Table of Contents

2 To Our Shareholders
President s Message

56 Segment Information
58

10 DNP in Brief

Information Communication 68 Lifestyle & Industrial Supplies 76 Electronics
58

Portrait

68

Portrait

76

Portrait

60

Business Strategies

70

Business Strategies

78

Business Strategies

12

Synopsis of Performance

62

Financial Results

72

Financial Results

80

Financial Results

16

DNP at a Glance

64

Topics74

Topics82

Topics18

Products

20

Solutions

84 Sustainable Development

22

Major Events of This Fiscal Year

86

Legal Compliance and Corporate Ethics

24

Management Concept and Business Vision

88

Information Security

26

Corporate Governance

90

Managing Intellectual Property

31

Board of Directors, Statutory Auditors and92

Research and Development

Corporate Ofﬁcers

93

Product Safety

32

The Making of DNP

94

Environmental Protection

34

Investor Information

97

Creating Safe and Lively Workplaces

100

Contributing to Society

36

Special Feature:

P&I Solutions

38

Introduction

40

Display Products Business

104

Management s Discussion and Analysis

42

Color Filters

112

Selected Financial Data

44

Optical Films

114

Consolidated Financial Statements

45

OLED

119

Notes to Consolidated Financial Statements

131

Independent Auditors Report

46

IPS/Smart Cards Business

50

Life Science Business

102 Financial Section

52

Regenerative Medicine

132

Appendix: Printing Process and Its Basic Technologies

53

Cell Sheet Engineering

137

Glossary

54

Microbioreactor

138

Major Subsidiaries and Afﬁliates

55

Lung Cancer Diagnostic Kits

140

Sources of Information about DNPThis annual report is aimed at providing information about DNP’s businesses, management vision, and business results. Opinions andforecasts 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.

To
Our
Shareholders
President s Message

Most people get a fresh idea of what “printing” is when we explain the various
directions in which our business has branched out. From printing on paper to packaging
materials, lifestyle materials, information recording media, liquid crystal color filters,
electronic devices, and even life science — our products and services play importantroles in people’s daily lives, and all are closely connected to “printing.”
DNP’s corporate vision is to provide “P&I solutions” that solve our customers’ problems
by developing and combining the printing technologies (PT) and information technologies(IT) that we have cultivated for so many years. In the fiscal term ended March 2008, as inprevious years, we actively promoted measures based on this vision in a variety of fields.
We responded to strong demand for displays not only by boosting production capacity
for LC color filters and optical films, but also by implementing merger, acquisition,and other types of corporate tieups. In addition, we continued to create products andservices based on consumers’ needs. Specifically, this included progress in our smart
card-based information security business, IC tag business, digital print business, anddevelopment of content for mobile phones and data broadcasting. Furthermore, as
examples of new businesses, we have been working hard at developing advanced andhighly original technologies and products related to medical care, pharmaceuticals,
health care and other life science fields, and to fuel cells, etc. in the energy field.
However, the business environment has remained very difficult, due to such factors as
surging material costs and intensifying price competition. In the fiscal year through March
2008, DNP marked its fifth consecutive year of increased revenues and achieved a large
increase in profits in our Electronics segment, but overall profits declined.
In order to overcome these difficulties and increase DNP’s corporate value in the future,
I believe it is important to strive to improve ROE and to emphasize capital efficiency inaddition to improving our bottom line by realizing our corporate vision. I believe that thebest way to continuously improve DNP’s corporate value is to use appropriate financial
strategies, invest aggressively in the most profitable fields where growth is likely, andfurther solidify our basis for growth.
Based on these ideas, we will continue to make every effort to be able to meet the
expectations of our shareholders and everyone who holds a stake in DNP.

2

To Our Shareholders

DNP Annual Report 20083

Performance in the Fiscal Term Ended March 2008

Net sales increased in our three main segments, and grew
3.7% overall relative to the previous term, to 1.62 trillion yen.
However, due to the effects of higher materials costs andlower unit sale prices, etc., operating income declined by 9.4%
to 87.14 billion yen, net income declined by 17.6% to 45.17
billion, and ROE declined by 0.7 percentage point to 4.4%.
We were especially hard hit by the worldwide surge in oil
prices as it led to price hikes for materials such as packaging
films and other petroleum products, and for printing paper.
Overall, materials costs rose by about 11.8 billion yen. We didour best to pass on these cost increases to customers throughnegotiations, but with the price of petroleum products rising
several times during the term, we were not able to raise our
prices as rapidly as costs increased.

Meanwhile, client companies continued to press strongly forlower prices, making the sales environment extremely tough.
The effects of increased competition, including lower unit sales
prices, cost us about 28.0 billion yen during the fiscal term.
In response to this situation, the entire Group worked
together on cost structure reform. Primarily in manufacturingsectors, we succeeded in cutting costs by about 35.0 billion
yen by boosting process efficiency, improving yields, reducing
materials losses, and shortening preparation and coordination
times as part of our Groupwide “Monozukuri 21 Initiative.”

Performance of DNP and Segments(¥ million)

2008.3
Net sales

1,616,053¥

2007.3% change

1,557,802

3.7 %Results from Cost Reduction Initiative “Monozukuri 21”- Amount of Cost Reduced -Information Communication

679,897

668,842

1.7

Lifestyle & Industrial Supplies

555,792

532,713

4.3

Electronics

322,312291,916

10.4

Beverages

73,495

74,122-0.8

Operating income

87,104

96,145-9.4

Information Communication

43,07650,958-15.5

20Lifestyle & Industrial Supplies

31,86336,252-12.1

15

Electronics

19,81814,89233.1

10Beverages

1,326

640

107.2

5

54,842-17.6

Net income
ROE (%)

4¥¥

45,172
4.4%

¥

5.1%

-0.7 point(¥ billion)

35.0

35
30

29.6
26.2
23.0

25

20.8

0

04

05

06

07

08

Net sales increased for both Information Communication andLifestyle and Industrial Supplies, but both segments ended
the fiscal term with year-on-year declines in operating income:
15.5% for the former and 12.1% for the latter. Many of thefactors behind these results were beyond our control, such as
soaring materials costs, demographic changes, and fluctuations
in financial markets in reaction to the sub-prime loan crisis.
Nevertheless, we hope to overcome these negative factors byincreasing the added value of the products and services that
DNP provides.
For example, net sales have been growing by more than
10% a year in high added-value businesses like information
processing services and smart cards that provide safe andreliable information processing functions. These businesses arealso making a growing contribution to profits. By paying close
attention to consumers’ needs, making the most of DNP’sstrength in a variety of media types — including paper, Internet,
DVDs, and data transmission — and by developing productswith superior functionality and concern for the environmentand human health, we intend to expand our business field andrevenues. These are two of the goals toward which the entire
DNP Group directs its efforts in realizing our corporate vision of“P&I Solutions.”

Capital Investments by Electronics Segment(¥ billion)

80

74.7

76.0

60

46.0
40

39.0

The Electronics segment made a sharp recovery, with net
sales growing 10.4% and operating income increasing by
33.1% from a year earlier. In the market for displays usedin products like televisions and computer screens, demandremained brisk throughout the year. Demand for liquid crystal
color filters increased a great deal, and with full operation of our5th, 6th, and 8th-generation production lines, revenues weremuch improved. The installation of new 6th and 8th-generationlines in particular allowed us to boost production capacity ata good time. Efforts to improve yields and other aspects ofefficiency allowed us to maintain high productivity, which also
contributed to the segment’s success.
Color filter demand is expected to increase even further
in the future, and we plan to continue to actively invest. For
example, in the summer of 2008 we plan to start full operationof an additional 8th-generation production line at our plant inKurosaki, Kita-Kyushu, and in the following fiscal year, we plan
to start operating a new plant for 10th-generation products
adjacent to Sharp Corp.’s new plant in Sakai, Osaka Prefecture.
The Sakai City by-plant will mass-produce color filters using
inkjet technology on the world’s largest substrates. In addition,
we plan to build a new plant in Himeji City, Hyogo Prefecture,
to supply Hitachi and Matsushita’s IPS Alpha Technology
joint venture with 8th-generation products. By reinforcing our
production system in ways like these, we aim to secure theworld’s largest supply capacity for color filters used in large
liquid crystal panels.
We intend to continue strengthening the Electronics
segment’s business base by supplying high-quality products
at the right time in order to meet demand for photomasks —which grew in the second half of the fiscal term — and highdensity build-up boards, which grew sharply, primarily for use inincreasingly sophisticated cellular phones.

31.6

20

0

04

05

06

07

08

To Our Shareholders

DNP Annual Report 20085

Our Client Base of 30,000 Companies Is an Asset That Will Help Us Expand Our Own BusinessIn the 21st century, consumers are looking for safer and morereliable lifestyles, and there is a need for measures to protect the
Earth’s resources and environment. Also, as the number of Internet
users grows, people are becoming accustomed to relying on
paperless communication, and information security is becoming
more and more important. And as people demand improvements
to their quality of life, there is a need for more compact devices
with greater functionality, pleasant access to media content, andmaterials that meet individual needs.
In 1876, in the turbulent era that immediately followed the Meiji
Restoration, DNP’s founders started a printing business basedon the cutting-edge technology of the time. Later, Japanesesociety underwent changes — including rapid internationalizationand diversification of individuals’ values — so momentous thatthey cannot even be compared to the changes of the late 19th
century when DNP was founded. In these times of intense change,
corporate clients and consumers desperately seek solutions tovarious problems, including some they face for the first time.
DNP has long been identifying these problems by engaging
business clients and consumers in taiwa,* and has continued
to solve them by applying world-class printing and information
technologies. Every member of our Group acts on the belief that theanswers to customers’ problems can be found within the customers
themselves. Through repeated taiwa, we come to understandour customers’ businesses better than they do themselves. By
considering more deeply, we come up with provisional solutions thatlead to another level of taiwa. The repetition of this process leads tocustomized solutions. Our customers so appreciate our work that
we maintain business relationships with more than 30,000 corporateclients. This is probably one of the largest customer bases in Japan,
and we consider it to be an important asset.
These times of intense change are too much for a single company
to weather alone, so we view our connection with business clientsin all types of industries as a source of strength. We believe thatthe key to expanding our business in the future lies in building ourbusiness partners’ faith in us, by providing appropriate solutions toproblems.
* Taiwa is a process that entails identifying problems and finding solutions through the exchange of viewpoints
and ideas.

6

DNP Will Create New Value and Contribute to Society with P&I Solutions

In order to achieve long-term expansion of our business,
it is crucial that we forge ahead and realize our corporate
vision of P&I Solutions. We will use original developments andextensions of printing and information technologies as tools
with which we create solutions for the problems of corporateclients and consumers — problems that we identify throughtaiwa. Given the importance of rapid and accurate problem
solving, we believe that providing carefully thought-out solutions
will foster long-term trust in DNP and lead to increased sales
and profits.
P&I Solutions are helping to build the types of infrastructurethat society needs. For example, we are seeing significant
growth in businesses such as smart cards, which provide
a basis for home and workplace security, and information
processing services (IPS) that handle personal information
securely. In addition, by digging deep to identify problems andcreate solutions, we have come to provide many products andservices that are indispensable to our customers’ businesses,
such as color filters, optical films, photomasks, multilayer wiringboards, and aseptic plastic bottle-filling systems.
We intend to continue actively developing along lines likethese that lead to expanding our business field. We havealready started several projects that we expect to develop
into new businesses in the medium or long term. In the life
sciences arena, we are developing cancer diagnostic kits andgetting involved in regenerative medicine, and in the energy
field, our activities include developing and manufacturing fuelcells and solar power cells. Going forward, we intend to keep
pushing ahead with innovations aimed at long-term growth andidentifying areas with good growth potential as we expand ourfield of business.

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

Independent andversatile individuals
and organizations

Interaction

Emergently evolving society

Effects on individuals
and organizations

Unforeseen
phenomena

Creation of new value
Taiwa

Taiwa

Marketing/
Planning

R&D

Printing
Technology

DNP’s
Comprehensive
Strengths

P&I
Solutions

To Our Shareholders

Production

Information
Technology

DNP Annual Report 2008

7

We Work Toward Sustainable Growth in Corporate Value

DNP’s management aims to increase corporate value andguide the company to long-term, sustainable growth. We will
strive to maximize DNP’s corporate value by making the mostof all of the superb assets that DNP has built up — our worldclass products and services, the intellectual property andresearch capacity that underpin those products and services,
one of the largest customer bases in Japan with some 30,000
business clients, a sound financial constitution, and mostimportantly, the strength of our brand, which is backed by ahigh degree of trust.
First of all, we will aim to further improve our bottom line bymaking maximum use of DNP’s strengths. Toward that end,
we will concentrate on boosting our ability to compete bydeveloping original DNP technologies and solutions, as well as
by expanding the scale of our business and cultivating growthfields. We will continue our “Monozukuri 21” activities in order
to become more cost competitive, while actively reforming thestructure of our business to achieve balanced developmentthat avoids excessive dependence on individual sectors or
products.

Primary Rankings
Environmental Rating 2006
Total: Ranked A (3rd from the top, out of 9 grades)

2007, Deloitte-TECO“Corporations Easy to Work For”
Ranked 16th of 399 companies

2007, Nihon Keizai
ShimbunThe 11th “Corporate Environmental Management
Level Survey”
Total: Ranked 39th out of 1,752 manufacturing
companies

2007, Nihon Keizai
ShimbunThe 4th “Corporate Strength Rankings”
Ranked 19th of 297 companies

2008, The Nikkan Kogyo
ShimbunThe 7th “Survey on Integrity, Transparency (Morality
and Sociality) of Companies”
Ranked 3rd out of 709 companies

2008, Integrex Co., Ltd.

SRI Indices that Include DNP
Sustainable Asset Management
Dow Jones Sustainability Index
FTSE4Good
Ethibel Sustainability Index
Morningstar Socially Responsible Investment Index

8

Improvement of capital efficiency
through appropriate financial strategies

Creation of new value in the everyday
operations of each business

Sustainable increase incorporate value

Increase in long-term
cash flow

Return of profits to all stakeholders
from a long-term standpoint

In order to continuously improve corporate value, it isimportant to increase long-term cash flow. In today’s businessenvironment, change occurs at a dizzying pace. In order toincrease or even maintain growth potential in this environment,
it is essential to invest in research and development related to
new products and technologies, to invest in equipment neededfor developing new businesses, and to implement strategic
alliances, including mergers and acquisitions. Therefore, we
strive to retain profits and strengthen our financial constitution.
At the same time, we watch demand for capital and othermarket trends, and work at returning profits to shareholders.
In fact, in the fiscal term through March 2008, we increased
dividends per share for the sixth consecutive year, to 36 yen.
We also acquired 96,213,000 of our own shares (161.4 billion
yen) during the past six years, of which we retired 59,000,000.
Looking ahead, we want to increase revenues throughbusiness expansion, boost corporate value even further byadequately fulfilling our corporate social responsibilities, andmeet the expectations of all of our shareholders.

President Yoshitoshi Kitajima

To Our Shareholders

DNP Annual Report 2008

9

DNP in Brief

Contents
12 Synopsis of Performance
16 DNP at a Glance
18 Products
20 Solutions
22 Major Events of This Fiscal Year
24 Management Concept and Business Vision
26 Corporate Governance
31 Board of Directors, Statutory Auditors and Corporate Officers
32 The Making of DNP
34 Investor Information

Synopsis of Performance
Grand Summary of Financial Results

Dai Nippon Printing Co., Ltd. and Consolidated Subsidiaries

Years ended March 31

change2008/2007

2008

2007

2006

¥ 1,616,053¥ 1,557,802¥ 1,507,505

Income Statement (¥ million)
Net sales

3.7%

Operating income

87,104

96,145

120,669-9.4%

Ordinary income

86,502

101,348

124,715-14.6%

Income before income taxes

88,46998,950114,639-10.6%Net income

45,172

54,842

65,187-17.6%¥ 1,040,135¥ 1,099,439¥ 1,063,308-5.4%

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

80,104

69,22867,99315.7%

1,601,193

1,700,250

1,662,377-5.8%

141,673

27.9%

Cash Flow Statement (¥ million)
Cash flows from operating activities¥

157,283¥

123,011¥

Cash flows from investing activities(122,523)(150,717)(151,780)-18.7%Cash flows from financing activities(73,728)(42,590)(46,712)

73.1%

Free cash flow**

34,760(27,706)(10,107)̶

Per Share Data*** (¥)
Net income
Net assets
Cash dividend

¥

67.08

91.23

-14.1%

1,516.35

1,544.02

1,507.89

-1.8%

36

32

26

12.5%

¥

78.10

¥

Profit Margins (%)
Operating income margin

5.39

6.17

8.00

-0.78

EBITDA margin

12.36

12.87

13.48

-0.51

Net income to net sales

2.80

3.52

4.32

-0.72

Financial Ratios
ROE (%)

4.35

5.14

6.29

-0.79

ROA (%)

2.74

3.26

4.00

-0.52

8

6

6

̶

70.09

76.46

93.27

̶

23.64

23.74

23.35

̶

PBR (times)

1.05

1.20

1.41

̶

EV/EBITDA (times)

4.94

5.74

6.26

̶

PCFR (times)

6.76

8.30

9.85

̶

Dividend yield (%)

2.26

1.73

1.22

0.53

58,31019,475

20,480199.4%

53.7

41.0

28.5

̶

AA+ (stable)

AA+ (stable)

AA+ (stable)

̶

29.53

34.53

34.30

̶

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

Return to Shareholders
Value of shares repurchased (¥ million)
Dividend payout ratio (%)
OthersLong-term credit rating (R&I)
Foreign ownership (%)* The figure for March 2006 shows total stockholders equity. ** Cash flows from operating activities - cash flows from investing activities

12*** No diluting securities outstanding

Record-high net sales 5 years in a row
Double-digit growth in Electronics Segment net sales; Operating income up 33.1%
Dividend payouts increased for 6 years in a row, to 36 yen per share

Net Sales

Operating Income

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

150

80

2,000

1,500

1,354.1

1,424.9

1,507.5

1,557.8

1,616.1

120.5
120

102.4

65.1

70

120.6
96.1

90

60

87.1

1,000

59.9
54.8

52.9

45.1

50
40

60
500

30
20

30

10

0

0

04

05

06

07

08

0

04

05

06

07

08

04

Net Income per Share

ROE

ROA

(¥)

(%)

(%)

100

82.56
80

7

91.23

6.0
6

78.10

71.49

67.08

60

4

6.3

05

06

3.9

4.0

07

08

3.6
3.3

5.5

5.1

5

4.4

3

2.7

4
2
3

40

2

1

20
1
0

0

0

04

05

06

07

08

04

05

06

07

08

04

DNP in Brief

05

06

07

DNP Annual Report 200808

13

Other Important Financial Figures and Indicators
Income Before Income Taxes

EBITDA(¥ billion)(¥ billion)

120
100

114.6

107.7

250

98.9

93.1

88.4

200

179.5

203.2

200.4

199.7

06

07

08

1,507.9

1,544.0

1,516.4

06

07

08

1,662.3

1,700.2

06

07

189.4

80
150
60
100
40
50

20
0

0

04

05

06

07

08

04

05

Total Net Assets*

Net Assets per Share(¥ billion)

(¥)

1,200
1,000

978.7

1,007.9

1,063.3

1,099.4

2,000

1,040.1
1.500

1,348.4

1,409.1

800
1,000

600
400

500
200
0

0

04

05

06

07

04

08

05

* As of the year through March 2007, figures show net assets insteadof total stockholders equity.

Interest-bearing Debt

Total Assets(¥ billion)(¥ billion)

100

2,000

80.1
80

71.4

72.8

67.9

69.2

1,513.7

1,600.1

1,601.1

1,500

60
1,000
40
500

20

0

0

04

05

06

07

08

04

05

PER (Price Earnings Ratio)

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

25

24.07

23.35

23.74

23.64

1.41
1.4

21.18
20

08

1.28

1.24

1.20

1.2

1.05

1.0
15
0.8
10

0.6
0.4

5
0.2
0

0

04

14

05

06

07

08

04

05

06

07

08

Capital Expenditures*Free Cash Flow*(¥ billion)(¥ billion)

200

80

66.7
162.8
150

60

52.1

136.0
116.1

100

34.8

40

86.0

20

69.8

0

50

–10.1

–27.7

06

07

-20
0

04

05

06

07

04

08

* Figures include capital expenditures for intangible fixed assets.

