for compact semiconductor package[43] Metal substrate for LED light[44] Recorder for security camera[45] NFC (near field communication) module[46] Electronic paper display system[47] MEMS (micro electro mechanical systems) products
Note: Numbers in square brackets correspond to photographs on pp. 26-27.

26* Effective April 2014, Optical Films was transferred into the Electronics segment.

Synopsis of Performance

［5］

［12］

［13］

［6］ ［7］

To Our Shareholders［4］

Special Feature［11］［14］ ［15］

［20］

［21］

［22］

DNP’s Businesses

［19］

［23］

［36］ ［37］

［43］

［44］

［45］ ［46］

［30］

［31］

［38］

［39］

［47］

Appendix

［35］

［29］

Financial Section［28］

Corporate Governance

［27］

27

Evolution of DNP’s Businesses

1876 <Founding>

1950

1960

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

Information Communication

1970

1980

Comprehensive Printing

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

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

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

Business Forms▶1898 Began printing of securities▶1954 Start of carbon-backed ledger printing▶1973-74 Full-scale production of magnetic plastic cards and magnetic passbooks▶1945 Began printing new Bank of Japan notes▶1965 Began mass production of OCR ledgers▶1983 Development of smart cards
after being designated to do so by Japanese Ministry of Finance

Lifestyle and Industrial Supplies
Packaging▶1951 Full-scale entry into
paper container business▶1951 Began printing on vinyl andother non-paper materials▶1961 Started production of
blow-molded bottles▶1962 Began producing paper cups

▶1975 Began producing retort pouches▶1976 Development of▶1983 Development of
aseptic filling systemtechnology for drawing
on molded plastic goods▶1969 Began producing laminated tubes▶1984 Began producing PET
plastic beverage bottles

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

Industrial Supplies▶1984-85
Development of thermal resin-typeand dye-sublimation thermaltransfer printing media

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

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

Optical Films▶1983 Started producing
projection screens

28

2000

2010

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

P&I Solutions▶2001 Announcement of DNP Group Vision for the 21st Century(125th anniversary of DNP’s founding)▶2008-10 Alliances with Maruzen Co., Ltd.
Junkudo Co., Ltd. andBunkyodo Group Holdings Co., Ltd., etc.
▶2010
Startup of “honto” e-book sales service▶1989 Construction of global network system▶2001 Began Orikomio! e-flyer service▶2008 Launch of digital signage project▶1995 Began Internet service “Media Galaxy”▶1997 Began e-commerce service▶2007 Development of packaging forJapanese-style space food▶1998 Development of transparent “innovative barrier film (IB Film)”— Growth Strategies —Hybrid publishing solutions
Hybrid bookstore network “honto”
Businesses that make use of big data
Cross media communications business
Promotion of BPO business
Expansion of security solutions

DNP’s Businesses▶1993 Production of contactless smart cards▶2004 Began Card Data Management Service (CDMS)▶1999 Launch of IC tag project▶2005 Establishment of “SSFC” office security consortium“Today’s Innovation isTomorrow’s Basic”▶1992 Development of preform method for PET plastic bottles▶2002 Completed production line for “B 2 it” high-density
build-up boards▶1996 Establishment of anti-glare film technology for LCDs
▶2004 Development of “JETBLACK” front projection screensElectronic devices:develop cutting-edge technologies
and expand overseas business
Optical films:
used basic technologies to expand
into new markets

Appendix▶1995 Launched multilayer wiring formation technology▶1999 Entered semiconductor package substrate field▶2001 Began MEMS (micro electro mechanical systems)
processing under contract

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

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

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

Corporate Governance▶1999 Commercialization of “soft packs” for lithium-ion batteries▶2003 Development of photovoltaic module components▶2005 Began development of “PrintRush” self-service printing system▶2005 Development of fuel cell components▶2007 Development of printed organic photovoltaic cells▶1985 Development of LCD color filter production technology

Expand eco-friendly products
Develop new products usingmaterials with more advanced
functionality▶1996 Began producing sheet with EB coating

Special Feature▶1985 Development of world’s first electronic dictionary on CD-ROM▶1992 Development of Shueitai True Type font
▶1997 Start of online publishing business2014

To Our Shareholders

Information Communication

Synopsis of Performance

1990

Effective April 2014, Optical Films wastransferred into the Electronics segment.

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

Promote research and development
aimed at business creation

culture substrates▶2008 Development of cell sheet culture film

29

Major Events of this Fiscal Year

2013
Apr.

Opening of Osaka cafe aimed at increasing communication with consumers
DNP teamed up with Pronto Corporation and Knowledge Capital, a facility inOsaka that supports collaboration between corporations, universities, research
institutes and other entities, to open “the Lab. CAFE Lab.” The new“communication cafe” is located within Knowledge Capital. Its shelves holdbooks that were carefully selected by the cafe staff, and customers are free toread e-books using the tablet PCs found on each table. DNP will make use of
the cafe in future business development, for example by organizing workshopswith consumer participation.

May

The Lab. CAFE Lab.

Startup of packaging plant in Vietnam (details on P 16)
Expansion of production equipment at Pittsburgh plant, which makes thermal resin-typetransfer printing media for printing barcodes (details on P 17)
Tie-up with Will Smart on digital signage business
DNP and Will Smart Co., Ltd., a subsidiary of Zenrin DataCom Co., Ltd.,
formed a capital and operational alliance primarily in order to jointly promotea content and advertising transmission business that will make use of digital
signage. The partnership will introduce Will Smart touch-screen digital
signage in public places such as train stations, airports, and shopping mallsin order to provide maps and tourist information in multiple languages, mainly
for foreign tourists.

Jun.

DNP and Quanta Computer jointly develop color management LSI
DNP and Quanta Computer Inc., a major contract manufacturer of notebook
computers and tablet terminals, began working together to develop alarge-scale integrated circuit (LSI) that can correct uneven color tones for an
entire display. DNP is handling development and manufacturing of the color
management LSIs while Quanta Computer is handling development,
manufacturing, and sales of the terminals that make use of them. The LSI uses
contrast correction technology developed by Apical Ltd. (U.K.) combined with
DNP’s unique image-based noise reduction technology to express realistic andaesthetically pleasing images

Jul.

“Will Smart” touch-screen digital signage

Before contrast
correction (left)

Full-scale startup of operations at Utsunomiya factory making functional materials andactive pharmaceutical ingredientsDNP Fine Chemicals Utsunomiya Co., Ltd. (formerly called DNP Fine Chemicals
Fukushima Co., Ltd.) began full-scale operation of its Utsunomiya plant. The newplant capitalizes on DNP’s excellent organic synthesis technology. Besides
manufacturing active pharmaceutical ingredients and intermediates, it will expand
into the new business of producing functional materials used in electronicmaterials, such as ultraviolet curable resins and color resists used in displays.
Utsunomiya plant

30

After contrast
correction (right)

Synopsis of Performance

Redemption of DNP’s first series of unsecured corporate bonds
DNP redeemed its ﬁrst series of unsecured corporate bonds totaling 50 billion yen. The bonds were issued on
September 25, 2003, mainly to fund capital investments. As a result, the company’s balance of outstanding corporate
bonds amounts to 100 billion yen, consisting of 50 billion yen from the second series of unsecured corporate bonds(issued July 30, 2009, scheduled for redemption on July 30, 2019) and 50 billion yen from its third series of unsecured
corporate bonds (issued March 3, 2011 and scheduled for redemption on December 18, 2020.)

Opening of Malaysian plant, producing dye-sublimation thermal transfer materials
used for printing photographs (details on P 17)
Opening of DNP Kashiwa Data Center,equipped with advanced information security measures (details on P 14)

Special Feature

Dec.

To Our Shareholders

Sept.

2014
Business and capital tie-up with MK Smart Joint Stock Company, Vietnam’ sleading manufacturer of smart cards (details on P 17)

Apr.

Reorganization of semiconductor photomask business in Taiwan

A photomask used for
manufacturing semiconductors

Corporate Governance

DNP subsidiary DNP Photomask Technology Taiwan Co., Ltd., a manufacturerof logic photomasks, was merged into Photronics Semiconductor Mask
Corporation, whose strength is in the manufacture of memory photomasks.
The resulting new company, Photronics DNP Mask Corporation, is a DNPequity-method afﬁliate in which DNP holds 49.99% of common shares. The joint
venture will enhance its sales systems and manufacturing environment, andestablish stable sales routes to serve the highly changeable world
semiconductor market, with a focus on Southeast Asia.

DNP’s Businesses

Mar.

Optical Films business unit integrated into Electronics segment (details on P 47)

Reorganization of nationwide sales and manufacturing systems
belonging to Information Communication and Packaging operations

Appendix

In line with changes in consumer lifestyles and corporate clients’ needs, DNP aims to provide a uniform level of service
throughout Japan regardless of time or place. Toward that end, as of July 1 we reorganized our Information
Communication Operations and Packaging Operations nationwide.
We split each of the regional DNP Group companies that handle production and sales for these business segments(DNP Hokkaido Co., Ltd., DNP Tohoku Co., Ltd., DNP Chubu Co., Ltd., and DNP Nishi Nippon Co., Ltd.) and integrated
their sales divisions into our Group headquarters, Dai Nippon Printing Co., Ltd. At the same time, we integrated thecommercial printing-related manufacturing divisions of DNP Group companies into DNP Graphica Co., Ltd., andmanufacturing divisions related to business forms into DNP Data Techno Co., Ltd. We will pursue overall optimization
under this new system of integrated nationwide sales and nationwide production. Our aims are to improve customer
service, enhance solution proposals, and expand income and capital efﬁciency by boosting production efﬁciency.

Financial Section

Jul.

31

Information
Communication

Business Strategies

As the information media used by consumers become
increasingly diverse and a global network environment istaking shape, our customers need pleasant channels ofcommunication that are protected by strong information
security. DNP’s Information Communication segment addresses
this need by developing optimal forms of content expression
and diverse information media to provide broad solutions thatare closely linked to our customers’ business processes.
We are working to expand our business by focusing on avariety of solutions. For example, we offer services such as
marketing-based consulting, “hybrid” publishing in both paperand electronic formats, cross media solutions, online flyers, ande-commerce support, as well as business process outsourcing(BPO).
In order to strengthen the foundation of these businesses,
in December 2013 we opened the DNP Kashiwa Data Center,
which has achieved a high degree of information security. In
addition to adopting the cloud technology of Nihon Unisys, Ltd.,
with whom DNP has capital ties, we linked the new center withexisting data centers operated by DNP and Nihon Unisys toform one of the largest service networks in Japan.
In July 2014, we merged the sales, planning, andmanufacturing functions of Commercial Printing and Business
Forms in order to increase capital efficiency and profitability by
improving customer service, proposing better solutions, andraising production efficiency. This merger will help us promoteoverall optimization and provide a uniform level of service
throughout Japan, regardless of time or place.
Our Information Communication segment is composed
mainly of Books and Magazines, Commercial Printing, Business
Forms, and Education and Publications Distribution operations.
Fusing the specialized strengths of these various units will help
us to solve problems faced by corporate clients and consumers.

Above: Electronic dictionary application
Below: Maruzen’s main bookstore in Tokyo’s Marunouchi district

32

Synopsis of Performance

Main Policies
さP 36

Promote business process outsourcing (BPO) business

さP 37

Total security solutions that
protect businesses and organizations

DNP’s Businesses● Focus on BPO operations that provide comprehensive support for corporate clients’
overall business processes.
● Build on our track record from the introduction of the Nippon Individual Savings Account(NISA) system in the fiscal year ended March 2014, in order to expand BPO business.
● Offer a variety of solutions, including analysis of operational issues, design of market
research and business processes, operation of data centers and customer service
centers, production and shipment of sales promotion tools, and printing on demand.

Special Feature● Rather than serving solely as a manufacturer of printed materials, provide total support for
stimulation of the publications market, including through marketing and customer service.
● Make the most of the strengths that we gained through our involvement in digitalizationof printing processes since the early 1970s, and take a comprehensive approach tobusinesses such as production of paper books and e-books, and printing on demand.
● Promote our “honto” hybrid bookstore network that links physical bookstores, online
mail-order sales, and e-book sales.

To Our Shareholders

Expand hybrid publishing solutions and
DNP’s “Hybrid Bookstore Network” business

さP 38
Corporate Governance● Establish security infrastructure for reliably protecting sensitive corporate information andconsumers’ personal information.
● Collaborate with business partners to offer total security solutions that guard both
physical locations and online, virtual spaces.

Initiatives aimed at developing comprehensive payment services さP 39

さP 15● Focus on developing communication channels that connect corporations and consumers.
● Expand services aimed directly at consumers, such as DNP’s “Receipi!” household
budget-tracking application, “Elne” loyalty point service, and “Orikomio!” e-flyer service.
● Develop an O2O (Online to Offline) service for inducing customers with whom we formed
relationships online, for example through a mobile application, to come to physical storesand buy products.

Appendix

Expand business that makes use of big dataand consumers’ point of view

Financial Section● Building on our track record as leader of the Japanese smart card market since the1980s, in 2013 we created an international brand prepaid system.
● Become a “comprehensive payment service business” by expanding settlement-related
solutions such as BPO operations, card-linked offers (CLO: payment history-based
advertising services), and servicing of settlement terminals that handle multiple types ofcards.

33

Financial Results

Financial Highlights(¥ billion, %)					 2012.3		 2013.3		 2014.3¥ 714.6¥ 704.7¥ 700.3

Operating income

15.5

15.9

11.9

Operating income margin

2.2%

2.3%

1.7%

Net sales

Net Sales

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

800

120

714.6

704.7

100

700.3

600

80
60

400

40
200

11.9

12

20

15.9

15.5
0

13

14

0

Net sales
Net Sales
Operating Income (¥ billion)
The overall environment
surrounding
the segment remained
sales)(Operating income)harsh amid a(Netlackluster
publications market,
decreased demand
800
120
for flyers, catalogs and other commercial printed matter, and100
cutbacks in corporate expenses, among otherfactors. Net sales
600
amounted to 4.4 billion yen, or 0.6% less than80the previous fiscal
533.6
522.8
521.4
term.
60
400
40

200
Operating income
31.8

28.0

33.9

20

On the positive 0side were growth in smart cards
and business0
process outsourcing12(BPO), startingwith
13
14 financial institutions’printing-related operations, along with segment-wide costcutting measures such as increasing the ratio of in-houseproduction. However, due to factors like intensified competition
pushing down unit prices, higher raw material costs andexpenses related to development of e-book and otherbusinesses, operating income declined by 25.4% or 4.0 billion
Net Sales
Operating Income (Loss)yen from the previous term. The segment’s operating
income(¥ billion)(Net sales)(Operating income)margin decreasedby
0.6
point,
from
2.3%
a
year
earlier
to 1.7%.
800
120
100
600
80
400

60
40

34

200

0

224.8

180.5

171.3 12.9
– 0.3

20
0

Fiscal Term through March 2014:
Business Environment andSummary of Financial Results■ Books and Magazines
The Japanese publications market has continued to shrink
since reaching its peak of 2,656.3 billion yen in 1996. In the year
through March 2014, publishing industry sales declined by 3.4%
from the previous fisical year to 1,658.9 billion yen according toJapan’s Research Institute for Publications. Overall publications
sales were lackluster, declining 2.7% from a year earlier to775.6 billion yen. Magazine sales were also sluggish. In addition
to a drop in the number of magazines sold, many magazines
suspended publication, resulting in a 4.1% year-on-year decline
in sales to 883.3 billion yen.
Despite this environment, Books and Magazines increased
sales from book publishing for the fourth year in a row, thanks
to proactive sales efforts. However, magazine sales declined,
and the business’s overall sales ended below the previous-yearlevel.
Meanwhile, according to Impress Research Institute, Ltd.,
Japan’s e-book market grew a sharp 28.3% in the fiscal
term through March 2014, to 93.6 billion yen. Combinedwith electronic magazines, the overall market for electronic
publications amounted to 101.3 billion yen, topping 100 billion
yen for the first time. DNP focused on providing services thatmake consumers “certain to find a book they want to read”
and “able to read the book they want in the format they want,”
primarily through the “honto” hybrid bookstore network thatcombines bricks-and-mortar bookstores, online mail-ordersales, and e-book stores. We issued point cards sharedthroughout the “honto” network and worked hard to gain
members. We also offered coupon distribution services, ranvarious types of sales campaigns, and worked on enhancing
communications with customers. At Communication Plaza dot
DNP, our experiential showroom in Tokyo’s Ichigaya district,
we have been operating the “honto Cafe,” where visitors canexperience reading e-books free of charge, and we haveorganized various campaigns in cooperation with publishingcompanies. Since July 2013, we have been publishing bothelectronic and paper versions of a PR magazine called “honto+(plus)” as part of our drive to further expand “honto.”

Corporate Governance
Financial Section

Amid the market trends discussed above on page 34, we
worked hard to expand our “honto” hybrid bookstore network,
but sales at bricks-and-mortar bookstores declined, bringing
down overall sales compared to the previous year.
Maruzen CHI Holdings Co., Ltd. performed more contracted
operations on behalf of libraries and worked on boosting
profitability through steps like closing unprofitable stores andincreasing operational efficiency. Bunkyodo Group Holdings
Co., Ltd. worked to expand sales, for example by opening newstores and remodeling existing stores.
Although we expect the publications distribution market toremain difficult, we will promote business reforms and workon sales promotion and attracting customers, primarily byenhancing market strategies and sales promotion projects witha focus on the “honto” hybrid network. We will also focus on
reducing expenses, consolidation of facilities and rebuilding ofoutdated ones, enhancing our bookstores’ distribution network,and other ways to improve the profitability of our bricks-andmortar and online sales businesses.

DNP’s Businesses
Appendix

As corporations streamline their organizations and trim
expenses, various types of notices that used to beprinted on paper and mailed to each consumer are now
being displayed on corporate websites instead. Due totrends like these, demand for printing is declining and thebusiness environment surrounding this sector remains
harsh. On the other hand, there is increasing worldwide
demand for information security systems that enablesafe and reliable storage and use of sensitive corporate
information and consumers’ personal information.
By taking advantage of our strengths, including ourBusiness Forms unit’s high capacity for developing
software and processing information under the protectionof DNP’s strong information security infrastructure,
we expanded sales of products like smart cards usedby financial institutions and prepaid electronic money
applications. Because we won BPO contracts forcorporate accounting and other operations related to the■ Education and Publications Distribution■ BusinessSpecial Feature■ Business Forms

introduction of the Nippon Individual Savings Account(NISA) system, we were pleased with the performance ofInformation Processing Services (IPS) that handle every
aspect of personal mail production, from data input toprinting and mailing.
DNP has always led Japan’s smart card market, inmanufacturing, issuing, and development of operating
systems and applications. We are taking advantage ofthis strength to expand our original security solutions
businesses. We also intend to develop domestic andglobal services that use the Near Field Communication(NFC) international standard that is expected to be widelyused in smartphones and other devices. In January 2016,
the Japanese government is scheduled to start using
citizen ID numbers (nicknamed the “My Number” system)
for tracking social security and taxation. DNP is getting
ready to seek related business, for example by taking on
the job of issuing smart cards or informing individuals andcorporations of their numbers.

To Our Shareholders

Japanese corporate advertising expenses in the fiscal
year ended March 2014 grew by 4% from the previous
year according to the Ministry of Economy Trade andIndustry, reflecting increased personal consumption andimprovement in corporate profits. Internet advertising
grew by 8.9% and sales campaign/event-related outlays
increased 6.6%, but newspaper inserts, direct mail, andother printed paper promotional items declined by 1.1%
from a year earlier. Demand for printed material continues
to decline amid a growing trend toward providing productcatalogs and user manuals online.
DNP's BPO business, including services like sales
campaign office management and customer service
center operation, grew despite this trend. In addition,
DNP's Commercial Printing benefited from a rush of
demand right before the latest national consumption
tax hike took effect on April 1, 2014. But with sales ofcatalogs, pamphlets, and other printed materials weakthroughout the year, overall sales declined year on year.
Based on consumers’ point of view, DNP is promotinga “cross media communication” business that provides
consumers with the information they want at the times
they want it, by means of the most appropriate information
media. We are also pursuing electronic flyers and other
online businesses by actively proposing solutions. We
will also work to expand businesses that take advantage
of our strengths, including the DNP Kashiwa Data
Center that we started up in December 2013 and DNP’scooperative ties with Nihon Unisys, Ltd.

Synopsis of Performance■ Commercial Printing

35

Expanding Hybrid Publishing Solutions and
DNP’s “Hybrid Bookstore Network” Business
Providing hybrid publishing solutions as
the Japanese publishing industry’s “No. 1 partner”
DNP does not just manufacture printed materials. Rather, as
the Japanese publishing industry’s “No. 1 partner,” we offer acomprehensive menu of publishing support services that wecall “hybrid publishing solutions.” These solutions may include
marketing, sales promotion planning, distribution and sales of
e-books and paper books, and customer service.
They also include “hybrid production solutions,” whichmake use of the strengths that DNP has gained through our
involvement in the digitization of printing processes since theearly 1970s. These include boosting the efficiency of both paper

book and e-book production, building optimal manufacturingsystems, and supporting on-demand printing of small-lot
publications. We also offer “inventory control solutions,” whereby
we optimize inventory levels by independently analyzing store
sales data and warehouse turnover rates.
In addition, we offer a variety of “editing and production
solutions” that lighten the workload of publishing companies
and increase the efficiency of various operations including
magazine and comic book editing and production. For example,
DNP’s fully digital comic book production system creates
databases of DTP data to allow easy secondary use of content.
・ Product development
・ Events
・ Promotions, etc.

・ Editing support
・ Magazine and other brands
・ Content

Corporateclients

DNP
Hybrid production solutions

Authors

Publishers

Digital data
production

Editing andproduction ofdata for printing
Data production
for electronic
publishing

Consumers

Readers

Printing and binding

Hybridbookstore
network

Printing on demand

PhysicalbookstoresElectronicallypublished content(shared basis for
distribution and sales)

Marketinginformation

Onlinebookstores
E-booksales services

・ Books
・ Magazines

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

information
terminals

Marketing information" DNP’s “honto” hybrid bookstore network links multiple sales formats”
DNP aims to create services that make consumers “sure to finda book they want to read” and “able to read the book they wantin the format they want,” primarily through our “honto” hybrid
bookstore network that combines three sales formats: physicalbookstores, online mail-order sales, and e-book sales.
We promote “honto” by issuing “honto” loyalty point cards
that work with all three sales formats, and by promoting sales
in all three formats through loyalty point and coupon offers. At
Communication Plaza dot DNP, DNP’s showroom in Tokyo’s
Shinjuku Ward, we invite visitors to try reading e-books for free,
and we organize various types of campaigns in conjunction
with publishers. In July 2013, we launched “honto+ (plus),” a
PR magazine published in both electronic and paper versions.
Other initiatives include a hybrid “My Bookshelf” program andsmartphone application that allow consumers to keep track of
their electronic and paper book purchases in one place.

36

Through these various activities, we compile and analyze
consumer needs and purchasing trends. We provide this highly
reliable marketing information to publishers and other corporateclients in order to help stimulate the publishing market.

PR magazine “honto” in electronic and Communication Plaza dot DNP : apaper formats (above)
showroom where consumers can
A “honto” loyalty point card (below)
experience various products and services
offered by the DNP Group.
The photo above shows the “honto Cafe”
on the first floor.

Cardservices

Corporateclients

Printing

Consumers

Advertise
NotifyMail
Networking

Issue
Store

Collect

Sales promotion
services

DecideRecordPrinting
Supply services
Documentation
Card services
Networking
Marketing services
Sales promotion
services

Documentation: provision of reliably processed personal information in printed form
: storage of printed matter; selection and mailing in response to
individual requests: compilation of information from applications or other forms;
provision to client in electronic form
: production and issuance of smart cards, etc.
under high-security conditions: distribution of information through networking between
clients and consumers: provision of research and other marketing services: provision of services related tosales promotions and sales operation support●Easy-to-understand information●Highly convenient●Safe and reliable usage●Greater customer loyalty

Appendix●Efficient processing●Reliable operation●High degree of security●High performance

Supplyservices

Financial Section

Marketing
services

Corporate Governance

DNP’s Business Process Outsourcing (BPO)

DNP’s Businesses

The main features of DNP’s BPO business are:(1) Capacity and track record for offering a full range of businessprocesses, from generation to collection of information(2) Execution of processes using the latest and best information
technologies(3) Nationwide business continuity plan (BCP) centered aroundproduction bases in the Tokyo and Kansai areas(4) A high-security operating environment for handling sensitive
information(5) A high level of credibility that can hold up over many years ofbusiness execution

Special Feature

DNP divides its BPO business into two categories: businessprocess outsourcing (BPO) by the narrow definition, which
involves strict control of business information, including
personal information used for processes like issuing smart
cards or various types of ledger sheets, and commerce process
outsourcing (CPO), which mainly handles information related
to commercial transactions involving products or services. We
provide more precisely tailored solutions by responding withsensitivity to the different characteristics of these two types ofprocess outsourcing.
On the CPO side, in addition to offering centralized executionof tasks like databasing information about products and/or
services, managing large batches of sales promotion tools, andbuilding e-commerce websites, we also have a great deal ofexperience in successfully operating sales campaign offices andcustomer service centers.

To Our Shareholders

DNP is focusing on expanding its business process outsourcing(BPO), which provides comprehensive support for clients’business processes. We offer much more than simple
outsourced operations. Rather, we take a broad view of the
field of business process outsourcing and offer a variety ofsolutions ranging from analysis of operational challenges andconstruction of necessary frameworks and systems to planning,
design, and actual execution of business processes. As aresult, we work as a business partner in the medium or longterm in line with each client company’s management strategies
to strengthen each client’s business constitution and to support
effective and strategic operational reforms that lead to actual
business expansion.
Our BPO business requires that we handle sensitive
information, including corporate and personal information,
under strictly secure conditions. In December 2013, we built
the DNP Kashiwa Data Center for that purpose. We use thenew data center and other facilities as bases for performing
routine operations such as setting up new accounts for banks
or receiving and sending policyholder information for insurancecompanies, and have achieved greater efficiency and stability
in the operations of a wide variety of industries and businesstypes. With the introduction of NISA (Nippon Individual Savings
Account) tax-exempt accounts in the fiscal term throughMarch 31, 2014, we successfully met large-scale demand forprocessing of new accounts.

Synopsis of Performance

Promoting Our Business Process Outsourcing (BPO) Business

37

DNP Security Solutions:Protecting Information, People and Organizations
Cyber attacks have become more sophisticated in recent years,
making it necessary to use stronger-than-ever information
security techniques to guard against them. DNP provides avariety of security solutions for a large number of companies,
mainly financial institutions. We integrate strengths from both
inside and outside the DNP Group to provide analysis ofwebsite vulnerabilities, network analysis tools, and source code
vulnerability detection tools, etc.
The state-of-the-art security solutions provided by DNP

address both virtual (online) space and physical (office, etc.)
spaces. For example, we offer solutions for managing paper
documents, USB drives, and other information media that caneasily lead to information leakage; management of smartphones
and tablet computers, whose loss can have a devastating effecton a business; and monitoring cameras and room entry/exit
control systems to prevent criminal actions by employees aswell as intrusion by outsiders.

Comprehensive Security Solutions for Protecting Companies and Organizations
Malware detection

Information security

Mobile security

Other
Security
zoning and consulting

Web/Network
vulnerability and analysis

Web tampering
detection

PC operation control
and monitoring

Remote control andmonitoring of terminals

Source code analysis

Fishing/
fraudulent remittancecountermeasures

IT assets management

Application tampering
prevention

Malware detection

Targeted email
attack response training

Support for acquisition Response to unintendedof various types of
information leakage
security certification

Physical security

User authentication
enhancement (PKI)

Application tampering
detection

Personal information detection

Smart card-based
control systems

Application vulnerability
analysisPrevention of erroneouse-mail transmission

Entry/exit controls

Cafeteria/vending machine
settlement systems

Monitoring cameras

Vehicle gates

Systems for checking
employee safetyin emergency situations" DNP’s smart sensing services provide new value”
Smart sensing is a system whereby sensors and other devices
connected to a network exchange data with each other andperform functions such as measurement and control. DNP
contributes to improving productivity and other aspects ofa business’s performance by safely and reliably connecting
a variety of sensors and devices so that they transmit andprocess information in real time.
In addition to using smart card and SIM*1 card information
security technologies together with issuing and authentication
technologies to develop a Machine-to-Machine (M2M*2) securemodule that safely and reliably connects networked devices,
DNP’s other security-related projects include development ofbiosensors using IC tag automatic recognition and wirelesstechnologies. DNP is also working on services that use big datato generate new value by analyzing data obtained through smart
sensing.
＊

1 SIM (Subscriber Identity Module): a smart card that contains identifying
information specific to a mobile phone number
2 M2M (Machine to Machine): communication between devices linked to acommon network＊

Various types of service
Account
settlement

Health care

Security

M2M
Cloud service

Maintenance+Connectivity
M2M securemoduleNetwork
Gateway

M2M agent
Secure element
built into
each device

DeviceDeviceDeviceDevice+Security
Examples ofapplicable devices:38

Settlement-related
devices

Medical devices

Security devices

Facility infrastructure

* PCI DSS (Payment Card Industry Data Security Standards) authentication: credit card industry security standards established to ensure that stores and service
providers safely handle credit card member information. The standards are implemented and managed by the Payment Card Industry Security Standards Council(PCI SSC), which was established jointly by five global card brands: American Express, Discover, JCB, MasterCard and Visa.

Consumers

Customer baseMulti-application
payment terminals

Financial institutions

Account settlement
network

Account settlement
processing

Account settlement systems

DNP’s Comprehensive Payment Services Business

DNP’s Businesses

Sales promotion
and customer
attraction systems

Distribution-relatedcompanies

Special Feature

its smart card business, DNP created a system that meetsthe strict information security (PCI DSS authentication*) andusefulness standards required of a finance-related system.
Several companies that use global brand prepaid services havealready adopted the system, for which DNP will provide a fullrange of services including card manufacturing and issuance,
application data entry, and sales promotion-related services.
Going forward, in addition to providing the system, DNP aims
to develop a comprehensive payment service business thatwill include business process outsourcing, card-linked offers(payment history-based advertising services), and mobile wallet
service, with a focus on peripheral payment services such as
multi-type settlement terminals.

To Our Shareholders

In 2013, a global brand prepaid service was launched as a new
method of account settlement. This payment service offers
the convenience of being usable at any business that has anaccount with a global brand like Visa or MasterCard, together
with the sense of security resulting from the fact that it canbe used only up to a predetermined amount. The service is
expected to be popular as a payment method used by a wide
variety of consumers, including young people and active
seniors.
Also in 2013, DNP responded to the introduction of thisservice by constructing its own global brand prepaid system,
which it began providing to card-issuing companies. Making
use of the experience and knowledge it has acquired throughSynopsis of Performance

Initiatives Aimed at Developing Comprehensive Payment Services

Examples of international-brand prepaid services using DNP's services:

Credit Saison Co., Ltd.’s
COCOKARA CLUB CARDNTT DoCoMo, Inc.’s Docomo
Prepaid Visa
*A virtual card displayed on
the screen of a mobile device

Appendix

Amid increasingly widespread use of “wallet services” that use smartphones
for intelligent management of payment-related services, we are hearing morenews about consumers wanting to conveniently and efficiently manage multiple
applications besides payment. In addition to providing credit and prepaid
settlement services, DNP’s mobile wallet service platform can be used toefficiently manage a variety of other services including loyalty point tracking
and coupon distribution, member information management, and provisionof information about subjects such as healthcare or travel. We can provide avariety of new services by also linking the service to the collection of big data:
for example, improving member loyalty to businesses, and devising effective
marketing strategies based on analysis of consumer behavior.

Financial Section" Mobile Wallet Service makes shopping more pleasant and convenient for consumers”

Corporate Governance

JACCS Co., Ltd.’s
Visa TravelMoney “Gonna”

In February, 2014, DNP launched the “Salon de Wallet” smartphone application in partnership with
HyperSoft Co., Ltd., which provides 2,300 beauty salons throughout Japan with its “Salon de Net”
point-of-sale system. (right)

39

Lifestyle andIndustrial Supplies

Business Strategies

The Lifestyle and Industrial Supplies segment is composedof three business divisions: Packaging, Lifestyle Materials,
and Industrial Supplies. The segment plays a vital part in our
corporate clients’ manufacturing processes and provides many
products that are important in the daily life of consumers.
Packaging Operations creates many of the packages that
consumers actually use, including packaging for foods andbeverages and for pharmaceutical products. Lifestyle Materials
is involved in a wide variety of products that create the spaces
in which consumers live, such as floor and wall coverings,
residential exterior products, and automotive interior products.
Examples of the products provided by Industrial Supplies
include dye-sublimation thermal transfer printing media (color
ink ribbons and receiver paper) used for printing photographs,
and components of photovoltaic cells and lithium-ion batteries.
Products and services that are indispensable to comfortableliving must also contribute to people’s safety and sense of
security. They must be designed with consideration for universal
design principles that make products and services easy touse for most consumers. In our product development andmanufacturing, DNP strives to conserve energy, use cleaner
energy sources, and dispose of waste material in ways thatare least damaging to the environment. This segment’s basic
business strategy is to accurately respond to the diverse needsof corporations and consumers and develop a large number of
products that have optimal functions for enriching people’s lives,
while adhering to all of the above requirements.
We take an active approach toward developing new products
and businesses, and provide customers in Japan and abroadwith advanced, original products in fields like environment,
energy, and life science. We will speed up the developmentof these new businesses by making use of DNP’s originaltechnologies and by actively forming alliances with companies
and research institutes that have special capabilities.
In April 2014, the Optical Films unit, which makes various
types of optical films including anti-reflection films used on liquid
crystal displays, was transferred to the Electronics segment,with which it shares its main markets. Going forward, OpticalFilms will combine its technologies and talent with those of theElectronics segment to accelerate the development of new
products.

Above: "Party Print" mobile event application
Below: Ellio products applied to exterior of the DNP Emergent Evolution
Forest: The Hakone Training Center

40

Synopsis of Performance

Main Policies
Develop eco-friendly,
advanced packaging products worldwide

さP 44

Lifestyle
Materials

Provide solutions for the spaces in whichpeople live their lives

さP 18-19

さP 45

Financial Section
Appendix

Imaging Communication● Reinforce global manufacturing and sales systems; expand field of business into everything related to“imaging,” without being limited to existing markets.
● Dye-sublimation thermal transfer printing media: Supply the global photo imaging market with photo
printing systems that meet consumers’ needs and added-value services such as online photo bookproduction.
● Thermal resin-type transfer printing media: Increase market share by expanding lineup of outstandingly
durable products, mainly for barcode use, and by strengthening our sales networks.
Advanced Materials● Supply corporate clients in Japan and overseas with advanced products that solve problems in fields likeenvironment and energy by making use of DNP’s original converting (material processing) technologies.
● Photovoltaic cell components: Reduce costs and increase functionality of back sheets and encapsulants;
develop new products that contribute to improvement in reliability of photovoltaic cells and theirconversion efficiency.
● “Soft packs” for lithium-ion batteries: Take advantage of our strength as the world’s number one supplier
to expand applications beyond mobile devices to include, for example, electric vehicles and householduse storage batteries.
● Focus on developing new products, such as products that control light and heat, and high-added value
barrier films for medical care or industrial applications.

Corporate GovernanceRealize sustainable growth by providing diverse products

DNP’s Businesses● Develop products using DNP’s original electron beam (EB) coating technology.
・ Scratch and soil-resistant wall and floor coverings; exterior products with outstanding weatherability,etc.
● Develop businesses that address the entire living space supply chain, such as living space design(including proposals based on special considerations such as Kansei (emotional) engineering), living
environment assessment, and development of easier construction methods.
● Develop new products needed for the realization of smart cities and smart houses.
・ Metal panels and other materials that save energy by effectively reflecting and/or diffusing light● Expand market share in Europe, the Americas and emerging countries by making use of DNP’s global
business networks.
Industrial
Supplies

Special Feature● Actively develop eco-friendly products that reduce environmental load, and support biodiversity and useof sustainable resources.
● Enhance lineup of advanced products that offer outstanding preservation and durability.
・ Innovative Barrier (IB) film: transparent packaging film with excellent barrier properties to keep out
oxygen and moisture・ “Biomatech PET” series of plastic films using plant-based materials● Promote global packaging business using overseas production bases.
● Analyze consumers’ awareness of packaging-related issues and actual usage patterns.
● Develop packages that are easy for anyone to use, following universal design principles.

To Our Shareholders

Packaging41

Financial Results

Net Sales

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

800

120

714.6

704.7

100

700.3

600

80

Financial Highlights

60

400

40

(¥ billion, %)

200

11.9

20

					
2013.3		 2014.3
15.9
15.5 2012.3		
00

12 ¥ 522.8
13¥ 521.4
14¥ 533.6

Operating income

31.8

28.0

33.9

Operating income margin

6.1%

5.4%

6.4%

Net sales

Net Sales

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

800

120
100

600

522.8

80

533.6

521.4

60

400

40
200

0

Net sales

31.8

12

Net Sales

28.0

13

33.9

14

20
0

Operating Income (Loss)(¥ billion)(Net sales)
Although salesof aseptic PET plastic bottle
filling(Operating
income) systems
800
120
declined, we enjoyedgood sales of decorative
materials andother Lifestyle Materials thanks to an increase100in domestic
600
80
housing starts and our larger share of the market.
We also soldmore Industrial400Supplies, including optical films
60 used in flatpanel displays and information media supplies40used for printing
200 224.8
photographs. Overall
segment
sales increasedby 12.2 billion
20
180.5
171.3 12.9
yen, or 2.3% fromtheprevious
term.
0
0

– 4.6

12
Operating income

– 0.3

13

14

– 20

Operating income grew by 5.9 billion yen or 21.0% year on year
despite higher prices of raw materials for films and resins andlower unit prices resulting from increased competition. Our
success was due largely to increased sales and the effects of
the weakened yen. The operating income margin increased 1.0
point from the previous year’s 5.4%, to 6.4%.

42

Fiscal Term through March 2014:
Business Environment andSummary of Financial Results■ Packaging
In the year through March 2014, Packaging Operations enjoyedstrong sales overseas, especially in Indonesia. Worldwide salesof soft packaging and paper cups grew from year-earlier levels,
but overall sales declined relative to the previous term, partly
due to the slump in sales of large-scale aseptic PET plastic
bottle filling systems, which declined relative to the year before.
Overseas, we are expanding our manufacturing bases in
response to robust demand in Southeast Asia, where economic
growth continues. In May 2013 we built a factory in Vietnam.
We continue to reform our cost structure. In 2012 wereorganized our domestic manufacturing units to create amore efficient system. In July 2014 we have integrated oursales organizations into a new system that coordinates themnationwide as we aim for even greater competitiveness andoverall optimization.

■ Lifestyle Materials
Japanese housing starts in the fiscal term through March2014 grew by 10.6% year on year to about 980,000 units,
increasing for the fourth consecutive year. Among the factors
behind the increase were a rush to build before the April 2014
consumption tax hike, increased optimism about the economy,
availability of low-interest housing loans, and expectations ofrising construction material costs. DNP’s eco-friendly products
made with our unique EB coating technology, along with otherhigh-added value DNP products that excel in terms of bothaesthetics and functionality, won praise from client companies
and consumers and captured a larger share of the market,
helping Lifestyle Materials to exceed its previous-year sales.
We intend to continue to develop various applications andrespond to markets around the world. For example, in addition
to focusing on the markets for home renovation and elderly
housing, we will expand our lineup of exterior and interior
decorative products and develop automotive products using
electron beam (EB) coating and railway car products using Ellio
steel plates.

Synopsis of Performance■ Industrial Supplies

Financial Section
Appendix

Worldwide demand for LCD displays used in large-screen
televisions was lackluster, and demand for displays used inlaptop computers and computer monitors declined. However,demand for displays used in smartphones and tablet PCs
remained strong. Amid these trends, in the year ended March2014 DNP increased sales of new products including films for3D displays and touch panel displays. Sales of anti-reflection
films for cutting-edge LCDs also grew from a year earlier. On
the other hand, sales of other products, including contrast
improvement film used for plasma display panels and projection
screen components, declined.
In April 2014, the business units that handle products related
to optical films were merged with units in charge of display
components and semiconductor photomasks to form a newunit within the Electronics segment. Going forward, members of
the new unit will fuse the technologies and expertise that they
have cultivated to date and promote the development of new
businesses and new products. They will also work to improve
the functionality of existing products, implement thorough cost
reductions, and improve investment efficiency, thereby giving
DNP an even greater competitive edge. (Refer to P 47.)

Corporate Governance

Advanced Optics (Optical Films)

DNP’s Businesses

The market for photovoltaic cells, which had long been led
by Europe, has been sluggish due to the effects of a financial
crisis there. In July 2012, Japan introduced a program forbuying excess energy generated from renewable sources at a
fixed price. This spurred demand for both residential-use andindustrial-use solar panels, prompting greater sales of DNP’sphotovoltaic cell components. There has been solid demand
for soft packs used in lithium-ion rechargeable batteries for
smartphones and tablet PCs, but not so much for the electricvehicles that had been expected to become more widespread.
Overall, the market for these products has been lackluster.
In the future, we will focus on the development and saleof higher-performance, more durable components for which
demand is expected to increase. Also, we plan to expand
our advanced materials business, for example by using our
proprietary converting (materials processing) technologies tomake products that control light and heat, and high-added value
barrier films for medical and industrial applications.

Special Feature

Energy Systems

Worldwide, there was increased demand for dye-sublimation
thermal transfer printing media (color ink ribbons and receiverpaper), which work without the use of a developing solution.
There were also solid sales of thermal resin-type transfer
printing media used for logistics and production control. In lightof increasing worldwide demand, in May 2013 we expanded thethermal resin-type transfer printing media production facilities
at our Pittsburgh plant in the US. In December 2013, wecompleted construction of a plant in Malaysia for making dyesublimation thermal transfer printing media, thereby increasing
production capacity. Thanks to the increased production
at these overseas bases along with the effects of the yen’s
depreciation, sales for the fiscal year through March 2014
increased over the previous year.
We intend to supply dye-sublimation thermal transfer printing
media in response to increasing demand for photo printing
in the global “imaging market,” which includes emerging
markets. We will provide consumers with new ways to enjoy
photographs, greater convenience, and services that support
rich communication through products like Ki-Re-i photo ID
kiosks and PrintRush systems installed at retail outlets whereusers can instantly print photos from digital data.
Regarding thermal resin-type transfer printing media, we will
enhance our lineup of high-performance products that offer
greater durability. We will also reinforce our sales network inemerging countries in order to boost our market share.

To Our Shareholders

Information Media Supplies

43

Packaging

Expanding Global Business with a Focus on Advanced,
Eco-friendly Products

DNP provides all types of packaging, including paper
containers, flexible wrapping materials, and plastic containers,
for use in a wide variety of fields such as foods, beverages, andhousehold items. Starting from the product planning stage, we
design packages with consideration for many factors including
preservation of content, durability, ease of use, clear labeling,
and universal design. We are also actively developing eyecatching designs to attract attention on store shelves. DNP’scomprehensive packaging business makes use of our flexible
manufacturing framework with production bases in Japanand overseas to supply products on a timely basis, to developfunctional films and other specialized materials, and to design
and manufacture aseptic filling systems.
In October 2012, we reorganized our domestic
manufacturing, production control, and technology sections tocreate a uniformly controlled production system with the aims

Examples of DNP packages made in Japanof increasing competitiveness and earning power and building
optimal systems to support our business continuity plan (BCP).
In July 2014, we will integrate all of our domestic sales units
and focus on enhancing solution proposals and increasing
production efficiency.
Overseas, one of our main policies is to expand our businessin the Asian region. Since 1972, DNP has been supplying
packaging products in Indonesia, where we have captured
the top market share in many fields including household items
and food products. Building on this success, in May 2013 webuilt a packaging factory in Vietnam. In addition to continued
strong economic growth, Vietnam has also attracted attention
as a distribution base for all of Indochina. From this production
base we will supply high-added value products and services
to Japanese companies doing business overseas and to otherglobal companies.

Examples of DNP packages made outside Japan" Expanding packaging materials that use plant-derived material”
DNP is developing many types of packaging that containsustainable resources. As part of that effort, we are focusing
on increasing usage of packaging materials made of “biomass”
plastics that contain plant-derived materials and place lesseffect on the environment. In May 2011, DNP became the firstcompany in the world to develop “Biomatech PET” polyethylene
terephthalate (PET) film containing material taken from sugar
cane. Later, we developed “Biomatech IB-PET film,” whichfunctions as a barrier against moisture and oxygen. By
combining it with our plant-derived polyethylene film “Biomatech
PE,” we can create packaging products that have outstanding
barrier properties but emit up to 50% less CO2 when burned
than existing petroleum-derived films.
In May 2014, DNP and J-Oil Mills, Inc. received the Japan
Packaging Institute’s 38th Kinoshita Prize New Creation Award,
for their standing “UD eco-pouch” made of Biomatech IB-PET
film. The prize is given in honor of remarkable achievements
in areas such as research and development of packaging
technology or streamlining of production. In this instance,
the recipients earned high praise for reducing environmental
pollution by using plant-derived PET film.

44

DNP is expanding its Biomatech series, for example bydeveloping Biomatech PET film that makes use of aluminum
vapor deposition. We will promote use of these products in awide variety of fields, including foods and beverages, household
items, and pharmaceutical products. We will also develop awide variety of formats such as paper containers and molded
plastic goods.

UD eco-pouch made with biomass material,for “Sara-sara Canola Oil”

Our Expanded Business Includes Everything to Do with
the Imaging Market
Going forward, as we continue to develop and produce print
media, we will also use our capacity for printing system andsoftware development in order to provide convenient products
and services for consumers’ enjoyment.

To Our Shareholders
Special Feature

Based on the concept of “building a future that connects people
to the rest of the world through imaging,” we are expanding ourimaging communication business to cover the entire “imaging
market,” including everything from taking photos and dataprocessing to photo printing and content sales.
At the core of imaging communication are dye-sublimation
thermal transfer printing media (color ink ribbons and receiverpaper) used in photo printers and card printers for printing fullcolor high-resolution images, which DNP began developing in
the 1980s. With the recent spread of smartphones added toexisting digital cameras, opportunities for picture-taking havegreatly increased, and this in turn has sparked an increase inworldwide demand for photo printing. DNP’s dye-sublimation
thermal transfer materials are increasingly popular in themarketplace because, besides delivering the same highquality images and smooth color tones as conventional silver
halide printing, printing is instantaneous and initial equipment
investment costs are lower.

Synopsis of Performance

Imaging
Communication

Photo books and dye-sublimation thermal transfer printing media (upper right)
DNP’s Businesses" Self-service printers deployed throughout Japan”“PrintRush” selfservice photo printing
system

“Ki-Re-i” ID photoboothafforded by the dye-sublimation thermal transfer method makes
it possible to complete a book in as little as five minutes.

Appendix

DNP’s “DreamPages” photo book production service offers
a website that enables customers to easily design and orderbooks and albums of their original photos. By simply arranging
digital images on each page and inserting text where desired,customers can produce their own high-quality, completely
unique photo book, printed by a six-color digital printer. In
November 2013, we launched “DreamPages+ (plus),” which
offers a free, dedicated application allowing customers to
produce photo books with a high degree of freedom of design.
DNP has also introduced “PrintRush PhotoBook” self-service
photo book machines that allow users to produce their own
original photo books at electric appliance chain stores and otherretail outlets in Japan. The system’s automatic layout function
makes it easy to design a photo book, and the instant printing

Financial Section"” DNP leads the growing market for photo books

Corporate GovernanceThroughout Japan, DNP Fotolusio Co., Ltd. has installed some 3,000“PrintRush” self-service systems containing dye-sublimation type
printers, and about 7,000 “Ki-Re-i” photo ID kiosks. These systems
are receiving high praise from consumers, mainly for offering highquality images and ease of use. Both systems are among the top
players in their respective markets in Japan. As examples of how wekeep these products and services in tune with market needs, we
improved PrintRush’s smartphone compatibility and launched a “withsmartphone” service that enables Ki-Re-i users to store image data on
their smartphones.