05

Net Sales by Segment

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

Information
Communication

679.8

Lifestyle &Industrial Supplies

322.3

0

43.0

31.8

19.8

Electronics

73.4

Beverages

Information
Communication
Lifestyle &Industrial Supplies

555.7

Electronics

1.3

Beverages

200

400

600

800

0

10

20

Capital Expenditures by Segment

Employees by Segment(¥ billion)(persons)
Beverages
1,248

Information
Communication

46.0

11.8

Others

0

10

20

30

40

40

50

Information
Communication
19,088

31.8

Electronics

30

Corporate
1,132Electronics
4,634

26.5

Lifestyle &Industrial Supplies

08* Free cash flow = Net cash provided by operating activities – Net cash used in investing activities

Lifestyle &Industrial Supplies
12,55550

Research and Development Expenditures(¥ billion)
40

30

35.5

26.0

26.3

04

05

28.6

30.1

20

10

0

06

07

08
DNP in Brief

DNP Annual Report 2008

15

DNP
at
a Glance

ProfileA comprehensive printing company with printing andinformation technologies at its core; the world’s top
supplier of many products
DNP is one of the world’s largest comprehensive printing
companies. It provides diverse products and services ina wide range of fields to about 30,000 corporate clientsand to consumers in Japan and around the world. At
the company’s core are the printing and information
technologies that it has cultivated since its founding in
1876. Since then, the company has branched out into avariety of fields, including packaging, decorative materials,
display-related products, and electronic devices, and has
become the world’s top supplier of many products.
Today, DNP continues to work at expanding its fields ofbusiness by developing and combining technologies inorder to provide original solutions.
The DNP Group employs about 38,000 people. In Japan,
DNP has 48 sales bases and 58 production plants, aswell as 21 sales offices in 16 other countries and sevenproduction plants in six countries other than Japan.
Overseas sales contributed 17.3% of the Group’s overall
net sales in the fiscal year ending March 2008.

Business Portfolio
Three Well-Balanced Strategic Segments

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

The 3 Segmentsof DNP’s Printing
Business
Lifestyle andIndustrial Supplies
The force that drives expansion of
our business fields; we haveapplied printing technologies to
new fields such as packaging,dwelling materials,
opto-materials andindustrial supplies

16

Electronics
Our growth driver; we have achieved
an overwhelming market share andhigh growth potential in display
components and electronic
devicesA business portfolio that is well-balanced from thestandpoints of stability, expandability, growth potential
and risk
DNP has two main businesses: Printing, which
contributes 95% of the group’s net sales, and Beverages,
which generates 5% of net sales through Hokkaido CocaCola Bottling Co., Ltd.
Printing consists of a group of businesses that DNP
developed through the application and combination of
printing and information technologies. It is a strategic
business unit that has been expanding into a variety offields.
We divide our Printing business into three segments
according to the types of products and services provided:
Information Communication, Lifestyle and Industrial Supplies,
and Electronics. These three segments together make up abusiness portfolio that is well-balanced from the standpointsof stability, expandability, growth potential, and risk.

Structure
An Efficient Group Structure
The DNP Group manages its business efficiently
by concentrating functions like planning, researchand development, and sales at its main office, Dai
Nippon Printing Co., Ltd. (DNP), while distributing mostmanufacturing and technical functions among Group
companies. The DNP Group includes 144 consolidated
subsidiaries and 11 affiliated companies that are accounted
for by the equity method. The head office and Group
companies concentrate on their respective roles while
cooperating closely so that the Group can operate in ahighly profitable manner.
We continuously review our organizational structure andwork to improve our comprehensive strength. For example,
we established regional companies in Hokkaido, Tohoku,
Chugoku, Shikoku and Kyushu, combining sales, planning,and manufacturing functions in each region in order tomeet the particular needs of each locality.

A Group Structure That Enables Efficient Operation

PlanningGroupcompany

ResearchGroup
company

Dai Nippon Printing Co., Ltd.

Development

Sales

Group
company

Groupcompany

Groupcompany

Groupcompany

Groupcompany

A Comprehensive Printing Company
One of the important features that distinguishes DNP
from competitors is our comprehensive order-taking
structure, which allows us to respond coherently to various
customers’ needs. We built this structure by developing
original printing technologies, applying them to diverse
fields, and adapting our internal corporate structure tochanging societal and customer needs. Additionally,
by combining printing technologies with our other setof core technologies — information technologies — weexpanded our field of business even further and created acomprehensive order-taking structure that includes auxiliary
businesses and responds to a wide range of customer
needs ranging from product planning and proposals toperformance measurement of their sales promotions.
This type of comprehensive printing company format
is rarely found anywhere in the world. It constitutes animportant strategic advantage for our business and provides
us with a framework for further business expansion.
We intend to actively press ahead and develop
our solutions-oriented business model, whereby weorganically link functions such as research, development,
manufacturing, sales, planning, and administration andcreate new businesses as we propose ways to solve theproblems of corporate clients and consumers.

DNP’s Business Grows through “Comprehensive Orders”
Work Flow at DNP

Planning

Data
processing

Design/Development

Products
delivery/Serviceprovision

Production/
Manufacturing

Evaluationof results

Receive comprehensive orders that include
supplementary services

Cross-media
development

Text
processing

DB construction
and management

Serveroperation

Distribution
management

Research

Promotionplanning

Production ofstill andvideo images

Programdevelopment

Information
security

Implementation/
Operationof plans

Marketing

Product
planning

Intellectual
property
management

Systemdevelopment

Customer
information
management

Customer
service center

Alliances

DNP in Brief

DNP Annual Report 200817

Products
Information Communication
Net Sales

Operating Income

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

100

600

100
600

80

Net Sales by Segment
400(Depreciation)
120

679.9

668.8

662.4

(%)

Depreciation(¥ billion)

51.0

60

51.0

557.5

539.2

522.4

80

400

60

43.1

Beverages
4.5%

40
200

40
200

20

Electronics
19.7%

0

0

06
Information
Communication
41.7%

20

0

0

08

06

07

08

Lifestyle and Industrial Supplies
Net Sales

Lifestyle andIndustrial Supplies
34.1%

07

23.3

20.9

19.2

Operating Income

Assets(¥ billion)

Depreciation(¥ billion)(Net sales)
800(Operating income)120(Assets)
800(Depreciation)
120

100
600

555.8

532.7

80

436.1

400

60

37.5

Operating Income by Segment

532.2

522.2

80

479.9

36.3

31.9

400

60

40

200

(%)

100
600

28.5

24.7

23.2

200
20

Beverages
1.4%

0

0

06

07

40
20

0

08

0

06

07

08

Electronics
20.6%

Electronics
Information
Communication
44.8%

Net Sales

Operating Income

Assets(¥ billion)(Net sales)
800

Lifestyle andIndustrial Supplies
33.2%

Depreciation(¥ billion)(Operating income)120(Assets)
800(Depreciation)
120

100
600

100
600

80
400

296.7

37.8

19.8

14.9
0

07

08

366.2

427.4
49.6

51.7

39.5

60
40

200
20
0

06

400

40

200

18

60

322.3

291.9

80

438.7

20
0

0

06

07

08

Product Lineup
Books and Magazines Books, magazines, comics [1] [2], dictionaries, CD-ROM [3], free newspapers and magazines, textbooks, graphic art collections, corporate histories, historical reviews, and other published materials
Commercial Printing Catalogs [4], flyers, pamphlets, posters and calendars [5], point-of-purchase materials [6], and printed materials advertising events, etc.
IPS/Business Forms Smart cards [7], plastic cards, bankbooks
and continuous ledger forms for computerized accounting [8], IPS (information processing services) [9], direct mail, stock and other securities certificates, gift certificates [10], digital pens [11], hologram products [12]

1

2

3

4

5

6

7

8

9

10

11

12

Packaging Printed packaging products and eco-friendly containers (for beverages [13], food [14], household products [15], and cosmetics and pharmaceuticals, etc.), PET bottles and preformed bottles [16], aseptic filling systems [17],Lifestyle Materials Decorative materials for stores, offices and homes (including coverings for walls, floors, furniture surfaces, modular bath interiors, and exteriors) [18], Auto interior materials [19], and surface materials used inelectronic appliances [20]Opto-Materials/Industrial Supplies Optical film for displays [21] [22], transfer ribbons for color printers and fax machines [23], digital photo printers [24], electrodes for lithium-ion rechargeable batteries

13

14

15

16

17

18

19

20

21

22

23

24

Display Components LCD color filters [25], back plates for plasma display panels [26], hologram screens [27], organic EL displays [28], and projector screens [29]Electronic Devices Photomasks [30], lead frames [31], system modules [32], package substrates [33], IC tags [34], electrodeposition separators [35], MEMS [36]

25

26

27

28

29

30

31

32

33

34

35

36

DNP Annual Report 200819

DNP in Brief

Solutions
Cross-Segment Solutions

Information Communication
Solutions that lead to more pleasant and effective communication
DNP solves problems and manages business processes on behalf of its corporateclients, starting with the establishment of business goals, and including strategy
proposals, marketing, system design and development, content planning and production,and maintenance and operation of services. In addition to handling a variety of typesof information communication media, we construct solid security systems that protect
personal and corporate information.

Main Solutions Menu
• CRM solutions		
• Support for sales promotion• RFID solutions		
• Marketing support solutions• Personal printing, on-demand publishing, editing support systems• Brand communications support solutions

In addition to supplying cutting-edge, highperformance products and services from eachindividual business segment, DNP also provides
solutions that give greater satisfaction to both
corporate and individual customers by having
segments cooperate closely and blending theirtechnologies and expertise. One way we approach
this is by becoming deeply involved in our customers’
business processes and engaging in a great deal of
taiwa through which we clearly identify their problems.
Only then can we put together a solutions menu andimplement effective resolutions to those problems.

Main Solutions Menu

Solutions by type of business process
Sales Promotion-Related Solutions

Lifestyle and Industrial Supplies
Solutions that lead to better lifestyles or support industrial infrastructures
DNP provides numerous products that are closely connected to people’s daily lives, inthe areas of photo printing and other industrial materials as well as packaging and dwellingspace materials. People are always seeking safety and reliability. We have prepared a menu
of solutions that help meet the need to make highly functional, high-quality products that
respect human health and environmental preservation, through such services as productdevelopment and design, design and development of machinery, and provision of test
environments.

Main Solutions Menu
• Usability studies and analysis • Traceability systems• Universal design• Aseptic filling systems• Dwelling space solutions• Environmental assessment of building materials, etc.
• Digital photo printing solutions

Electronics
Solutions for creating high-quality, sophisticated products together with ourcustomers
Backed by the world’s highest level of technologies related to display products (such ascolor filters) and electronic devices (like photomasks), we work together with our customers
to clearly identify problems and harness all our capacities to find solutions. We provide highadded-value services, including planning needed products, cutting-edge research anddevelopment, quality and function testing, mass production, and boosting productivity.

Main Solutions Menu
• Test charts for checking picture quality, color viewers• In-plant, by-plant facilities design and development• LSI design and prototyping• MEMS foundry services• Development of new products and technologies

20• Product development support• Sales measures reinforcement• Marketing and research• Proposals for promotion strategies• Producing sales tools more efficiently• Making customer data more secure

Solutions that Support Backyard Operations• Boosting efficiency of ordering and receiving
orders for supplies• Product information databases• Production line control systems• Delivery and distribution systems• Collection systems• Improving production efficiency

Organizational Management-Related
Solutions• Support for all types of IP-related operations• Materials procurement systems• Support for employee ID issuance/management/utilization• Electronic ledger systems

Network Infrastructure-Related Solutions• Development and operation of all types of ASPs
• Content distribution platforms• Data mining systems• Internet data centers• Construction of information security systems

Public Relations/IR-related solutions• Corporate communications support• Construction of corporate information archives• IR-related solutions

Training-Related Solutions• Online learning• Educational materials production support• Editing of curriculum information

Examples of Solution Implementation
DNP examines problems both from the standpoint of our corporate
customers and consumers. We use printing and information technologies
as tools for developing and providing a wide range of solutions. We intend
to continue solving various problems with maximum effectiveness.

Increasing corporate value
Brand management
Corporate archives

Consulting
Business planning support

Employee IDs and other forms
of in-house information security

Human resource development support
Online learning

Trading area analysis
Mapping solutions

Intellectual property management support

Promotion planning

Business strategy
proposalsMarket analysis and research

Universal design

Product development
Service development

CRM marketing
Database marketing
Purchase data analysis

All types of content production
All types of system development

Promotion of taiwa withcorporate customers and consumers

Consumers

Corporate
customers
business
processes

All types of sales
promotion tool production

Data input centers

Design and developmentof production equipment
Customer and consumer
information management

Production support
using CAD-CG, etc.

Production/
Manufacturing
In-store promotions(Shelf displays, point of purchase, etc.)

Optimization ofbusiness processes

Distribution/Sales

Campaign headquarters

Traceability

Customer service centers
Accounts settlement systems
Internet data centers

Distribution supportand management

Media promotion

Cross-media solutionss Paper medias Web sites (PCs/mobile phones)s Broadcast medias Packaged media (CDs, DVDs)s Other information media

Smartcard solutions
RFID solutions

DNP in Brief

DNP Annual Report 200821

MajorEventsofThis Fiscal
Year

2007
May
• At our May 17 Board of Directors meeting, we decided
to adopt a takeover defense measure that would preventthe purchase of a large number of DNP shares. At the113th regular General Meeting of Shareholders held on
June 28, adoption of this measure was approved by ourshareholders. Realization of DNP’s management concept,
and the elements that make it possible for us to realize thatconcept – our corporate systems, corporate culture, tangible
and intangible management resources, and the bond oftrust with our numerous stakeholders – are what create
DNP’s corporate value and the collective interest of ourshareholders. Without a sufficient understanding of theseelements, it is impossible to appropriately determine DNP’scorporate value or shareholders’ collective interest. Thisbuyout defense measure establishes rules and proceduresfor providing shareholders with necessary and adequate
information to allow them to make an appropriate decisionin the event that there is an attempt to purchase a large
number of DNP shares.

June• We acquired the semiconductor photomask manufacturingand marketing business of NEC Electronics Corporation
and NEC Fabserve Ltd., and on June 1 began operations
under a newly formed company – DNP Fine Electronics
Sagamihara Co., Ltd. This transfer allowed DNP tostrengthen its photomask development and manufacturingsystems, and made it possible to lower total costs byimproving economies of scale in photomask manufacturing.

July• We acquired a test preparation business and related
publishing business from Waseda Seminar KK, and began
operating it on July 2 as a wholly-owned subsidiary of
DNP named Waseda Management Publishing. This gives
DNP direct entry to the education business, which we
intend to expand by combining our information technology
with Waseda Seminar’s licensing and hiring examination
preparation content in order to provide services with greater
added value.
• DNP concluded a basic agreement to form business andcapital ties with Maruzen Co., Ltd., one of Japan’s largest
book sellers, which, like DNP, has been in business for morethan 130 years. In August 2007, DNP will acquire some10.5 billion yen worth of Maruzen shares, which will give us
a 25.6% stake in the company. This capital alliance meansthat DNP will expand the supply chain of our Information
Communication segment. DNP will combine its printing andinformation technologies to improve customer satisfaction
and operational efficiency in Maruzen’s education, academic
research support, retail stores, and publishing businesses.

22

• DNP and the University of Tokyo jointly developed amicrochannel semiconductor using Micro ElectroMechanical Systems (MEMS) technology. DNP uses
technologies like ultra-fine processing and precision etching
to provide comprehensive MEMS-related services fromdesign and prototype fabrication to mass production. As of
the year through March 2007, DNP was the only company inJapan with its own 8-inch MEMS manufacturing equipment,
which it uses as a MEMS foundry to provide a variety of
MEMS products. The new chip has a pattern of ultra-finechannels and hollows formed on a silicon substrate. Buildingon this success, DNP will begin full-fledged prototype andmass production of bio-MEMS devices.

September• DNP developed a template with nanometer-level patterns
for nano-imprinting. The template is designed for use in
the manufacture of next-generation 18nm semiconductors.
Since starting its photomask business in 1961, DNP has
remained a leader in the development of cutting-edge
technologies on the strength of our microfabrication andother skills. DNP has worked actively to develop technology
for mass producing templates in the under-30 nm class. The
company intends to be among the first to participate in whatis expected to be a growing market in the future.

October• DNP decided to build a new plant in Sakai City, Osaka,
where we will use the inkjet production method to produce
10th-generation (2,850mm X 3,050mm) color filters for liquid
crystal displays (LCDs). DNP will invest approximately 43.5
billion yen in the new plant, which will be able to produce
36,000 sheets of mother glass per month. The entire output
is to be supplied to a new plant that Sharp Corp. is buildingin the same city. Operations are scheduled to begin by
March 2010. Combined with our Kameyama plant and a
new production line at our Kurosaki Plant, the new plant will
give us the world’s greatest supply capacity for large LCD
panels.
• DNP acquired a dye-sublimation thermal transfer media
manufacturing and marketing business from General Co.,
Ltd. and General Technology Co., Ltd. Demand for dyesublimation thermal transfer media has been rising sharply
with the popularity of digital photo printing. By increasing
production capacity through this acquisition, DNP aims
to preserve its top share of the market and boost costcompetitiveness by sharing materials and raising production
efficiency.

December• DNP Company President Yoshitoshi Kitajima was decorated
by the French Republic as a Commander in the Order of theFrench Legion of Honor, recognizing DNP’s contributions
both to French industrial development and cultural exchange
between Japan and France. To date, DNP’s businessactivities in France have included production of smart cards,
ink ribbons, and photo-related products. In addition, DNP
has been active in cultural exchange through collaboration
with the federation of French museums (La Réunion desMusées Nationaux) and the Musée du Louvre.
• DNP received the Japanese government’s 19th annual“barrier-free promotion” award for the encouragementof universal design – an award presented by a speciallyappointed Minister of State. The Cabinet Office recognized
DNP for its proactive proposals to client companies for the
introduction of products such as Braille-imprinted containersand easy-to-open packaging, development activities basedon an awareness of universal design and consumers’ pointof view, and broadening access to easy-to-use packaging.

2008
January• DNP joined Sony Corp, Gourmet Navigator Inc, Mitsui & Co.
Ltd and Tanseisha Co. Ltd in establishing a joint venture,“FeliCa Pocket Marketing.” The new company aims to use“FeliCa Pocket,” a general-purpose application for use withcontactless IC cards, to provide marketing support services
for a wide variety of businesses including retail stores,
restaurants, and entertainment providers.

March• DNP and Sony Chemical & Information Device Corporation(SonyCID) signed a letter of intent regarding the transfer of
SonyCID’s global thermal transfer ink ribbon business to
DNP. The two companies agreed to work toward signinga definitive contract with a view to complete the transfer
by July 2008, after which DNP aims to expand the global
business.

DNP in Brief

DNP Annual Report 200823

Management
Concept
andBusiness
VisionManagement Concept

The DNP Group will contributeto the emergently evolving societyof the 21st century.
When DNP was first founded, its motto was to “run a civilizedbusiness.” This was just after the political and social upheavalof the Meiji Restoration, and expressed the company’s
desire to contribute broadly to the development of Japanesesociety. During the 130 years that have passed since, we havemaintained this aspiration. Even in the 21st century, our desire
to contribute to society has not changed.
Autonomous individuals and organizations influence eachother, society changes in response to unexpected phenomena,and these phenomena in turn further influence individuals andorganizations. We call this an “emergent society.” In this type ofan emergent society, we believe that quickly noticing changes
and identifying and solving the problems faced by corporate
customers and consumers leads to social contribution. Allof us at DNP work together every day to realize this ideal. By
actively leading social evolution and development, we not only
expand our business, but also fulfill our social responsibility.

Business Vision

P&I Solutions
We will identify and solve the problems and issues
that consumers and corporate clients face within theemergently evolving society by fusing our Printing
Technologies (PT) and Information Technologies (IT).
In an emergently evolving society, markets and consumers’
needs change in unpredictable ways. Telecommunications
networks, financial and distribution systems, education,
food, clothing and shelter, and other social infrastructure
are constantly changing. As corporations and consumers
increasingly wonder how they will cope amid such changes,
we can discover business opportunities for DNP in the need tosolve their problems.
We believe that by noticing signs of change before others do,coming up with possible solutions for problems, and getting ahead start on making proposals, we can develop our businessand contribute to society. We can make the most of thesebusiness opportunities by making use of the PT and IT that wehave cultivated in order to offer various products and services,and by developing new solutions and becoming involved in thebuilding of a new infrastructure.

24

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

Guiding Principles
1. Engage in taiwa* with all persons concerned
Through taiwa, we can identify the hopes and dreams of
consumers and corporate clients, as well as uncover our own
problems of which we had been unaware. By pursuing taiwa
on the identified problems and issues with various members of
the company as well as people outside the company, we will
be able to find solutions to these problems and issues.

DNP Group Code of Conduct

1. Contributing to the development of society
2. Social contribution as a good corporate citizen
3. Compliance with the law and social ethics
4. Respect for human dignity and diversity

2. Work with an independent and collaborative mind-set inorder to solve problems
Acquiring specialized knowledge and skills, thereby
becoming independent, allows us to sharpen our sensitivity forperceiving the problems and issues that surface within taiwa.
We should collaborate on these issues with other members
while recognizing one another’s sense of values and roles inorder to propose solutions that will meet the satisfaction of ourclients.