A photo book made with “DreamPages+ (plus)”

45

Electronics

Business Strategies

Corporate clients and consumers alike place many demandson the wide assortment of electronic devices on the market
today, which includes smartphones, tablet PCs and othermobile information terminals, high-definition display products,
and digital household appliances. In the face of increasingly
diverse demands for new functions made possible by thelatest technologies and for greater ease of use, along with anaccelerating rate of change, electronic equipment manufacturers
must be forward-looking in their technology development andcapital spending, detailed in their analysis of information, andcorrect in their conclusions.
In response to this situation, in April 2014 DNP merged its
Optical Films business, which had previously been part of theLifestyle and Industrial Supplies segment, into the section of
our Electronics segment that handles products such as display
components and semiconductor photomasks. Both of thesebusiness units serve the same major markets, including themarket for electronic devices. By combining their technologies
and expertise, the resulting, expanded section can develop new
products more quickly.
In particular, this section will apply world-class printing
technologies like fine patterning and ultrafine etching techniques
in its response to the diverse needs of corporate clients andconsumers. Concerning existing products, we will work on
increasing the production efficiency and earning power of ourwide variety of display components and electronic devices,
including color filters for liquid crystal displays, anti-glare
films, 3D display films and other optical films, semiconductor
photomasks, and touch panel components. As we develop
new products, we will keep our eyes on the next generationof electronic products and work hard to provide outstandingly
functional, high-added value products that meet marketplaceneeds. As we do so, we will also work proactively to engage incollaboration with companies that have important strengths, inorder to speed up business development.
Furthermore, we will move ahead with thorough cost
reductions and investment efficiency improvements, for example
by making good use of our mother plant in Japan and overseas
production bases, and by optimally locating production from a
global standpoint.

Above: Tablet PC using DNP components
Below: A photomask used for manufacturing semiconductor

46

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

Develop new markets and synergistic effects of business units’ merger

Electronic
Devices

Respond on a global scale and generate new business models

Financial Section
Appendix● Meet global demand for semiconductor photomasks and develop cutting-edge technologies.
・ Acquire one of the world’s top market shares, with a focus on the most advanced products (those with line widthsof 28nm*1).
・ Respond to demand for miniaturization by developing cutting-edge products with line widths of 15-16nm, andprepare frameworks for supplying them.
・ Focus on commercializing next-generation microfabrication technologies such as nanoimprinting*2 and extreme
ultraviolet (EUV) exposure*3.
・ Make use of overseas production bases to actively take up global demand.
● Boost earning power by developing new products.
・ Develop products that make use of microfabrication technologies, such as components for hard disk drives, LED
modules, printed wiring boards with embedded components, and MEMS (micro electro mechanical systems)*4
products.
・ Reinforce new product development by cooperating with other segments, for example in the development of image
processing modules.

Corporate Governance● Realize synergistic benefits from shared markets such as domestic and overseas electric device manufacturers. (InApril 2014, Optical Films operations were transferred from the Lifestyle and Industrial Supplies segment to Electronics.)
・ Develop a wide range of types of optical films by combining DNP’s original optical technologies with clean
converting technologies, such as those used for applying precision thin-film coatings in a clean environment.
・ Develop new products to address trends toward higher-definition, more functional displays and energy conservation.
Examples include optical films for 3D displays, and “Moth Eye®” ultra-low reflection film.
・ Focus on developing products and services that solve problems related to the environment and energy, such as
smart houses and smart cities.

DNP’s Businesses

OpticalFilms

Special Feature● Focus on small- and medium-size liquid crystal color filters, and on higher-definition products.
・ Focus color filter production on the still-growing markets for small- and medium-size displays used in smartphones,
tablet PCs and similar devices.
・ Promote cost structure reforms such as equipment optimization and rethinking of production and development
systems.
・ Make use of the technologies that we have cultivated, with a special focus on developing high-definition, highquality products needed for small- and medium-size devices in order to stabilize our business.
● Make use of our strongest technologies and existing facilities in order to develop new products.
・ Make effective use of our strongest technologies and existing production equipment and focus on developing new
products related to areas like touch panels, organic EL, and LEDs.
・ In anticipation of further growth in demand for sensors and other touch panel components, increase our share ofthis market by responding to demand for both film and glass type components.

To Our Shareholders

Display
Components

Synopsis of Performance

Main Policies*1 nm (nanometer): one billionth of a meter*2 Nanoimprinting: a semiconductor manufacturing technique that entails physically transferring a pattern to a resin-coated silicon wafer by pressing a template
bearing a minute pattern against the wafer*3 Extreme ultra-violet (EUV) exposure: a technique for using ultraviolet rays with extremely short wavelengths to burn minute circuit patterns onto wafers*4 MEMS (micro electro mechanical system): a group of minute components made with semiconductor microfabrication technologies

47

40
200

11.9
0

12

13

0

14

Financial Results

Net Sales

20

15.9

15.5

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

800

120
100

600

Financial Highlights
522.8
521.4

80

533.6

60

400

40
200

31.8

33.9

(¥ billion, %)					 2012.3		 2013.3		 2014.3
0

Net sales

12

28.0

¥ 224.8

Operating income13¥ 180.50（ 4.6 ）

14

（ 0.3 ）–

Operating income margin

Net Sales20–¥ 171.3
12.9
7.5%

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

800

120
100

600
80
400

60
40

200

224.8

180.5

0

– 4.6

12

171.3 12.9

0

– 0.3

13

20

14

– 20

Net sales
Small- and medium-size color filters used in smartphones
and tablet PCs sold well, while demand for laptop computers
and monitors declined. Overall sales declined, partly due tothe transfer of our Sakai plant’s color filter business to Sakai
Display Products Corp. in August 2012. Sales of semiconductor
photomasks increased over the previous year due to greater
demand by overseas customers. Overall, Electronics sales
declined by 9.2 billion yen, or 5.1%.

Operating income
The Electronics segment benefited from cost structure reforms
such as the transfer of our no-longer-profitable Sakai plant andthe sale of surplus equipment, and from the contributions of
new products like the touch panel sensors that we began mass
producing. Compared to the operating loss of 0.3 billion yen
posted last term, operating income increased by 13.2 billion yen
to 12.9 billion yen.

48

Fiscal Term through March 2014:
Business Environment andSummary of Financial Results■ Display Components
The market for mobile devices continued to grow. According
to one research company’s figures, worldwide shipments ofsmartphones in calendar 2013 increased by 38% over theprevious year, exceeding one billion units for the first time,
while shipments of tablet PCs shot up by 51% to about 220
million units. Meanwhile, the popularity of tablet PCs dampened
shipments of personal computers, which declined 10% year
on year to about 320 million units. Although shipments of LCD
televisions resumed growing after shrinking in 2012, demand waslackluster due to economic slowdowns in emerging countries.
Shipments grew by just 2%, to about 208 million units.
Amid these trends, DNP’s color filter business also enjoyedsolid sales of small- and medium-sized products for use insmartphones and tablet PCs, while sales of products usedin personal computers declined. Sales were also affected bychanges to the Electronics segment’s manufacturing scheme,
including the transfer of the Sakai plant and the sale in February
2013 of some of the color filter production equipment from ourMihara Plant in Hiroshima Prefecture. The unit's sales declined
relative to the previous year.
In the future, demand for LCD television displays is expected
to grow primarily in Africa, India and other emerging countries.
In industrialized countries, we expect to see wider use of 4K
televisions and other higher-definition products. Among smalland medium-sized panels, we foresee slower growth of highend smartphones and tablet PCs but greater demand for lowerpriced products, especially from emerging countries.
Going forward, DNP will continue to expand production
mainly in the growing category of small- and medium-size
products. In addition, we will continue to respond to demand
for thinner, lighter products and to develop products for flexible
displays. We will also accelerate development of new productsthat can be made with color filter production equipment, suchas static electricity sensors for touch panels and surface covers
that protect touch panels from scratching.

Synopsis of Performance■ Electronic Devices

Special Feature

Regarding electronic products that make use of etching andsimilar technologies, we will focus on expanding our shareof three markets: lead frames for making the thin, compact
semiconductor packages often used in smartphones and tablet
PCs, etc.; autofocus springs used in camera modules built
into mobile devices; and printed wiring boards with embedded
components.
We will also actively promote development of new products
like MEMS (Micro Electro Mechanical Systems) devices andvarious types of electronic modules for image processing andother functions, including metal substrates for LED lights andhard disk drive components.

To Our Shareholders
DNP’s Businesses
Corporate Governance
Financial Section

In calendar 2013, the global semiconductor market grew by
4.8% from the previous year, mainly thanks to greater demand
for smartphones and tablet PC memories as well as increased
demand for semiconductors that are indispensable to theimprovement of automobile safety and fuel economy. In theJapanese market, domestic semiconductor manufacturers’
performance was lackluster in the face of heightened worldwide
competition.
DNP’s Electronic Devices business focused on taking
advantage of overseas demand and increasing its share of
the domestic market. Photomask sales exceeded those of theprevious term. While DNP enjoyed increased sales of electronic
modules used in commercial amusement machines andlead frames for compact semiconductor packages, sales ofsuspensions and other hard disk drive components declined.
We expect the semiconductor market to remain solid in the
future amid continued growth in demand, primarily for mobile
terminals such as smartphones and tablet PCs, and amid
more active investment in further miniaturization of line widths
to support the trend toward thinner, denser semiconductor
products. As miniaturization progresses, we aim to increase
DNP’s share of the market for cutting-edge products by working
to improve our photolithography techniques and by accelerating
research and development of next-generation semiconductor
lithography technologies such as nanoimprinting and extreme
ultraviolet (EUV) exposure.
We reviewed our presence in Taiwan in light of the fact thatwhile demand is growing in the global market, competition is
also increasing. In order to enhance our sales and production
frameworks and to establish stable sales channels, in April 2014
we merged a DNP subsidiary that specialized in photomasks forlogic products, DNP Photomask Technology Taiwan Co., Ltd.,
with a company that specialized in semiconductors for memory
products, Photronics Semiconductor Mask Corporation,
to establish a joint venture called Photronics DNP Mask
Corporation. The new company became an equity-method
affiliate of DNP, with DNP owning 49.99% of its common shares.

Appendix49

DNP Electronics Products in Everyday LifeDNP Products and Technologies Used in Smartphones and Tablet PCs

For more than half a century, DNP has been supplying awide variety of electronic products by applying thephotographic plate-making skills that we gained through ourprinting business, and by refining the photolithography andetching technologies that enable us to make extremely finepatterns. DNP’ s various products and systems contribute toimproving the ease of use and functionality of smartphones,
tablet PCs and other information terminals.

Structure of a liquid
crystal display (LCD) panelColorfilterCameramoduleAntireflective film for LCDs
When affixed to the surface of an LCD or the back side of atouch panel, antireflective film reduces glare from bothindoor and outdoor light, making the screen easier to see
and enabling brighter displays.
This product is based around original DNP optical design
technology. It is mass produced using “clean converting
technologies” that we cultivated through the design anddevelopment of a variety of materials and manufacturing
processes. DNP holds the top share of the world market forthis type of product.
In order to respond to demand for even clearer screen
displays, we are developing films with even lower reflection
rates, which we intend to market commercially.

LCD backlight components
In order to extend the lifespan of tablet PC batteries, it isnecessary to make effective use of the light emitted from thebacklight.
We have developed optical components that greatly
improve brightness by using "fine embossing," one of DNP'sproprietary technologies, and we are working on bringing
these products to market.
In addition to increasing light usage efficiency andreducing power usage, the product makes it possible toreduce the number of components in a backlight, thus
helping to make it thinner and lighter.

50

SIM (Subscriber
Identity Module) card

Soft pack forlithium-ion battery

Synopsis of Performance

Sensors and other touch panel components

To Our Shareholders

Touch panel sensor

Special Feature

Amid widening use of smartphones, tablet PCs and other mobile
terminals, there is increasing demand for touch panel sensors that
detect fingertip movement on a display. When building a touch panel
function into a display, it is important to avoid increasing the device’s
thickness or weight. In response to this consideration, DNP has
begun mass producing cover glass-integrated sensors using
tempered glass, and film-type sensors that are processed on bothsides of the film. Both of these products enable the production ofthinner, lighter mobile terminals.

High-definition color filters for LCDs

DNP’s Businesses

In order to display more beautiful images, the small screens ofsmartphones and tablet PCs need to have better resolution andbrightness than the display of a conventional television or computer
monitor. In our color filter production, we have developed some of
DNP’s existing proprietary technologies to meet the market’s
demands for higher-definition, brighter, thinner, lighter displays for
smartphones and other mobile terminals, and these efforts have wonhigh praise.

Electronic devices

Financial Section

Photomask used for making semiconductors

Appendix

DNP makes use of printing technologies like patterning and etching toprovide a large number of products that are essential to the operationof all kinds of electronic devices.
We mass-produce cutting-edge photomasks—masters for making
large-scale integrated circuits (LSIs), DRAM semiconductor
memories, and other semiconductor products—with line widths ofless than 20nm. We also meet our corporate clients’ miniaturizationneeds by working to develop practical applications fornext-generation semiconductor lithography technologies likenanoimprinting and extreme ultraviolet (EUV) exposure.
In addition, we supply a wide variety of lead frames for use in thecompact semiconductor packages that are widely used insmartphones, tablet PCs, and other mobile terminals. We supply, foruse in built-in camera modules, printed wiring boards with embedded
components—made with DNP’ s unique B2it (pronounced“bee-square-it” ) technology—and autofocus springs that enableinstant lens focusing. We also supply metal substrates for LEDs usedin the LED packages that provide the light to liquid crystal panels, andother products. We intend to continue working hard to develop evenmore new products.

Corporate Governance

Color filter, with enlarged view at lower right

Lead frame

51

Corporate
Governance
CONTENTS

52

54

Corporate Governance

61

Board of Directors, Statutory
Auditors and Corporate Officers

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

1

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

■ Progress on Corporate Governance Measures(1) Corporate governance structure
DNP’s organization is designed to allow directors withspecialized expertise and experience in a wide range ofbusiness fields to participate in management decisions, totake responsibility and authority as they execute their work,and to supervise the work of other directors. Independent
outside directors also participate in decision-making in orderto facilitate prompt and precise management decisions andsmooth execution of those decisions, and to further
strengthen proper supervisory functions. Corporate officers
named by the Board of Directors execute the decisions
made by the Board of Directors, and have the responsibility
and authority to decide upon and carry out those mattersdelegated by the Board. Working in close communication
with the directors and in close proximity to the workplace,
their function is to ensure that the views of those on the front
lines are reflected in management.
In order to nimbly construct optimal management systems
for responding to changes in the business environment, andto further clarify management responsibility for each fiscal
year, we set the term of office for directors at one year.
The Board of Directors consists of 18 directors including
two independent outside directors. In principle, the Board
meets once a month. Based on the Company’s Board of
Directors Regulations, the directors ensure that meetings areappropriately run and supervise each other in day-to-day
operations. The directors and corporate officers hold54

executive committee meetings twice a month toexchange information that is helpful for efficient decision
making. To speed up the Company’s activities and makethem more efficient, DNP has also established aManagement Committee consisting of directors at the senior
managing director level and above. The committee meetsonce a month, in principle, to review and discuss
management policies, strategies, and important businessmatters.
DNP has in place a Board of Statutory Auditors thatconsists of five auditors, including one auditor withconsiderable knowledge of finance and accounting andthree outside auditors. In accordance with auditors’prescribed audit criteria and responsibilities, the statutory
auditors conduct audits of the directors’ management of
day-to-day operations and, as necessary, seek informationfrom the directors and employees regarding business
operations.
We believe that by adopting this type of corporate
governance structure, we ensure that the Board of Directors
can make appropriate decisions efficiently.

(2) Internal controls and auditor’s auditing
In order to maintain a structure that allows for precise
management decision-making, appropriate and prompt
execution of business, and inspection and monitoring ofthese functions, the Corporate Ethics Committee, as the
body in charge of internal control, inspects and guides
DNP’s operating units according to the DNP Group’s Basic
Compliance Management Regulations, and regularly reports
to auditors regarding management conditions. In addition,
the Auditing Department (consisting of 15 employees)
ensures the propriety of operations by conducting
accounting and operational audits based on internal audit
regulations and by providing progress reports to thestatutory auditors and the accounting auditor.
The statutory auditors hold regular meetings of the Boardof Statutory Auditors, work with other statutory auditors to
perform their audit duties, and closely cooperate with theaccounting auditors by receiving from them an explanationof the audit plan at the start of the fiscal year, assessing
audit operations during the fiscal year as appropriate, andreceiving a report of audit results at the end of the fiscal year.
The names of the certified public accountants who
performed the accounting audits, the audit firms they are
employed by, and their assistants in the audit work are as
follows:

Synopsis of Performance● Certified public accountants who performed the

Meiji Audit Corporation● Number of accounting audit assistants

12 certified public accountants, 5 others(3) Development of a risk management structure
To manage risks related to compliance, information security,
the environment, disasters, product safety, insider tradingand export management, the Corporate Ethics Committee,
other special committees, and other head office divisions
develop rules and conduct training as part of risk-related
preemptive efforts, and respond promptly to avert or

DNP’s Businesses(5) DNP's Corporate Governance Structure
General Meeting of Shareholders
Audit

Audit

Board of Directors

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

● Audit firm

To Our Shareholders

minimize losses to the DNP Group. When new risks arise, we
promptly appoint specific divisions and directors to takeresponsibility for responding.

accounting audits
Senior partners and managing partners
Jun Sasayama, Tsuguhiro Tsukakoshi,
Junko Shima, Yurika KimuraManagement Committee

Corporate Ethics Committee

ReportingOpen Door Room
Directors in charge

ReportingInformation Disclosure Committee

Complaint Handling Committee
Central Disaster Prevention Council

Audit

Audit
Guidance

ReportingAssistance

Financial Section

Environmental Committee

Legal and other main divisions

Guidance
Training(Environmental Safety Division, Labor Division,
Technology Division, Accounting Division, Management
Division, IP Division, Legal Affairs Division, etc.)

Corporate Social Responsibility Committee
Audit
Guidance

Appendix

Audit unit

(Autonomous implementation, inspection,
review, improvement)

Audit

Product Safety Committee

Board of Statutory Auditors

Group companies

Information Security Committee
Auditing Department

Divisions

Insider Trading Prevention Committee

Oversight of internal controls

Head office

Audit

Operating units

Accounting Auditors

Corporate officers

Corporate Governance

Representative Directors

Reporting

Coordination

55

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

56

auditors have concluded agreements that limit the directors’
and auditors’ liability for damages within the parameters set
forth in Article 423, Paragraph 1 of Japan’s Companies Act,so long as they execute their duties in good faith and without
serious negligence.

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

Synopsis of Performance(10) Requirements for shareholder approval of special
resolutions
DNP’s Articles of Incorporation specify that the approval of
special resolutions stipulated in Article 309, Paragraph 2 ofJapan’s Companies Act requires the attendance of at least
one third of shareholders with voting rights and at least two
thirds of the votes of these shareholders, so that theshareholders’ meetings can run smoothly.

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

Base compensation

Bonus

Number of directors
and statutory
auditors covered

1,344

1,166

178

21

77

77

–

2

91

91

–

4

Statutory auditors(excluding outside auditors)

Outside directors
and auditors

DNP’s Businesses(excluding outside directors)

Total compensation by type (¥ million)(¥ million)

Total compensation

Special Feature■ Compensation Paid to Directors and Statutory Auditors

To Our Shareholders

4) Interim dividend
DNP’s Articles of Incorporation specify that the Company
may, by a resolution of the Board of Directors, pay amonetary dividend stipulated in Article 454, Paragraph 5 ofJapan’s Companies Act to shareholders of record as of
September 30 of each year and shareholders with actual
stock certificates, so that profits can be flexibly passed on toshareholders.

Notes: 1. Bonuses are provisions for bonuses for directors and statutory auditors for the fiscal year.
2. There were 19 internal directors, two internal statutory auditors and four outside directors as of the end of the fiscal year.

Name(director type)

Total
compensation

Company(¥ million)

Total compensation by type (¥ million)
Base compensation

Bonus

297

Dai Nippon Printing Co., Ltd.

271

26

Koichi Takanami

126

Dai Nippon Printing Co., Ltd.

111

14

Masayoshi Yamada

126

Dai Nippon Printing Co., Ltd.

111

14

(Director)(Director)(Director)

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

Appendix(3) Policies regarding the determination of compensation for directors and statutory auditors
Compensation for directors is calculated within the limits on directors’ compensation approved byshareholders at a general meeting, reviewed and discussed by the Management Committee, anddeliberated and decided on by the Board of Directors.
Compensation for each director is determined based on a broad range of factors, including theoperations they are in charge of, their responsibilities, achievements, and contributions.
Compensation for statutory auditors is calculated within the limits on statutory auditors’compensation, and the compensation of each statutory auditor is determined based on discussions withthe statutory auditor.

Financial Section

Yoshitoshi Kitajima

Corporate Governance(2) Company directors and total compensation57

■ Stockholdings(1) Stocks held for reasons other than for pure investment purposes
No. of stocks: 403
Total on the balance sheet: 180,061 million yen(2) Holding category, company name, number of shares, amount recorded on the balance sheet,and holding purpose of stocks held for reasons other than for pure investment purposes(Previous fiscal year)
Stocks held for reasons other than pure investment purposes

The Dai-ichi Life Insurance Co., Ltd.

66,066

Amount recordedon balance sheet(¥ million)
8,357

NuFlare Technology, Inc.

10,0005,830Strengthen business alliance

27,134,319

5,399

Enhance business relationship

Taisho Pharmaceutical Holdings Co., Ltd.

692,700

4,724

Enhance business relationship

Terumo Corporation

1,101,000

4,459

Enhance business relationshipAsahi Group Holdings, Ltd.

1,860,029

4,183

Enhance business relationship

NISSIN FOODS HOLDINGS CO., LTD.

898,711

3,940

Enhance business relationship

Ezaki Glico Co., Ltd.

3,224,268

3,140

Enhance business relationship

YAMATO HOLDINGS CO., LTD.

1,660,600

2,889

Enhance business relationship

YAKULT HONSHA CO., LTD.

701,000

2,667

Enhance business relationshipToyo Suisan Kaisha, Ltd.

794,980

2,289

Enhance business relationship

Aica Kogyo Co., Ltd.

1,293,743

2,248

Enhance business relationship

TOSHIBA CORPORATION

4,547,000

2,146

Strengthen business alliance

CALBEE, Inc.

258,200

1,970

Enhance business relationshipLion Corporation

3,140,665

1,626

Enhance business relationship

Hulic Co., Ltd.

2,040,000

1,576

Enhance business relationship

Mitsubishi Chemical Holdings Corporation

3,598,790

1,565

Strengthen business alliance

Sapporo Holdings Limited

3,796,388

1,499

Enhance business relationship

Mitsubishi UFJ Financial Group, Inc.

2,399,760

1,339

Enhance business relationship

NSK Ltd.

1,814,000

1,297

Strengthen business alliance

FUJIFILM Holdings Corporation

685,965

1,259

Enhance business relationship

Hakuhodo DY Holdings Inc.

172,000

1,233

Enhance business relationship

Meiji Holdings Co., Ltd.

282,200

1,231

Enhance business relationship

Senshukai Co., Ltd.

1,509,663

1,160

Enhance business relationship

Daikin Industries, Ltd.

300,000

1,107

Enhance business relationship

NIPPON STEEL & SUMITOMO METAL CORPORATION

4,594,768

1,079

Strengthen business alliance

Company name

Mizuho Financial Group, Inc.

Number ofsharesHolding purpose
Enhance business relationship

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

Note:

58

Company name

Number ofsharesAmount recordedon balance sheet(¥ million)

Terumo Corporation

1,930,500

7,818

TV Asahi Corporation

4,030,000

7,338

Astellas Pharma Inc.

913,770

4,623

Japan Tobacco Inc.

1,000,000

3,000

Holding purpose
Hold voting instruction rights forshares in retirement benefit trust
Hold voting instruction rights forshares in retirement benefit trust
Hold voting instruction rights forshares in retirement benefit trust
Hold voting instruction rights forshares in retirement benefit trust

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

Synopsis of PerformanceStrengthen business alliance692,700

5,756

Enhance business relationshipMizuho Financial Group, Inc.

27,134,319

5,535

Enhance business relationshipAsahi Group Holdings, Ltd.

1,860,029

5,373

Enhance business relationship

Terumo Corporation

1,101,000

4,961

Enhance business relationship

Ezaki Glico Co., Ltd.

3,226,766

4,410

Enhance business relationship

NISSIN FOODS HOLDINGS CO., LTD.

898,7114,183

Enhance business relationship

YAMATO HOLDINGS CO., LTD.

1,660,600

3,693

Enhance business relationship

YAKULT HONSHA CO., LTD.

701,000

3,631

Enhance business relationship

Aica Kogyo Co., Ltd.

1,293,743

2,974

Enhance business relationship

Hulic Co., Ltd.

2,040,000

2,884

Enhance business relationshipToyo Suisan Kaisha, Ltd.

794,980

2,738

Enhance business relationship

CALBEE, Inc.

1,032,800

2,508

Enhance business relationship

TOSHIBA CORPORATION

4,547,000

1,987

Strengthen business alliance

NSK Ltd.

1,814,000

1,926

Strengthen business alliance

Lion Corporation

3,140,665

1,918

Enhance business relationship

FUJIFILM Holdings Corporation

685,965

1,900

Enhance business relationship

Meiji Holdings Co., Ltd.

282,200

1,837

Enhance business relationship

Daikin Industries, Ltd.

300,000

1,734

Enhance business relationship

Mitsubishi Chemical Holdings Corporation

3,598,790

1,543

Strengthen business alliance

Sapporo Holdings Limited

3,796,388

1,541

Enhance business relationship

Mitsubishi Electric Corporation

1,300,000

1,510

Enhance business relationship

Eidai Co., Ltd.

2,237,000

1,386

Enhance business relationship

Mitsubishi UFJ Financial Group, Inc.

2,399,760

1,360

Enhance business relationship

Senshukai Co., Ltd.

1,509,663

1,271

Enhance business relationship

SMK Corporation

3,200,000

1,244

Enhance business relationship

Hakuhodo DY Holdings Inc.

1,720,000

1,238

Enhance business relationship

ROHM Co., Ltd.

268,366

1,235

Enhance business relationshipShiseido Co., Ltd.

677,619

1,230

Enhance business relationship

NuFlare Technology, Inc.
Taisho Pharmaceutical Holdings Co., Ltd.

Number ofsharesAmount recordedon balance sheet(¥ million)

Holding purpose

Terumo Corporation

1,930,500

8,698

Hold voting instruction rights forshares in retirement benefit trust

TV Asahi Corporation

4,030,000

7,536

Hold voting instruction rights forshares in retirement benefit trust

Astellas Pharma Inc.

913,770

5,592

Hold voting instruction rights forshares in retirement benefit trust

Japan Tobacco Inc.

1,000,000

3,240

Hold voting instruction rights forshares in retirement benefit trust

Appendix

Note:

Company nameFinancial Section

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

Corporate Governance

6,820

The Dai-ichi Life Insurance Co., Ltd.

Holding purpose

DNP’s Businesses

Enhance business relationship

1,000,000

Number ofsharesSpecial Feature

6,606,600

Amount recordedon balance sheet(¥ million)
9,909

Company nameTo Our Shareholders(Current fiscal year)
Stocks held for reasons other than pure investment purposes

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

(3) Stocks held for pure investment purposes
None

59

2

Compensation Paid to Accounting Auditors(1) Compensation paid to accounting auditors
Previous fiscal year

Current fiscal year

Compensation foraudit certification(¥ million)

Compensation forother services(¥ million)

Compensation foraudit certification(¥ million)

Compensation forother services(¥ million)

Dai Nippon Printing Co., Ltd.

83

Consolidated subsidiaries

128

–

92

–

–

121

Total

211

–

–

213

–

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

60Board of Directors, Statutory Auditors and Corporate Officers
Synopsis of Performance(As of June 27, 2014)

Standing Statutory Auditors

Senior Corporate Officers

Kunikazu Akishige

Kenji Noguchi

Shigemi FuruyaMotoharu Kitajima

Minoru Yoneda

Ryuji Minemura

Executive Vice Presidents

Masaki Tsukada

Shin-ichi Ikeda*

Masato Koike

Koichi Takanami

Sakae Hikita

Masayoshi Yamada

Fujio Yamazaki

Statutory Auditors

Morihiro Muramoto

Yoshinari Kitajima

Tokuji Kanda

Makoto Matsuura*

Kenji Miya

Takashi Saito

Kuniaki Nomura*Toshiki Sugimoto

Senior Managing Directors

Masato Yamaguchi

Kouichi Hashimoto

Mitsuhiko Hakii

Corporate Officers

Masahiko Wada

Directors

Kiyotaka Nakagawa

Tetsuji Morino

Satoru Inoue

Naohiko Sugimoto

Tadao Tsukada*

Shuichi Kobayashi

Tsukasa Miyajima*Kazuhiko Takada
Nobuyuki Asaba
Mitsuru Tsuchiya

DNP’s Businesses

Ryota Chiba

Special FeatureManaging Directors

Yoshitoshi Kitajima

To Our Shareholders

President*Outside directors or auditors

Corporate Governance
Financial Section
Appendix

Yoshinari Kitajima

Koichi Takanami

Yoshitoshi Kitajima

Masayoshi Yamada

61Financial Section
CONTENTS

64

Management’s Discussion and Analysis

74

Selected Financial Data

76

Consolidated Financial Statements

98

Independent Auditor’s ReportManagement’s Discussion and Analysis

Operating Results■ Business Environment
Japan’s economy showed some positive signs during the current fiscal year,
including growth in consumer spending and improvement in corporate
earnings, aided by a series of government economic policies. However, higher
energy prices and slower economic growth in emerging countries helped keep
the economy from entering a full-fledged recovery. The printing industry faced acontinued tough business environment as a result of sluggish demand, higher
raw material costs, and decline in order prices from stiffer competition.
A discussion of the business environment affecting each of DNP’s businesssegments during the current fiscal year is provided below.
Information Communication
・ In the Books and Magazines business and the Education and Publications
Distribution business, publication industry sales fell 3.4% year on year to¥1,658.9 billion during the fiscal year ended March 2014, continuing adownward trend from a peak of ¥2,656.3 billion in 1996. Book sales
slowed overall, declining by 2.7% to ¥775.6 billion. Magazine sales also fell
by 4.1% to ¥883.3 billion as circulation decreased and the number of
discontinued publications continued to far outpace the number of new
publications. However, the e-book market grew by a robust 28.3% to¥93.6 billion, and adding e-magazines, the overall electronic publishingmarket totaled ¥101.3 billion, surpassing ¥100 billion for the first time inJapan (according to Impress Research Institute, Ltd. ). A growing numberof new books are being simultaneously released in both paper andelectronic formats, and a variety of genres of e-books and e-magazines
have emerged. We expect the market to expand further as use ofsmartphones and tablet PCs spreads.
・ Corporate advertising expenditures have a large impact on theCommercial Printing business, and they grew by 4% year on year during
the fiscal year ended March 2014 (according to the Ministry of Economy,
Trade and Industry). Internet advertising rose by 8.9% and campaign andevent spending increased by 6.6%, but expenditures for sales promotions,which consist mainly of flyers, direct mail, and other printed papermaterials, decreased by 1.1%. Moreover, more companies are switchingfrom printed materials to the Internet as the main method of providing
product catalogs and instruction manuals, and demand for printed
materials continues to decline.
・ In the Business Forms business, corporate streamlining and cost cutting
are contributing to the discontinuation of printed material publication and a
decline in circulation, and to the simplification and website viewing of
invoices and notifications. Order prices have also fallen as a result of stiffer
competition, resulting in a continued difficult business environment.
However, the market for Business Process Outsourcing (BPO; e.g.
handling account opening procedures for securities companies andbanks, and policyholder notification printing services for insurancecompanies) has grown favorably, especially for financial institutions.

64

Synopsis of Performance
Special Feature
DNP’s Businesses
Corporate Governance
Financial Section
Appendix

Electronics
・ In the Display Components business and Electronic Devices business,
global smartphone shipments grew by 38% year on year in January–
December 2013 and surpassed 1 billion units for the first time. Tablet PCs
shipments also grew by 51% to around 220 million units, as the mobile
device market continued to expand. However, PCs fell 10% to around 320
million units, as shipments slumped under pressure from the spread oftablet PCs. LCD TVs broke free from negative growth in the previous year,
but rose by just 2% to around 208 million units on sluggish demand amid
slower economic growth in emerging countries.
・ The global semiconductor market grew by 4.8% on rising demand formemory installed in smartphones and tablet PCs and high demand forautomotive semiconductors, which are essential for enhancing safety andreducing fuel consumption.

To Our Shareholders

Lifestyle and Industrial Supplies
・ In the Packaging business, consumer spending was relatively firm as aresult of bulk buying demand ahead of the consumption tax hike in April
2014 and a recovery in business confidence. Domestic supermarket salesrose 0.8% year on year, rising above prior-year levels for the first time in the
17 years since the fiscal year ended March 1997. Moreover, the market
continued to expand for private brand products that are independently
planned, developed, and sold by supermarkets, convenience stores, andother retailers, and demand increased for high-value-added private brandproducts.
・ In the Lifestyle Materials business (including decorative materials),
domestic housing starts grew 10.6% year on year to around 980,000 units
during the fiscal year ended March 2014, rising for a fourth consecutive
year due to front-loaded demand ahead of the consumption tax hike,
improvement in business confidence, low-interest mortgage loans, and an
expected rise in construction material costs.
・ For optical films in the Industrial Supplies business, the LCD panel market
had favorable growth in demand for small- and medium-sized panels in
January–December 2013, with tablet panel shipment volume up 60% year
on year and smartphone panels up 30%. In contrast, large TV panel
shipments were sluggish worldwide, rising just 1%. Additionally, althoughlarge production cutbacks at panel makers were a source of concern
throughout the fiscal year ended March 2014, capacity utilization was
relatively high despite future uncertainty, due partly to prospects for higher
demand in emerging countries in Africa and elsewhere, where salesconditions are hard to gauge. TV panel prices trended downward
throughout the fiscal year as a result of continued surplus supply, but there
were signs of prices bottoming out for 30-inch models, which are a main
source of demand.
・ In the Imaging Communication business (including thermal transfer printing
media for photo printing), there was a shift from conventional silver halide
methods that use a developing solution to dry methods that do not use adeveloping solution.

65

■ Overview
DNP aggressively pursued business activities with the concept “Today’s
Innovation is Tomorrow’s Basic,” based on its business vision “P&I Solution.”
It also worked to quickly identify problems confronting consumers andsociety, to create new value by solving these problems, and to deliverproducts, services, and various solutions tailored to the needs of companies
and consumers. As a result, DNP’s consolidated net sales grew by 0.1% year
on year to ¥1,448,550 million in the fiscal year ended March 2014.
Operating income grew by 40.0% year on year. Despite the impact ofhigher raw material costs, price declines and sluggish performance in the
Information Communication segment, DNP achieved growth thanks to cost
structure reforms in the Electronics segment and business growth for lifestylematerials, thermal transfer printing media for photo printing, and optical films
in the Lifestyle and Industrial Supplies segment. The operating income marginrose by 1.0 percentage points to 3.5%.
The operating income margin decreased by 0.6 percentage points to 1.7%
in the Information Communication segment, but increased by 1.0 percentage
points to 6.4% in the Lifestyle and Industrial Supplies segment. The
Electronics segment had an operating income margin of 7.5%, improving by
7.7 percentage points from a negative margin of 0.2% in the previous year.
The Beverages segment also rose by 0.4 percentage point to 1.2%.

Net sales (¥ million)

2014.32013.32012.3¥ 1,448,550¥ 1,446,607¥ 1,507,228

Gross profit margin (%) 		

18.8%

18.0%

17.3%

Operating income margin (%) 		

3.5%

2.5%

2.3%

Ordinary income margin (%)		

3.7%

2.8%

2.4%

1.3%

Net income margin (%)		
1.8%
Net income (loss) per share (¥)

¥

39.82

¥

29.84

–
¥

（ 25.39 ）■ Net Sales
Net sales totaled ¥1,448,550 million in the current fiscal year, up 0.1%, or¥1,943 million, from the previous year.

Net Sales by Segment(year ended March 2014)

Electronics
11.7%

Lifestyle andIndustrial Supplies
36.5%

66

Beverages
3.8%
Information
Communication
48.0%

Information Communication
In the Books and Magazines business, book sales increased thanks in part tohit titles, but magazines declined and overall sales decreased. In theCommercial Printing business, despite growth for BPO services (e.g.
operation of campaign offices and customer centers) and front-loaded
demand ahead of the consumption tax hike, overall sales decreased on weaksales of catalogs, pamphlets, and other printed materials. In the Business
Forms business, sales increased on a strong performance by smart cards andgrowth in Information Processing Services (IPS, ranging from data entry toprinting and shipment of personalized mail and other items) with the start ofaccount opening services for the Nippon Individual Savings Account (NISA)

Synopsis of Performance
To Our Shareholders

program. In the Education and Publications Distribution business, sales
decreased on a decline in bookstore sales. As a result, overall segment sales
declined by 0.6%.

Special Feature

Lifestyle and Industrial Supplies
In the Packaging business, sales of PET bottle preforms and flexible
packaging increased, but overall sales were down on declines in PET bottle
aseptic filling systems and other products. The Lifestyle Materials businessperformed well due to increased domestic housing starts and greater
demand for products that use Electron Beam technology. In the Industrial
Supplies business, sales of soft packs for lithium-ion batteries decreased, but
overall sales rose above prior-year levels thanks to growth in optical films forflat-panel displays, thermal resin-type transfer printing media for barcodes,
and dye-sublimation thermal transfer printing media for photo printing. As aresult, overall segment sales grew by 2.3%.

DNP’s Overseas Sales(¥ billion)

250
216.4

200
193.1

197.6

192.2

195.6

10

11

12

13

150

100

Financial Section

Overseas sales totaled ¥216,457 million in the current fiscal year, up 10.6%,
or ¥20,837 million, from the previous year. As a result, the ratio to overall sales
was 14.9%, up 1.4 percentage points from 13.5%. By region, sales in Asia
(including Indonesia and Taiwan) were up 10.9% from the previous term at¥152,501 million, and other regions (including the US and France) were up
10.1% at ¥63,956 million.

Corporate GovernanceBeverages
Amid a weak soft drink market and stiffer sales competition, DNP worked to
expand sales by conducting major sales promotions, including the Zero Limit
Promotion and the Coca-Cola Music Promotion. As a result, despite growthfor I LOHAS, a brand of mineral water that uses a lightweight eco-friendly PET
plastic bottle, overall segment sales fell by 2.6% on declines in sales ofcoffees and other products.

DNP’s Businesses

Electronics
In the Display Components business, sales of small- and medium-sized LCD
color filters for smartphones and tablet PCs were firm, but overall sales
decreased due to lower demand for laptop PC and monitor filters and thetransfer of the Sakai plant color filter business to Sakai Display Products
Corporation in August 2012. Semiconductor photomask sales rose above
prior-year levels on strong sales to overseas companies, but overall segment
sales (including Display Components) decreased by 5.1%.

50

14

Appendix

067

■ Cost of Sales

Gross Profit Margin
(%)

25

20

18.7

19.0

10

11

18.0

17.3

18.8

15

10

5

0

12

13

14

SGA Expenses to Net Sales(%)

The cost of sales totaled ¥1,176,077 million, down 0.9%, or ¥10,480 million,
from the previous year. The gross margin was 18.8%, up 0.8 percentage
points from 18.0%.
Naphtha prices rose during the current fiscal year due to the weaker yen,and prices for resins, films, and other petrochemical products increased.
Printing paper prices were also higher as the supply and demand balancetightened on a decline in imported paper due to the weaker yen andproduction cutbacks at domestic papermakers. As a result, higher raw
material costs had a ¥6.3 billion impact in the current fiscal year, far greaterthan the ¥1.5 billion impact in the previous year. Additionally, while DNP wasable to negotiate with customers to pass nearly the full amount of cost
increases through to product prices in the previous fiscal year, the passthrough rate was just around 40% during the current year, partly because raw
material costs increased several times.
DNP pursued several cost-cutting initiatives including improving production
efficiency based on integrated production control centers in the Information
Communication segment and Packaging Operations, significantly curbing
production costs through efforts to improve yields and reduce variable costs(including material losses), cutting personnel costs mainly by restraining
overtime, and lowering equipment costs through the consolidation of
production plants. As a result, DNP cut costs by ¥32.3 billion during thecurrent fiscal year.

20

16

14.5

14.7

15.0

15.5

15.4

Selling, general and administrative expenses totaled ¥222,374 million, downby 0.8%, or ¥1,895 million, from the previous year. Selling, general andadministrative expenses equated to 15.4% of net sales, down 0.1 percentage
points from the previous year.

12

8

4

0

10

11

12

13

14

Operating Income Margin
(%)

10

8

6
4.2

4.3

4
3.5
2

0

68

■ Selling, General and Administrative Expenses

10

11

2.3

2.5

12

13

14

■ Operating Income
Operating income totaled ¥50,099 million, up 40.0%, or ¥14,319 million, fromthe previous year. The operating income margin was 3.5%, up 1.0 percentage
points from 2.5% in the previous year.
Information Communication
In the Information Communication segment, DNP worked to expand
businesses with relatively high profitability such as smart cards and BPO
services (e.g., print processing for financial institutions), and to reduce
segment-wide costs by raising the ratio of internal production based on
integrated production control centers. Despite these efforts, segment
operating income totaled ¥11,901 million, down 25.4%, or ¥4,043 million, fromthe previous year, as a result of price declines caused by stiffer competition,higher raw material costs, and increased outlays for developing e-books andother new businesses.

Synopsis of Performance
To Our Shareholders

Lifestyle and Industrial Supplies
DNP was affected by higher costs for films, resins, and other raw materials
and by price reductions caused by stiffer competition. Nevertheless, segment
operating income totaled ¥33,910 million, up 21.0%, or ¥5,881 million, fromthe previous year, due to higher sales of strong-performing products andoverseas business expansion driven by the weaker yen. The operating
income margin was 6.4%, up 1.0 percentage points from 5.4% in the previous
year.

Special Feature

Electronics
Segment operating income totaled ¥12,931 million, up ¥13,235 million from aloss of ¥304 million in the previous year, aided by cost structure reforms,
including the transfer of operations at the Sakai plant after a downturn inprofitability in 2012 and the subsequent sale of surplus equipment, and by acontribution from new products, including touch panel sensors for whichmass production has recently commenced.

DNP’s Businesses

Beverages
Segment operating income totaled ¥652 million, up 38.5%, or ¥181 million,
from the previous year, due to reductions in production and distribution costs
from increasing the ratio of internal production and to a review of advertisingand sales promotion costs.

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

7
6
5
4
3

2.6

2.7

2.2

2.8

2
1
0
–1
–2
–3

– 1.8

10

11

12

13

14

Financial Section
Appendix■ Net Income

ROE
(%)

Corporate GovernanceNonoperating income totaled ¥10,507 million, down 29.2%, or ¥4,326 million,
from the previous year; and nonoperating expenses totaled ¥7,320 million,
down 28.9%, or ¥2,975 million. As a result, net nonoperating income was¥3,187 million.
Ordinary income totaled ¥53,285 million, up 32.2%, or ¥12,967 million, fromthe previous year.
Extraordinary income totaled ¥2,318 million, down ¥7,869 million from theprevious year, reflecting a large decline in gains on the sale of property, plantand equipment relative to large sales or disposals of property, plant andequipment in the previous fiscal year. Extraordinary losses totaled ¥6,995
million, down ¥8,358 million from the previous year, due to lower losses on
the sale or disposal of property, plant and equipment and lower impairment
losses. As a result, net extraordinary losses totaled ¥4,677 million, down from
¥5,166 million in the previous year.
As a result of the above, income before income taxes and minority interests
totaled ¥48,608 million, up ¥13,456 million from the previous year.

Net income totaled ¥25,642 million, up 33.4%, or ¥6,424 million, from theprevious year. Net income per share was ¥39.82, up ¥9.98.

69

Liquidity and Capital Resources
Cash Flow
2014.3
Cash flow from operating activities ¥120,109

2013.3¥

100,498

2012.3¥

108,603

Cash flow from investing activities		 （ 58,371 ）（ 72,588 ）（ 80,126 ）Free cash flow 		 61,738

27,91028,477(¥ million)

Interest-bearing Debt to Cash Flow Ratio(times)

2.5

2.3

2.1
2.0
1.6
1.5

1.5

1.2
1.0

0.5

0

10

11

12

13

14

Capital Expenditures and Free Cash Flow(¥ billion)

200

150

119.1

100

102.2

98.2
88.3

50

28.5

19.9

0

10

11

Capital expenditures

70

63.5 61.7

57.5

12

27.9

13

Free cash flow

14

Net cash provided by operating activities totaled ¥120,109 million, up 19.5%
from the previous year.
Net cash used in investing activities totaled ¥58,371 million, down 19.6%,
or ¥14,217 million, from ¥72,588 million in the previous year.
Net cash used in financing activities totaled ¥80,038 million, up ¥43,802
million, from ¥36,236 million in the previous year.
As a result of these activities, cash and cash equivalents at the end of the
fiscal year totaled ¥199,813 million, down 5.7%, or ¥12,249 million, from theprevious year.
Free cash flow—i.e. net cash provided by operating activities minus net
cash used in investing activities—was ¥61,738 million, up ¥33,828 million
from ¥27,910 million in the previous year.

■ Capital Expenditures; Depreciation;■ Research and Development Expenditures, etc.
Capital expenditures this fiscal year were mainly invested in streamlining, andtotaled ¥63.5 billion, down 28.1%, or ¥24.9 billion, from the previous year.
By segment, capital expenditures in Information Communication were ¥23.7
billion, down ¥3.6 billion from the previous year, and accounted for 37% of
total capital expenditures. Investment in Lifestyle and Industrial Supplies was¥26.3 billion, down ¥6.3 billion, and 42% of the total, while investment inElectronics was ¥9.0 billion, down ¥11.1 billion and accounting for 14%.
Capital expenditures on other businesses totaled ¥4.5 billion, down ¥3.8
billion and accounting for 7%.
Depreciation totaled ¥73.5 billion, down 8.4%, or ¥6.7 billion from theprevious year. By segment, depreciation in the Information Communication
segment was ¥22.0 billion, down ¥0.3 billion from the previous year andaccounting for 30% of total depreciation. The Lifestyle and Industrial Supplies
segment was ¥25.5 billion, down ¥0.9 billion and accounting for 35%. The
Electronics segment was ¥20.6 billion, down ¥5.3 billion and accounting for28%. Other businesses were ¥5.3 billion, down ¥0.2 billion and accounting
for 7%.
Research and development expenditures totaled ¥30.8 billion, unchanged
from the previous year.