5. Environmental conservation and the realization of arecycling-oriented society

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

10. Realization of a safe and vibrant workplace

6. Realization of a ‘universal society’
7. Ensuring the safety and quality of our products andservices
8. Ensuring information security
9. Proper disclosure of information

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

DNP in Brief

DNP Annual Report 200825

Corporate
GovernanceFundamental Philosophy
DNP has established a management concept of contributing
to the emergently evolving society of the 21st century, andrecognizes that fulfilling its corporate responsibilities to society
as a corporation and being trusted by its shareholders,customers, consumers, employees and other stakeholders
is critical to improving the competitiveness of the Company.
Toward this end, we regard corporate governance, including aninternal control system, as a top management priority. We havestrived to establish and manage an organizational structurethat allows for precise managerial decision-making, prompt
and appropriate execution based on the decisions made, andproper supervision and surveillance; strengthen education andtraining to improve each employee’s awareness of complianceissues; and enhance our overall corporate governance.

Progress on Corporate Governance
Measures
1. The organizational structure for managerial
decision-making, execution, supervision andother aspects of the corporate governancestructure(1) Organizational details
DNP’s organization is designed to allow the directors withspecialized expertise and experience in a wide range ofbusiness fields to participate in management decisions, to takeresponsibility and authority as they execute their work, and tosupervise the work of other directors. Also, so as to promptly
make precise management decisions, smoothly act basedon the decisions, and further strengthen proper supervisory
functions, corporate officers named by the Board of Directors
execute the decisions made by the Board of Directors, andhave the responsibility and authority to decide upon and carryout those matters delegated by the Board. Working in close
communication with the directors and in close proximity to theworkplace, their function is to ensure that the views of thoseon the front lines are reflected in management.
At the general shareholders’ meeting held June 28, 2007,
DNP revised the term of office for the directors from two years
to one year, in order to have more flexibility to construct amanagement system best suited to responding to the businessenvironment; to further clarify management responsibility foreach fiscal year; and to increase opportunities to earn theconfidence of shareholders. Also, in order to strengthen our
corporate governance and management systems, we revised
our management structure to have the Board of Directors
appoint four representative directors, consisting of one
President and three Executive Vice Presidents.
The Board of Directors consists of 25 directors, including one
outside director. In principle, the Board meets once a month.
Based on the Company’s Board of Directors Regulations, thedirectors ensure that operations are appropriately run andmutually supervise day-to-day operations. The directors holdexecutive committee meetings once a month to exchange
information that is helpful for efficient decision-making.

26

To speed up the Company’s activities and make them more
efficient, DNP has also established a Management Committee
consisting of directors at the senior managing director level
and above. The committee meets once a month, in principle,
to review and discuss management policies, strategies, andimportant business matters.
DNP has in place a Board of Statutory Auditors that consistsof five auditors, including three outside statutory auditors.
In accordance with auditors’ prescribed audit criteria andresponsibilities, the statutory auditors conduct audits of thedirectors’ management of day-to-day operations and, as
necessary, seek information from the directors and employees
regarding business operations.
(2) Internal controls and auditing
In order to maintain a structure that allows for precise
management decision-making, appropriate and prompt
execution of business, and inspection and monitoring of thesefunctions, the Corporate Ethics Committee, as the body incharge of internal control, inspects and guides DNP’s executive
departments according to the DNP Group’s Basic ComplianceManagement Regulations. The Auditing Department ensures
the propriety of operations by conducting accounting andoperational audits based on internal audit regulations and byproviding progress reports to the statutory auditors.
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 explanation of
the audit plan at the start of the fiscal year, assessing audit
operations during the fiscal year as appropriate, and receivinga 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 firm they are
employed by, and their assistants in the audit work are as
follows:■ Certified public accountants who performed theaccounting audits (Continuous audit years)
Senior partner, managing partner
		 Atsushi Sasayama (6 years), Taichiro Hosoya (1 year)
Managing partner
		 Kazuhiko Terada (1 year), Junko Shima (1 year)

Group. Certain organizational units and directors are promptly
established and appointed for responding to risks that have
newly developed.
(4) Progress on other corporate governance measures
By establishing in October 2007 the DNP Group Guidelines
for Conduct, which expand on the DNP Group Corporate
Pledge and the DNP Group Employee Code of Conduct,
DNP has set down codes of conduct and specific guidelines
for conduct for employees to follow, so as to contribute to
the prosperity and solid development of society, promote fair
and appropriate corporate activity, protect the environment,
contribute to society, and establish a free and lively corporate
culture. Among the stipulations is that DNP, as an emergently
evolving company that does not do business with anti-social
elements, fulfill its corporate responsibilities to society as acorporation, respect its shareholders, customers, consumers,
employees and other stakeholders, and act in a way that earns
trust. The DNP Group CSR Report details not only the DNPGroup’s business activities but also efforts to address social
issues and protect the environment, and aims to enhance
understanding and deepen confidence and trust throughcommunication with various stakeholders.
(5) Compensation paid to directors and auditors
The details of compensation DNP paid to directors andauditors are as follows:

Directors

NumberCompensation(¥ million)

28

1,602

Auditors

5

117

Total

33

1,719

Note
Of which, 4 outside
directors accountedfor ¥81 million

Notes: 1. The figures above include provisions for bonuses for directors and statutory auditors(¥240 million for directors) for the fiscal year.
2. The figures above include compensation paid to outside directors and statutory auditors.
3. In addition to the above, bonuses of ¥28 million were paid to employee directors.
4. In addition to the above, total retirement bonuses of ¥260 million were paid, based on
resolutions at the 113th general meeting of shareholders held on June 28, 2007, to four
directors and two statutory auditors who retired.
5. The above figures do not include costs of ¥6,553 million for final retirement bonus payments
related to the Company’s decision, as approved at the 113th general shareholders’ meeting
held on June 28, 2007, to abolish the practice of granting retirement bonuses to members of
the Board and to auditors.

(6) Compensation paid to Meiji Audit Corporation(accounting auditor)
The details of compensation DNP paid to Meiji Audit
Corporation are as follows:( ¥ million)■ Audit firm
Meiji Audit Corporation■ Number of accounting audit assistants
9 certified public accountants, 7 junior accountants, 1 other

Compensation for services in accordance with Article 2-1 of theCertified Public Accountants Law (Law No. 103, 1948)

70

Compensation for other services

−

Total

70

Note: Figures less than ¥1 million have been rounded down.

(3) Development of a risk management structure
To manage risks related to compliance, the environment,
disasters, product safety, information security and 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 minimize losses to the DNP

DNP in Brief

DNP Annual Report 200827

A diagram of the corporate governance structure is shown below.

General Meeting of Shareholders
Audit

Audit

Board of Directors
Management Committee

Representative Directors

Corporate Ethics Committee

ReportingOpen Door Room
ReportingInformation Disclosure Committee

Executive Directors

Audit

Corporate officers

Group companies

Audit
Guidance
Training

Product Safety Committee
Environmental Committee
Complaint Handling Committee
Central Disaster Prevention Council

Audit

Auditing Department

Business divisions

Information Security Committee

Oversight of internal controls

Head office

Operating units

Accounting Auditors

Insider Trading Prevention Committee

ReportingBoard of Statutory Auditors

Audit

Guidance
Assistance

Legal and other main divisions(Environmental Safety Division, Labor Division,
Technology Division, Accounting Division, Management
Division, IP Division, Legal Affairs Division, etc.)

Audit(Autonomous implementation, inspection,
review, improvement)

Reporting

Audit unit

Corporate Social Responsibility Committee

Guidance

Coordination

2. Interests between DNP and its outside director
and outside statutory auditors
Neither the outside director nor the outside statutory
auditors have personal, financial or business relationships orother interests with DNP.

3. Measures for enhancing DNP’s corporate
governanceIn accordance with a resolution by the Board of Directors at a
meeting on May 10, 2006, DNP has established arrangements
based on the Corporate Law and the Enforcement Regulationsof the Corporate Law for ensuring the propriety of operations.
Based on subsequent developments, the arrangements
were revised as follows and approved at a Board of Directors
meeting held on November 15, 2007.

1. Arrangements for ensuring that the execution of operations
by the directors and employees complies with the laws andthe Articles of Incorporation

1) To deepen consideration of the DNP Group’s Vision for the28

21st Century on the 130th anniversary of the Company’s
founding, the DNP Group has established DNP Group
Guidelines for Conduct by revising and expanding the DNPGroup Corporate Pledge and DNP Group Employee Code,the code of conduct for all employees (including directors).
The Group provides all employees with a copy of theguidelines and conducts training to familiarize them with it.
2) The Board of Directors meets once a month, in principle.
Based on the Company’s Board of Directors Regulations,the directors ensure that operations are appropriately run
and mutually supervise day-to-day operations. By naming
outside directors with no relationships or interests with DNP,
the Company has established a way to ensure that the workof directors is in compliance with the laws and the Articles ofIncorporation. In addition, directors with day-to-day business
responsibilities preempt acts in violation of laws or the Articles
of Incorporation by supervising the conduct of the heads ofthe various operating units, including corporate officers.
DNP has in place a Board of Statutory Auditors thatconsists of auditors, including outside statutory auditors.
In accordance with auditors’ prescribed audit criteria andresponsibilities, the statutory auditors conduct audits of thedirectors’ management of day-to-day operations.
3) The Corporate Ethics Committee, which consists of thedirectors in charge of each head office division, oversees
the establishment and management of arrangements
for ensuring the propriety of operations in the DNPGroup according to the DNP Group’s Basic ComplianceManagement Regulations.
4) Under the oversight of the Corporate Ethics Committee,
including an Information Disclosure Committee, Insider
Trading Prevention Committee, Information Security
Committee, Product Safety Committee, Environmental
Committee, Complaint Handling Committee, Central
Disaster Prevention Council, and each head office divisionin charge of specific laws and regulations, conduct reviews,
provide guidance, and offer training for operating units andgroup companies in their areas of responsibility.
5) The heads of the divisions autonomously determine,
implement, inspect, review and improve the required
arrangements and procedures for their divisions, basedon the DNP Group’s Basic Compliance Management
Regulations of the DNP Group and in light of the specificoperations of each division.
6) Based on internal audit regulations, the Auditing
Department, which is independent of the operating units,
conducts internal audits and provides guidance to thedivisions and group companies regarding the establishment
and management of arrangements for ensuring the
propriety of operations.
7) The Open Door Room, a gateway for internal notifications
within the DNP Group established within the Corporate
Ethics Committee, receives and responds to reports fromGroup employees concerning legal violations.

2. Rules and other arrangements for managing the dangers oflosses1) To manage risks that could have a material impact on
business, such as those related to compliance, theenvironment, disasters, product safety, insider trading andexport management, the Corporate Ethics Committee, otherspecial committees and other head office divisions develop
rules and conduct training as risk-related preemptive efforts,
and respond promptly to avert or minimize losses to the
DNP Group. Certain organizational units and directors arepromptly established and appointed for responding to risks
that have newly developed.
2) The Company regularly tries to manage information security
risks mainly through its Information Security Committee
and by reviewing how personal information is managed,
expanding its Information Security Headquarters, expanding
and revising rules and regulations, expanding training,
controlling who comes into and goes out of company
property with biometric verification systems, expanding the
installed base of surveillance cameras, and minimizing thenumber of workers.
3) For managing financial reporting-related risks (thedevelopment and management of internal controls
for ensuring the reliability of the Company’s financial
reports), DNP has established an arrangement for thetimely and appropriate assessment and disclosure of theeffectiveness of internal controls. Specifically, necessary

adjustments with the auditor are made, and under theoversight of the Corporate Ethics Committee, businessprocesses with a material impact on the Company’s
consolidated financial reports (sales, manufacturing,purchasing, asset management, and accounting) andrelated divisions (including consolidated subsidiaries) areappropriately identified and selected based on disclosed
internal control development and evaluation criteria. Rules
for managing related operations, manuals, and checklists
are documented; self-inspections are conducted on thedivisions subject to evaluation; and internal audit reports arecompiled.
4) Under the oversight of the Corporate Ethics Committee,risks are regularly inventoried. For any new risks that could
have a material impact on business, units and directors aredesignated to respond properly.

3. Arrangements for ensuring that the execution of operations
by directors is efficient

1) The Board of Directors meets once a month and at othertimes as needed, as one fundamental arrangement for
ensuring that the execution of operations by directors is
efficient. A Management Committee, consisting of directors
at the senior managing director level and above, meets oncea month, in principle, to contribute to efficient decisionmaking and to review and discuss important businessmatters. In addition, an Executive Committee meets oncea month to share management information among thedirectors.
2) Those responsible for carrying out operations based on
decisions by the Board of Directors do so within theirauthority and in accordance with organizational regulations,
position authority rules, collective decision-making rules,
and other internal rules. Also, directors with day-to-day
business responsibilities try to do their work more efficiently
by delegating appropriate authority to corporate officers.

4. Arrangements concerning the maintenance and managementof information relating to directors execution of operations

Information on the directors’ execution of operations isregistered or recorded in the form of minutes of Board of
Directors meetings, minutes of various committee meetings,
approval documents (ringi) and other documentation, or
electronic documentation. This information registered orrecorded as paper or electronic documents is appropriately
and safely retained and stored in easily searchable condition
for at least 10 years, in accordance with basic regulations on
information security, document management standards, andelectronic record-keeping standards.

5. Arrangements for ensuring proper group business operations

1) To ensure the propriety of its operations, the DNP Grouphas established DNP Group Guidelines for Conduct for all
employees (including the directors) and conducts training
to familiarize employees with them. The Group has also

DNP in Brief

DNP Annual Report 200829

established Basic Compliance Management Regulations
concerning the establishment and management of
arrangements for ensuring the propriety of operations, andbased on them, group companies implement the regulations.
2) The group companies autonomously determine, implement,
inspect, review, and improve the required arrangements
and procedures for their divisions, based on the policies
written in 1) above and in light of the details and scale oftheir businesses.
3) The Auditing Department, the Corporate Ethics Committee,
other special committees, and other head office divisions
audit or review, provide guidance, and offer training on the
progress made as specified in 1) and 2) above.

6. Arrangements concerning employees who assist auditorswith their work and matters related to the independence ofsuch employees from the directors

1) The Audit unit with a dedicated staff assists auditors with
their work.
2) The Audit unit staff performs operations under the directionof the statutory auditors. Reviews and reassignments of anddisciplinary actions against staff require the consent of theBoard of Statutory Auditors.

7. Arrangements for directors and employees reports tostatutory auditors, arrangements regarding reports to otherauditors, and arrangements for ensuring that statutory
auditors conduct their audits effectively

1) The statutory auditors may request reports on day-to-day
operations from the directors and employees as necessary,and DNP Group directors and employees are to promptly
provide such reports when requested to do so.
2) The directors are to promptly report to the statutory auditors
any facts that come to light that are in violation of laws ormight seriously hurt the Company.
3) The Auditing Department and the Corporate Ethics
Committee regularly report to the statutory auditors on
the establishment and management of arrangements for
ensuring the propriety of audits and operations.
4) The Representative Director regularly exchanges views with
the Board of Statutory Auditors.

4. Summary of limitation of liability contract
DNP and its outside director and outside statutory auditors
concluded an agreement that limits directors’ and auditors’
liability for damages within the parameters set forth in Article
423, Paragraph 1 of Japan’s Corporate Law, so long as
they execute their duties in good faith and without serious
negligence.

5. Number of directors
DNP’s Articles of Incorporation specify that the number ofregular members on the Board of Directors shall be no morethan 25.

30

6. 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 thirdof shareholders with voting rights and a majority of the votesof these shareholders, and does not depend on cumulative
votes.

7. Matters to be resolved at the Meeting of
Shareholders that can be resolved by the Boardof 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 Corporate Law,
upon approval by the Board of Directors, in accordancewith Article 165, Paragraph 2 of Japan’s Corporate Law,to allow the Company to use capital more efficiently andimplement a flexible capital structure policy in response tochanges in business conditions.
2) Exemption of directors from liability
DNP’s Articles of Incorporation specify that directors(including former directors) may, by a resolution of theBoard of Directors, in accordance with Article 426,
Paragraph 1 of Japan’s Corporate Law, be exempted fromliabilities in Article 423, Paragraph 1 of Japan’s Corporate
Law so that the directors can sufficiently carry out their
expected responsibilities.
3) Exemption from liability of auditors
DNP’s Articles of Incorporation specify that statutory
auditors (including former statutory auditors) may, by aresolution of the Board of Directors, in accordance with
Article 426, Paragraph 1 of Japan’s Corporate Law, be
exempted from liabilities in Article 423, Paragraph 1 ofJapan’s Corporate Law so that the statutory auditors cansufficiently carry out their expected responsibilities.
4) Interim dividends
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 5of Japan’s Corporate Law 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
to shareholders.

8. 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 Corporate Law requires the attendance of at least one
third of shareholders with voting rights and at least two thirdsof the votes of these shareholders, so that the shareholders’meetings can run smoothly.

Board of Directors,
Statutory Auditors
and Corporate Officers
President

Managing Directors

Directors

Corporate Officers

Yoshitoshi Kitajima

Kazumasa Hiroki
Tatsuya Nishimura
Tetsuji Morino
Takashi Toida
Shigeru Kashiwabara
Kunikazu Akishige
Kenji Noguchi
Yoshiaki Nagano
Motoharu Kitajima
Takao Shimizu

Tatsuo Komaki
Akira Yokomizo
Yoshiki Nozaka
Masaki Tsukada
Tadao Tsukada *Akira Oguri
Tatsuro Kitayuguchi
Koichi Hashimoto
Masanori Akada
Fujio Yamazaki
Takashi Saito
Shigemi Furuya
Katsuhisa Fudouta
Yoshio Nishida
Jun-ichi Tsuchiya
Kensuke Nakamura
Tokuji Kanda
Yoji Yamakawa
Takashi Wada
Sakae Hikita
Ryuji Minemura
Masato Koike
Masato Yamaguchi
Shigeo Nobutoki

Executive Vice Presidents

Koichi Takanami
Satoshi Saruwatari
Masayoshi Yamada
Senior Managing Directors

Mitsuhiko Hakii
Osamu Tsuchida
Teruomi Yoshino
Yoshinari Kitajima
Yujiro Kuroda
Masahiko Wada

Standing Statutory Auditors

Noriaki Nakamura
Minoru Yoneda
Kiyoshi Yuzawa *Statutory Auditors

Yasuchika Negoro *Kuniaki Nomura **Outside director or auditors

Satoshi Saruwatari

Koichi Takanami

Yoshitoshi Kitajima

Masayoshi Yamada

DNP in Brief

DNP Annual Report 2008

31

The
Makingof DNP
Expanding Our Business through“Expansion Printing” and “P&I Solutions”
The history of DNP’s business growth is the history of how we haveapplied two core technologies: printing and information. Since its
founding in 1876 as Shueisha, DNP has refined techniques used inprinting to world-class levels. We then branched out from each typeof printing technique to expand our fields of business in a variety of
directions.
This process began with our entry into the packaging business in 1951.
From this starting point, we applied the idea of printing on materials
other than paper to cloth, wood, plastic, and metal, etc. This led us togrow in leaps: we started a Lifestyle Materials business that handles
construction materials and other products, and an Industrial Supplies

Energy-RelatedMaterials(Solar Battery
Modules, etc.)

business whose products include thermal transfer recording media usedin printing and anti-glare film used in flat-panel displays.
Another important turning point in the expansion of our business was
1958, when DNP became the first Japanese company to go into thebusiness of producing shadow masks used in television manufacturing.
This business entails making millions of ultra-fine holes in a copper plate
only 0.2mm thick. We acquired this skill by applying micro processing
skills obtained through such processes as photolithography used formaking printing plates. We then expanded the range of applications forour micro processing technologies to other areas, including lead frames
for semiconductors and micro-electro-mechanical systems (MEMS).
Recently, we have even been moving into the field of regenerative
medicine through capillary blood vessel reproduction and into organic
solar battery modules.

Display-Related
Products

Electronic Devices
SemiconductorRelated Products
MEMS
Lifestyle Materials

Optical Films

Books andMagazines

Packaging for
Food and Beverage

Materials
Technologies
Patterning
Technologies

Commercial
Printing

Converting
Technologies

Holograms

PT (Printing Technologies)
CRM
Consulting

Production
Technologies

Digital Contents

Industrial Supplies/
Carrier Tapes

IT (Information Technologies)
Data Processing
Technologies

SystemSolutions

HMI
Technologies

Information Security
Technologies

Web Sites
Shopping Mall
(PC andMobile Phone)

Product/
Distribution
Management

Smart Cards
IC Tags (RF ID)
Database
Management
Telecommunications/
Broadcasting

32

Print-related
Products

Quality Control& Security
Technologies

Regenerative
Medicine

Anti-Counterfeit/
Security
Developing businesses with technology at their coreMeanwhile, information technologies — our other set of coretechnologies — begin with letters used in printing. When letters became
digitized and turned into electronic information, this was a big turning
point for DNP. After that, we rapidly developed technologies for handling
digital information used in printing, eventually evolving into areas such as
today’s network technology and authentication technologies.