Synopsis of Performance■ The Balance Sheet
2014.32013.32012.3¥ 1,574,754¥ 1,578,976¥ 1,608,806

164%

177%

Working capital/net sales (%)		 22%

20%

23%

Debt-to-equity ratio (%) 		
20%

25%

26%

Current ratio (%) 		
175%¥ 1,447.96¥ 1,386.86¥ 1,352.71

Current Ratio
(%)

200
177

177
164

157

175

150

100

50

0

10

11

12

13

14

Corporate Governance

Equity Ratio
(%)

80

60

55.1

54.2

56.6

10

11

12

13

59.2

Financial Section

56.6

40

20

0

DNP’s Businesses

DNP’s total assets at the end of this fiscal year amounted to ¥1,574,754
million, down 0.3%, or ¥4,222 million from the previous year.
Among current assets, cash and cash equivalents, and time deposits
totaled ¥203,212 million, down 4.9%, or ¥10,418 million from the previous
year. Trade receivables totaled ¥356,981 million, down 2.9%, or ¥10,784
million. Inventories of merchandise and finished products, work in process,raw materials and supplies totaled ¥139,656 million, up 0.4%, or ¥601 million.
As a result, current assets totaled ¥733,054 million, down 2.4%, or ¥18,097
million.
Among long-term assets, property, plant and equipment totaled ¥528,538
million, down 1.8%, or ¥9,917 million from the previous year. Intangible assets
totaled ¥31,751 million, down 10.5%, or ¥3,729 million. Investments and otherassets totaled ¥281,409 million, up 10.8%, or ¥27,519 million. As a result,long-term assets totaled ¥841,700 million, up 1.7%, or ¥13,875 million.
Current liabilities totaled ¥418,423 million, down 8.6%, or ¥39,362 million,
from the previous year. Long-term liabilities totaled ¥179,946 million, down
2.3%, or ¥4,190 million. As a result, total liabilities amounted to ¥598,369
million, down 6.8%, or ¥43,552 million.
Additionally, net assets totaled ¥976,385 million, up 4.2%, or ¥39,330
million.
DNP repurchased a total of about 112.86 million of its shares through 2008
and retired 59 million treasury shares during this time. As of March 31, 2014,
the number of treasury shares totaled 56,586,830, or 8.08% of total shares
outstanding of 700,480,693 shares. The number of treasury shares increased
by 96,501 shares from the previous year due to the purchase and sale of
odd-lot shares.

Special Feature

Net assets per share (¥)

To Our Shareholders

Total assets (¥ million)

14
Appendix71

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

■ The Japanese and overseas economies■ and consumption trends
DNP engages in a wide range of businesses with anextremely large number of corporate customers, andconducts its business stably, so as not to overly depend on
specific customers. DNP does most of its business in theJapanese market, but if consumer spending and othercomponents of domestic demand slump, owing todomestic economic weakness in sympathy with global
economic trends, declines in order volume and unit prices
may affect its corporate performance.
Additionally, DNP could be directly or indirectly affectedby market trends in various industries in Japan or overseas.
In particular, electronics-related industries are susceptible
to global declines in unit prices caused by expansion of
production in emerging countries and changes in demand,and DNP’s performance could be affected by majorchanges in market trends.

■ Overseas business activities
DNP conducts overseas business activities in theAmericas, Europe, Southeast Asia, and elsewhere, andthese activities face risks including social and politicalturmoil caused not only by economic factors, such as
unexpected changes in laws and regulations, fragility ofindustrial infrastructure, and difficulty of hiring and securingpersonnel, but also by terrorism, war, and other factors.
DNP’s performance could be affected if its overseas
business activities are obstructed as a result of these risksmaterializing.

■ Development of new products and services
DNP uses its printing and information technologies todevelop and provide to a broad range of industries
products and services that solve problems facing
companies, consumers, and society. The pace oftechnological innovation in these areas has been
accelerating, and customers’ needs have been rapidly
diversifying. We believe that in the future, competition72

in the area of product development will become more
intense than ever before in Japan and overseas, and it ispossible that DNP’s performance could fluctuatesignificantly due to unforeseeable changes in market trends
or a shortening of product life cycles.

■ Strategic business and capital alliances and■ corporate acquisitions
DNP engages in strategic business and capital alliancesand corporate acquisitions, and its performance could be
affected if it is unable to achieve initially expected results
and synergies as a result of deterioration in the businessenvironment affecting the companies and businesses
involved in these alliances and acquisitions.

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

■ Currency fluctuations
Particularly in fields such as Lifestyle and Industrial
Supplies, and Electronics, we are expanding our dealingsin products and services with overseas customers.
Because we expect the effects of currency rates togradually become more important, we use such means asforeign exchange forward contracts to hedge the risks ofcurrency fluctuations. Nevertheless, it is possible thatradical swings in currency values could have a more
serious effect on DNP’s performance.

Financial Section
Appendix

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

DNP works to establish corporate ethics throughout thegroup and earn the trust of society by having each andevery employee comply with laws and regulations in
conducting business activities, maintaining higher ethicalstandards than required by society, and contributing tomaintaining and advancing orderly and freely competitivemarkets with a consistently fair attitude. Nevertheless,
DNP’s performance could be affected in the event of being
subject to lawsuits and resulting fines in Japan or overseas.

Corporate Governance■ Response to changes in■ legal regulations, etc.

■ Lawsuits and fines
DNP’s Businesses

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

Special Feature■ Information security and■ personal information protection

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

To Our Shareholders

DNP is affected by legal regulations in Japan and othercountries related to energy conservation, climate change
prevention (e.g. reduction of greenhouse gas emissions),
reduction of the use of harmful substances, air pollution
prevention, water quality protection, waste treatment, andproduct recycling. These regulations could possibly bestrengthened or changed in the future. In addition, DNP’sbusiness could be substantially affected if faced witha situation in which soil is contaminated by harmful
substances and it is held responsible for assessment andcleanup.

■ Disasters

Synopsis of Performance■ Environmental protection and■ stricter environmental regulations

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

2014

2013

2012

2011

¥ 1,448,550¥ 1,446,607¥ 1,507,228

Cost of sales		1,176,077

		1,186,558

		1,246,878

		 1,287,581

Gross profit

		 272,473

		 260,049

		 260,350

		

301,792

Selling, general and administrative expenses

		 222,374

		 224,269

		 226,335

		

233,973

Operating income		

50,099		

35,780		

34,015

		

67,819Ordinary income		

53,285

		

40,318

		

36,843

		62,786

Income (loss) before income taxes and minority interests		

48,608

		

35,152

		

2,673

		

52,696

		25,642

		

19,218

		 (16,356)

		25,033¥ 1,574,754¥ 1,578,976¥ 1,608,806¥

1,649,784

Property, plant and equipment—net

		 528,538

		 538,455

		 579,567

		614,827

Long-term liabilities

		 179,946

		 184,136

		 251,414

		249,575

Total liabilities

		 598,369

		 641,921

		 694,593

		697,343

Total stockholders’ equity

		

		

		

–

		

–

Stockholders’ equity

		 892,110

		 887,194

		 888,650

		

925,702

Total net assets

		 976,385

		 937,055

		 914,213

		

952,441

Statements of Operations Data (¥ million)
Net sales

Net income (loss)¥

1,589,373

Balance Sheet Data (¥ million)
Total assets––

Other Selected Data (¥ million)
Capital expenditures¥

63,465¥88,315¥98,189¥102,173

Depreciation expenses

		73,459		

80,200		

95,829		

97,977

R&D expenditures		

30,820		

30,820		

31,690		

33,147

¥

39.82

¥

29.84

¥

(25.39)¥38.86

Earnings (loss) per share—fully diluted

		

39.65

		

29.79

		

–

		

–

Dividends paid per share

		

32.00

		

32.00

		

32.00

		

32.00

Book value per share		 1,447.96

		 1,386.86

		 1,352.71

		

1,410.44

No. of common shares outstanding (exc. treasury shares)
		643,893,863

		643,990,364

		644,062,928

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

644,142,530

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

		 18.81%

		 17.98%

		 17.27%

18.99%

		 Selling, general and administrative expenses

		 15.35

		 15.50

		 15.02

14.72

		 Operating income

		 3.46

		 2.47

		 2.26

4.27

		 Income (loss) before income taxes and minority interests 		 3.36

		 2.43		 0.18

3.32

		 Net income (loss)

		 1.77		 1.33

		 -1.09

1.57

Return on equity

		 2.81		 2.18

		 -1.84

2.74

Current ratio

		

175

		

164

		

177

177

D/E ratio

		

20

		

25

		

26

25

		

74

		

		

2005

1,583,383¥ 1,584,844¥ 1,616,053¥ 1,557,802¥ 1,507,506¥ 1,424,943

		 1,286,682

		1,324,522

		1,327,872

		1,268,072

		1,202,160

		1,121,374

		

296,701

		 260,322

		 288,181

		 289,730

		 305,346

		 303,569

		230,187

		 214,145

		 201,077

		 193,585

		 184,676

		 183,041

		66,514

		

46,177

		87,104

		

96,145

		 120,670

		 120,528

		

68,841

		

47,390		

86,502

		 101,348

		 124,715

		 120,485

		

49,496

		 (27,842)

		88,469		

98,950		 114,640

		 107,686

		23,278		 (20,933)

		

45,172

		

54,842

				

¥

1,618,854¥ 1,536,557¥ 1,601,193¥ 1,700,250¥ 1,662,377¥ 1,600,129

		

616,848

		 604,904

		 639,343

		 635,784

		 568,966

		 528,009

		

190,045

		 126,671

		 106,691

		 118,437

		 118,287

		 115,801

		

661,990

		 596,471

		 561,058

		 600,811

		 571,170

		 566,796

		

–

		

		

		

		1,063,309

		1,007,944

		921,775

		 917,348

		 990,122

		1,027,475

		

–

		

–

		

956,864

		 940,086

		1,040,135

		1,099,439

		

–

		

–

¥

119,063

		

91,695

		 106,883

		 109,902

		33,850		

34,112

		

¥

36.13

¥

(32.35)

¥

¥

¥

–

96,156¥–116,139¥–

162,886

65,18859,937¥136,059¥

86,057

		 100,161

		

87,264

		

80,44035,556

		30,113

		28,692

		

26,386

67.08

¥

78.10

¥

91.23

¥

82.56

–

		

–

		

–

		

–

		

–

		

–

		

32.00

		

32.00

		

36.00

		

32.00

		

26.00

		

24.00

		

1,422.34

		 1,393.91

		 1,516.35

		 1,544.02

		 1,507.90

		 1,409.18

		644,238,930

		644,357,076

		661,366,377

		694,226,171

		704,972,101

		715,076,830

		 16.43%

		 17.83%

		 18.60%

		 20.26%

		 21.30%

		 14.54

		 13.51

		 12.44

		 12.43

		 12.25

		 12.85

		

4.20

		 2.91		 5.39

		 6.17

		 8.00

		 8.46		

3.13

		 -1.76

		 5.47

		 6.35

		 7.60

		 7.56		

1.47

		 -1.32

		 2.80

		 3.52

		 4.32

		 4.21		

2.57

		 -2.20

		 4.35

		 5.14

		 6.29

		 6.03

		

157

		

144

		

157

		

166

		

178

		

186

		

18

		

14

		

8

		

6

		

6

		

7

Appendix		 18.74%

Financial Section		

Corporate Governance

2006

DNP’s Businesses

2007

Special Feature

2008

To Our Shareholders

2009

Synopsis of Performance

2010

75

Consolidated Financial Statements

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

Millions of yen

Dai Nippon Printing Co., Ltd. and Consolidated Subsidiaries
March 31, 2014 and 2013

2013

2014

2014

AssetsCurrent assets:
Cash and cash equivalents (Notes 4 and 16)
Time deposits (Note 16)
Trade receivables (Notes 10 and 16)
Allowance for doubtful receivables
Inventories (Note 6)
Prepaid expenses and other current assets (Notes 10 and 13)
Total current assets¥¥

212,062
1,568
367,765(2,883)139,055
33,584751,151$

1,939,932
33,0003,465,835(27,097)
1,355,883
349,476
7,117,029

Investments and advances:Non-consolidated subsidiaries and associated companies(Notes 10 and 16)
Investment securities (Notes 5 and 16)
Other (Note 16)
Total investments and advances

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

33,716
157,088
8,992
199,796

329,466
1,785,214
83,825
2,198,505

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

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

154,005
529,760
925,341
32,17022,922
1,664,198(1,125,743)
538,455

1,486,990
5,213,388
8,687,058
304,787
267,738
15,959,961(10,828,524)
5,131,437

86,71689,574

841,903

Other assets (Notes 7, 8, 13 and 14)

Total assets

76

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

1,574,754¥

1,578,976$

15,288,874

2013

2014

2014

48,962
14,330249,605
38,656
8,942
57,928418,423¥

47,29757,565249,568
36,528
9,015
57,812457,785$

475,359
139,126
2,423,350
375,301
86,816562,407
4,062,359

122,349
26,442–35,345
184,136

1,158,301–
286,893
301,855
1,747,049

114,464
144,898
727,070

114,464
144,898
722,058

1,111,301
1,406,777
7,058,932(94,322)892,110(94,226)
887,194(915,748)
8,661,262

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

18,9089(12,987)–
5,930
16
43,915937,055

335,903
29
1,408
53,136
390,476
155
427,573
9,479,466

DNP’s Businesses

119,305–
29,55031,091
179,946

Contingent liabilities (Note 18)

1,574,754¥

1,578,976$

15,288,874

Financial Section¥

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

Corporate GovernanceNet assets
Stockholders’ equity
Common stock Authorized: 1,490,000,000 shares;
Issued: 700,480,693 shares;
Capital surplus (Note 9)
Retained earnings (Note 9)
Treasury stock, at cost
56,586,830 shares in 2014 and 56,490,329 shares in 2013 (Note 9)
Total stockholders’ equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Net deferred gains on hedges
Foreign currency translation adjustments
Remeasurements of defined benefit plans (Note 8)
Total accumulated other comprehensive income
Stock acquisition rights
Minority interests
Total net assets
Total liabilities and net assets

Special Feature

Long-term liabilities:
Long-term debt (Notes 7 and 16)
Liability for retirement benefits (Note 8)
Net defined benefit liability (Note 8)
Other long-term liabilities (Notes 7 and 13)
Total long-term liabilities¥

To Our Shareholders

Liabilities and Net Assets
Current liabilities:
Short-term bank loans (Notes 7 and 16)
Current portion of long-term debt (Notes 7 and 16)
Trade payables (Notes 10 and 16)
Accrued expenses (Note 10)
Income taxes payable (Note 13)
Other current liabilities (Notes 7, 10 and 13)
Total current liabilities

Synopsis of Performance

Thousands of
U.S. dollars (Note 3)

Millions of yen

Dai Nippon Printing Co., Ltd. and Consolidated Subsidiaries
March 31, 2014 and 2013

Appendix77

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

Millions of yen

Dai Nippon Printing Co., Ltd. and Consolidated Subsidiaries
Years ended March 31, 2014 and 2013

Net sales (Note 19)
Cost of sales (Notes 11 and 19)
Gross profit
Selling, general and administrative expenses (Notes 11 and 19)
Operating income¥

1,448,550
1,176,077
272,473
222,374
50,099Other income (expenses) (Note 12):Interest and dividends income
Interest expenses
Equity in earnings of affiliates
Foreign exchange transaction gain
Net (loss) gain on sale or disposal of property, plant and equipment
Net gain on sales of investment securities
Loss on devaluation of investment securities
Impairment loss on fixed assets (Note 14)
Other

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

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

78

2013

2014
¥

1,446,607
1,186,558
260,049
224,269
35,7802014$

14,063,592
11,418,223
2,645,369
2,158,971
486,398

3,738(2,914)743
1,068(3,861)
385
(489)
(140)
(21)
(1,491)

3,465(3,483)
3,013
1,411
2,844
140
(2,692)(3,564)(1,762)(628)

36,291(28,291)
7,214
10,369(37,486)
3,738(4,748)(1,359)(204)(14,476)

48,60835,152471,922

14,5897,224
21,813
26,795

17,079(314)
16,765
18,387

141,640
70,136
211,776
260,146(1,153)25,642¥831
19,218$(11,195)
248,951

Thousands of
U.S. dollars (Note 3)

Millions of yen

Dai Nippon Printing Co., Ltd. and Consolidated Subsidiaries
Years ended March 31, 2014 and 2013¥

26,795¥$

260,146

15,125
1
13,09914,2907
9,276

146,84410
127,175698
28,92355,718162
23,73542,122

6,777
280,806
540,952

42,568
(446)

Yen

$

528,70912,243

U.S. dollars (Note 3)

2014

Net assets per common share¥

1,447.96¥

1,386.86$

14.06

Net income per common shareprimary

¥

39.82

¥

29.84

$

0.39

Net income per common share
fully diluted

¥

39.65

¥

29.79

$

0.38

DNP’s Businesses

2013

2014

Corporate Governance

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

Special Feature¥

54,457
1,261¥

18,3872014
To Our Shareholders

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

2013

2014

Synopsis of Performance

Consolidated Statements of Comprehensive Income

Financial Section
Appendix79

Consolidated Statements of Changes in Net Assets
Millions of yen

Dai Nippon Printing Co., Ltd. andConsolidated Subsidiaries
Years ended March 31, 2014 and 2013

Balance at April 1, 2012
Changes of items during the period
Net income
Cash dividends paid
Changes in resulting from changeof scope of consolidation
Purchases of treasury stock
Disposal of treasury stock
Changes in valuation difference
on available-for-sale securities
Changes in deferred gains (losses)on hedges
Changes in foreign currencytranslation adjustments
Changes in minority interests
Total changes of items during the period
Balance at March 31, 2013
Changes of items during the period
Net income
Cash dividends paid
Changes in resulting from changeof scope of equity method
Purchases of treasury stock
Disposal of treasury stock
Changes in valuation difference
on available-for-sale securities
Changes in deferred gains (losses)on hedges
Changes in foreign currencytranslation adjustments
Changes in remeasurementsof defined benefit plans
Changes in minority interests
Total changes of items during the period
Balance at March 31, 2014

Stockholders’ equity

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

Number ofsharesissued(in thousands)

Commonstock

CapitalsurplusRetainedearnings

700,480

114,464

144,898

723,460(94,172)

4,370

(15)

(21,776)–

16

42,968

–
–

–
–

–
–

19,218(20,626)

–
–

–
–

–
–

–
–

–
–

–
–

–
–

–
–
–

–
–
–

–
–
–

17
–
(11)

(33)
(38)
17

–
–
–

–
–
–

–
–
–

–
–
–

–
–
–

–
–
–

–

–

–

–

–

14,538

–

–

–

–

–

–

–

–

–

–

–

24

–

–

–

–

–
–
–
700,480–––
114,464–––
144,898––(1,402)722,058––(54)(94,226)––
14,53818,908

–
–
24
9

8,789
–
8,789
(12,987)

–
–
–
–

–
–
–
16

–
947
947
43,915

–
–

–
–

–
–

25,642(20,625)

–
–

–
–

–
–

–
–

–
–

–
–

–
–

–
–
–

–
–
–

–
–
–

(4)
–
(1)

–
(97)
1

–
–
–

–
–
–

–
–
–

–
–
–

–
–
–

–
–
–

–

–

–

–

–

15,690

–

–

–

–

–

–

–

–

–

–

–

(6)

–

–

–

–

–

–

–

–

–

–

–

13,132

–

–

–

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

–
–
(6)
3

–
–
13,132
145

5,473
–
5,473
5,473

–
–
–
16

–
125
125
44,040

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

Minority
interests

Treasurystock,
at costMinority
interests

Thousands of U.S. dollars (Note 3)
Number ofsharesissued(in thousands)

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

Stockholders’ equity
Commonstock

Retainedearnings

700,480 1,111,301 1,406,777

7,010,272(914,816)

183,57387(126,087)–155

426,359

–
–

–
–

–
–

248,951(200,243)

–
–

–
–

–
–

–
–

–
–

–
–

–
–

–
–
–

–
–
–

–
–
–

(39)
–
(9)

–
(942)
10

–
–
–

–
–
–

–
–
–

–
–
–

–
–
–

–
–
–

–

–

–

–

–

152,330

–

–

–

–

–

–

–

–

–

–

–

(58)

–

–

–

–

–

–

–

–

–

–

–

127,495

–

–

–

–
–
–
–
–
–
–
–
–
700,480 1,111,301 1,406,777––
48,6607,058,932

–
–
(932)
(915,748)––
152,330
335,903

–
–
(58)
29

–
–
127,495
1,408

53,136–53,13653,136

–
–
–
155

–
1,214
1,214
427,573

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

80

Treasurystock,
at costCapitalsurplusThousands of
U.S. dollars (Note 3)

Millions of yen

Dai Nippon Printing Co., Ltd. and Consolidated Subsidiaries
Years ended March 31, 2014 and 2013¥¥35,152$471,922

19,482
12,295(31,665)
8,638
119,689(1,704)(17,487)
100,498

146,457
29,534(59,680)
16,534
1,307,757(2,417)(139,233)
1,166,107(1,484)(54,876)
7,168(7,922)
1,232
–

(276)
(66,217)
14,719(14,138)489
8,091(14,408)(532,777)
69,592(76,912)
11,961–796
5,127(8,412)(58,371)–
3,971(19,227)(72,588)

7,728
49,777(81,670)(566,709)

168
9,227
(7,453)–
850(50,760)(2,956)(20,625)(440)(99)(7,950)(80,038)
6,051(12,249)
212,062(5,490)7,450(6,438)
1,882
500
(660)
(3,494)(20,626)(406)(39)(8,915)(36,236)
4,134(4,192)
216,280

1,631
89,583(72,359)–8,252(492,816)(28,699)(200,243)(4,272)(961)(77,184)(777,068)
58,748(118,922)
2,058,854–
199,813¥(26)
212,062$

Appendix

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

Financial Section

713,194
1,359(5,010)–(72,602)
6,981(7,214)35,418(36,291)
28,291(3,738)
4,748
37,854

Corporate Governance

80,2003,564(1,043)(6,695)––(3,013)3,020(3,465)
3,483
(140)
2,692
(2,816)

DNP’s Businesses

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

Special Feature¥

48,6082014
To Our Shareholders

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

2013

2014

Synopsis of Performance

Consolidated Statements of Cash Flows–
1,939,932

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

81

Notes to Consolidated Financial Statements

Dai Nippon Printing Co., Ltd. and Consolidated Subsidiaries March 31, 2014 and 2013
1. Basis of Presenting the Consolidated Financial Statements
Dai Nippon Printing Co., Ltd. (hereinafter referred to as the “Company”) and its domestic subsidiaries maintain their books of accountand prepare their financial statements in conformity with accounting principles and practices generally accepted in Japan (“Japanese
GAAP”), and its foreign subsidiaries in conformity with the Company’s group accounting policies based on International Financial
Reporting Standards (“IFRS”) or accounting principles generally accepted in the United States of America (“US GAAP”).
The accompanying consolidated financial statements have been compiled from the consolidated financial statements filed with the
Financial Services Agency of Japan as required by the Financial Instruments and Exchange Act of Japan. Certain reclassifications ofaccounts and modifications have been made in the accompanying consolidated financial statements to facilitate understanding byreaders outside Japan. Certain reclassifications have also been made in the 2013 financial statements to conform with current
classifications. In addition, the notes to the consolidated financial statements include additional information which is not required fordisclosure under accounting principles and practices generally accepted in Japan.
2. Significant Accounting Policies
Consolidation
The accompanying consolidated financial statements include the accounts of the Company and its significant majority-owned
subsidiaries. All significant intercompany accounts and intercompany transactions have been eliminated in consolidation.
Consolidated financial statements include the accounts of the Company and 119 consolidated subsidiaries. Some subsidiaries areconsolidated with their fiscal year ends that differ from that of the Company. Significant transactions that took place between theirfiscal year ends and the Company’s fiscal year end are reflected in the consolidated financial statements.
Investments in non-consolidated subsidiaries are stated at cost and, for valuation of such investments, the equity method has notbeen applied since these investments are considered immaterial in the aggregate. However, investments are devalued if the decline invalue is judged to be other than temporary.
Investments in 20% to 50% associated companies are principally accounted for by the equity method.
The differences between costs and underlying net assets at the date of investment in consolidated subsidiaries are included in otherassets or other long-term liabilities and are amortized over a period mainly for five years.
Translation of foreign currency accounts
Monetary assets and liabilities denominated in foreign currencies of the Company and its domestic subsidiaries are translated into
Japanese yen at the exchange rates at the balance sheet date. Revenues and expenses denominated in foreign currencies aretranslated at the exchange rates prevailing during the year. The resulting translation gains (or losses) are included in other income (orexpenses).
The translation of foreign currency financial statements of foreign consolidated subsidiaries into Japanese yen has been made forconsolidation purposes in accordance with the translation method prescribed in the accounting standard for foreign currencytransactions. The balance sheet accounts of the foreign consolidated subsidiaries are translated at the exchange rates in effect at thebalance sheet date, except for common stock and capital surplus, which are translated at historical rates. Revenue and expense
accounts are translated at the average exchange rates during the year. The resulting translation adjustments are presented as “foreign
currency translation adjustments” which is shown as a separate component of accumulated other comprehensive income in the
consolidated balance sheets.
Cash and cash equivalents
Cash and cash equivalents include all highly liquid investments, generally with original maturities of three months or less, that arereadily convertible to known amounts of cash and are so near maturities that they present insignificant risk of changes in value
because of changes in interest rates.
Inventories
Inventories are stated at cost which is determined substantially by the average method being written down to reflect the decline ofprofitability.
Marketable securities and investment securities
Marketable and investment securities are classified and accounted for, depending on management’s intent, as follows: i) held-tomaturity debt securities, which are expected to be held to maturity with the positive intent and ability to hold to maturity, are reported
at amortized cost and ii) available-for-sale securities are reported at fair value, with unrealized gains and losses, net of applicabletaxes, reported in a separate component of valuation and translation adjustments.
Non-marketable securities are stated at cost determined by the average method. For other than temporary declines in fair value,
investment securities are reduced to net realizable value by a charge to income.
Property, plant and equipment and depreciation
Property, plant and equipment are carried at cost. Major renewals and additions are capitalized, while minor renewals, maintenanceand repairs are charged to income when incurred. Interest expenses on capital expenditures during the construction stage are notcapitalized.
Depreciation of property, plant and equipment is principally computed by the declining-balance method at rates based on estimated82

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

3 to 50 years
2 to 13 years

Leased assets
Finance leases which do not transfer ownership were accounted for as operating leases prior to April 1, 2008 but are capitalized sincethen. Depreciation for leased assets is computed on a straight-line basis over the lease period with a residual value of zero.
Intangible assets
Intangible assets included in other assets are carried at cost less accumulated amortization calculated by the straight-line method
over their estimated useful lives. Software for internal use included in intangible assets is amortized by the straight-line method over
five years.

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

Appendix

Net assets and income per common share
Net assets per common share were computed based on the number of shares outstanding after deducting treasury stock at March
31, 2014 and 2013, respectively.
Net income per share was computed based on the average number of shares of common stock outstanding after deducting
treasury stocks during each year. Necessary adjustments were made on the net income or the number of shares for diluted net
income per share in order to reflect dilutive effects.

Financial Section

Derivatives and hedging activities
The Company and certain consolidated subsidiaries use derivative financial instruments (“derivatives”) for foreign currency forward
contracts, currency options, interest rate swaps and currency swaps to manage the risk arising from fluctuation in foreign currency
exchange rate and interest rates. The Company and its subsidiaries do not enter into derivatives contracts for speculative purposes.
Derivatives are carried at fair value with change in unrealized gains or losses charged or credited to operations, except for thosewhich meet the criteria for deferral hedge accounting under which an unrealized gain or loss is deferred as an asset or a liability.
The trade accounts receivable and payable denominated in foreign currencies of the Company and domestic subsidiaries which areindividually covered by foreign currency forward contracts are translated at the contracted rates because such treatment is also
allowed to be elected under the accounting standard if the forward contracts qualify for hedge accounting.

Corporate Governance

Income taxes
The asset and liability approach is used to recognize deferred tax assets and liabilities for the expected future tax consequences of
temporary differences between the carrying amounts and the tax bases of assets and liabilities. Deferred taxes are measured byapplying currently enacted tax laws to the temporary differences.
The amounts of deferred tax assets and deferred tax liabilities were changed due to the Act on Partial Revision of the Income Tax Act(Act No.10 of 2014) which was enacted into law on March 31, 2014. Accordingly, the statutory effective tax rate was reduced from
38.0% to 35.6% used for calculating deferred tax assets and deferred tax liabilities which are expected to be realized in the fiscal year
beginning April 1, 2014. This change in the tax rate had the effect of reducing deferred tax assets (net of deferred tax liabilities) by¥671 million ($6,515 thousand), with income taxes-deferred increasing by the same amount.

DNP’s Businesses

Employees’ retirement benefits
The Company and several domestic significant consolidated subsidiaries applied the accounting standard for employees’ retirement
benefits. Under the accounting standard, accrued pension and liability for employees’ retirement benefits has been provided based on
the estimated amounts of projected pension and severance obligation and fair value of plan assets at the end of the fiscal year. Prior
service cost is being amortized as incurred by the straight-line method over the period within the average remaining service periods ofthe eligible employees. Actuarial gains and losses have been amortized from the following fiscal year by the declining- balance method
over the periods within the average remaining service periods of the eligible employees.

Special Feature

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

To Our Shareholders

Assets with an acquisition cost of ¥100,000 ($971) or more per unit and less than ¥200,000 ($1,942) per unit are depreciated overthree years on a straight-line basis, whereby one-third of such acquisition cost may be taken as depreciation expense each year.

Synopsis of Performance

useful lives. However, depreciation of buildings acquired on or after April 1, 1998 is computed by the straight-line method.

Change in accounting policies
Application of “Accounting Standard for Retirement Benefits”
Effective from the end of the current fiscal year, the Accounting Standard for Retirement Benefits (ASBJ Statement No.26, issued May
17, 2012; hereinafter, the Accounting Standard) and the Guidance on the Accounting Standard for Retirement Benefits (ASBJ
Guidance No.25, issued May 17, 2012; hereinafter, the Guidance) have been applied (however, excluding the rules provided in83paragraph 35 of the Accounting Standard and provided in paragraph 67 of the Guidance). Accordingly, the Company has switched tothe method of posting the amount by subtracting pension assets from retirement benefit obligations under net defined benefit liabilityor net defined benefit asset, and posted unrecognized actuarial gains/losses and unrecognized prior service costs as net defined
benefit liability and net defined benefit asset.
The Accounting Standard, etc., have been applied in a transitional manner as provided in paragraph 37 of the Accounting Standard,
and the effects from the change have been reflected in remeasurements of defined benefit plans of the total accumulated othercomprehensive income at the end of the current fiscal year.
Consequently, net defined benefit assets of ¥19,234 million ($186,738 thousand) and net defined benefit liabilities of ¥29,550 million($286,893 thousand) have been posted at the end of the current fiscal year. Accumulated other comprehensive income also increasedby ¥5,473 million ($53,136 thousand).
3. Basis of Translating Financial Statements
The consolidated financial statements are expressed in Japanese yen in accordance with accounting principles generally accepted inJapan. The Japanese yen amounts have been translated into U.S. dollar amounts, solely for the convenience of the readers, at therate of ¥103=U.S. $1, the approximate exchange rate on the Tokyo Foreign Exchange Market at March 31, 2014. Such translations
should not be construed as representations that the Japanese yen at that or any other rate could be converted into U.S. dollars.
4. Cash and Cash Equivalents
Cash and cash equivalents as of March 31, 2014 and 2013 were comprised of the following:Thousands of
U.S. dollars (Note 3)

Millions of yen

2013

2014
Cash and deposits(excluding time deposits with a maturity over three months)¥¥

199,813212,0622014$

1,939,932

5. Marketable Securities and Investment Securities
The acquisition cost and aggregate fair value of marketable and investment securities classified as available-for-sale securities including
those with no fair value as of March 31, 2014 and 2013 were as follows:
Millions of yen

March 31, 2014
StocksOthers
Total

Acquisition cost
132,605262¥
132,867¥

Unrealized gains¥
53,16010¥
53,170

Unrealized losses
¥
2,121
0
¥
2,121

¥
¥

Fair value
183,644272
183,916

Thousands of U.S. dollars (Note 3)

March 31, 2014
StocksOthers
Total

Acquisition cost
1,287,427
2,544$
1,289,971$

Unrealized gains$
516,11697$
516,213

Unrealized losses$
20,5920$
20,592$$

Fair value
1,782,951
2,641
1,785,592

Millions of yen

March 31, 2013
StocksOthers
Total

Acquisition cost
127,246
1,281¥
128,527¥

Unrealized gains¥
35,941
6¥
35,947

Unrealized losses
¥
6,370
7
¥
6,377

¥
¥

Fair value
156,8171,280
158,097

The proceeds from sales of available-for-sale securities for the years ended March 31, 2014 and 2013 were ¥1,140 million ($11,068
thousand) and ¥268 million, respectively. The gross realized gains on these sales for the years ended March 31, 2014 and 2013 were¥348 million ($3,379 thousand) and ¥155 million, respectively, and the gross realized losses on these sales for the years ended March 31,
2014 and 2013 were ¥25 million ($243 thousand) and ¥15 million, respectively.

84

Synopsis of Performance

The redemption schedules for securities with maturities classified as other securities at March 31, 2014 and 2013 were as follows:
Millions of yen

March 31, 2014
Corporate bonds

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

30

¥

¥

Over five years
¥

–

150
To Our Shareholders

Thousands of U.S. dollars (Note 3)

March 31, 2014
Corporate bonds

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

291

$

$

–

Over five years
$

1,456

Millions of yen

Due after one year
through five years
–

¥

¥

1,030

Over five years¥

100

6. Inventories
Inventories at March 31, 2014 and 2013 consisted of the following:Thousands of
U.S. dollars (Note 3)

Millions of yen

2013

2014
¥

¥

91,68228,50919,465
139,656

¥

¥

2014

91,04829,03018,977139,055$

890,116
276,786
188,981
1,355,883$

7. Short-term Bank Loans and Long-term Debt
Short-term bank loans at March 31, 2014 and 2013 were represented by bank loans and bank overdrafts, etc. bearing interest at an
average rate of 0.67 % per annum for 2014 and 0.72 % per annum for 2013.
Long-term debt at March 31, 2014 and 2013 consisted of the following:Thousands of
U.S. dollars (Note 3)

Millions of yen$¥
50,00050,000Millions of yen
170
270
2013
510
91,048¥850
29,0301,850
18,977–139,055¥

50,00050,000
–
100
2012
340
91,912680
39,356
1,680
19,85150,720151,119$

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

11,917
14,437
179,914(57,565)
122,349

–

¥

¥

¥

Mortgage loans, maturing 2014~2030
Unsecured loans, maturing 2014~2020
Current portion of long-term debt¥¥–

485,437
485,437
Thousands
ofU.S. dollars(Note 3)
1,651

$

2,621
2013
4,952
968,5968,252
308,830
17,961
201,883–
1,479,309$

133,660
157,456
1,297,427(139,126)
1,158,301$

Finance lease obligations at March 31, 2014 and 2013 which are included in other long-term liabilities consisted of the following:Thousands of
U.S. dollars (Note 3)

Millions of yen

2013

2014
Finance lease obligations
Current portion of lease obligations¥¥

16,285(6,670)9,615¥¥

Appendix

40¥

Financial Section

Unsecured debentures
1.358% due 2021
1.705% due 2020
0.47~0.54% due 20190.40~0.54% due 2018
0.40~0.79% due 2017
Merchandiseandfinished
0.40~0.79%
due
2016 products
Work in process
0.40~0.79% due 2015
Raw materials and supplies
0.40~1.67% due 2014

¥

2014

Corporate Governance

2013

2014
Secured debentures
1.05% due 2014

DNP’s Businesses

Merchandise and finished products
Work in process
Raw materials and supplies

Special Feature

March 31, 2013
Corporate bonds

Due in one
year or less

19,435(7,684)
11,751

2014$$

158,107(64,757)
93,35085

The assets pledged as collateral for the company and its consolidated subsidiaries’ indebtedness, such as property, plant andequipment and other assets, were ¥11,233 million ($109,058 thousand) and ¥10,238 million at March 31, 2014 and 2013, respectively.
With minor exceptions, interest rates on mortgage loans ranged from 0.60 % to 2.86 % per annum for 2014 and 2013, while interest
rates on unsecured loans ranged from 0.54 % to 2.00 % per annum for 2014 and from 0.64 % to 2.00 % per annum for 2013.
The aggregate annual maturities of long-term debt after March 31, 2014 were as follows:
Years ending March 31
2015
2016
2017
2018
2019
2020 and thereafter

Millions of yen¥

14,330
8,891
5,122
3,151
1,478
100,663
133,635¥

Thousands of
U.S. dollars (Note 3)$$

139,126
86,32049,72830,592
14,350977,311
1,297,427

The aggregate annual maturities of finance lease obligations after March 31, 2014 were as follows:
Years ending March 31
2015
2016
2017
2018
2019
2020 and thereafter

Millions of yen

¥

¥

6,670
3,219
1,985
1,204
756
2,451
16,285

Thousands of
U.S. dollars (Note 3)$$

64,75731,253
19,272
11,6897,340
23,796
158,107

8. Retirement Benefits
The Company and its domestic subsidiaries have several defined benefit retirement plans covering all of their employees, i.e. defined
benefit corporate pension plan, a governmental welfare contributory pension plan, lump-sum retirement plan and defined contribution
pension plan. Upon retirement or termination of employment for reasons other than the cause of dismissal, employees are entitled to
lump-sum payments based on the current rate of pay, length of services and accumulated number of points determined based on theemployment services.
Under the Defined Benefit Pension Plan Law, the Company has established new defined benefit pension plans on March 1, 2005
under which most of the retirement benefit liability of the Company is covered by the employees’ pension fund.
The reconciliation of beginning and ending balance of the projected benefit obligation at March 31, 2014 was as follows:
Change in projected benefit obligation:
Balance at April 1, 2013
Service cost
Interest cost
Actuarial gain/loss
Benefits paid
Prior service cost
Change of scope of consolidation
Other
Balance at March 31, 2014

Millions of yen¥¥

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

Thousands of
U.S. dollars (Note 3)$$

2,050,087
108,291
36,486(9,883)(65,408)(126)
10,204(311)
2,129,340

The reconciliation of beginning and ending balance of the plan assets at March 31, 2014 was as follows:
Change in plan assets:
Balance at April 1, 2013
Expected return on plan assets
Actuarial gain/loss
Contributions by the employer
Contributions by employees
Benefits paid
Other
Balance at March 31, 2014

86

Millions of yen¥¥

178,478
4,435
14,105
17,18764(5,268)5
209,006

Thousands of
U.S. dollars (Note 3)$$

1,732,796
43,058
136,942
166,864621(51,146)49
2,029,184

Millions of yen

Funded projected benefit obligation
Plan assets

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

190,468(209,006)(18,538)
28,854
10,316¥29,550(19,234)
10,316$

1,849,204(2,029,185)(179,981)
280,136
100,155$

286,893(186,738)
100,155$

To Our Shareholders

Unfunded projected benefit obligation
Net amount of liabilities and assets recognized in consolidated balance sheet¥

Thousands of
U.S. dollars (Note 3)

Synopsis of Performance

The reconciliation of projected benefit obligation and plan assets to net defined benefit liability and asset recognized in the
consolidated balance sheet as of March 31, 2014 was as follows:

The components of net periodic benefit costs for the year ended March 31, 2014 were as follows:
Thousands of
U.S. dollars (Note 3)Service cost
Interest cost
Expected return on plan assets
Actuarial gain/loss
Amortization of prior sevice cost¥

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

$

107,670
36,485(43,058)
10,0784,320

Net periodic benefit costs of the defined benefit plan¥

11,896$

115,495

Millions of yen

Unrecognized actuarial gain/loss
Unrecognized prior service cost
Total

¥
¥

8,761
(1,231)
7,530

Thousands of
U.S. dollars (Note 3)$$

85,058(11,951)
73,107

DNP’s Businesses

Remeasurements of defined benefit plans, before income-tax effect, at March 31, 2014 consisted of:Special Feature

Millions of yen

The major categories of plan assets as of March 31, 2014 were as follows:
25%
47%
28%
100%

Assumptions used for the year ended March 31, 2014 were set forth as follows:
Straight-line method
1.6%
2.5%
9 years
6 years

The liability for employees’ retirement benefits at March 31, 2013 consisted of the following:

Financial Section

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

Corporate Governance

Bonds
StocksOther
Total

Millions of yen¥¥

211,159(178,478)(7,337)(1,689)2,787
26,442

Appendix

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

87

The components of net periodic benefit costs for the year ended March 31, 2013 were as follows:
Millions of yen

Service cost
Interest cost
Expected return on plan assets
Actuarial gain/loss
Amortization of prior service cost
Other
Net periodic benefit costs¥¥

10,440
4,582(3,580)
2,516
442
163
14,563

Assumptions used for the year ended March 31, 2013 were set forth as follows:
Attribution method of estimated benefits to periods of services
Discount rate
Expected rate of return on plan assets
Recognition period of actuarial gain/loss
Amortization period of prior service cost

Straight-line method
1.6%
2.5%
9 years
6 years

9. Net Assets
Japanese companies are subject to the Companies Act of Japan (the “Companies Act”). The significant provisions in the Companies
Act that affect financial and accounting matters are summarized below;(a) Dividends
Under the Companies Act, companies can pay dividends at any time during the fiscal year in addition to the year-end dividend
upon resolution at the stockholders meeting. For companies that meet certain criteria such as: (1) having the Board of Directors,(2) having independent auditors, (3) having the Board of Corporate Auditors, and (4) the term of service of the directors isprescribed as one year rather than two years of normal term by its articles of incorporation, the Board of Directors of suchcompany may declare dividends (except for dividends in kind) at any time during the fiscal year if the company has prescribed soin its articles of incorporation. The Company meets all the above criteria. However, its articles of incorporation have not stipulated
that the Board of Directors may declare dividends at any time during the fiscal year.
The Companies Act permits companies to distribute dividends-in-kind (non-cash assets) to stockholders subject to a certain
limitation and additional requirements.
Semiannual interim dividends may also be paid once a year upon resolution by the Board of Directors if the articles ofincorporation of the company so stipulate. The Companies Act provides certain limitations on the amounts available for dividends
or the purchase of treasury stock. The limitation is defined as the amount available for distribution to the stockholders, but theamount of net assets after dividends must be maintained at no less than ¥3 million.
Cash dividends of ¥16.00 ($0.2) per share, aggregating ¥10,311 million ($100,107 thousand) were approved at the generalstockholders’ meeting held in June 2014 with respect to the year ended March 31, 2014.
(b) Increases/decreases and transfer of common stock, reserve and surplus
The Companies Act requires that an amount equal to 10% of dividends must be appropriated as a legal reserve (a component ofretained earnings) or as additional paid-in capital (a component of capital surplus) depending on the equity account charged upon
the payment of such dividends until the total of aggregate amount of legal reserve and additional paid-in capital equals 25% of thecommon stock. Under the Companies Act, the total amount of additional paid-in capital and legal reserve may be reversed without
limitation. The Companies Act also provides that common stock, legal reserve, additional paid-in capital, other capital surplus andretained earnings can be transferred among the accounts under certain conditions upon resolution of the stockholders.
(c) Treasury stock and treasury stock acquisition rights
The Companies Act also provides for companies to purchase treasury stock and dispose of such treasury stock by resolution of
the Board of Directors. The amount of treasury stock purchased cannot exceed the amount available for distribution to thestockholders which is determined by specific formula.
Under the Companies Act, stock acquisition rights are presented as a separate component of net assets.
The Companies Act also provides that companies can purchase both treasury stock acquisition rights and treasury stock. Suchtreasury stock acquisition rights are presented as a separate component of net assets or deducted directly from stock acquisitionrights. At present, the Company has not issued such stock acquisition rights.

88Thousands of
U.S. dollars (Note 3)

Millions of yen

2013

2014
¥

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

¥

2014

7,818
1,317
32,569
545
602
6,424
256
777

$

47,69914,252
322,165
1,456
5,845
52,777
2,262
13,553Thousands of
U.S. dollars (Note 3)

Millions of yen

2013

2014
¥

¥

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

¥

¥

2014

66,708
5,636
4,521
13,34527,976
106,083
224,269$$

643,660
57,67031,010130,029
278,786
1,017,816
2,158,971

Total research and development expenses (including manufacturing costs) amounted to ¥30,820 million ($299,223 thousand) and¥30,821 million for 2014 and 2013, respectively.

Thousands of
U.S. dollars (Note 3)

Millions of yen

2013

2014
Interest and dividends income
Leasing fees
Contributions

¥

62
165

2014
44
172

¥

$

602
1,602

(7)

–

–

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

2014

2013

38.0%
0.7
2.2
3.6
1.4
(1.0)
44.9%

38.0%
6.6
2.0
4.5
–
(3.4)
47.7%

Appendix

The following is a reconciliation of the difference between the normal effective statutory tax rate and the actual effective tax rate forthe years ended March 31, 2014 and 2013, respectively.

Financial Section

13. Income Taxes
The Company and its domestic consolidated subsidiaries are subject to a number of different taxes based on income, which, in theaggregate, resulted in a normal effective statutory tax rate of approximately 38.0% for the years ended March 31, 2014 and 2013,
respectively.
In addition, the statutory tax rate was reduced from approximately 38.0% to 35.6% effective for the fiscal years beginning on or after April 1,
2014. This change was caused by the revision of the Income Tax Act in 2014. (Refer to 2. Significant Accounting Policies: Income Taxes)
The actual effective tax rate reflected in the accompanying consolidated statements of operations differs from the normal effective
statutory tax rate primarily due to the effect of permanently non-deductible expenses, current operating losses and different tax rates
applicable to foreign subsidiaries, etc.

Corporate Governance

12. Other Income (Expenses)
The following types of income (expenses) from non-consolidated subsidiaries and associated companies were included in otherincome.

DNP’s Businesses

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

Special Feature

11. Selling, General and Administrative Expenses
Selling, general and administrative expenses for the years ended March 31, 2014 and 2013 consisted of the following:

To Our Shareholders

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

Synopsis of Performance

10. Accounts with Non-consolidated Subsidiaries and Associated Companies
Account balances with non-consolidated subsidiaries and associated companies as of March 31, 2014 and 2013 were summarized
as follows:89

Net deferred tax assets at March 31, 2014 and 2013, resulting from temporary differences between the carrying amounts and thetax bases of assets and liabilities were reflected on the accompanying consolidated balance sheets under the following captions:Thousands of
U.S. dollars (Note 3)

Millions of yen

2013

2014

2014

Prepaid expenses and other current assets
Other assets

¥

8,677
11,083¥

10,27825,167$

84,243
107,602

Other current liabilities
Other long-term liabilities
Net deferred tax assets¥(84)(2,232)
17,444¥(12)(2,170)33,263$(816)(21,670)
169,359¥¥$

Significant components of deferred tax assets at March 31, 2014 and 2013 were as follows :Thousands of
U.S. dollars (Note 3)

Millions of yen

2013

2014
Deferred tax assets:
Excess provision for retirement benefits
Net defined benefit liability
Loss on devaluation of investment securities
Excess provision for doubtful receivables
Accrued bonuses
Loss on write-down of inventories
Operating loss carryforwards
Impairment loss on fixed assets
Other
Total deferred tax assets
Less: valuation allowance
Total
Deferred tax liabilities:
Unrealized gain on available-for-sale securities
Reserve for special depreciation
Undistributed earnings of subsidiaries
Prepaid pension cost
Net defined benefit asset
Other
Total
Net deferred tax assets :–12,948
4,073
1,829
6,078
1,176
46,185
13,05915,207
100,555(56,871)
43,684¥¥¥(16,459)
(17)
(818)
–
(6,850)(2,096)(26,240)¥

17,444

¥

¥

¥

2014

13,022
–
4,559
1,721
6,018
1,341
45,59013,497
17,069102,817(55,467)
47,350$$¥(10,030)
(563)
(807)
(969)
–
(1,718)(14,087)$(159,796)(165)(7,942)–(66,505)(20,349)(254,757)¥

33,263$

169,359¥$–
125,709
39,54417,75759,01011,417448,398
126,786
147,641
976,262(552,146)
424,116

14. Impairment Loss on Fixed Assets
The Company and its consolidated subsidiaries reviewed the fixed assets for impairment for the years ended March 31, 2014 and2013. Fixed assets were, in principle, grouped at the business unit for impairment testing purposes. Idle assets were grouped ineach asset. Loss on impairment of fixed assets for the years ended March 31, 2014 and 2013 were recognized in the amount of ¥140
million ($1,359 thousand) and ¥3,564 million, respectively due to a significant decline in profitability.
15. Leases
Finance leases
Effective the year ended March 31, 2009, the Company and its domestic subsidiaries adopted “Accounting Standard for Lease
Transactions.” Under this standard, finance lease transactions without ownership-transfer whose inception date is on or before
March 31, 2008 are still allowed to be accounted for as operating leases.