We use the term “expansion printing” to express the idea that we have
expanded our business by applying printing technologies to other fields.
The main concept that underlies our business today is “P&I solutions.”
In other words, we aim to combine printing and information technologies
to offer brand-new solutions and thereby expand our field of business aswell as our profits.

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

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

1876

1950

1960

Printing

1970

1980

Comprehensive Printing

1990

2000

Information
Processing

Information
Communication

2010

P&I Solutions

Information Communication
Books and Magaziness 1997 use of soy-oil ink

Commercial Printing
Business Formss 1955 ledgers

s 1964 OCR ledgerss 1971 hologramss 1983 development of smart cardss 1999 promotion of IPS businesss 2000 contactless IC tagss 1967 plastic cards

s 2005 SSFC establisheds 1974 magnetic cards

Digital Medias 1972 digitization of text
and imagess 1985 electronic dictionarys 1997 online publishing businesson CD-ROMs 1989 satellite broadcasting/high-vision gallerys 1992 development of Shueitai fonts

Lifestyle & Industrial Supplies
Packagings 1951 paper containerss 1951 flexible packaging

s 1961 plastic
containerss 1962 paper cupss 1969 laminate tubes

s 1982 PET bottles

s 1994 aseptic filling system for PET bottles
s 1997 IB filmss 1970 retort pouchess 1976 aseptic portion packages

Opto-Materials/Industrial Suppliess 1989 thermal transfer recording medias 1995 anti-glare films

Lifestyle Materialss 1974 printing techniques for curved surfaces (Curlfit)s 1951 decorative sheet s 1961 steel plate printing
with wood grain patterns1965
transferring
printing
on cloths 1982 mass production of Curlfits 1951 rayon cloth printings 1995 non-vinyl chloride productss 1996 lithium-ion rechargeable batteriess 1999 environmentally friendly
decorative papers

Electronics
Display Components
s 1958 shadowmaskss 1983 projection screenss 2001 development offlexible organic ELs

s 1985 LCD color filterss 2006
mass production ofcolor filters using
inkjet method

Electronic Devicess 1959 photomaskss 1995 multi-layered wiring forming techniquess 1964 lead framess 1999 semiconductor package boardss 2001 MEMS
s 2003 organic solar
battery module

New Businesss 2004
regenerative medicine(formation of capillary patterns)

s 2005 fuel cell parts

DNP in Brief

DNP Annual Report 200833

Investor Information(as of March 31, 2008)

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

Dow Jones Sustainability IndexesTokyo 162-8001, JapanFTSE4Good Index Series
Ethibel Sustainability Index
Morningstar Socially Responsible Investment Index

Established:

S&P/TOPIX Shariah

1876

FTSE Shariah Japan 100 Index
Dow Jones Japan Titans 100 Index

Number of Employees (consolidated):

MSCI World Index

38,657

Nikkei Stock Average
TOPIX Large70

Paid-in Capital:

S&P/TOPIX 150¥114,464 million

Stock Code:

Number of Common Stocks:
Authorized

1,490,000,000 shares

Issued700,480,693 shares

7912
Administrator of Shareholder Register:Mizuho Trust & Banking Co., Ltd.

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

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

30,303
Stock Exchange Listings:

Annual Meeting of Shareholders:Tokyo, Osaka
Major Shareholders:Shares (thousands)

Percentage (%)

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

43,824

6.26%

The Dai-ichi Mutual Life Insurance Co.

34,646

4.95%

Hero & Co.

25,904

3.70%

UBS AG London-IPB Segregated Client Account23,462

3.35%

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

22,924

3.27%

Mizuho Corporate Bank, Ltd.

15,242

2.18%

Nippon Life Insurance Co.

14,3492.05%

Mizuho Bank, Ltd.

12,471

1.78%

State Street Bank and Trust Company 505103

10,142

1.45%

Employees Shareholding Association

10,013

1.43%

Other than above, DNP holds 38,422,796 of its own shares.
While the registered owner of these shares is Dai Nippon Printing Co., Ltd.,
1,000 of the shares are in effect not owned by the company.

34

The annual meeting of shareholders of DNP is
normally held in June each year in Tokyo, Japan
Investor Relations:
Dai Nippon Printing Co., Ltd.
IR Group, Press and Public Relations
1-1, Ichigaya Kagacho 1-chome, Shinjuku-ku,
Tokyo 162-8001, JapanTel:+813-5225-8220

Fax:+813-5225-8239

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

Share Price Evolution (Tokyo Stock Exchange)(between April 1, 2005 and March 31, 2008)
DNP Stock Price (yen)Increase (%)*
60

−DNP
−Nikkei Average−TOPIX

50

2,500
40

30

20
2,000
10

0

-10
1,500
-20

06

07

08
*Index 100 = March 31, 2005

Voting RightsType(as of March 31, 2008)

Number of Stocks (stocks)

Number of Voting Rights (rights)

Stocks with no voting rights

̶̶

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

Stocks with limited voting rights (other)̶̶

Stocks with voting rights (treasury stocks, etc.)

Common stocks

39,856,000

̶

Stocks with voting rights (other)

Common stocks

657,801,000

657,801

Stocks with less than trading units

Common stocks

2,823,693

̶

Outstanding shares
Total voting rights of stockholders

700,480,693

̶̶

657,801

Treasury Stocks
Holder(as of March 31, 2008)

No. of Stocks Held

Percentage of Holding to No. of Outstanding Shares

Dai Nippon Printing Co., Ltd.

38,421,000

5.48

Kyoiku Shuppan Co., Ltd.

1,435,000

0.20

Total

39,856,000

5.69

DNP in Brief

DNP Annual Report 2008

35

Pioneering Key Technologies

In this special section we take a look at several themes related to “P&I Solutions” that develop and fuse printing
and information technologies in order to solve problems faced by corporate clients and consumers. We will hearfrom some of the corporate leaders who promote businesses that implement these solutions. We expect that thepossibilities presented here will vastly change your image of “printing.”

Gutenberg invented oil-based ink.
In the middl e of the 15th c e ntur y, Joha nne s G u te nb e rg inve nte d acomprehensive printing system using movable type. By simultaneously
improving separate technologies such as metal type and oil-based ink
production, and by optimally combining those technologies to develop
processes for improving qualit y, it became possible to mass produce
printed materials.
T he production of di ve r se pr inte d mate r ials was made pos sible bydeveloping three types of Printing Technology: Material Techniques fordeve loping optima l inks, pa pe r, a nd othe r mate r ials use d in pr inting,Patterning Techniques for using type and other tools to turn manuscripts
into patterns that can be reproduced on a mass scale, and Conver tingTechniques for turning printed paper into books or other final formats.
There are also three types of techniques that make up the Information
Technology that we use for handling text, images, and other information.
Data Proce s sing Te chnologie s involve e diting, conve rsion, sy nthe sis,

accumulation or other types of data handling. Human Media Interaction( H M I ) te c h n o l o g i e s c r e a te g o o d r e l a t i o n s h i p s b e t w e e n p e o p l e a n d
information, through such means as pleasant colors, fonts, and designs.
Information Security Technologies assure that information is accuratelytransmitted to the correct target and managed safely and securely. These
information technologies are developing particularly rapidly in connection
with a general trend toward digitalization.
Today, all of the products and services that DNP provides are supported
by technologies like these that have their roots in printing processes. We
have applied and developed these technologies and taken them beyond
the realm of printing on paper to create a wide variety and large numberof business fields. Printing technology has branched out into areas thateven Gutenberg could never have imagined. We intend to solve a variety ofproblems and meet society’s expectations for further contributions as we
continue to offer infinite possibilities.

P&I Solutions

It’s
All InOur
Genes...

“Many people were surprised to hear that DNP
would begin a life science business.
But from our point of view, this is a completely
natural and inevitable business development that
results from simply changing the field where weapply the technologies that we are best at.
Our mission is to contribute more to society,by broadening the fields in which we apply ourprinting and information technologies in order tosolve various problems and build infrastructurethat people want, for example.”Managing Director

Takashi Toida38many fields because our strength lies in the technologies that
we have developed in more than 130 years of our corporate
history and because we constantly maintain a spirit ofchallenge that allows us to enter new fields without fear. We
aspire to continue growing in the future. However, it is difficult
to see what it is that companies and consumers really wantin these dramatically changing times. By engaging in oneon-one dialogue and identifying problems, I believe that thetechnology and spirit that have become imprinted in our genes
will continue to contribute to society.

I suppose that anyone who lives in Japan these days is sure
to come into contact with a DNP product or service every day.
Of course it could be something like a book, magazine, catalog
or pamphlet, or it could be an electronic device such as atelevision, mobile phone, or personal computer, or it might bea food or beverage package, or a material used in a building or
auto interior, a smart card or bank book, medicine packaging,a photo print, etc., etc.
At first glance, the spread of our business might seem to bedisorderly. But it is all supported by printing and information
technologies. We were able to expand our business into so

Strategies for promoting
commercialization of technologicaldevelopments

Emergent societyngThree axes of technological development;
Combining them to create new businesses

MEMS

pa

in

of

IC tag system

es

ia
at

lli

Digital photo materials

Information
Communication
business

M

ak

in

g

in

te

Fuel cells
Photomasks

CD-ROM

m
nt

ge

ng
si

er

fin

Printedcircuit board

Biomaterial

Color filter

In

cr
ea
DVD

ls

en

nc
va
Ad
IC card materials

IPS

Organic EL

s

es

in

Data mining

Network security

tte

rm

rn

s

at

MPEG4
modulefo

Information filtering

io

n

pr
oc

es

si

Recommendation engine

Shadow frames

High-function optical films

Shadow masks
Eco-friendly building materials

Electronics
business

Packaging materials
that are impermeable to gases

Lifestyle & Industrial
Supplies businesss %NERGY BUSINESSs ,IFE 3CIENCE BUSINESS
s %NVIRONMENT RELATED BUSINESSs /THER .EW BUSINESSES

Combinationsof PT and IT
Printing Technology(PT)

Creating new businesses

Information Technology(IT)Special Feature: P&I Solutions

DNP Annual Report 2008

39

Display Product Business: Color Filters, Optical Films and OLED

Growing Markets,
Diversifying
Needs…

The trend in panels
is toward larger glass
substrates. Manufacturers
are still building new
production lines for 7.5thgeneration and beyond.

40

A widening gap between
high-end (high resolution,
high-quality) and lowend (low cost) in small
and medium-size panels
market.

Manufacturers areseeking high-quality
color filters anddemanding small lots ofdiverse products withshort lead times.

In the year ended
March 2008, DNP
supplied 40% of
outsourced color filtersIn 1958, DNP applied its printing technologies to becoming
the first company in Japan to succeed in the developmentof shadow masks for the production of color televisions. The
skill and spirit that underpinned this achievement led to thecreation of a large variety of DNP electronics products, andcontinues to support the production of world-class color
filters for LCDs.
The market for flat-panel displays such as LCD andplasma displays continues to grow by almost 20% eachyear. Large displays used for televisions and personal
computers are growing larger and cheaper than ever,while the market for smaller displays used in devices likenotebook PCs and mobile phones is polarizing increasingly
rapidly, with one side favoring smaller, high resolution, highquality displays and the other seeking mass-market, lowcost wares.
Especially in the large-screen TV market, competition
between LC and plasma TVs has heated up. Since costcompetition has also intensified, LC panel manufacturers
are increasing capital spending in order to make larger
substrates and boost the efficiency of their production lines
in order to bring down the cost per panel.

Special Feature: P&I Solutions

DNP Annual Report 200841

ColorFilters
MeetingAll
Demands

The 10th-generation plantin Sakai is scheduled tostart mass production by
March 2010.

To date, we have gradually expanded our capacity for
producing color filters for LCDs in line with growth in the LCD
market. In the future, we expect even further expansion anddiversification in this market. We will invest proactively in plantand equipment so that we can meet demand for increasingly
diverse products.
We plan to build a new LCD color filter plant adjacent to
the LCD plant that Sharp Corporation is currently building in
Sakai City, Osaka Prefecture. The glass substrates are the10th-generation size (2,850mm x 3,050mm), currently thelargest in the world. We plan to supply 36,000 sheets permonth. We will use the inkjet production method in which
DNP is a world leader, since this method costs less both atstartup and during production. We plan to actively expand our
production capacity of glass substrates of the 8th-generation
and beyond. In order to streamline logistics, shorten lead time,and minimize inventories, we will strengthen our alliances withpowerful customers and use by-plant or in-plant systems as
we respond to demand for larger panels.
We have also spent many years developing color filters formobile phones, and positive recognition of the high qualityof our products both in Japan and overseas has led to a
growth in orders. We are pressing ahead with developmentof technologies that will allow us to meet demand for evengreater precision and performance, and we are working toreinforce our dominant position in this market. In addition,amid demands for small lots of diverse products, short leadtimes, and lower prices, we are working to build flexible andefficient production lines.

Ｗe plan to build an 8th-

generation plant on asite that belongs to IPSAlpha Technology, Ltd.

Display Market Growth

In the year ended March
2008, we continued fulloperation. In the future,
we intend to further
increase production
capacity.

We intend to further
enhance the highprecision technologies
and color reproduction
technologies, to further
increase our competitiveedge in this high addedvalue market.

History of DNP’s Color Filter Business(¥ billion)

2007

2010

Growth rate

1989
1994
2001 – 2004
20022005 – 2006
2006

(%)
40
30
20
10
0
-10

Market forcolor filters,
anti-glare films,
etc.

15%

（¥1,165.7）

Market forcolor filters,
anti-glare films,
etc.

2008
2010

14%

LCD

（¥1,301.5）（¥8,100）

LCD（¥9,730）

Started out with Kuki Plant (1st generation)
Otone Plant (2nd – 4th generations)
Mihara Plant (4.5 – 5th generation)
Kurosaki Plant* (3rd – 4.5th generation)
Kurosaki Plant (6th generation)
DNP Color Techno Kameyama Plant(8th generation)
Kurosaki Plant (8th generation)
Sakai Plant (10th generation)
Himeji Plant (8th generation)*acquired by DNP from Advancedcolor Tech, Inc.

-20
-30
-40
Source: DNP estimate *Size of circle indicates size of market. The center of each circle shows the market’s growth rate.

42* IPS Alpha Technology, Ltd.: LCD panel manufacturing company
established by Matsushita Electric Industrial Co., Ltd. and Hitachi, Ltd.

Two Production Methods
DNP was the first company in the world to succeed at mass
producing color filters by the inkjet method. This method isbased on our printing technology and uses the manufacturingexpertise that we cultivated in our color filter business overthe course of many years. The manufacturing process entails
techniques for coating surfaces evenly with ink at high speed,
filling an entire surface evenly without letting the ink overflow
the space of a single pixel, drying the ink evenly and in an
appropriate shape, and measuring and inspecting color levels
and uniformity – techniques in which DNP is a world leader.
Compared to the conventional photolithographic methods, theinkjet method entails fewer processes and costs less to startup and to operate.
At the same time, we are continually improving thephotolithographic method. By introducing to this evolved
photolithographic method new techniques, such as the typeof coloration layers used in the inkjet method, larger size,
greater speed, and shorter processes, we can create anefficient production system. We intend to further combine
the two methods, construct innovative production lines, andfurther reinforce our competitive position from a technologicalstandpoint.
Small and Medium-sized LCD Market Trends
Uses for small and medium-sized LCDs have increased. The
market has polarized into two extremes: high added-value
products whose specifications depend on their application,and standard products. Both markets are growing strongly,
and we intend to serve both.
In the high added-value market, major target products
include smart phones, 1-seg mobile phones, portable music
players, automotive displays, and displays for high-end digital
cameras. These products require higher specifications in suchareas as definition, color purity, and video capabilities.
The market for standard products is also continuing to growvigorously. In particular, the mobile phone market is displaying
strong growth in BRICs (Brazil, Russia, India and China), andthis demand is expected to continue to increase in the future.

Other products that are becoming more widespread include
low-cost computer games, DVD players, digital photo frames,
and compact digital cameras. In this market, there is a quest
for production technologies that can reduce material costs,
improve yields, or otherwise improve efficiency. Technology
and ideas for reducing production costs are the keys tosuccess in this market.
Strategies for Small and Medium-sized LCDs
We plan to produce color filters for all types of products,from high added-value ones to standard models. The firstthing we need to do is reinforce our competitive dominancein the high added-value market. Thanks to many years of
research and development in this area, our products are muchappreciated by customers in Japan and around the world,
and are used in products like smart phones and portable
game machines which have been hot sellers recently. In
order to be able to provide color filters that meet the needs ofdiverse products in the future, we will push ahead with further
technical development to reinforce our position as the leader
in this field. For example, reliability and wide viewing angle
are important for automotive displays. Video functionality isimportant for game machines. Excellent visibility in strong
sunlight is important for 1-seg mobile phones that are used outof doors. In addition, there is demand for other features suchas eco-friendliness.
Meanwhile, demand is emerging for color filters for othertypes of displays, such as organic EL displays. We want to
respond to this demand by using DNP’s unique technologicaldevelopment capacity to provide differentiated products
and continue to build “win-win” relationships with panel
manufacturers.

“The basic concept underlying DNP’s large-scale LCD color filter
plants is the ‘high quality, low cost, energy efficient’ concept that sums
up the innovative developments and production technologies that wehave cultivated over many years.
Based on this concept, we actively introduced the inkjet methodthat reduces both start-up and ongoing production costs, andaffords exceptional freedom of material design. We also improved
the photolithographic method by introducing new techniques thatallowed us to increase product size and production speed, and shorten
production processes. We aim to combine these two production
methods to construct the most efficient production systems possible.”

General Manager, Operations Planning, R&D Division,and Display Components Operations

Mitsuru Iida

OpticalFilms

Responding to Demand for
Increasingly High Performance

DNP is also active in the business of providing opticalfilms for flat-panel displays such as LCDs and plasma
displays. Optical films that we handle include surface
films for displays, optical films used in LCD backlights, and electromagnetic interference shielding film
for plasma displays.
DNP — Holder of the world’s top market share
Of these various films, surface films are our main product.
They are used to improve contrast by preventing glare fromoutside light on display surfaces.
In order to respond to the trend toward larger, higher
definition flat-screen television by delivering sharper images
with blacker blacks and more vivid colors, we applied theclean converting and optical design technologies that we
cultivated over many years to the development of optical film
products that meet manufactures’ needs. By doing so, weestablished ourselves as the leader in this field.
Recent years have seen increased use of touch screensand displays with interactive input functions. Here too, we
provide surface films that contribute scratch resistance andstain-resistance functions.
Actively developing a variety of sophisticated products
We are working hard at developing new products thatmake use of technologies cultivated through our existing
businesses. For example, our JET BLACK® front projection
screen can clearly and vividly display images from a projector
even in a brightly lit place. We are also developing contrast
improvement film that makes images stand out on a plasma
display by absorbing outside light.
LCDs and plasma displays are used in many types ofdevices including televisions, personal computers, and mobile
phones. As use of these devices spreads, users demand
more diverse functionality. We intend to accurately grasp
these market demands, focus on product development, andfurther expand our business in the optical film field.

44

OLED

A Growing Market and Growing
Expectations for Organic EL Displays
Organic EL displays are attracting a great deal ofattention as a likely candidate to become the next
generation of displays. However, there is still a needto find ways to make the screens larger and theprices lower before ELs can achieve full-fledged
market penetration. We do not plan to simply supply
components for organic EL displays; rather weare working on the development of technologies
for producing EL display devices themselves. Our
research and development efforts are progressing
with a full range of possibilities in sight, fromcomponents to modules.
Stirrings in the Market
Organic EL displays first began spreading gradually ascompact mobile phone displays. Now that their use has
spread to include devices as large as televisions, they havesuddenly begun to attract a great deal of attention. Because
organic EL displays use self-luminescence, it is possible
to make them even thinner than liquid crystal displays. In
addition, the vivid colors and ease of viewing afforded by
the wide angle have put them in the limelight as the ultimate
display choice, and manufacturers are rushing to develop
them further.

Color Filters for Organic EL Displays — a PromisingMarketOrganic ELs can display colors even without a color filter,but recently the use of color filters with organic ELs has
been attracting attention. In addition to enhancing color
reproduction quality, color filters offer the important benefitof making it possible to increase display size for little costby combining the filters with white organic EL luminescentmaterial.
Based on DNP’s world-class LCD color filter production
technology, we have been developing materials andprocesses that are suitable for organic ELs. We have received
very favorable responses from organic EL manufacturers, andhave begun mass production.
Organic ELs Offer a Wide Variety of Possibilities
Starting with color filters and masks that are needed in the
production process, we are developing a variety of productsthat can serve as components for organic EL displays. We
are also exploring possibilities such as the development ofmaterials that improve photo luminescent efficiency or offering
modular panels, and are considering expanding this type ofbusiness by means of a new business model. We are also
working on developing organic EL signs used for in-store
advertising, which is expected to be a growing market that weplan to supply.
Future Technological Developments
We intend to actively pursue joint development with various
companies and focus on developing production technology
for color filters and for organic EL displays themselves. We
aim to improve yields and reduce production costs throughsuch means as developing a production technology thatuses one of our printing technologies, the “roll to roll method”
of using rolled materials efficiently in mass production, ordeveloping production processes that do not require a
vacuum environment. By applying technologies that we
cultivated through printing, we will develop methods of finetuning materials used in organic ELs. Also, by developing
full-color, flexible organic EL displays, we intend to develop
new markets that apply them to such media as newspapers,
magazines, flyers and posters.

Expectations for Vapor Deposition Masks Used in Organic
EL Display Production
Currently, metal vapor deposition masks play an importantrole in improving the quality and performance of displays formobile phones or televisions that are mass-produced using
the low molecular vapor deposition method. We are applying
our etching technology, which we cultivated for many years
in order to make shadow masks used in cathode-ray tube
production, to the development of vapor deposition masks fororganic EL displays. DNP’s high level of technology has been
well received, and we have begun mass production.

Special Feature: P&I Solutions

DNP Annual Report 2008

45

IPS/ Smart Cards Business: From Smart Card Manufacturer to Solutions Provider

NEXT IC

Evolution of applications will determine value.

46

So far Japan’s smart card market has only grown bigger
and bigger, but now it has come to a big turning point. In
addition to existing types of contact and contactless cards,
there is demand for the development of high added-value
cards such as smart cards with a display function and cards
that combine both contact and contactless functions. We willpropose and deliver to consumers new lifestyles that makeuse of advanced smart cards.
In the smart card market, a company needs to ask notonly how it can improve the functions of cards themselves,
but what kinds of card-based services it can offer and whatkinds of lifestyles it can propose. Smart cards are becoming

established as tools that allow consumers to experience
security, safety, and convenience by serving as electronicmoney, employee cards, passports, driver’s licenses andother identification cards.
DNP views its smart card business as part of its overallsolutions business, in which we make and implement
proposals related to these kinds of services. We call theconcept behind the smart card business that we aim at future
generations, “NEXT IC.” We are focusing on developing a
new market for security that includes a range of functions
from card-based personal identification to authentication ofvarious devices and contents.

Special Feature: P&I Solutions

DNP Annual Report 200847

We arethe market.
We create
the market.

Q: How has DNP been involved in the smart cardbusiness so far?

A: Since we began research and development of smart

cards in 1981, we have emphasized and reinforced three
types of technology: techniques for manufacturing cards,
issuance techniques involving the writing of personal
information, and software development.
Especially in the area of software development, we have an
overwhelming advantage over competitors. For example,
we even developed operating system for controllingthe motion of IC chips. It was DNP that developed theoperating system for the Mondex ® electronic money card
used worldwide, as well as multi-OS basic software such
as MULTOS™ or Java™, and it was DNP that was the firstin the world to develop a vein authentication-based smart
card used for account settlements such as bank cards.

Q: What is DNP’s market position?

DNP determines the direction
the market will take.

A: There is no other company in the world that offers acomprehensive service like ours, or that makes use of sucha good balance of card manufacturing and processing,card issuance, and software development technologies.
Our services are very well received by the market. New
services that we offer drive the Japanese smart card
market to rapid growth. We are not exaggerating when we
say that DNP created this market.
DNP currently holds a 40% share of the domestic market
for smart card manufacturing. In the market for cards
issued by financial institutions, where a high degree of
security is required, our share is about 60%. Of course, inboth cases we are the largest player.

Q: Where do you plan to take the business in the
future?

A: Our assessment of the business environment is thatsmart cards have entered a new phase. From now on, withthe development of digital societies, success will hinge on
what kind of services we can offer through smart cards
and what kind of lifestyles we can propose to consumers.
We plan to respond to this new era with “NEXT IC” as our
guiding concept. We will make use of the advantageous
position that we have built for ourselves to make new
products, create new markets, and connect those products
and markets to new businesses. Through these threeendeavors, we want to continue to win.

Director, Smart Card Business
Development Division
IPS Operations

Kunimitsu Sato48

Q: What services do you have in mind for “NEXT IC”?
A: Under the “NEXT IC” concept, we plan to introduce new
businesses that only DNP could create.

(1) Card Data Management Services (CDMS)
CDMS are provided via an online network as ASP services,
including smart card data management and card issuanceprocessing. These are operations that the financial
institution or other card issuer would normally performusing their own host, but DNP can perform them as a
package, faster and cheaper than the card issuer could, by
combining DNP’s unique technology and expertise.
For example, DNP uses its own server to provide uniform
management of data from smart cards and Osaifu-keitai(“wallet mobile”), Japan’s rapidly growing mobile phonebased payment system. DNP contracts with card issuers
to release all of the personalized data needed for the use of
membership cards and credit cards, etc.
This is the first example in the world of this type of
integrated business model, and DNP is probably the only
company in the world that is actually putting it into practiceby itself. We feel certain that this cutting-edge solution will
spread in the worldwide smart card market, whose size isestimated at 3.0 billion cards. DNP is capable of providing
CDMS precisely because we have experience in smart
card design, manufacturing, issuing, OS and application
software development, and because we have experience indeveloping and using networking technology and Internet
data center (IDC) operating technology. In addition, weplan to actively engage in online authentication services
that will allow consumers to use the Internet and engage inelectronic transactions securely.

(3) New Security Businesses
What makes “NEXT IC” decisively different from what wasin the past is the fact that it is not tied to conventional card
formats. We intend to provide digital security solutions
that make use of our smart card and authentication
technologies by distributing content or automatically setting
or maintaining functions vis-à-vis televisions, audio devices,
refrigerators or other household appliances, automobiles,
and mobile phones, etc. which have been equipped with
one or more IC chips connected to a telecommunications
network. In 2008, we plan to start developing authentication
software that can be loaded onto ICs in various network
terminals that support a ubiquitous society. By making themost of the know-how and production capacity that allow
DNP to record individualized information on a large numberof smart cards, we expect to be able to serve this attractive
market on an even larger scale.

(2) Security Solutions
By “digital security,” we mean that we will offer safe,
reliable, and convenient services with smart card andauthentication technologies at their core.
For example, DNP serves as secretariat of the Shared
Security Formats Cooperation (SSFC) that constructed
a de facto standard for office security with its member
companies to allow use of a single smart card for uniform
control of access to areas that most offices had been
managing individually, such as room entry and exit
control, PC usage oversight, printer and storage accessmanagement, and cashless use of cafeterias and otherfacilities that benefit employees. Employees of companies
that have introduced this system enjoy the convenience ofusing a single, contactless smart card to easily access all
equipment, while the company greatly simplifies the work
involved in its security management.
It is only recently that the idea of document security has
begun to take root in Japan. Until recently, the Japanese
were not accustomed to thinking in terms of document
security. By providing comprehensive security solutions,
we are raising awareness of security and developing a newmarket.

Special Feature: P&I Solutions

DNP Annual Report 200849

Life Science Business: A New Challenge/Frontier for DNP

NewDimension
for OurTechnology…

Combining PT and IT to reap new fruits

50Patterning technologies are a category of printing technologies that entail the formation of letters or images on a base material
in preparation for making high quality, attractive mass reproductions. By applying the patterning technologies that we cultivatedthrough printing not only to paper but to other materials such as metal and glass, we have also become a world leader in thedevelopment and production of liquid crystal color filters and photomasks for the manufacture of semiconductors.
Today, our Life Science business is about to take off because of our ability to do things like apply printing and information
technologies to living cells in order to create new products for the regenerative medicine* field. Our track record for continuous
mass production of highly accurate, high-quality products at the micron or nanometer level serves as well as we begin to reap
new fruits in a new market.

“We will not limit the target of our printing to paper, butwill widen the target to include film, metal, glass, and evenliving cells.
Our technological strength and our spirit of challenge will
open up new horizons for our Life Science business.”

General Manager, Biomaterial Laboratory,
Research & Development Center

Yoichi Takahashi

One after another, we see the emergence of innovative
new technologies that meld the best printing and information
technologies. Examples include regenerating tissues through“printing,” improving the accuracy of cancer diagnosis through“printing,” and checking the condition of cultured cells through“printing.”
In the field of regenerative medicine, we have begun working
to produce real, commercial products. Starting with capillary
vessels and corneas, there is promise for expanding to a wide
range of applications in the future. Our Life Science businessis expanding rapidly, to include such projects as a cell culture
system that combines a device made with microprocessing
technology with image analysis techniques, and the developmentof clinical diagnostic kits that use technology developed throughour industrial supplies business. Our Life Science business has
already grown to generate 30.0 billion yen in sales, and we aim
to expand it to become a new pillar of the DNP Group that will
generate 70.0 billion yen in the year ending March 2016.
We intend to contribute to regenerative and preventative
medicine by establishing cutting-edge technologies that can beused against illnesses that are difficult to treat by existing methods.
We also aim to contribute to society as we build new businessmodels and create new value by improving quality of life.

DNP’s Life Science Business: History and Future
DNP’s history of providing diverse products for the medical caremarket began in 1985 with paper urine test strips. We were able toapply technology that we developed for this product — a methodof expressing enzymes as ink — to other fields, and went on tocommercialize products such as teardrop, saliva, and pregnancy
testing kits. We also developed blood sugar sensors and otherproducts for which demand has been increasing in recent years. In
addition, we use sterile packaging technology and durable film thatis highly impervious to moisture and oxygen to package syringes,
catheters, and medicines, etc.
In 2004, in collaboration with Tokyo Medical and Dental
University, we succeeded in the formation of capillary blood vessel
patterns by using micro-processing technology. In 2005, we
donated funds to establish the “DNP Nanomedicine Seminar” at
the university. We are also involved in ongoing projects aimed atapplying DNP’s unique printing and information technologies to thelife science field in collaboration with cutting-edge medical research
institutes such as those at Tokyo Women’s Medical University andUniversity of Tokyo, and at private companies around the world.
In the future, we intend to accelerate the process of developing,
prototyping, proposing and commercializing products that are
more effective and convenient to use than existing methods.

* Regenerative medicine: a new field of medicine that seeks ways to restore the functionality of missing or damaged tissues or organs. Very promising research is being done in a wide variety of areas,
including treatment of burns and myocardial infarction, and transplants of organs, tissues, and corneas.

Special Feature: P&I Solutions

DNP Annual Report 200851

Life Science Business Example

Regenerative
Medicine

DNP’s “smart surface,” based on patterningand surface processing technologies, hasbegun to make an important contribution toregenerative medicine.

Through joint research into the application of patterningtechniques used in printing to the field of regenerative medicine,Tokyo Medical and Dental University and DNP’s Biomaterials
Laboratory succeeded in establishing a method of transferring
capillary blood vessels.
One outcome of this success is that in July 2008, DNP beganselling CytoGraph, a tool for controlling the area where cultured
cells adhere to glass surfaces, to research institutes. In the near
future, it is expected that European countries will prohibit theuse of animal testing for cosmetic products. DNP is working on
developing products like cell chips for this type of test market.
The same technology is also expected to be effective forrestoring skin that was damaged by bedsores and for treating
periodontal disease. Conventional treatments for restoringskin include using medicine to promote skin formation andtransplanting skin from the patient or from someone else.
The new technology uses endothelical progenitor cells fromthe patient's peripheral blood to form new blood vessels on amembrane made of collagen or similar material which is thenapplied to the affected part. This technology is very promising
as it obviates the need for surgery and the danger of immune
reactions.
■ Capillary Formation Technology
This technique uses printing technology to copy and form capillary bloodvessels, which branch out in finely meshed patterns. The procedure is as follows:
first, a capillary blood vessel pattern is taken while a substrate is formed bycoating glass with a material that does not allow cells to adhere to it. After using
DNP’s original photocatalytic lithography technology to break down and remove
the material that prevents cell adhesion only from the area where the capillary
pattern falls, the endocapillary cells that form the basis for new blood vessels
are disseminated on the substrate. These endocapillary cells gather in the areas
where the capillary pattern has been formed on the substrate (i.e. where thematerial that prevents cell adhesion has been removed), so the cells begin to
multiply and differentiate along the lines of the pattern. When this is transferred
to a living organism or collagenous materials, finely meshed pattern of capillary
blood vessels is formed. We are working on commercializing this “smart surface”
technology that combines patterning and surface processing techniques.

Regeneration of blood vessels is important because blood vessels supply nutrition and oxygen to every type oftissue, and their transference can be applied to a wide variety of uses, including tissue transplants. In this project, weare now building blood vessel reconstruction technology with an animal model using the subject’s own cells, and wehave just recently succeeded in reconstructing bone tissue. In the medium term, we plan to apply this technology tothings like bedsores and bone reconstruction in humans, and to develop new cell culture methods and a dish for cellbiology experiments and market these products. Regeneration of capillary blood vessels became possible for the firsttime thanks to DNP’s technology. We look forward to other important contributions from DNP in the future.
Professor Ikuo Morita, Department of Cellular Physiological Chemistry, Graduate School, Tokyo Medical and Dental University52

Life Science Business Example

Cell SheetEngineering

DNP has been collaborating closely with
Tokyo Women’s Medical University (TWMU)
on the mass production of cell sheets, which
is an original and long-awaited technologythat was first developed at TWMU.

■ Cell Sheet Technology

Cells can adhere to and spread on
the hydrophobic surface at 37°C

Cells detach easily and canbe collected as a cell sheet on
the hydrophilic surface at 20°C

Cell sheet engineering has been developed as a method of
removing cultured cells from a dish in sheet form, so that they
can be easily used in surgery or other medical applications.
Previously, cells cultivated in a dish were typically collectedwith the aid of an enzyme such as trypsin, as disassembled
cells, so the cells could only be used in a very limited number ofapplications. Cell sheet engineering preserves the functionality ofcultured cells by allowing them to be removed without breaking
cell-cell junction and adhesive proteins covered one side of thecell sheet interaction, thus, cell sheet engineering has attracted
much attention for its potential use in novel medical applications.
Even before full-fledged commercial use, there have alreadybeen many clinical successes. My collaborators at Osaka
University have succeeded in around 20 clinical trials ofcornea regeneration using cell sheet engineering, and anothercollaborators at the national hospital in Lyons, France, have also
succeeded in around 5 patients. Following these successes, theFrench government and EU are expected to approve the use ofcell sheet engineering for cornea regeneration in 2009, and othergovernments are expected to accept clinical trials using cell sheetengineering in the near future. In addition, collaborators at Osaka
University treated a patient with serious myocardial infarction
using 20 laminated sheets composed of cultivated myoblast cells
taken from the patient’s own thigh. As a result, the patient wasable to walk and to go home unaided.
DNP is currently engaged in joint research aimed at developing
technology for mass producing dishes used in cell sheetengineering. The company is establishing a framework for fullfledged sales by developing a high-volume manufacturing method
using the electronic beam (EB) technology that it developed formaking decorative materials, and “roll-to-roll” technology used formass printing on rolled materials at high speed.

Decreasing temperature triggers
the change from hydrophobic
surface to hydrophilic surface

Poly (N-isopropylacrylamide) (PIPAAm) is a well-known thermoresponsive
polymer, which exhibits the lower critical solution temperature when in aqueous
solution. The polymer chains hydrate and expand at temperatures below around
32°C, and dehydrate and contract above 32°C. The ultra-thin surface of PIPAAm
is slightly hydrophobic at human body temperature (around 37°C), but changes
to hydrophilic below 32°C. Various types of cells can adhere to, spread, andproliferate on PIPAAm dishes at 37°C. But when the culture temperature isdecreased to under 32°C, the cells spontaneously detach from the surface insheet form, because of the rapid hydration of the grafted PIPAAm chain surfaces.

Laminate of cell sheets for application to large organs

Researchers and medical facilities all over the world are awaiting the development of cell sheet engineering, which havebeen recognized for their effectiveness in the treatment of dilative cardiomyopathy and esophageal cancer. Therefore,
researchers all over the world are hoping to develop new tissue engineering therapy based on cell sheets. Developmentof the new roll-to-roll production process and technology for quickly peeling off cell sheets is now almost completed,and developers are considering methods of making patterned cell sheets. Additionally, developers are working on new
methods of layering cell sheets that will allow the construction of cardiac muscle, liver, or other tissues. We have highhopes for developments from DNP using its printing technologies including mass production systems and more rapid
peeling off of cell sheets.
Teruo Okano is Professor and Director of the Institute of Advanced Biomedical Engineering and Science at Tokyo Women’s Medical University.
His research currently involves the use of intelligent biomaterials in applications in various fields such as tissue engineering, drug/gene delivery,
green chromatography, microfluidics, and cell-based on-chip assays.

Special Feature: P&I Solutions

DNP Annual Report 200853

Life Science Business Example

Microbioreactor

A P&I solution that combines DNP’s
microprocessing and information technologies
contributes to the development of efficientJapanese Black Cattle production methods

DNP is currently collaborating with the University of Tokyo’s
Institute of Industrial Science and the National Livestock Breeding
Center, an independent administrative institution, to develop
microbioreactors in order to cultivate fertilized ova of beef cattle
and other livestock in vitro. The conventional method was tocultivate ova in petri dishes and have an examiner look at themthrough a microscope and select those that appear to be most
likely to develop well. Our current project replaces the petri dishwith a “microbioreactor” that was specially developed for thispurpose. By using a computerized system that selects ova bychecking against an image database, we succeeded in improving
selection accuracy.
DNP plans to be fully engaged in commercialization of thissystem, including design and production of the microbioreactor,
image processing, and database construction. This technology
can be used not only for beef cattle, but for cultivation of ova
from other animals. Its use in treating human infertility and inregenerative medicine is also under study and holds a great dealof promise for the future. That is why DNP is actively pursuingthis project as another way to take advantage of our strengths inareas like microprocessing and information technologies.
■ Microbioreactor Technology
Under the conventional method, multiple ova were cultivated together inthe same petri dish. Because each ovum in the microbioreactor is cultivatedin a tiny individual space, it is possible to distinguish one from another moreaccurately. Furthermore, this method uses a substratum of bovine cells from theuteral lining or fallopian tube epithelial cells, allowing the cells to be cultivatedin an environment that approximates that of the mother cow’s womb. Anotheradvantage of the system is that it uses a database of images of normal cell
division in fertilized eggs, combined with pattern recognition techniques thatgrew out of DNP’s image processing technology, to automatically select ova
that are developing well. Using techniques like these, we intend to construct an
ova selection system that is more economical and more accurate than existing
cultivation methods.
Ovum Cultivation Compartment

DNP’s Bioreactor Cultivation System

Fertilized ovum

Culturesolution (broth)Cultivation of uterine endometrial
cells or fallopian tube epithelial cells

ll
Ce

n

tra

en

ce

Culture solution irrigation compartment

Rating of 8-cell embryo
4（ excellent ）0（ very poor ）We applied pattern recognition technology to the development of an algorithm that allows us toautomatically rate fertilized ova.

We resolved the technical problems that we faced in the early stages of this project and are now moving on to
construct a system. For the time being, we aim to develop a bioreactor that can very efficiently cultivate 1,000 ova at atime. In the long term, this technology could be useful for cell cultures as part of researching single cell reproduction.
DNP contributed its comprehensive strength, including its technology for fabricating microfluidic devices andintegrating peripheral devices. I appreciate DNP’s efficient, businesslike approach and its awareness of the user in theprocess of development, and I look forward to continued cooperation with DNP.
Associate Professor Yasuyuki Sakai, Institute of Industrial Science; Center for Disease Biology and Integrative Medicine, Graduate School of
Medicine; University of Tokyo

54

Life Science Business Example

Lung
CancerDiagnostic
Kits
In 2004, DNP invested in a U.S. bio
venture, Cangen Biotechnologies, Inc., inorder to develop its Life Science business.
Since then, we have been working on
the commercialization of a lung cancer
diagnostic kit.