90Millions of yen

2013

2014
¥
¥

4,987
21,19926,186

¥
¥

2014

4,871
22,69327,564$$

48,417
205,816
254,233

Special Feature

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

To Our Shareholders

Future lease payments:
One year or lessMore than one year

U.S. dollars (Note 3)

Synopsis of Performance

Operating leases
The amounts of outstanding future payments under non-cancelable operating leases as of March 31, 2014 and 2013 were also
summarized as follows:
Thousands of

2. Fair value of financial instruments
Fair value and difference compared to the carrying amounts reported in the consolidated balance sheet as of March 31, 2014 and2013 were as follows.
Millions of yen

¥

¥

15
(5)
10

203,212356,981
168,928
9,046

Difference
¥

–
–
7,173

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

1,491
8,664
–
–
6,639
6,639

15
(5)
10

–
–
–

March 31, 2014
(1) Cash and deposits(2) Trade receivables(3) Short-term and long-term investment securities(4) Long-term loan receivables
Allowance for doubtful receivables*1

1,972,932
3,465,835
1,570,437
88,146(14,796)
73,3507,082,554
2,423,350
475,359
1,297,427
4,196,136
146
(49)
97

$

1,972,932
3,465,835
1,640,078
87,825Difference$––
69,64187,825
7,166,670
2,423,350
475,359
1,361,883
4,260,592

14,475
84,116––64,45664,456

146
(49)
97

–
–
–

Appendix

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

$

Fair value

Financial Section

Thousands of U.S. dollars (Note 3)

Carrying amounts
reported in the
consolidatedbalance sheet

Corporate Governance

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

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

Fair value

DNP’s Businesses

March 31, 2014
(1) Cash and deposits(2) Trade receivables(3) Short-term and long-term investment securities(4) Long-term loan receivables
Allowance for doubtful receivables*1

Carrying amounts
reported in the
consolidatedbalance sheet

91Millions of yen

March 31, 2013
(1) Cash and deposits(2) Trade receivables(3) Short-term and long-term investment securities(4) Long-term loan receivables
Allowance for doubtful receivables*1
Assets(1) Trade payables(2) Short-term bank loans(3) Long-term debts
Liabilities
Derivatives*2[1]Hedge accounting is not applied[2]Hedge accounting is applied
Total

Carrying amounts
reported in the
consolidatedbalance sheet¥

213,630
367,765
140,924
9,658(1,385)
8,273
730,592
249,568
47,297
179,914476,779

Fair value¥

213,630
367,765
144,565
9,541

(702)
(3)
(705)

Difference
–
–
3,641

¥

9,541
735,501
249,568
47,297
188,006
484,871

1,268
4,909
–
–
8,092
8,092

(702)
(42)
(744)

–
(39)
(39)

*1. Allowance for doubtful receivables associated with long-term loan receivables is deducted.
*2. Derivative assets and liabilities are on a net basis.
Note A: Fair value of financial instruments, marketable securities and derivatives
Assets(1) Cash and deposits and (2) Trade receivables
The carrying amounts approximate fair value because of the short maturities of these instruments.
(3) Marketable and investment securities
The fair values of equity securities are measured at the quoted market price of the stock exchange and the fair values of debt
securities are measured at the quoted price provided by financial institutions.
(4) Long-term loan receivables
The fair values of long-term loans are mainly determined based on the present value of the future cash flows discounted bygovernment bonds rates plus certain credit risk premiums by categories according to the internal ratings.
Liabilities(1) Trade payables and (2) Short-term bank loans
The carrying amounts approximate fair value because of the short maturities of these instruments.
(3) Long-term debts
The fair values of bonds issued by the Company and its subsidiaries are measured based on market price, if available. The fair valuesof bonds without market price are measured at the present value of total principal and interest discounted by using a rate whichreflects its remaining period and credit risk.
The fair values of long-term debts are based on the present value of total principal and interest discounted by using the current
borrowing rate for similar debt.
Derivatives
The information of the fair value for derivatives is included in Note 17.
Note B: Financial instruments whose fair value is extremely difficult to measure

March 31, 2014
Unlisted equity securities
Other

March 31, 2013
Unlisted equity securities
Other

92

Millions of yen

Thousands of
U.S. dollars (Note 3)

Carrying amounts

Carrying amounts¥$

55,139204

535,330
1,981

Millions of yen

Thousands of
U.S. dollars (Note 3)

Carrying amounts

Carrying amounts¥$

48,534
209

516,319
2,223

Special Feature

Fair Value of Derivative Financial Instruments:
The contracted amount and fair value of derivatives at March 31, 2014 and 2013 were as follows:
Derivative transactions to which the Company and its subsidiaries did not apply hedge accounting
Millions of yen

Contracted amount¥

Payables:U.S. dollars

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

16,176
1,812

¥

123
18,111¥600

Fair value¥

Unrealized gain (loss)

(90)
(27)

¥

(90)
(27)

¥

(1)
(118)

¥

(1)
(118)

¥

133

¥

133

DNP’s Businesses

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

To Our Shareholders

17. Derivative Financial Instruments
Nature of Derivative Financial Instruments:
The Company and certain consolidated subsidiaries enter into derivative financial instruments (“derivatives”) for foreign currency
forward contracts, currency swap contracts, currency option contracts and interest rate swaps to manage the risk arising fromfluctuation in foreign currency exchange rates and interest rates. Derivatives related to currency are utilized to hedge foreignexchange risks associated with certain accounts receivable, accounts payable and other debts, including forecasted transactions,denominated in foreign currencies. Interest rate swaps are utilized to hedge interest rate risks on interest-bearing debts. The
Company and its subsidiaries do not hold derivatives for speculative purposes.
Derivatives are subject to market risks and credit risks. Because the counterparties to those derivatives are limited to 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 Company’s internal regulations and the execution and control of derivatives
are controlled by the Accounting Department.

Synopsis of Performance

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

Thousands of U.S. dollars (Note 3)

Contracted amount$

Payables:U.S. dollars$

Unrealized gain (loss)

(874)
(262)

$

(874)
(262)

$

1,194
175,835$(10)(1,146)$(10)(1,146)

$

5,825

$

1,291

$

1,291

Millions of yen

Currency swap contracts
Receive U.S. dollars, and pay Japanese yen:
Currency option contracts
Buying Euro
Selling Euro

Contracted amount¥

Fair value

¥

¥

(683)
(90)
(773)

¥

(683)
(90)
(773)

900

¥

70

¥

70

124
124
248

¥

(4)
4
0

¥

(4)
4
0

¥

¥

14,682
1,987
16,669¥¥¥Unrealized gain (loss)¥¥

Appendix

March 31, 2013
Foreign currency forward contracts
Receivables:
U.S. dollars
Euro

Financial Section

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

157,049
17,592

Fair value

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

93

Derivative transactions to which the Company and its subsidiaries applied hedge accounting
Millions of yen

March 31, 2014
Foreign currency forward contracts
Receivables:
U.S. dollars
Euro
Payables:U.S. dollars
Sterling pound
Euro
Japanese yen

Hedged items

Trade receivables
Trade receivables

Contracted amount¥

Trade payables
Trade payables
Trade payables
Trade payables¥

Currency swap contracts
Receive Japanese yen, and pay Danish krone:
Receive U.S. dollars, and pay Japanese yen:Interest rate swaps
Receive floating and pay fixed

Trade payables
Long-term loan payables

Long-term loan payables

¥

449
59
920
89
162
90
1,769

Fair value

0
–

¥

5
0
(2)
0
3

¥

¥

¥

62
273
335

¥

(8)
–
(8)

¥

5,730

¥

–

Thousands of U.S. dollars (Note 3)

March 31, 2014
Foreign currency forward contracts
Receivables:
U.S. dollars
Euro
Payables:U.S. dollars
Sterling pound
Euro
Japanese yen

Hedged items

Trade receivables
Trade receivables

Contracted amount$

Trade payables
Trade payables
Trade payables
Trade payables$

Currency swap contracts
Receive Japanese yen, and pay Danish krone:
Receive U.S. dollars, and pay Japanese yen:Interest rate swaps
Receive floating and pay fixed

94

Trade payables
Long-term loan payables

Long-term loan payables

$

4,359
573
8,932
864
1,573
874
17,175

Fair value

$

$

0
–
48
0
(19)
0
29

$

$

602
2,650
3,252

$

(78)
–
(78)

$

55,631$–

Synopsis of Performance

Millions of yen

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

Trade receivables
Trade receivables

Contracted amount

¥

¥

(37)
(1)

¥

933
104
204
200
2,281

¥

5
0
6
(16)
(43)

¥

429
429

¥

–
–

¥

5,558

¥

–

Trade payables
Trade payables
Trade payables
Trade payables

Long-term loan payables

Long-term loan payables
and corporate bonds

599
241

Fair value

Corporate Governance

18. Contingent Liabilities
The Company and its consolidated subsidiaries were guarantors of bank loans of other companies, amounting to approximately ¥33
million ($320 thousand) and ¥34 million at March 31, 2014 and 2013, respectively. It is common practice in Japan for companies, inthe ordinary course of business, to receive promissory notes in settlement of trade accounts receivable and to subsequently discountsuch notes at banks. At March 31, 2014 and 2013, the Company and its consolidated subsidiaries were contingently liable on tradenotes discounted in the amount of ¥665 million ($6,456 thousand) and ¥643 million, respectively. Notes discounted were accounted for
as sales. One of the consolidated domestic subsidiaries securitized deposits for its leased property and sold them to third parties for¥1,720 million ($16,699 thousand) and ¥928 million at March 31, 2014 and 2013, respectively.

DNP’s Businesses

The fair values of currency swap contracts subject to alternative method and interest rate swaps subject to exceptional accrual
method are included in the fair values of hedged items, long-term debts, because such hedging instruments are embedded in thecorresponding hedged items.
Fair value of derivatives is based on information provided by financial institutions at the end of the fiscal year.
Foreign currency forward contracts which are qualified for hedge accounting are assigned to the associated assets and liabilities ordeferred until completion of the forecasted transactions.

Special Feature

Interest rate swaps
Receive floating and pay fixed

Hedged items

To Our Shareholders

March 31, 2013
Foreign currency forward contracts
Receivables:
U.S.dollars
Euro
Payables:U.S.dollars
Sterling pound
Euro
Japanese yen

Financial Section
Appendix9519. Business Segment Information
Outline of reportable segments:
The Company and its consolidated subsidiaries' reportable segments are components of the group whose operating results are regularly
reviewed by the Board of Directors to make decisions about resources to be allocated to the segments and assess their performance,
for which discrete financial information is available. The group's reportable segments consist of Information Communication, Lifestyleand Industrial Supplies, Electronics, and Beverages, based on a classification by commonality in manufacturing and marketing methodof products.

Information on sales and profit (loss), identifiable assets and other items by business segment
Millions of yen
Segment report

For 2014:
Net sales and operating income
Net sales
Outside customers
Intersegment
Total
Segment income
Segment assets
OthersDepreciation and amortization
Amortization of goodwill
Impairment loss
Tangible/intangible fixed assets increased

Information
Communication

¥

¥

¥

Lifestyle andIndustrial
Supplies

Electronics

Beverages

Total

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

527,457 ¥
6,122
533,579
33,910599,910 ¥

171,340 ¥1
171,341
12,931
229,266 ¥

54,805 ¥ 1,448,550 ¥3
11,48254,8081,460,032
652
59,39445,471 ¥ 1,504,465 ¥

21,957 ¥2,666
134
23,681

25,534 ¥1,101–
26,288

20,623 ¥
101
–
9,002

3,910 ¥
1
6
3,559

72,024 ¥
3,869
140
62,530Adjustment

Consolidated– ¥ 1,448,550(11,482)–(11,482)
1,448,550(9,295)50,09970,289 ¥ 1,574,754

1,435 ¥––
935

73,4593,869
140
63,465

Thousands of U.S. dollars (Note 3)
Segment report

For 2014:
Net sales and operating income
Net sales
Outside customers
Intersegment
Total
Segment income
Segment assets
OthersDepreciation and amortization
Amortization of goodwill
Impairment loss
Tangible/intangible fixed assets increased

Information
Communication

Lifestyle andIndustrial
Supplies

Electronics

Beverages

Total

Adjustment

Consolidated$ 6,747,068 $ 5,120,942 $ 1,663,495 $
52,00059,43710
6,799,068
5,180,379
1,663,505
115,544329,223
125,544$ 6,114,738 $ 5,824,369 $ 2,225,883 $

532,087 $14,063,592 $– $ 14,063,592
29
111,476(111,476)–
532,116
14,175,068(111,476) 14,063,592
6,330
576,641(90,243)486,398
441,466 $14,606,456 $ 682,418 $ 15,288,874$

37,961 $10
58
34,553

213,175 $
25,883
1,301
229,913

247,903 $10,689–255,223

200,223 $981–
87,398699,262 $
37,5631,359
607,087

13,932 $––
9,078

713,194
37,563
1,359
616,165

Millions of yen
Segment report

For 2013:
Net sales and operating income
Net sales
Outside customers
Intersegment
Total
Segment income (loss)
Segment assets
OthersDepreciation and amortization
Amortization of goodwill
Impairment loss
Tangible/intangible fixed assets increased

96

Information
Communication

¥

¥

¥

Lifestyle andIndustrial
Supplies

Electronics

Beverages

Total

698,362 ¥6,365
704,727
15,944
606,572 ¥

511,465 ¥9,960
521,425
28,029583,120 ¥180,506 ¥1
180,507(304)
238,828 ¥56,274 ¥ 1,446,607 ¥
3
16,32956,277
1,462,936
471
44,14045,888 ¥ 1,474,408 ¥

22,256 ¥1,533
705
27,26826,467 ¥
1,411
2,762
32,59725,957 ¥326
10
20,1283,976 ¥
032
7,115

78,656 ¥
3,270
3,509
87,108Adjustment

Consolidated– ¥ 1,446,607(16,329)–(16,329)
1,446,607(8,360)35,780104,568 ¥ 1,578,976

1,544 ¥–
55
1,207

80,2003,270
3,564
88,315

Information regarding regions
Millions of yen

For 2014 :Net salesJapan¥

1,232,093

Asia¥

Other region

152,501¥

63,956

Total$

14,063,592¥

1,446,607

Thousands of U.S. dollars (Note 3)

For 2014 :Net salesJapan$ 11,962,068

Asia$

Other region

1,480,592$

620,932

Total

Millions of yen

For 2013 :Net salesJapan¥

1,250,987

Asia¥

137,538

Other region¥

58,082

Total

Special Feature

1,448,550
To Our Shareholders¥

Synopsis of Performance[Relative information]

DNP’s Businesses
Corporate Governance
Financial Section
Appendix97Independent Auditor’s Report

To the Board of Directors of Dai Nippon Printing Co., Ltd.:
Report on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheet of Dai Nippon Printing Co., Ltd. and consolidated
subsidiaries as of March 31, 2014 and the related consolidated statements of income, comprehensive income, changes
in equity, and cash flows for the year then ended, and a summary of significant accounting policies and other explanatory
information (all expressed in Japanese yen).
Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements inconformity with accounting principles generally accepted in Japan, and for such internal control as management
determines is necessary to enable the preparation of consolidated financial statements that are free from material
misstatements, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted
our audit in conformity with auditing standards generally accepted in Japan. Those standards require that we plan andperform the audit to obtain reasonable assurance about whether the consolidated financial statements are free frommaterial misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated
financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of therisks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making thoserisk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of theconsolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not forthe purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating
the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management,
as well as evaluating the overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
OpinionIn our opinion, the consolidated financial statements referred to above present fairly, in all material respects, theconsolidated financial position of Dai Nippon Printing Co., Ltd. and consolidated subsidiaries as of March 31, 2014, andthe consolidated results of their operations and their cash flows for the year then ended in conformity with accounting
principles generally accepted in Japan.
Convenience Translation
Our audit also comprehended the translation of Japanese yen amounts into U.S. dollar amounts and, in our opinion, suchtranslation has been made in conformity with the basis stated in Note 3 to the consolidated financial statements. Such U.S.
dollar amounts are presented solely for the convenience of readers outside Japan.
Report on Internal Control
We have audited management’s report on internal control over financial reporting of the consolidated financial statementsof Dai Nippon Printing Co., Ltd. as of March 31, 2014.
Management’s Responsibility for Report on Internal Control
Management is responsible for designing and operating effective internal control over financial reporting and for the
preparation and fair presentation of its report on internal control in conformity with assessment standards for internal
control over financial reporting generally accepted in Japan. There is a possibility that misstatements may not becompletely prevented or detected by internal control over financial reporting.
Auditor’s Responsibility
Our responsibility is to express an opinion on management’s report on internal control based on our audit. We conducted
our internal control audit in conformity with auditing standards for internal control over financial reporting generally
accepted in Japan. Those standards require that we plan and perform the audit to obtain reasonable assurance about
whether management’s report on internal control is free from material misstatement.

98

Synopsis of Performance

An internal control audit involves performing procedures to obtain audit evidence about the results of the assessment ofinternal control over financial reporting in management’s report on internal control. The procedures selected depend on theauditor’s judgment, including the significance of effects on reliability of financial reporting. An internal control audit includes
examining representations on the scope, procedures and results of the assessment of internal control over financial
reporting made by management, as well as evaluating the overall presentation of management’s report on internal control.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

In our opinion, management’s report on internal control referred to above, which represents that the internal control
over financial reporting of the consolidated financial statements of Dai Nippon Printing Co., Ltd. as of March 31, 2014 iseffectively maintained, presents fairly, in all material respects, the results of the assessment of internal control over financial
reporting in conformity with assessment standards for internal control over financial reporting generally accepted in Japan.

Tokyo, Japan
June 27, 2014

Special Feature

MEIJI AUDIT CORPORATIONTo Our Shareholders

Opinion

DNP’s Businesses
Corporate Governance
Financial Section
Appendix99

Investor Information(as of March 31, 2014)

Dai Nippon Printing Co., Ltd.
Major Stock Indices in which DNP is a
Constituent:
Nikkei Stock Average
TOPIX Large70
S&P/TOPIX 150
Dow Jones Sustainability Indexes
FTSE4GoodETHIBEL PIONEER & EXCELLENCE

Head Office:1-1, Ichigaya-Kagacho 1-chome, Shinjuku-ku,
Tokyo 162-8001, Japan
Established:
1876
Number of Employees (consolidated):
39,524Morningstar Socially Responsible Investment Index
Stock Code:
7912

Paid-in Capital:¥114,464 million

Administrator of Shareholder Register:Mizuho Trust & Banking Co., Ltd.
2-1, Yaesu 1-chome, Chuo-ku,
Tokyo 103-8670, Japan

Number of Common Stocks:
Authorized: 1,490,000,000 shares
Issued:700,480,693 shares
Number of Trading Unit Shareholders (own 1,000 or more shares):28,001
Stock Exchange Listings:
Tokyo Stock Exchange
Major Shareholders:Shares (thousands) Percentage (%)

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

41,175

6.39

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

31,419

4.88

The Dai-ichi Life Insurance Co., Ltd.

30,882

4.79

Mizuho Bank, Ltd.

21,913

3.40

Employees’ Shareholding Association

15,691

2.43

Nippon Life Insurance Company

10,116

1.57

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

8,109

1.26

STATE STREET BANK AND TRUST COMPANY 505225

7,752

1.20

Trust & Custody Services Bank, Ltd. as trustee forMizuho Bank, Ltd. Retirement Benefit Trust Accountre-entrusted by Mizuho Trust and Banking Co., Ltd.

6,658

1.03

The Bank of New York Mellon SANV 10

6,413

1.00

Notes: 1. The number of treasury shares (56,039,454) is excluded from the figures above.
2. The ownership stakes are based on the total number of shares outstanding lesstreasury shares (644,441,239).

100

American Depositary Receipts:
Ratio (ADR:ORD): 1:1
Exchange: OTC (Over-the-Counter)
Symbol: DNPLYCUSIP: 233806306
Depositary:
The Bank of New York Mellon
101 Barclay Street, 22 West,
New York, NY 10286, U.S.A.
Telephone: (201) 680-6825
U.S. toll free: 888-269-2377 (888-BNY-ADRS)URL: http://www.adrbnymellon.com/
Annual Meeting of Shareholders:
The annual meeting of shareholders of DNP is
normally held in June each year in Tokyo, Japan.
Investor Relations:
Dai Nippon Printing Co., Ltd.
Corporate Communication Division
IR Group, Press and Public Relations
1-1, Ichigaya-Kagacho 1-chome, Shinjuku-ku,
Tokyo 162-8001, Japan
Tel: +81-3-5225-8220
Fax: +81-3-5225-8239
Web Site:
http://www.dnp.co.jp/eng/Synopsis of Performance

Share Price Evolution (Tokyo Stock Exchange)

DNP Stock Price (yen)Increase (%)*※

－

1,800

－

80

－

70

50
40

1,400

30

Special Feature

60

1,600

To Our Shareholders(between April 1, 2011 and March 31, 2014)

20

1,200

10

-10
-20

800

-30

DNP’s Businesses

0

1,000

-40

600

-50

12

13

14
*Index 100 = March 31, 2011

Voting Rights(as of March 31, 2014)

Number of Stocks (stocks)

Type

Number of Voting Rights (rights)––

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

Stocks with limited voting rights (other)––

56,039,000
1,085,000––

Stocks with voting rights (other)

Common stocks 641,277,000

641,276

Stocks with less than trading units

Common stocks

Outstanding shares

2,079,693–

700,480,693––

641,276

Treasury Stocks
Holder(as of March 31, 2014)

No. of Stocks Held

Percentage of Holding to No. of Outstanding Shares

Dai Nippon Printing Co., Ltd.

56,039,000

8.00

Kyoiku Shuppan Co., Ltd.

1,085,000

0.15

Total

57,124,000

8.15

Appendix

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

Financial Section

Stocks with no voting rights

Stocks with voting rights(treasury stocks, etc.)

Corporate Governance

400

101

Major Subsidiaries and Affiliates(As of March 31, 2014)

Printing
DNP Hokkaido Co., Ltd.
Film making, printing, bookbinding; production and sale of packaging
DNP Tohoku Co., Ltd.
Film making, printing, bookbinding; production and sale of packaging
DNP Chubu Co., Ltd.
Film making, printing, bookbinding; production and sale of packaging
DNP Nishi Nippon Co., Ltd.
Film making, printing, bookbinding; production and sale of packaging
DNP Shikoku Co., Ltd.
Film making, printing, bookbinding; production and sale of packaging
Information Communication
Books and Magazines
DNP Book Factory Co., Ltd.
Offset printing and bookbinding
DNP Media Art Co., Ltd.
Film making
OGUCHI BOOK BINDING & PRINTING CO., LTD.
Printing and bookbinding
Tien Wah Press (Pte.) Ltd.
Film making, printing and bookbinding				Commercial Printing
DNP Media Techno Kansai Co., Ltd.
Planning, production, film making, printing and bookbinding
DNP Graphica Co., Ltd.
Printing and bookbinding
DNP Media Create Co., Ltd.
Planning, production and film making
DNP Multi Print Co., Ltd.
Film making, printing and bookbinding
Business Forms
INTELLIGENT WAVE, INC.
Credit card business; security systems construction
DNP Data Techno Co., Ltd.
Production of plastic cards
DNP Data Techno Kansai Co., Ltd.
Production of business forms and plastic cards
DNP Total Process Warabi Co., Ltd.
Film making and plate making
NBC Co., Ltd.*
Mailing of printed matter, etc.
DNP Media Support Co., Ltd.
Production and sale of all types of printed matter
Other
DNP Art Communications Co., Ltd.
Planning, production and sale of artistic images and videos
DNP AV Center Co., Ltd.
Planning, production and sale of TV programs, movies and video software
DNP Digitalcom Co., Ltd.
Website planning, production and delivery
YouToo Co., Ltd.*
Provision of information over the Internet and mobile phones
CP Design Consulting Co., Ltd.*
Consultation for privacy protection and crisis management
M’s Communicate Co., Ltd.*
Consultation and mediation for customer membership services
At Table Co., Ltd.*
Research, consulting and planning concerning production and sales promotions for supermarkets
DNP Social Links Co., Ltd.
Planning, development and operation of online advertising and computer systems
Lifestyle and Industrial Supplies
Packaging
LIFESCAPE MARKETING CORPORATION
Surveys and provision of various information
DNP Technopack Co., Ltd.
Production, printing and processing of packaging materials
Sagami Yoki Co., Ltd.
Production of laminated tubes
Aseptic Systems Co., Ltd.
Production, sale and consultation for aseptic systems
DNP Hoso Co., Ltd.
Filling and processing of packages
DNP Field Eyes Co., Ltd.
Surveys and provision of various information
PT DNP Indonesia
Production and sale of packaging products
				
DNP Vietnam Co., Ltd.
Production and sale of packaging products
				Lifestyle Materials
DNP Lifestyle Materials Marketing Co., Ltd.
Sale of decorative products
DNP Ellio Co., Ltd.
Printing and processing of steel, aluminum and other metals
DNP Lifestyle Materials Co., Ltd.
Production, printing, processing of decorative materials
Industrial Supplies
DNP Dream Pages Co., Ltd.
Computerized processing of image and text data; sales of processed data
DNP Energy Systems Co., Ltd.
Production and sale of coating films, multilayer films, and other films
DNP Photo Imaging Co., Ltd.
Investment in operating companies
DNP IMS Co., Ltd.
Production of ink ribbons for thermal resin-type transfer printers and for dye-sublimation thermal transfer printers
DNP Advanced Optics Co., Ltd.
Manufacturing of optical products
DNP Fotolusio Co., Ltd.
ID photo business and sale of photo materials and accessories
DNP ID System Co., Ltd.
Sale of equipment for making driver licenses and ID photos
DNP IMS Malaysia Sdn. Bhd.
Production and sale of ink ribbons for dye-sublimation thermal transfer printers
				
DNP Denmark A/S
Production and sale of precision electronic components				
DNP IMS America Corporation
Production and sale of ink ribbons for thermal resin-type transfer printers and for dye-sublimation thermal transfer printers
				
DNP Electronics America, LLC
Production and sale of precision electronic components				Compagnie de Découpe de l’Ouest-CDO SAS
Production and sale of ink ribbons for dye-sublimation thermal transfer printers
				
DNP Photo Imaging Europe SAS
Sale of photo-related products				
DNP IMS Netherlands B.V.
Production and sale of ink ribbons for thermal resin-type transfer printers and for dye-sublimation thermal transfer printers				Electronics
Display Components
DNP Color Techno Kameyama Co., Ltd.
Production and sale of color filters for LCDs
DNP Precision Devices Himeji Co., Ltd.
Production of display-related components

102

Capital(¥ million)

Ownership ratioof voting rights (%)

350		
350		
350		
400		
50		

100.0
100.0
100.0
100.0
97.0

200		
180		
50		
(S$1,000)
4,600

100.0
100.0
84.9
100.0

200		
100		
100		
100		

100.0
100.0
100.0
100.0

844
100		
100		
80		
20		
10		

50.6
100.0
100.0
100.0
100.0
95.0

300		
100		
100		
50		
40		
30		
30		
10		

100.0
100.0
100.0
100.0
92.5
95.0
66.7
100.0

430		
300		
200		
100		
80		
50		
(US$1,000)
26,000(US$1,000)
24,000

84.0
100.0
90.0
100.0
100.0
100.0
51.0

300		
300		
200		

100.0
50.0
100.0

400		
200		
100		
100		
100		
100		
60		
(RM 1,000)
190,000(Dkr 1,000)
135,000(US$1,000)
71,980		
(US$1,000)
15,045		
(Euro 1,000)
3,040(Euro 1,000)
2,408		
(Euro 1,000)
1,000

100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0

2,500		400

(15.2)

100.0(20.0)

100.0
100.0(100.0)100.0(100.0)23.4
100.0(100.0)
100.0

100.0
100.0

(33.3)(100.0)

65.0
100.0
100.0
100.0
100.0
(0.3)DNP
80.6

(1.0)
(53.0)(53.0)(53.0)(53.0)(53.0)(53.0)(53.0)(11.0)(16.1)(100.0)

32.1
100.0
33.4

86.8
100.0
94.3

DNP’s Businesses

63.5
100.0
48.3
99.8
100.0
100.0

Corporate Governance

100.0
100.0
100.0
88.8
100.0
100.0
100.0
100.0
(7.2)
100.0
100.0

Financial Section

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

Appendix

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

Production and sale of soft drinks

2,935		

Special Feature

22.1
73.8
53.0
53.0
53.0
53.0
53.0
53.0
53.0
53.0
99.6
18.3
51.9
100.0
100.0

To Our Shareholders

Electronic Devices
DT Fine Electronics Co., Ltd.
Production and sale of semiconductor components
490		
DNP Fine Electronics Co., Ltd.
Production of display-related and semiconductor components
300		
DNP LSI Design Co., Ltd.
Design and production of drawings used in semiconductor production100		
DNP Micro Technica Co., Ltd.
Inspection, processing and loading of precision electronic components
40		
DNP Photomask Technology Taiwan Co., Ltd.
Production and sale of photomasks(NT 1,000)				
6,480,618		Photomask Europe S.p.A.
Production and sale of photomasks(Euro 1,000)
				
47,200Other
Development and sale of software; computer system support services
5,483		Nihon Unisys, Ltd.
2Dfacto, Inc.
Production, agency and sale of digitized books, magazines and other publications
4,340		Maruzen CHI Holdings Co., Ltd.
Investment in operating companies
3,000		Toshokan Ryutsu Center Co., Ltd.
Sale of books, creation of data, library operation support, and consulting
266		
Maruzen Co., Ltd.
Educational and academic business; store operation; academic publishing and interior design, etc.
100		
Maruzen Bookstores Co., Ltd.
Educational and academic business; store operation; academic publishing and interior design, etc.
50		
MARUZEN PUBLISHING CO., LTD.
Publishing50		
honto Book Service Co., Ltd.
Production, agency and sale of digitized books, magazines and other publications
50		
Junkudo Co., Ltd.
Sale of books
39		
Yushodo Co., Ltd.
Import and sale of books, magazines, and other publications
35		
SHUFUNOTOMO Co., Ltd.
Publishing
2,611		BOOKOFF CORPORATION LIMITED
Used bookstore operation; development and operation of new used goods businesses; management guidance for affiliated stores 2,564		
BUNKYODO GROUP HOLDINGS CO., LTD.
Sale of books, magazines, CDs, DVDs, stationery, games, hobby-related products, etc.
2,036		DNP Fine Chemicals Co., Ltd.
Production and sale of chemical products
2,000		DNP Fine Chemicals Utsunomiya Co., Ltd.
Production, procurement and sale of organic and inorganic chemicals
100
Operation of website offering lifestyle information from specialists in various areas and Internet advertising
All About, Inc.
1,169
DNP Logistics Co., Ltd.
Packing, shipping operations, freight transport and warehouse management626		
DIC Graphics Corporation
Production and sale of printing ink
500		
Development, sale, and maintenance of computer software
VISUAL JAPAN. INC.*
435
D.N.K. Co., Ltd.
Production, sale and repair of printing equipment and machine tools
100		
DNP Trading Co., Ltd.
Sale and purchase of paper and other products100		Electronic publishing and distribution platform services and e-book distribution service
MobileBook.jp, Inc.
100
DNP SP Tech Co., Ltd.
Planning and production of promotional materials
80		
Kyoiku Shuppan Co., Ltd.
Editing and sale of textbooks and educational materials
60		
My Earth Projects LLC *Planning, production and sale of trading cards
50		
DNP Asia Pacific Pte. Ltd.
Coordination of DNP businesses in the Southeast Asia/Oceania region(S$1,000)
				
2,000
DNP Business Consulting (Shanghai) Co., Ltd.*
Study of Chinese market and business feasibility(US$1,000)				
420
Personal Welfare, Facility Service and Others
DNP Facility Services Co., Ltd.
Building management, cleaning and security; operation of public health and recreation facilities
350		
DNP Information Systems Co., Ltd.
Design, development and maintenance of information systems; production and sale of software100		
DNP Human Services Co., Ltd.
Planning and management related to personnel plans
90		
Uzumine Country Club Co., Ltd.*Management of golf courses
33		
DNP Accounting Services Co., Ltd.
Accounting agency and consulting services
30		
DNP Techno Research Co., Ltd.*
Studies related to patents and the preparation of contracts
20		
Overseas Sales
DNP Korea Co., Ltd.*Sale of precision electronic components(Krw 1,000)
				
500,000
DNP Corporation USA
Investment in operating companies(US$1,000)				
62,164DNP Taiwan Co., Ltd.
Sale of precision electronic components(NT 1,000)
				
10,000DNP International Trading (Shanghai) Co., Ltd.*Sale of printed matter (commercial printing and packaging materials)(US$1,000)
				
5,400
DNP Singapore Pte. Ltd.*Sale of precision electronic components and decorative materials(S$1,000)				
350
DNP UK Co., Ltd.*Sale of decorative materials(£1,000)
				120
DNP America, LLC
Sale of printed materiais, precision electronic components, and decorative materials(US$1,000)
				100
DNP Holding USA Corporation
Investment in operating companies(US$1,000)
				100
DNP Europa GmbH*
Sale of precision electronic components and decorative materials(Euro 1,000)
				92
Dai Nippon Printing Co. (Australia) Pty. Ltd.*Sale of printed materials and decorative materials(A$1,000)				70

Ownership ratioof voting rights (%)

Synopsis of Performance

Capital(¥ million)

60.0

(6.8)

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

103

Glossary

1. Terms Related to the DNP Group■ Management Concept

The DNP Group will contribute to theemergently evolving society of the 21st
century.
■ Business Vision“P&I Solutions DNP”
We will identify and solve the problems
and issues that consumers andcorporate clients face within theemergently evolving society by fusing
our Printing Technologies (PT) andInformation Technologies (IT).
■ Guiding Principles

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

■ DNP Group’s CSR

CSR (Corporate Social Responsibility) is
generally defined as “the responsibilities
of a corporation to society,” but we at
the DNP Group go further, viewing CSR
as “being a company that is trusted bysociety.”
By simultaneously meeting the threevital corporate responsibilities—“Value
Creation,” “Integrity in Conduct,” and“Transparency (Accountability)”—
we seek to continue being a trusted
company.
1. Value Creation:
Providing new value to society
2. Integrity in Conduct:
Practicing fairness and impartiality inthe value creation processes
3. Transparency (Accountability):
Being a company that is accountable
and highly transparent■ The DNP Group Code of Conduct

A set of codes underlying all types ofactivities that express DNP’s corporate
ethics. All DNP Group employees mustobey these codes.
● Contributing to the development ofsociety● Social contribution as a good
corporate citizen● Compliance with the law and social
ethics● Respect for human dignity anddiversity● Environmental conservation and therealization of a sustainable society● Realization of a universal society’● Ensuring the safety and quality of our
products and services● Ensuring information security● Proper disclosure of information● Realization of a safe and vibrantworkplace’* Taiwa is a process that entails identifying problems andfinding solutions through the exchange of viewpoints and ideas.

104

2. Information Communication■ Augmented reality (AR)A technology for synthesizing images,
text, or other virtual information with anactual scene or object in the physicalpresence of the user, so as to createa rich expression that augments theexperience of reality. For example, a
webcam or mobile phone-mounted
camera may record images or
identification codes along with imagesof the surrounding environment, all ofwhich are synthesized and displayed
together with preregistered informationsuch as 3D computer graphics.

A picture book using augmented reality■ Big data

Massive amounts of data of varying
types, such as trends in consumer
usage of information services,
merchandise purchasing records,
or global climate changes. In recent
years, big data has attracted attention
as a source of important information
for companies, including consumer
preferences, and indicators forpredicting buying patterns. Big data canbe used by businesses more effectively
now that smartphones and otherinformation terminals are more widelyused along with social networking andother information services.
■ Business Process Outsourcing(BPO)
Contracting out the execution of someof a company’s business processes toan outside provider that has specialized
technology or expertise.

Maruzen’s main bookstore inTokyo’s Marunouchi district

Financial Section

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

A type of hologram, which is a threedimensional image recorded using a
split laser beam. Lippmann holograms
are excellent for expressing vertical andhorizontal three dimensionality and asense of depth. In addition, they are
extremely hard to counterfeit because
their production requires special
equipment. These holograms havegarnered praise around the world forproviding a high level of security andpotential for outstanding designs.

Corporate Governance

A service that lends electronic books
to libraries by providing them via theInternet after receiving permission fromthe publisher. As of July 2014, about 20
Japanese libraries were participating.
The system is expected to provide newopportunities for the sale of publishedcontent.

DNP offers a uniquely broad menu
of business services including
inputting and safely transmitting
massive amounts of personal
information and other data, editing andprocessing, printing, producing, mailing
and/or transmitting invoices, usage
statements, and other forms of
personalized mail—all in environments
protected by advanced information
security.

■ Lippmann hologram

frequency identification) tag■ Electronic library(IPS)

Personalized mail■ IC tag; also called RFID (radio“Tall Vision” display consisting of 12 linked panels■ Information Processing Services

DNP’s Businesses

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

A ser vice that sells both paper andelectronic books by integrating
DNP’s e-book sales ser vice, online
bookstore for printed books, andphysical bookstore chain operators
Maruzen, Junkudo and Bunk yodo.
The ser vice provides such features
as a “recommend function” thatsuggests products a customer
might like based on their previous
purchase histor y from all threesales formats, a shared customer
loyalty “point ser vice” that allows
customers to accumulate hybrid
points regardless of which sales
format they use, and an “electronic
book shelf function” that displays
all of the paper books and e-books
a particular customer has purchased.
The service has been fully operating
since June 2012.

Special Feature■ Digital signage■ Hybrid bookstore network “honto”

To Our Shareholders

A nickname for cloud computing.
Cloud computing makes it possible
to share and use software and data
via Internet or some other networkof remote servers, rather than using
individual computers to manage anduse the software and data, as wasdone in the past. Some say it is called
cloud computing because the system
is represented by a cloud in diagrams
depicting the network structure.
Cloud computing saves users money
because they don't need to set up theirown system. It saves time and trouble
because users do not need to purchaseand install software or back up theirown data.

Synopsis of Performance■ The cloudAppendix105

■ Shueitai

3. Lifestyle and Industrial Supplies

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

■ Anti-reflection (AR) film

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

A card that contains one or more IC(integrated circuit) chips enablingdata input, output and computing.
Smart cards that employ advanced
methods of user authentication, suchas biometrics or encryption, are widelyused in a broad range of applications
including cash cards, credit cards,
electronic money, transportation cards,
and employee ID cards. Compact SIM(Subscriber Identity Module) cards
that identify mobile phone subscribers
are also a type of smart card. DNP
entered the smart card business in the
1980s. In addition to developing the
MULTOS operating system and various
software applications for smart cards,
we provide a wide variety of services
such as smart card manufacture andpersonalization, and provision of online
security services.

“Biomass” may refer to the total
quantity of organisms living in aparticular area, or it may mean organic
resources derived from living thingsother than petroleum or other fossil
resources. Biomass material is madefrom resources of biological origin, suchas vegetable resins or natural fibers.
Biomass material has attracted attention
as a material that puts relatively little
strain on the environment due to theidea that CO2 absorbed by plants
during their growing process cancels
out the CO2 emitted when the material
is burned. Since biomass material isa renewable resource, supplies are
expected to be stable.
■ EB (Electron Beam) coating

technology
DNP’s original technique for hardening
a coat of resin by exposing it to electron
beams. EB technology makes it possible
to form films with harder surface than
products coated with urethane or UVcured resin. It also makes it possible toprovide products with superior abrasion
and soil resistance, photo-resistance,
durability, and stability. In addition,
the EB coating technique uses lessenergy, generates less carbon dioxide,and enables coating without the useof solvents, making it an eco-friendly,
next-generation manufacturing method.

Smart card

A rolled strip of film to which a thin,uniform layer of ink has been applied;
used in thermal transfer printers. There
are two types of thermal transfer
printers. Heat from the thermal head ofa thermal resin-type printer transfers
ink from the ribbon by melting it, while
dye-sublimation-type printers vaporize
ink in order to transfer it to paper.
Most of the thermal-resin ink ribbons
that DNP provides are monochrome
ribbons used for barcode printers, whilemost of the dye-sublimation type arecolor ribbons used for photo printing.
DNP has developed a lineup of dyesublimation thermal transfer printing
media consisting of ink ribbons in thethree primary printing colors (yellow,
magenta, and cyan, or YMC) andspecial receiver paper. These products
make it possible to express very smoothcolor tones.
thermal headdye-based ink
layerbase film

heattransfer
film

receiving layer

receiver paperrollerdye

substrate

Dye-sublimation
type thermaltypetransferrecording media
Dye-sublimation
thermaltransfer printing media■ IB (Innovative Barrier) film

Packaging film made by DNP that is
highly impermeable to water vaporand oxygen, highly transparent, andhighly heat-resistant. It is used mainly
for wrapping foods, medical supplies
and pharmaceuticals, and electronic
components. IB film is made by forminga thin, uniform coating of a material that
boosts impermeability on a transparent
base film.

IB film packages

EB Coating (an image)106■ Ink ribbon

■ Regenerative medicine

A therapeutic method using artificiallycultivated cells or tissues to restore or
recover the function of tissue or organs
lost through disease or accident.

4. Electronics■ B 2 it (pronounced “bee-square-it”)

DNP’s proprietary technology forconnecting layers in a buildup board
by using bumps of conductive paste
formed by means of screen printing. A
buildup board is a printed board madeby alternating insulating layers andwiring layers.

■ “Soft pack” for lithium-ion battery

Structure of an array of photovoltaic cells (solar cells)■ Lead frame

A metal component inside asemiconductor package that supports
the semiconductor chip or chips andtransmits electric signals.
■ Liquid crystal display (LCD) color

filterPhotovoltaic cell
The smallest unit that functions as aphotovoltaic battery; in crystalline
photovoltaic modules, a cell consistsof a silicon wafer“soft pack”

Array
An arrangement ofmultiple modules

Encapsulants
Sunlight

Surface glass

Wiring, etc.

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

Cell
Back sheet
Weatherproof film that protects the back of thephotovoltaic module from the roof or othersurface that it rests on

10th-generation

2,160

8th-generation

1,870

1,500

1,100

170 cm tall

7th-generation

Financial Section

(mm)
2,850

Corporate Governance

Structure of an array of photovoltaic cells (solar cells)
Metal frame, etc.

DNP’s Businesses

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

A component needed for colorizing
LCDs. It consists of pigments in thethree primary colors of light—red,
green, and blue (RGB)—arrayed in apattern on a glass substrate. Passing
light through the color filter causes
colored images to be displayed.
There are also different methods ofaligning liquid crystal molecules whenmanufacturing LCD panels: the verticalalignment (VA) method and the In Plane
Switching (IPS) method. LCDs display
images by using variations in voltage tochange the orientation of liquid crystal
molecules, thereby controlling theamount of light that passes through.
With the VA method, the liquid crystal
molecules are arranged vertically,
whereas with the IPS method, they arearranged horizontally. DNP provides
color filters that suit the characteristics
of LCD panels manufactured by bothmethods.

Special Feature

A laminated packaging film that seals inbattery materials such as electrolytes
and separators. Compared toconventional metal can-type packaging,a soft pack allows greater freedom
in designing a battery’s shape anddimensions and can help reduce its
weight and cost. Another advantage
is that the soft pack releases pressure
from inside the battery, preventing
deformation from excess heat.

To Our Shareholders

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

Synopsis of Performance■ Photovoltaic module components

6th-generation
5th-generation

730
370
300

400 470 650 920

1,300

1,800

2,200

2,400

3,050

(mm)

Relative Sizes of Glass Substrates Used in LC Panels

Relative sizes of glass substrates
used in LCD panels

Appendix

4th-generation
550
3rd-generation107

■ MEMS (Micro Electro Mechanical

System)An electronic device that integrates
components like IC chips, sensors
and electronic circuits into a threedimensional structure mounted on abase, which is usually a silicon wafer.
■ Nanoimprinting■ Touch panel sensor

A technology for exposing the surface ofa substrate coated with photosensitive
material to light, so that the exposed
areas and unexposed areas form aparticular pattern. DNP has honed its
photolithographic techniques throughthe production of masters used
for printing. Today, we apply thesetechnologies to the manufacture ofcolor filters and various other typesof electronic devices. In recent years,
we have been developing the nextgeneration photolithography techniques
using extreme ultraviolet (EUV) rays as a
new light source.

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

A photomask is a master used forforming semiconductor circuits. It
consists of minute circuit patterns drawn
on a glass substrate. Semiconductors
are made by passing light through a
photomask in order to transfer circuit
patterns onto a wafer coated with aphotosensitive resist, and then using
etching or a similar process to embed
the pattern in the wafer.

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

light guide plateliquid crystal display panel

Nanoimprinting is a manufacturing
process used to make next-generation
semiconductor products. Making
semiconductors by nanoimprinting
entails pressing a template against a
resin-coated silicon wafer so that theminute, nanometer-level pattern on thetemplate is physically transferred to theresin. Because nanoimprinting uses
relatively simple production equipment
compared to the complicated opticalequipment required for conventional
methods, it can bring down the cost of
manufacturing.

■ Photolithography

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

light source
lensphotomask
projection lensMaster template for nanoimprinting
siliconwafer

Photolithography machine for making semiconductors

Photolithography machine for making
semiconductors

About the Illustration on the Cover of this Report
The motif on last year’s Annual Report cover was sprouting seeds, symbolizing DNP’s rich diversity
and bright future. Those seeds grew into plants that flowered for the sake of the Earth’s future.
Our diverse human resources and technologies are like flowers; when we combine their strengths,
they form bouquets. We want them to keep on contributing to the development of society.

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

108

Annual Report 2013

Sources of Information about DNP
Synopsis of Performance

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

■

Annual Report (Japanese and English versions)

Near the end of July every year, we release a Japanese version and an English
version. The report contains financial information, explanations of our businessstrategies, and other relevant information about our business activities during aparticular fiscal year.

■

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

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

■“DNP Report” Report to Shareholders (in Japanese)“DNP Report” to shareholders

Special Feature

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

To Our Shareholders

Publications

This report is delivered quarterly to shareholders. Its contents include summaries
of financial results, special features about business activities, and introductions tovarious technologies.

■

DNP’s Businesses

DNP Group CSR Report (Japanese and English versions; English version
available only as PDF file for download from web site)

Each year around the end of June, we issue a report about DNP’s corporate social
responsibilities. We also have been issuing an annual “Eco-Report” since the ﬁrst
issue appeared in 1998.

■

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

DNP Group CSR Report■“Yuho” Annual Securities Report, etc. (in Japanese)

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

■

Corporate Governance

Reports“Tanshin” Earnings Release (Japanese and English versions)

Note: Trademarks mentioned in this annual report in connection with DNP products or services are used or registered in Japan.

Financial Section

In accordance with Tokyo Stock Exchange rules, we prepare earnings releases for each quarter. In addition to consolidated financial
statements, we report on the status of sales, etc.

Appendix109