DNP and Cangen are working jointly to commercialize a lungcancer diagnostic kit. Conventional methods of diagnosing lungcancer include x-rays, phlegm analysis, and CT scans. However,these methods are not satisfactory in terms of early detection
ability or cost, so there is a demand for a better diagnostic
method. The kit that DNP is developing with Cangen in responseto that demand consists of a tube fitted with a special filter.
Plasma is separated out from the test subject’s blood anddripped into the tube. The probability of the presence of cancer isdetermined by analyzing the plasma after it has passed throughthe special filter. DNP plans to manufacture and supply the tubes
and filters, and to package and wrap the kits.
Aiming for approval in 2011 at the earliest

About 160,000 people die of lung cancer each year in the
United States, so there is ample demand for early detection. We
hope to meet this demand by receiving approval from the U.S.
Food and Drug Administration (FDA) for sale of our diagnostic kit
as early as 2010. Worldwide, some 1.3 million people die of lungcancer each year, making it the most lethal of all types of cancer.
By developing this diagnostic kit, we aim to expand our Life
Science business while responding to global demand for earlylung cancer detection and increasing our contribution to society.
By meeting demand for testing some 60 million people per year in
the U.S., we should be able to recover our initial investment withina few years of starting sales. After that, we plan to gradually begin
sales in other areas, such as Europe and Japan.

In the U.S., 60 million people are expected to be tested
each year.

We succeeded in identifying basic principles of lung cancer detection. Currently, we are working on receiving
approval for commercialization and on solidifying our technology base to prepare for the start of sales. We could nothave succeeded at clinical diagnosis aimed at early detection without the DNP technology that allows us to analyze
and evaluate samples from lung cancer patients. In the future, we plan to provide diagnostic kits to clinical testing
facilities and engage in related businesses. In the long term, we can probably develop this basic technology for
diagnosing various other types of cancer. We hope to enjoy a long-term partnership with DNP, both on the researchand development side and on the business side.
Cangen Biotechnologies, Inc. CEO. Dr. Chul So Moon

Special Feature: P&I Solutions

DNP Annual Report 2008

55

Segment
Information

Contents
Information Communication

Lifestyle & Industrial Supplies

Electronics

58 Portrait

68 Portrait

76 Portrait

60 Business Strategies

70 Business Strategies

78 Business Strategies

62 Financial Results

72 Financial Results

80 Financial Results

64 Topics

74 Topics

82 Topics

Information
Communication
PORTRAIT

Contribution to GroupNet Sales:

41.7%

Contribution to GroupOperating Income:44.8%

This segment is DNP’s core business, and contributes 41.7% of the entire Group’s net sales. It centers around theBooks and Magazines sub-segment that is the cornerstone of the DNP Group’s value creation, and serves as a stablerevenue base.
*For details about products and services, please see Products and Solutions (p. 18-21).

Business■ In Commercial Printing, besides printing materials like catalogs

Operating Divisions

and pamphlets, we also handle web sites and events suchas in-store sales promotions and campaigns. All types ofcompanies that sell products or provide services are ourcustomers. Our field of business encompasses solving all
types of problems to help our customers increase their sales
and decrease costs and operational burdens.
■ In Business Forms, we have made a great deal of progress in
IPS, which involve individualized processing of large amountsof data, and businesses such as the development andmanufacturing of smart cards and IC tags and the operation ofservices that make use of them. Every company that handles
information is a potential customer. We keep that in mind andtake advantage of increasing demand for information security
as we work to expand this field not only in Japan but also
overseas.

■ In Books and Magazines, we plan and produce CD-ROMs

Strengths

Our Information Communication segment is composed ofthree sub-segments: the printing of books and magazines, which
has been a core business since DNP’s founding; commercial
printing; and business forms. This segment covers a wide variety
of media, beginning with paper and including electronic media
such as the Internet (via PCs and mobile phones), DVDs anddigital broadcasting. In addition to offering all types of printed
materials, smart cards, and information processing services (IPS),
we offer unique DNP solutions by combining capabilities likemarket analysis, customer relationship management, planning,system design and development, media content creation anddistribution, and data security management.

and DVD-ROMs and offer a wide variety of electronic
publications online, besides printing traditional paper books
and magazines. Starting with publishers, we serve all types ofcontent holders in Japan and the rest of the world. Contents
are our customers’ assets, and we have been expanding ourbusiness by editing, processing, and providing services that
help them deliver those assets by means of the optimal media
format.

58■ The printing and information technologies that we havecultivated since our founding, and the research anddevelopment capacities and comprehensive strength that
support those technologies. In particular, we have the capacity
to develop advanced software and top-notch support systems
for fields like text or image processing, networking, IPS, andsmart cards.

■ Coherent management systems that can provide total

support for products or services from planning to operation.
In particular, we have the management capacity to offer
complete support beginning with consultation regarding the
introduction of all types of systems, design, development,
manufacturing, and post-introduction follow-up.
■ The ability to promote new businesses through collaboration
across industry lines. In particular, the ability to produce
synergistic effects through corporate alliances by making
effective use of various types of information media including
paper media, DVDs, networking, and digital broadcasting, etc.
■ Data security technology supported by industry-leading
capacity for software development. Also, production systems
that can process massive amounts of data under completely
secure conditions, as required for IPS, smart cards, andvarious types of printed matter.
■ The ability to offer a menu of general-purpose solutions as wellas customized solutions that fit individual requirements, thanks
to our track record of solving problems for 30,000 corporateclients and consumers.

Industrial Trends
As access to the Internet, digital broadcasting, and othermodern media becomes more widespread, consumers comeinto contact with information in a wider variety of ways, andinformation communication has changed a great deal. Changes
in spending habits have also led companies to change theirsales promotion methods. Now that they expect synergistic
effects from combining various types of media, there are bigchanges in how they do business, including the way they
apportion their advertising budgets. In addition, companies arelooking for high added-value services that they can use safely,with peace of mind, and a high degree of security. As a result of
these changes, there is a clear trend for customers to bring theirbusiness to a comprehensive printing company that can respondconsistently to all of their diverse needs.

Books and Magazines
The domestic market for book and magazine publishingis said to be worth 2.09 trillion yen per year. Publicationof magazines continues to decline due to the influence of
the Internet and other new media, but at the same timethe market for electronic publishing is growing rapidly, as
evidenced by the recent boom in mobile phone novels. The
market for electronic publishing was worth about 1.0 billion
yen in 2002, and by 2007 had grown to almost 20.0 billion
yen. In the next few years it is expected to top 100.0 billion
yen. There is also growing demand overseas for Japanesepublishing content.
Commercial Printing
This sub-segment’s sales of items like catalogs, posters,
direct mail and promotional materials are affected byadvertising budgets, which rose slightly due to the recovery in
the Japanese economy. Advertising expenses in 2007 cameto 7.02 trillion yen, up 1.1% from the previous year. Advertisingexpenses allotted for mass media declined for the third year ina row, while expenses related to sales promotions increased
for the fourth year in a row. There was a prominent increasein advertising aimed at individual consumers through theInternet or mobile phones.

Business Forms
Some 180 million smart cards were sold in Japan in 2007,
representing an increase of 20% relative to the previous year.
Contact smart cards grew by 10% from the previous year,
while contactless cards grew 40%. In 2007, more than 30
million smart electronic money cards were issued, a morethan 70% increase over the previous year. And the IPS market
also continued to grow. IPS services are tending towardhigher added value, involving functions like customer analysis
and customer relationship management. Printing companies
that can promise a high level of security are attracting a good
portion of these orders. Regarding IC tags, each industry is
working on its own methods for achieving greater efficiency inthe supply chain.

Strategic Opportunities
In the dramatically changing environment surrounding theInformation Communication segment, we view the following
kinds of trends as opportunities to expand our business, which
we are actively engaged in doing.
In the Books and Magazines sub-segment, the electronic
publishing market is expected to continue growing as information
media and consumer needs diversify. Along with this trend,
publishers and other content holders will have an increasingneed for planning and production of electronic publications,provision of content distribution platforms, and marketingand sales promotion activities. Furthermore, the globalizationof contents is expected to speed up, especially regarding
animated films, comics, and fashion magazines. This presents
opportunities for manufacturing in optimal overseas locations
and for engaging in other new global endeavors.
Commercial Printing is affected by the shift towards Internet
advertising as access to the Internet via personal computers
and mobile phones has become a part of daily life. We need to
identify issues related to this shift and find appropriate solutions.
As consumers make use of multiple types of information media,
there is a growing need for solutions that link companies andconsumers — for example, sales promotions that link in-store
media, paper media, and web sites, or electronic commercerelated solutions.
In Business Forms, while the smart card market is expected
to grow steadily, there is increased demand for using ID cards
as part of a trend toward stronger corporate internal controls. Of
course these cards require a high degree of security, but there isalso demand for cards with more functions and network-linked
services. Related to IPS, there is a growing market for highadded-value services, such as sending advertisements that are
individually tailored based on an analysis of spending patterns
along with invoices.

Segment Information

DNP Annual Report 2008

59

Information Communication

BUSINESS STRATEGIES

Basic Strategies
Now that consumers’ values have become diversified and progress in information technology has caused people to be flooded
with information, people find themselves spending a great deal of time acquiring the information that they really want, whilebusinesses must spend enormous amounts of money to figure out what consumers really want.
Progress in the digitalization of information has made it easier to distribute information, which on one hand enlivens
communication, but on the other hand poses greater-than-ever risks of information leakage.
In this environment, DNP edits and processes the information that consumers want, in the formats they want, and provides
forums and systems that allow for safe and reliable communication. At the same time, DNP is expanding its business by creating
communication infrastructure for gathering consumers’ true feelings and opinions for use in business activities, and by providing
comprehensive solutions that include all types of services, both back office and front office.

P&I Solutions

Growing to
Accommodate Diverse
Communication Formats
Outsourcing ofCustomers’ Overall
Communication Activities

60

We will combine the Printing Technology and Information Technology that DNP has
cultivated since our founding to offer consumers and corporate customers information
communication solutions that only DNP can provide. Today we view our field of businessas including every aspect of information distribution. We intend to express DNP’s
maximum potential and develop solutions-oriented businesses that contribute to society
as we combine technologies, products, and services and participate in designing ourcustomers’ business processes and social infrastructure, etc.
With basic print media at our core, we accommodate a variety of information media,
including the Internet (via computers and mobile phones), digital broadcasting, DVDs,
game machines, and dedicated terminals. Moreover, we combine and integrate thesevarious media to provide new services and solve problems faced by consumers andcorporate clients.
Based on the technologies and expertise that we cultivated through our printing
business with regard to processing massive amounts of information, and based on our
expertise in maintaining the tight security required for handling important information, weare actively encouraging corporate customers to outsource services from us for all kindsof business processes such as research, analysis, consulting, planning and productionof content, on-demand and other types of printing, distribution, network delivery, andoperation of customer support centers. We are prepared to offer comprehensive followthrough whether a customer needs help with a single business operation or an overallsolution for their business processes.

Major Policies
Expanding our Business through P&I Solutions
By going a step beyond production, which used to be ourmain business, and combining the printing and information
technologies that are our specialties, we intend to further
expand our business through original solutions that only DNP
can provide.
Our Information Communication segment proposes a variety ofideas related to every manufacturing process, from upstream todownstream, including planning, design, and marketing strategies
for increasing the added value of products and services. We
will respond to businesses’ need for direct marketing services
by launching new, comprehensive information communication
services that handle everything from processing of personal
information and sales promotion information, to post-processing
and distribution of digital printouts.
Also, by linking products and services like IC tags, on-demandprinting, and personal DM with smart cards, electronic forms,
and other account settlement solutions, we are boosting ourcapacity for providing comprehensive solutions to customers’
problems and actively creating new types of business.
At the same time, we will keep an eye on our businessenvironment as information media become more diverse, andwill contribute to the development of interactive and emergently
evolving society by developing digital content businesses
related to electronic books and online distribution of music.
We aim to expand our revenues by increasing the proportionof this type of solutions-based business relative to our totalbusiness.

Gearing up to Promote Our Outsourcing Supply BusinessWe intend to continue beefing up the Information
Communication segment’s systems and strategies so that
we are prepared to provide support for our customers’ overallbusiness processes.
In addition to the back-office functions that we alreadyprovide, including input, output, and storage of data, data
center operation and secretarial functions, in the future we willfuse these functions with information processing services likeinvestigation and registration or on-demand printing using digitalprinters to expand our range of front-office services that support
our customers’ sales promotions and customer relationshipmanagement.
In addition, in order to speed up commercialization of new
ventures and acquire core skills and expertise, we will use
M&As or corporate alliances as necessary to build up ouroutsourcing supply business.
Developing New Markets through Global Expansion
We are using the local subsidiary that we set up in Shanghai
in 2005 to further develop the Asian market. We intend toactively meet overseas printing demand, and will view thewhole world as our market as we develop new businesses.
For example, we will develop Global Metamedia, a system fortransmitting printing data online to printing companies all over
the world, in order to produce materials in the best place.

Expanding the Role of Solutions in Information
Communications by Strengthening Coordination between
Business Sectors
We will use new bases, such as the DNP Gotanda Building(in Tokyo’s Shinagawa Ward) and the DNP Kamiya Solutions
Center (in Tokyo’s Kita Ward) to focus on strengthening ties
between business sectors. In addition to proposing individual
business processes or solutions that are tailored to the needsof specific customers or industries, we will create systems andframeworks that allow us to offer comprehensive services.
As a “building-wide showroom,” the DNP Gotanda Building
is equipped to give various types of presentations. Many DNP
divisions, including sales, planning, production, and researchand development, are concentrated there, and they use thespace that the building provides to collaborate with customers
by sitting down together, identifying problems, and debating
until they come up with optimal solutions.
The DNP Kamiya Solutions Center is a manufacturing basethat serves as an ideal business model for our corporate
customers.
Looking ahead, in 2009 we plan to start redeveloping the
Ichigaya area where our core base is located, and evolve it into
an eco-friendly printing plant where we will concentrate various
functions including planning and development, various sales
departments, and head-office functions in order to move closer
to realizing our corporate vision of providing “P&I Solutions.”
Additionally, we will reconsider the Information Communication
segment’s manufacturing and distribution bases, which are
currently scattered throughout the metropolitan Tokyo area, andfind ways to boost our competitiveness.

Segment Information

DNP Annual Report 2008

61

Information Communication

FINANCIAL RESULTS

Financial Highlights

Business Environment(¥ billion, %)		

2008.3		

2007.3		

2006.3

Net sales

679.9

668.8

662.4

¥

¥

¥

Operating income

43.1

51.0

51.0

Operating income margin

6.3%

7.6%

7.7%

Net Sales

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

800

120

679.9

668.8

662.4

80

51.0

60

51.0
43.1

40
200
20
0

0

06

62

Performance

100

600

400

In the fiscal year through March 2008, Japanese domestic
publishing sales declined 3.1% year on year, marking threeconsecutive years of decline. In commercial printing, advertising
companies’ sales increased by 1.1%, continuing the previous
year’s rise, but advertising expenses for the four major typesof mass media that support printing demand – newspapers,
magazines, radio, and television – decreased slightly while
Internet advertising expenses rose. At the same time, factorsthat squeezed profits — such as higher material costs and lower
unit prices resulting from intensified competition — were more
prominent than ever, and made the industry environment evenmore challenging than the previous year.

07

08

In book and magazine publishing, sales of free newspapers
and magazines increased with the issue of more titles, but
continued weakness in magazine sales affected every genre. In
commercial printing, we enjoyed increased sales not only frompamphlets and event planning, but also from building a web site
for a beverage sales campaign and from office management
related to merchandise shipping, etc. However, sales ofpromotional items such as flyers, point-of-purchase materials,
and promotional gifts declined. In the business forms sector,
sales of information processing services (IPS — complete
handling of personalized mail from data input to printing
and shipment) increased thanks to outsourcing of full backoffice operations, and sales of smart cards also grew thanks
to new orders for retail store credit cards and solid growth intelecommunications-related cards. As a result, net sales from
Information Communication grew by 11.1 billion yen, or 1.7%, to679.9 billion yen.

Profits were hard hit by lower unit prices and higher material
costs. Despite aggressive cost-cutting measures, operating
income declined by 7.9 billion yen, or 15.5%, from the year
before to 43.1 billion yen. The segment’s operating income
margin declined by 1.3 percentage points from the previous
year to 6.3%.
Information Communication contributed 41.7% of DNP’s total
net sales and 44.8% of its operating income.

increases and lower unit prices. Operating income declined
despite aggressive and multifaceted measures aimed atcost-cutting, including passing on increased paper costs
to customers, shortening lead times, improving productivity
through more systematic maintenance of production equipment,
strengthening business partnerships by providing technicalguidance and consulting to outsourcing providers, and reducing
outside warehousing fees by minimizing inventories.

Books and Magazines
In the fiscal year through March 2008, sales from domestic
publishing declined by 3.1% from the previous year to 2,063.2
billion yen, continuing the downward trend of previous years.
Each year in which a new volume was released in the Harry
Potter series, book sales exceeded previous-year sales, thendeclined in the following year. This pattern continued in theyear through March 2008, with book sales declining by 3.4%
to 893.2 billion yen. Magazine sales continued the 10-year
slide that began in 1998, dropping 2.9% to 1,169.9 billion yen.
Sales of free newspapers and magazines were strong amid anincrease in the number of publications.
The number of new magazines launched in Japan in the fiscal
term ended March 2008 grew by three relative to the previous
year, to 182. DNP received orders to print 38 of these, or 21%of the total. Meanwhile, the number of magazines whose
publication was discontinued during the fiscal term increased by
50, to 220. DNP had been printing 35 of these, or 16%.
Despite aggressive sales activities, the lackluster market
and the slowdown of growth in sales of free newspapers andmagazines prevented us from compensating for the slow salesof books and magazines, and overall net sales in the publishingsector declined by 4% from the previous year. Although we
worked at lowering costs by increasing the proportion of inhouse printing and lowering distribution costs, we were not able
to offset the decline in sales volume enough to maintain profits
at the previous year’s level.

Business Forms
In the business forms market, the paperless trend continued
with the introduction of electronic stock certificates. Other
trends were increased use of color in credit card statements
and direct mail in order to more effectively promote sales, andgreater diversification, for example by providing information
more finely tailored to individual needs. In addition, with theenactment of Japan’s new Financial Instruments and Exchange
Law, financial institutions must find ways to make their productexplanations easier to read and understand, and they aremaking major revisions to product descriptions.
Sales of ledgers, etc., increased in the year through March
2008 thanks to demand related to mobile phone applications,special envelopes for applying for ID cards authorizing the useof tobacco vending machines, letters of intent from life insurancecompanies, and large-scale orders from insurance underwriters.
In the IPS business, price competition heated up, but sales
grew with the receipt of orders for back-office operations to
support a nationwide scholastic ability survey and for processing
applications for a mobile bank. Thanks to double-digit growth in
IPS and smart card sales, overall net sales in the Business Forms
sub-segment increased 7% year on year.
Our major IPS services include invoicing for mobile phones,
credit cards, and transport services, certificates and application
forms for non-life insurance companies, statements andcustomer service-related documents for banks and securities
brokerages, direct mail for correspondence schools and otherbusinesses, and ticket issuance. DNP is actively marketing its
products and services by emphasizing the unique features thatdifferentiate them from competing products. For example, we
can offer the comprehensive strength that results from linking
smart cards with an Internet data center (IDC), and we cantrace individual pieces of mail by using two-dimensional codes.
DNP controls roughly 50% of the overall Japanese smart
card market. We became the number one player in the industry
by developing the MULTOS™ operating system, a SIM card
operating system for mobile phones, and various types ofapplication software. We are particularly strong in the market for
smart cards for banks, where we issue cards for all banks andhold an 85% share of the market, thanks to our skill at biometricidentification using veins in the fingertip or palm of the hand, andthanks to comprehensive technological strength based on our
track record, card issuance and management expertise, andimprovements in chip strength owing to joint development withchip manufacturers. We also hold a 55% share of the market
for credit cards and other smart cards issued by financial
institutions, a 40% share of the market for mobile phone SIM
cards and other telecommunications-related smart cards, a
50% share of the market for electronic toll collection smart
cards, 10% of the market for railway smart cards, and 17% of
the market for IC-embedded employee or member ID cards.

Commercial Printing
Advertising-related sales in the fiscal year through March
2008 increased for the fourth consecutive year, by 1.1% from theprevious year, to 5,868.5 billion yen. Spending on advertising in
the four major types of mass media — newspapers, magazines,
radio and television — declined, but online advertising
spending rose by 2.1%, still a strong showing although thepace of increase has slowed with expansion in the market.
With the spread of broadband Internet access, there has been
an increase in mass media collaboration on search enginelinked advertising. Mobile phone-based advertising also grew
sharply. At the same time, the market for printed materials isincreasingly geared toward more diverse products and smaller
lots amid increased competition for orders from smaller printing
companies. Customers’ demands for lower unit prices are as
strong as ever, making the business environment even harsher
than the previous year.
Net sales in the commercial printing sector were roughly flatfrom the previous year, as increased sales from pamphlets,
event planning, web site construction to support a beveragesales campaign, and office management services offset
declines in materials such as flyers, point-of-purchase materials,
and promotional gifts. Profits were hard hit by materials cost

Segment Information

DNP Annual Report 2008

63

Information Communication

TOPICS

Books and Magazines

Expanding the Market through Partnerships with
Publishers
Printing and publishing have been core businesses since
DNP’s founding in 1876. Based on the aspirations expressedin our corporate creed of the time, “run a civilized business,”
we have contributed to the evolution of society and culture as
we developed our business. In recent years, as the publishingmarket has undergone immense changes, we need to develop ourbusiness with an eye toward the overall business of media content,
including electronic publishing. We view this change as a business
opportunity. In addition to selling content for mobile terminals
in the rapidly growing market for electronic publishing, we are
expanding into a wide range of businesses including marketing andsales support, content production and processing, and provisionof distribution platforms. By making use of our relationships withpublishers, sometimes through business alliances, we intend todevelop new publishing and printing markets as a trusted partner.

Speeding up the Electronic Publishing Business
In September 2007, we became the lead shareholder in am3 in orderto promote DSvision, a download service that distributes content
for the Nintendo DS handheld game console. DSvision sells diverse
content including books, magazines, and movies through the Internet,
using the 20 million Nintendo DS game consoles in use in Japan asDSvision’s dedicated micro-SD and adapter

64

Mobile Phone Picture Book

its platform. DNP provides one-stop service, handling everything fromcontent production to management of the download site. DSvision
began operating in the fiscal year ended March 2009, and expects tosell 10,000 titles in 2010 for net sales of 10.0 billion yen.
DNP already engages in the sale of content for mobile phones, andin 2006 became the lead shareholder in MobileBook.jp Inc. DNP sells
a wide variety of content such as literary works, comics, photographcollections, and audio books through a mobile site that it operates
and other channels. It is responding to this growing market by adding
original products such as “Mobile Phone Picture Books” by popular
authors, and is the exclusive distributor of the weekly comic magazine“ANGIE.”

Making a Business out of Solving Problems in Printing
Production Processes
DNP has developed and provided a wide range of solutions toproblems that arise in the process of producing printed matter.
For example, in 2007 DNP developed a color matching systemthat replaces a printer’s color tone data with color tone data for
proofreading, in order to boost proofreading efficiency. DNP combined
this system with Fujifilm Graphic Systems’ printers and a maintenanceservice to develop and sell the “CMS Remote Proof System” for reliably
reproducing printed materials with the same color tone as the final
version.
Also, in collaboration with Iwanami Shoten Publishers, Ltd., wedeveloped a new editing support system that uses XML technology
and networking. Aimed at publishers of dictionaries or other referencematerials, this system aids in the efficient publication of content in
multiple media formats, such as printed materials, web sites, DVDROM’s, or electronic dictionaries. By using this system to produce
its sixth edition, Kojien, generally regarded as the most authoritative
dictionary of the Japanese language, reduced production time by one
third compared to previous editions, was able to release the printed
version and DVD-ROM version at the same time.
Some of the other types of infrastructure that DNP has developed tosupport the production of printed materials include an improved digital
version of DNP’s original Shueitai font and an automatic compositionand production support system for desktop publishing.

Expanding Business through Partnerships

Business Development through Active Partnerships

DNP formed a business and capital alliance with Maruzen Co., Ltd.,
which, like DNP, has been in business for more than 130 years. We
will use DNP’s printing and information technologies to develop a wide
variety of businesses together. For example, we will improve customer
service and expand Maruzen’s education, research, retail stores,
and publishing businesses. We will improve university management
and other operational processes by using IC tags to manage library
inventories, entrances and exits, introducing smart student ID cards
and digitizing lecture summaries, and promoting remote and e-learning.
At retail stores, we will help with sales promotion and customer
management. We will also engage in on-demand publishing andelectronic publishing.
In addition, we acquired Waseda Seminar KK’s test preparation
business and related publishing business, and began operating it
in July 2007 as a wholly-owned subsidiary of DNP called Waseda
Management Publishing. We expect to expand this business bydeveloping high added-value courses and curricula, for example byintroducing e-learning courses, improving operational efficiency byusing digital pens, and providing print-on-demand course materials.

In January 2008, DNP joined Sony Corporation, Gourmet Navigator
Inc., Mitsui & Co., Ltd. and Tanseisha Co., Ltd. in establishing a joint
venture, “FeliCa Pocket Marketing.” The new company’s main businessis providing marketing support for a wide variety of businesses including
retail stores, restaurants, and entertainment providers by using “FeliCa
Pocket,” a smart card application for mobile phones. FeliCa Pocket canfacilitate up to eight types of services at once, including “Osaifu-Keitai”(literally “Wallet Mobile”) mobile payment system. DNP will sell FeliCa
Pocket cards and provide solutions in the form of dedicated terminals
and customer relationship management services.
In addition, we developed a point system for use with Osaifu-Keitai
in collaboration with FeliCa Networks, Inc., and began marketing it in
September 2007. The system bundles various member management
functions such as member points management and mail distribution
and can be used with Osaifu-Keitai, making it possible for companies
to introduce it quickly and economically. DNP plans to develop otherrelated products as well, such as an event promotion system using
airwave posters.
Meanwhile, Microsoft Corp. has approved DNP’s Windows Vistacompatible PKI (public key infrastructure) driver, the first in Japan.
PKI using electronic certification of public keys and private keys is indemand in order to improve network security. Providing Microsoftapproved PKI drivers for free will promote the spread of smart cardbased PKI authentication and will lead to sales of products such as
smart cards and peripheral software and devices.

Smart Cards

Expanding the Business by Developing Applications andPromoting Widespread Use
Ever since DNP began developing smart cards in 1981, we havebeen a leader in the smart card market by developing basic andapplication software, and by manufacturing and issuing smart cards.
Currently, DNP controls about 40% of the Japanese overall smart
card market, and about 90% of the market for smart cash cards,
mostly issued by megabanks. In addition, we have secured about
50% of the rapidly growing market for contactless cards used as
employee ID cards, transportation cards, and electronic money, etc.
In the future, we intend to continue to lead this market through suchmeans as expanding services that link smart cards with computer
networks, developing more government-related or amusementrelated applications, and boosting sales of smart cards that combine
contact and contactless functions.

More Convenience, Greater Safety, and Higher Functionality
Most financial institutions are adopting biometric authentication
methods using veins either in a finger or the palm of the hand. In May
2006, DNP developed a “double biometric authentication smart cashcard” that uses both methods, and we have been supplying the card
to some 30 financial institutions. In August 2007, we began offering
these cards packaged with customized card-issuing services, enabling
financial institutions to introduce them quickly and at little cost. We
expect to take in 3.0 billion yen in sales from these cards over the next
three years.
In addition, we reinforced our smart cash card introduction support
services in order to respond precisely to financial institutions’ problems.
Some institutions began issuing smart cash cards but found that they
could not provide sufficiently appealing services to customers, so weare supporting them in upgrading to cards with multiple functions suchas electronic money, contactless credit, or loyalty point tabulation. We
expect that this will lead to 3.0 billion yen in sales in the three years
ending in March 2010.

Palm vein authentication

Responding to Demands for Diversity in Design
DNP has developed very stylish contactless smart cards that use
DNP’s original surface processing to give them a special sheen or othertexture which makes them enjoyable to see and touch. These unique,high added-value products make use of proprietary surface processing
techniques that combine printing and plate making technologies
that DNP cultivated through businesses like commercial printing andpackaging. As companies seek to make their cards stand out fromthose of competitors, we expect to respond to demand for issuing
about 160 million new cards this fiscal year, growing to some 300
million cards in the year through March 2012.
Other examples of chic, high-functioning, high added-value cards
provided by DNP include the world’s first credit cards with a verticaldesign and PayPass™ functions, which we developed in collaboration
with Orient Corporation, and Japan’s first contactless card combinedwith a rewritable display capable of color variations, which wedeveloped jointly with Nippon Signal Co., Ltd.

(Left) Cards with raisedor concave writing(Right) Textured cards
that mimic denim,
leather, and wood

Contactless smart
cards with rewritablelabels in a variety ofcolorsFinger vein authentication

Segment Information

DNP Annual Report 200865

IC Tags

Advertising - Sales Promotion - Commercial Printing

Expanding the Market through Partnerships with
Publishing Companies
IC tags have come to be used in a wide variety of situations,for example for improving operational efficiency in distribution or
manufacturing businesses and for building traceability systems,
and their importance has grown more than ever. As a tag solutions
vendor, DNP has played a leading role in expanding the IC tag
market, for example by creating industry standards, constructing
environments suited to IC tag use, and developing various
applications for the tags.

IC Tags: Indispensable to the Enhancement of Social Infrastructures
As applications for IC tags continue to grow broader, DNP has
developed three types of IC tags, each emphasizing particular functions
demanded by particular applications. “Water-resistant adhesive labeltype tags” are highly water resistant and have 10 times more adhesive
power than conventional tags manufactured by DNP. They are usefulfor containers or pallets that are used frequently and stored outdoors.
“Label-type tags for use with metal” are designed so as to minimize
metal-based communication interference. They are made as thin as
possible so that they can be stuck onto rolled or textured surfaces
easily, and are ideal for managing manufacturing equipment such as
tools and dies as well as computers and other metal office equipment.
“In-mold-type tags” are used when tags must be fixed more firmly thanlabel-type tags. By providing products like these that respond to users’
specific demands, DNP has made it easy for companies to adopt IC
tags and has broadened its own field of business.
In addition, DNP joined forces with Kakumaru Co., Ltd. and Ripro
Corporation Japan to develop highly durable IC tags for use at intelligent
control points, for surveying reference points as specified by Japan’s
Geographical Survey Institute. Embedding IC tags at triangulation points
or other benchmarks and recording relevant positional data on eachtag makes it possible to improve the efficiency of surveying and lifestylesupport. These tags were made to be exceptionally weatherproof andresistant to chemicals, temperature fluctuations, and strength, etc. We
aim to sell them widely as part of social infrastructures.

Intelligent control point containing IC tag

Promoting Corporate Use of IT Tags
Based on DNP’s own internal system for managing printed
materials, we have developed and marketed a traceability systemthat meets the needs of various industries such as processed foods
and agricultural products. In September 2007, DNP expanded on
this system by combining IC tags, barcodes, and other recognition
technologies with online communication to develop a manufacturing
process control system that can be customized to meet the needsof individual workplaces and provided on an ASP basis. The systemallows managers to confirm the status of production lines in real time,even from remote locations. In the future, DNP plans to add a tracing
function that will enable products to be tracked from the top of the
production stream to the bottom.
In addition, since December 2007 we have been selling IC tagor barcode-based control systems for company assets such as
documents, personal computers or other office equipment, etc.
We intend to continue getting more businesses to make use of IC
tags by constructing management systems that are optimally tailored toreal-life conditions in specific companies or industries.

Sales Support through Total Solutions
Investigative Research from the Consumer’s Standpoint:
The Kaiba Report
DNP Media Create Co., Ltd., a wholly-owned subsidiary of DNP, andAssociate Professor Naoto Onzo of the Graduate School of Commerceat Waseda University have begun jointly issuing a report of researchfindings regarding consumers’ purchasing behavior at retail stores.
Making the most of our experience in every aspect of sales promotion,
including planning and production of promotional materials andplanning and execution of campaigns and events, we are conducting
research that will lead to greater sales for our corporate clients.
In April 2007, we released “Volume 1: Shoppers at JapaneseDrugstores.” We used a questionnaire to study actual buying at
drugstores, and verified the effectiveness of sales promotional
materials found at actual retail stores. We found that 42% of customers
decide what brand to buy at the store, making it important to provide
information at the point of purchase. We also determined that providing
product information through such means as dedicated sales areas orelectronic POP materials is very effective for boosting sales.
In February 2008, we released “Volume 2: The Effect of Fragrance on
Shoppers’ Behavior.” We placed fragrance-releasing devices in 100-yen
shops and released a relaxing juniper/aloe fragrance or an invigoratingorange blossom fragrance, and studied the effects, including changes
in sales and in shoppers’ moods. We confirmed differences in theamount of sales and in the amount of time that customers remained in
the shop based on the fragrance.

Creating New Markets

Responding to the Global Need for Preventing Fraud andFighting Counterfeit Goods
Worldwide, there is an increasing demand for holograms for use invouchers, credit cards, ID cards, and as a security measure to prevent
forgeries and distinguish counterfeit merchandise. At the same time,
it is necessary to prevent forging of holograms themselves, making
it necessary to find more and more sophisticated manufacturing
techniques.
DNP began developing holograms in 1972 and has since gained agreat deal of experience in manufacturing and selling diverse types ofholograms. In July 2007, DNP and Sony PCL Inc. jointly developed aLippmann hologram that uses stereogram technology to store dynamic
picture images, including animated cartoons and live-action video
images. In addition, as an example of DNP’s global development,
China’s National Anti-counterfeiting Technology Product Management
Office awarded a “Certification of Review and Assessment of AntiCounterfeiting Technology” that recognizes our “Secure Image ®” as ahigh-security hologram.

The hologram image changes continuously as the viewing angle is changed

66

Special Feature: Advertising - Sales Promotion Commercial Printing

Development of “Magitti” Local Advertising
Delivery System
DNP has developed a system for distributing to consumers’ mobile
phones local advertising targeted to the time of day and the phoneowner’s location and personal preferences. The system, called “Magitti,”
uses a phone’s GPS function to acquire its location and uses an originalalgorithm developed by DNP to predict whether the phone’s owneris likely to “eat, buy, see, or enjoy” according to the time of day, andtransmits the most appropriate information for the time and place.
Magitti is a creative “information media” that provides consumers
with new value. Creating this type of media requires comprehensive
knowledge of sociology, human behavioral science and psychology,
and an imagination capable of foreseeing upcoming trends. DNP
proposed the media concept and developed the basic system incollaboration with the influential Palo Alto Research Center (PARC) of
the U.S. which has generated numerous innovative technologies andconcepts in the information communication field.
In the spring of 2009, we plan to start using this system to distributeinformation about stores, institutions, photographs and events, etc. tomobile phones.

The photograph displays an early prototype

Special Feature: Creating New Markets

Broadening Our Business Base with CAD-CG
Since 2006, we have been providing manufacturers of automobiles,
transportation equipment, household equipment and electrical
products, etc. with a “CAD-CG service” whereby we generate highquality 3-D computer graphics from CAD data used for product design,and develop the graphics into sales promotional materials. Based on
manufacturers’ desire to use CAD data in sales promotions before theirproducts are complete, we have been succeeding at implementing
more effective sales promotions while reducing the cost of producing
promotional materials.
In this business, it is important to be quick to acquire the latest
CG techniques and production methods, so DNP has been forming
alliances with overseas partners. We expanded the business by joining
forces with Germany’s Realtime Technology AG for still images andinteractive contents, and with Digital Domain Productions, Inc. for
Hollywood-quality digital animation imagery. In May of 2007, we began
a 3-D PDF production service using Adobe Systems Inc.’s Acrobat
3-D software to handle 3-D computer graphics as PDF files. And in
November 2007, we tied up with metaio GmbH of Germany to begin aninteractive content production service that displays live action images
synthesized in real time based on photographs taken with a web camor other camera.
The ultra-high-definition, print-quality CAD-CGs that we produce are
difficult to distinguish from photographs or images of actual products.
We established a full range of rapid and high-quality production
processes necessary to take CAD data, created in different formats
by different companies, prepare it to be used in 3-D CG production,
produce the CGs, and develop them into end products used as sales
promotional materials. In the future, we intend to develop CAD-CGs
into diverse media and expand this business by developing expressive
techniques needed for making even higher-quality 3-D CGs, developing
more efficient production processes, and introducing innovations suchas a new interactive system.

Interactive content with live
video images and 3-D CG being
synthesized in real time

Information Communication Research andDevelopment Center

Information Communication Research andDevelopment Center

Fumio Saito

Shigeru Komatsubara

Segment Information

DNP Annual Report 200867

Lifestyle& Industrial Supplies
PORTRAIT

Contribution to GroupNet Sales:

34.1%

Contribution to GroupOperating Income:33.2%

This segment is what drives the overall DNP Group to expand our business fields through the development andapplication of printing technologies. The segment contributes 34.1% of DNP’s total net sales.
*For details about products and services, please see Products and Solutions (p. 18-21).

Business
The Lifestyle and Industrial Supplies segment provides
products that are closely connected with ordinary people’s lives
through three sub-segments: Packaging, Lifestyle Materials
and Opto-Materials/Industrial Supplies. Starting with printing
on non-paper materials like film or steel, we use coating andetching technologies and other basic printing skills to makeproducts like optical film used in electronic displays and color
ribbons for printing photos from digital cameras. We supply awide range of high-function, high-quality products, including
some of which DNP is the world’s largest supplier.

Operating Divisions■ Our Packaging sub-segment offers turnkey service beginningwith packaging planning, design, development of materials,
manufacturing in large or small lots, and design anddevelopment of filling equipment and factories. Manufacturersof foods, beverages, medical equipment, medicines,
electronic components, or industrial materials and any othercompany that has a need to “wrap things” are all potential
customers. We plan to expand this business by precisely
addressing the characteristics of each material that needs tobe wrapped.

68■ Our Lifestyle Materials sub-segment develops and provides awide range of products including interior and exterior building
materials, room division and storage products, and interiormaterials for automobiles and railroad cars. Our potential
customers are companies that deal in “comfortable dwellingspaces,” whether in Japan or abroad, and include building
material or furniture manufacturers and automobile or railroad
car manufacturers. This sub-segment also provides solutions
to problems related to construction methods.
■ The Opto-Materials/Industrial Supplies sub-segment
develops and manufactures products like anti-glare film usedin LC displays and dye-sublimation thermal transfer recording
media, and other products of which DNP is the world’s top
supplier. Our main customers are world-class companies thatdeal in appliances or electronics, both in Japan and abroad,but our photo print business also markets DNP’s own brandof products directly to consumers.

Strengths■ Capacity for developing and designing products, principally

through specialized planning, research, and development
staff. Ability to respond flexibly with universal design solutions
that make products easy for anyone to use.
■ Ability to develop industry-leading, advanced and originaltechnologies. One example from the packaging field is ourability to develop technology and design plans to support
aseptic filling systems, an area where we hold the top sharein Japan. An example from Lifestyle Materials is the EB
coating technology that generated numerous high-function,eco-friendly products. And an example from Opto-Materials/
Industrial Supplies is our ability to develop technology fordye-sublimation thermal transfer recording media that has
become the world’s biggest seller.
■ The ability to develop and provide comprehensive proposals
and solutions based on a broad network of corporate clients.
■ The ability to expand our business through M&As andcorporate alliances.
■ Manufacturing and sales capacity that makes it possible for
us to expand into global markets.

Industrial Trends
In Japan, the demographic structure is undergoing majorchanges and new lifestyles are emerging, while on a global
scale, environmental problems are becoming more prominent.
It is important to establish safe and reliable lifestyles and reduceresource consumption at the same time. Companies andindividuals are seeking products that adequately address theirconcerns about health and the environment, and this trend is
expected to increase in the future. There is also an increasing
demand for establishing manufacturing processes that put lessstrain on the environment. On the other hand, there is also astrong demand for products based on universal design andfor products that are highly functional and convenient to use.
Creating products that meet all these needs requires a high levelof technical skill.

Packaging
As lifestyles become more diverse due to factors such as a
growing awareness of health and environmental issues, thedeclining birthrate, aging society, and women’s increasing
participation in the world outside the home, people arethinking more critically when they choose products. Thesechanges also affect packaging in fields like foods, beverages,
and pharmaceuticals. There is a demand for packaging thatmakes it possible to provide safer, more reliable products
by sterilizing the contents or using materials that block
the passage of moisture or oxygen and therefore better
preserve the contents. Also, due to an increased awarenessof universal design, there is also a need for appropriate
packaging that users can understand intuitively and thatanyone can use with ease.
Lifestyle Materials
New housing starts have slowed due to various factors
including the falling birthrate and aging of the population.
However, there is a growing demand for products that excel

from the standpoints of health, environment, design andfunctionality. Demand is growing for wood-grain laminatedboard in response to concerns about deforestation, and for
health-oriented products that do not use the volatile organic
compounds (VOCs) that cause sick house syndrome, and for
products that are scratch and stain resistant. There is also an
increasing demand for products and construction methods
that can help reduce overall costs and streamline large-scale
projects such as office buildings, hospitals, and commercial
facilities.

Opto-Materials/Industrial Supplies
As a result of growth in the market for flat-panel displays,
which is mainly a result of double-digit growth in LC
televisions, there is an increasing demand for optical films
that prevent glare or improve picture quality. The need for
greater functionality in optical films and stable supplies oflarge quantities is expected to continue into the future.
In the photo print market, demand for prints of photos takenwith digital cameras, including phone-mounted cameras, isincreasing rapidly. About one quarter of the estimated 85.0
billion photos printed worldwide each year are digital photos.
The number of digital photo prints is growing by double digits
each year, and is expected to reach 50.0 billion in 2010.

Strategic Opportunities
The Lifestyle and Industrial Supplies segment uncovers new
demands that arise from changes in people’s lifestyles andengages in projects that lead to future growth.
In our Packaging sub-segment, there is continued growthin safer, more reliable packaging made from more eco-friendly
materials, products that are convenient for people who live alone
or in households where both spouses work, and products basedon universal designs. The market for such products, and for
manufacturing processes and product planning developmentthat support such products, is expected to grow. We also foresee
growth in demand for such products as aseptic filling systems
that can be operated at room temperature, and from the medical
and pharmaceutical fields for products like transparent vapor
deposition barrier films that keep out moisture and oxygen.
In Lifestyle Materials, also, the market continues to grow for
products designed with health and the environment in mind,
and we expect to see greater demand for solutions to various
problems, including problems related to construction methods.
We expect growth in the market for products that use nonvinyl based materials and water-based inks, and for productsthat do not use formaldehyde or other VOCs said to cause sickhouse syndrome. Japan has the most advanced technology formaking these kinds of eco-friendly products; in the future we
can expect a surge in demand from overseas.
In the Opto-Materials/Industrial Supplies sub-segment, we
expect demand for flat-panel displays to continue to growrapidly, bringing continued strong demand for optical films.
In the digital photo print market, we expect that doubledigit growth will continue for dye-sublimation thermal transfer
recording media, which delivers excellent print speed anddurability. In addition, we expect rapid growth in use of thephoto print kiosks that we have installed in camera shops,
appliance stores, convenience stores, and similar locations.

Segment Information

DNP Annual Report 200869

Lifestyle & Industrial Supplies

BUSINESS STRATEGIES

Basic Strategies
DNP’s Lifestyle and Industrial Supplies segment aims to contribute to an emergently evolving society by developing businesswith an emphasis on high functionality, environmental responsibility, and adding greater value. We are working on boosting sales
from this segment both in Japan and overseas.
In the Packaging and Lifestyle Materials sectors, we will aim for more stable growth by developing products that focus onfunctionality and environmental responsibility. In the recording materials and industrial materials sectors, we will use coating
technologies as a nucleus from which to actively develop products with multifunctional, high quality, high added value and new
categories of products, in order to develop new markets.

High Functionality
and Environmental
Responsibility

Guided by an awareness of universal design and environmental responsibility, we willdevelop highly functional, eco-friendly products that meet consumers’ demands for “goodhealth, safety, comfort, and convenience.”

Adding Greater Value;
Shifting into GrowthFieldsCoating technologies have already sparked significant changes and expansion in
DNP’s business. We will explore additional uses for printing technologies and step up thedevelopment of products and services with high added value. At the same time, we will
shift our emphasis to areas with good potential for future growth, such as eco-friendly
products made with electron beam (EB) coating technology for curing resins.

Developing New
Businesses in Industrial
Supplies

We will take a broader view of our market and look at energy, life science, and industrial
materials and supplies as potential growth areas in which we aim to develop cuttingedge, original technologies and products. In addition to creating new businesses likesolar battery components, we will continue to create new business models that make useof corporate alliances.

70

Major Policies
Industrial Supplies Sub-segment will Actively Develop
Optical Films for Flat-Panel Displays
We intend to actively develop optical films for liquid crystal
and plasma displays, as the market for flat-panel displays is
expected to continue to grow. With the market demandinglarger, thinner, lighter displays for televisions and computers, we
intend to develop and market anti-glare films, backlight films,
electromagnetic shield films, and other high-performance new
products that will help resolve technical hurdles to creating thetype of displays the market wants.
We will also work at developing new products that make useof the printing and information technologies that we cultivatedthrough our previous businesses. One example is our front
projector screen that can display clear images even in a brightly
lit room. In the future, we expect new demand for this screen tocome not only from corporations but also from individuals.
Packaging: Bolstering our Lineup of Functional,
Environmentally Friendly Products
The market for foods and toiletries has been severely affectedby shrinkage in the scale of the market due to Japan’s fallingbirth rate and aging population, as well as by the surge inmaterials costs as a result of high crude oil prices. However,despite this environment, increased awareness of environmental
problems and food safety issues has generated demand for
new functions, and we believe that new business opportunities
have emerged.
In the Industrial Supplies sub-segment, we developed
components for solar batteries as part of our shift to higher
added value. In the Packaging sub-segment, we developed
products like aseptic filling systems for PET plastic bottles thatallow our customers to reduce strain on the environment while
also reducing manufacturing costs. Sales of these products are
steadily increasing. We have also begun expanding applications
for our IB (Innovative Barrier) film, which combines transparency
with high barrier strength, to the fields of medical supplies,
pharmaceuticals, and industrial supplies in addition to foods.
We intend to continue to view the dramatic changes of recent
years as business opportunities. We will develop comprehensive
solutions addressing every phase of business from productplanning to manufacturing and sales promotions in order toexpand our business.

In addition, we will use the dwelling space analysis andevaluation center that we established within our Okayama Plant
to expand our solutions-oriented business related to living
environments, such as measuring and assessing air quality inliving environments.

Recording Materials: Aiming for Major Expansion throughEffective Use of Resources Acquired From Konica
Minolta
As part of our drive to address the rapidly growing market for
digital photo printing by expanding our line of related products,
DNP acquired Konica Minolta Holdings’ domestic photographyrelated product sales business and other photo-related
operations. We hope to use the sales channels through which
Konica Minolta previously sold products like silver halide film
to dramatically increase our domestic sales of dye-sublimation
thermal transfer recording media. In addition, we aim to further
increase sales in the strategic area of digital photo printing
through other means, including staking out a share of the ID
photo market.
Developing New Markets through Global Expansion
We intend to develop new markets for both our Packaging
and Lifestyle Materials businesses by using domestic production
bases as launch pads from which to meet demand from East
Asia and other overseas locations.
In recording materials, we established a joint venture in
France for assembling ink ribbons, and a subsidiary in the U.S.
for selling dye-sublimation print materials. From these bases,
we aim to build an optimal production and sales framework forserving the global market.

Lifestyle Materials: Enhancing our Product Lineup with a
Focus on Eco-Friendly, High Added-Value Products
Since we can’t expect any rapid increase in demand for new
housing in Japan, our strategy in the Lifestyle Materials businesswill be to pursue revenues through high added-value products.
We will add new designs to our series of “SUPEREAGOS”
exceptionally wear-resistant and stain-resistant, eco-friendly
decorative paper and “Ecostandard WS Safmare” vinyl chloridefree decorative sheet for residential interiors. Also, we will
actively work to expand sales in overseas markets where there
is a strong demand for decorative sheets, largely for use as
surface coverings for furniture. We will enhance our portfolio of
mainly environmentally friendly, high added-value products andactively promote them in world markets, starting with Europe
and the United States.

Segment Information

DNP Annual Report 200871

Lifestyle & Industrial Supplies

FINANCIAL RESULTS

Financial Highlights

Business Environment(¥ billion, %)		

2008.3		

2007.3		

2006.3

Net sales

555.8

532.7

479.9

¥

¥

¥

Operating income

31.9

36.3

37.5

Operating income margin

5.7%

6.8%

7.8%

Net Sales

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

800

120
100

600

555.8

532.7

80

479.9
400

60

37.5

36.3

31.9

40

200
20
0

0

06

72

07

08

In the fiscal year through March 2008, Japanese convenience
store sales exceeded the previous year’s level by 1.2%, which
represented a 0.7 percentage point increase in the year on year
growth rate. Department store and supermarket sales also
increased slightly, by 0.3%, and overall retail sales increased by
3.2% over the previous year.
On the other hand, housing starts in the year through March
2008 declined by a sharp 19.4% from the previous year, afterrising for four consecutive fiscal terms.
The business environment remained difficult as prices of
petrochemical-based products continued to rise while unit
prices fell due to an intense competition for orders.

Performance
Despite sluggish sales of lifestyle materials due to the sharp
drop in housing starts, overall net sales in this sector increased
by 23.1 billion yen, or 4.3% year on year to 555.8 billion yen,primarily thanks to larger sales of antiglare film and otherproducts in our industrial supplies sector.
However, operating income declined by 4.4 billion yen, or
12.1%, from the previous year to 31.9 billion yen due to factors
such as higher prices for films, resins, and other petroleum
products, lower unit prices, and higher depreciation costs. The
operating income margin declined 1.1 percentage point year on
year to 5.7%.
The segment contributed 34.1% of DNP’s total net sales, and33.2% of its operating income.

Packaging
Packaging sales slipped 1% from the previous year despite
increased sales of flexible packaging and paper cups, due tosmaller sales of other types of paper containers and pre-formed
bottles. Pre-formed bottles are test tube-shaped primary
products that are made into plastic bottles used with large
aseptic filling systems. Sales of the aseptic filling systems were
little changed from the previous year. Operating income wasseverely pressured by higher prices for films, resin and othermaterials, and by an increase in depreciation costs resulting
from a tax reform that affected depreciation accounting.
* Aseptic filling systems: Aseptic filling is the process of filling sterilized packaging material withsterilized food or drink in a bacteria-free environment. In 1978, DNP became the first Japanesecompany to develop single-portion containers of coffee whitener. In 1994, we became the firstJapanese company to develop a system for aseptically filling PET plastic beverage bottles. DNP thenwent on to improve the system, for example by speeding it up and introducing pre-formed bottles,
and today holds an 80% share of the domestic market.

Lifestyle Materials
From July 2007 to March 2008, Japanese housing starts
plunged by 25% in reaction to the enforcement of the Revised
Building Standard Law that took effect in July 2007. Sales oflifestyle materials also declined overseas, particularly in North
America, so that net sales from this sector declined 10% fromthe previous year. Among non-PVC wall coverings, sales of ecofriendly products using DNP’s original EB coating technology*
grew, but overall sales declined relative to the previous year.
Profits remained under severe pressure from the decline in sales
and higher materials costs.

by PrintRush, and the system has made inroads with masselectronics retailers and leading DPE chains.
Meanwhile, DNP Photo Marketing Co., Ltd., which wasformed after DNP acquired Konica Minolta Holdings’ ID photoand photographic product sales businesses, launched a seriesof DNP-brand photographic products. Those aimed at thedomestic market have been doing well. In the future, we plan towork harder at promoting sales of products aimed at overseas
markets, while also promoting the DNP brand. The businessenvironment remained extremely difficult due to the yen’s rapid
appreciation and increases in material costs.
DNP ID Imaging Co., Ltd. continues to face tough times
marked by increased competition. The number of photos soldat each ID photo booth declined. However, awareness of newly
installed ID photo booths has gradually increased, and sales areon an upward trend. We will continue to install new booths andwork at expanding this business by locating PrintRush and ID
photo booths alongside each other to attract new customers,
and by selling more portrait photography equipment.

* EB (electron beam) coating technology: a next-generation, eco-friendly technique for hardening resin
applied to a flat surface by exposing it to electron beams and causing its molecules to polymerize.
Compared to products coated with urethane or UV resin, EB coated products display greater surface
hardness, soil resistance, photo-resistance, stability and durability, and are more practical foreveryday use. The manufacturing process uses less energy, generates less carbon dioxide, and does
not require the use of solvents.

Opto-Materials/Industrial Supplies
This segment enjoyed increased sales of dye-sublimation
thermal transfer recording media and antiglare films for LCDs
(liquid crystal displays). The latter is our biggest optical film
product. Sales increased in terms of both number of units andsquare meters, thanks to a recovery in demand for LCDs andthe introduction of larger displays. DNP supplies anti-glare film
to every manufacturer of polarizing plates in the world, andcontrols roughly 70% of the market. Meanwhile, manufacturers
are adjusting their production of plasma display panels (PDPs)
due to intense competition from 40-inch-class LC TVs, which
has made it difficult for us to profit from electromagnetic
interference shielding film used in PDPs. Meanwhile, major
manufacturers have been pulling out of the projection screen
business, causing that market to shrink rapidly. However, we use
the same production equipment to make contrast improvement
film for PDPs, which are taking the place of projection screens,and sales of the latter film are increasing nicely.
In ink ribbons, there was a big drop in demand formonochrome ribbons for devices such as facsimile machines,
but sales of products used for printing color digital photos havegrown well. Demand for digital photo printing grew thanks to therapid spread of digital cameras including those built into mobile
phones, and thanks to growth in the number of DPE shops
using commercial dye sublimation printers. The number ofPrintRush self-serve photo-printing kiosk systems installed grew
to about 1,200 units by the end of March 2008. The market hasappreciated the high-speed, highly accurate prints provided

Segment Information

DNP Annual Report 200873

Lifestyle & Industrial Supplies

TOPICS

Lifestyle & Industrial Supplies
Promoting Solutions-Oriented Businesses Basedon Universal Designs
DNP has engaged in a variety of projects aimed at making productsthat can be used safely and comfortably by all kinds of people,
including the elderly, pregnant women, and children. Our efforts tointroduce universal design in all our business fields — not just in foodand drink packages but also in catalogs, pamphlets, books and otherprinted materials, interior materials that do not harm human health or
the environment, and display products that make images easier to see,for example — have resulted in the additional benefit of leading us toengage in businesses that meet the needs of corporate clients andconsumers.
Another result was the receipt of a Special Cabinet Minister’sAward as part of the 2007 Barrier-Free Promotion Awards. This award
recognizes our awareness of universal design, our awareness of theconsumer’s point of view in product design, and our efforts to makeeasy-to-use packaging available to more people, as in the example ofBraille-imprinted packages and easy-to-open packaging.
Another example of our activity in this area is a book that wepublished jointly with Lion Corporation called, “The Touch and Learn
Tooth Brushing Book.” The book uses Braille and three-dimensional
illustrations to teach visually impaired people how to care for their teeth.
Braille libraries throughout Japan were presented with copies of thebook, and it was used in “tooth brushing seminars” and other activities
for the visually impaired.

Dwelling Space Solutions
Enhancing Our Lineup of Healthy, Eco-Friendly Products
DNP started its building materials business in 1951 and has
supplied diverse products not only for homes, but for a wide range
of applications including offices, hospitals, commercial facilities, andautomobiles. Especially in recent years, there has been greater demandfor comfortable dwelling spaces that do not harm the environment orhuman health. We have stepped up efforts to provide “dwelling spacesolutions” that respond to this demand and resolve technical problems
at the same time.
DNP’s original EB coating technology is an environmentally friendly,
next-generation technique that uses less energy in production
processes, reduces CO2 emissions, and makes it possible to coatsurfaces without using solvents. EB-coated products are highly
resistant to scratching, staining, and damage from sunlight — they
are exceptionally durable, practical, and stable. In May 2007, wegreatly expanded our series of original WS wood-grain residential-use
decorative materials made with EB coating. DNP boasts the top shareof the Japanese market for residential-use interior decorative materials,
primarily used in condominiums. We responded to increasing diversity
in consumers’ tastes by enhancing our selection of designs and thereby
positioning ourselves to further increase our market share.

Sample book of “WS Safmalle,” “WS-F” and“WS Ellio”

Universal design packaging: pouch (left), box (right)

74

Display space “VOXART”

Industrial Supplies: Photo Print Business
Expanding our Photo Print Businessand Our New “FOTOLUSIO” Brand
Since the latter half of the 1980s, DNP has built a business of
supplying ink ribbons used in photo printing and other dye-sublimation
thermal transfer recording media. We now hold the top share of theworld market for these products, partly because we supply the world’s
major digital printer manufacturers on an OEM basis. In 2005, welaunched our PrintRush self-service photo printing kiosks, and in 2006
we acquired the Konica Minolta Group’s ID photo, photography-related
product sales, and color printing paper manufacturing businesses. In
addition, we enhanced our manufacturing and sales bases in Europe
and the U.S.
In January 2008, DNP launched a new brand, “FOTOLUSIO,” toshow people all over the world that DNP has made a serious entry into
the photo print business. The name “FOTOLUSIO” combines three
concepts — “photograph,” “solution,” and “revolution.” We intend to
bolster our photo print business on the strength of three major assets:comprehensive group strength that allows us to expand into a varietyof business fields, technological strength that supports our leading
position in the rapidly growing market for dye-sublimation thermaltransfer recording media, and our capacity for expanding into global
markets that promise long-term growth.

Special Feature: Creating New Markets

DNP’s Universal Design Projects“Making Eating Easier, from the Customer’s
Point of View”
Most foods must be packaged before they can be transported,
stored or delivered to consumers. We thought about consumers’
eating habits from the consumer’s point of view and from a universal
design standpoint to consider what kind of packaging is easy to use
and understand. Doing a good job of incorporating the philosophyof universal design leads us to the creation of better products.
Packaging that allows more people to use a product comfortably
leads to more business for DNP.
DNP adapted the following Five Universal Design Rules: 1) Easyto-understand explanation of necessary information, 2) Simple andintuitive to use, 3) Flexible and safe to use, 4) Appropriate size andweight, and 5) Opens easily, without excessive force or extreme
movements. Additional, optional considerations are 1) Form andexpression that emphasize a product’s appeal, and 2) Ease of trash
separation and disposal. We will work actively to achieve our goalof developing packaging with a universal design in mind, in order toprovide consumers with safe and reliable food products.

Packaging Operations

Haruko Furuta

Aggressive Expansion that Makes the Most of Our Top Share in
Dye-Sublimation Thermal Transfer Recording Media
Demand for digital photo prints is growing rapidly due to the spreadof digital cameras and mobile phones equipped with cameras. In theyear through March 2009, more than 6.0 billion digital photos are
expected to be printed in Japan. DNP has installed its PrintRush selfservice printing kiosks in such venues as photo shops, camera storesand large electronic goods retailers. From consumers, we are hearing
things like, “I want to make larger prints” or “Can I still print my precious
old photos although I lost the negative or the data file?” From the stores
where the machines are located, we hear demands for a more modestly
priced system that is easier to introduce. In response, we developed a“PrintRush Jr.” series of four compact machines with which we intend
to expand this business. One type prints a variety of sizes from L(89 x130mm) to 6W (six photos on 203 x 305mm stock), the second typeis a copier that can copy photo prints, the third is an express printer thatcan produce an L-size print in four seconds, and the fourth is a standard
model, but smaller than the original PrintRush printer.
In addition, DNP acquired the dye-sublimation thermal transfer media
manufacturing and marketing business of General Technology Co., Ltd.,a wholly-owned subsidiary of General Co., Ltd. in order to be better
prepared to meet growing demand.

Self printing system “PrintRush”

Segment Information

DNP Annual Report 200875

Electronics
PORTRAIT

Contribution to GroupNet Sales:

19.7%

Contribution to GroupOperating Income:

20.6%

This segment has grown rapidly, along with the markets for the products it supplies. Expanding on DNP’s microprocessing technology and other core technologies made it possible for us to succeed in the electronics business. The
segment contributes about 20% of DNP’s overall net sales.
*For details about products and services, please see Products and Solutions (p. 18-21).

Business

Operating Divisions

DNP’s Electronics segment uses the world’s most advanced
micro-printing techniques to provide numerous semiconductor
and display products that support our information society,including photomasks (original plates for making LSI circuits)
and multilayer wiring boards, and color filters used in liquid
crystal displays (LCDs). Ever since DNP became the firstcompany in Japan to develop shadow masks for color
televisions in 1958 and to succeed at developing photomasks in
1959, the Company has developed a steady stream of productsthat meet the needs of client companies and has achieved rapid
growth. Today, DNP electronics components hold the key toprogress in many information-related devices.

■ Our Display Components sub-segment mainly deals in LCD

76

color filters, but also develops and manufactures a wide
variety of display-related products such as back panels
for plasma displays, projector screens, and organic EL
displays. This sub-segment supplies products to world-classmanufacturers in Japan, South Korea, China, Taiwan, andelsewhere. In our color filter production, we are increasingly
linking up with customers’ production facilities through inplant, by-plant, or other cooperative arrangements.
■ The Electronic Devices sub-segment provides products thatare indispensable to electronic devices, such as photomasks
and lead frames used in manufacturing semiconductors. In
addition, we are developing high-density, advanced productsthat require micro-processing, such as buildup substrates, ICtags, and MEMS products.
■ In both of these businesses, our main customers are
the world’s top companies. We are strengthening ourcollaboration with them and promoting turnkey operations inwhich we handle everything from compilation and analysis ofneeds, research and technical development, prototyping andquality assessment, construction of production equipment
and startup of mass production, and even follow-up
improvements.

Strengths■ Technologies backed by printing expertise, including world-class micro-processing technology, color management andpatterning techniques, and photolithography, as well as thecapacity to develop original new technologies and products.
■ Quality control technology that allows us to realize highprecision and stable quality. Also, uniform systems andcomprehensive organizational strength that supports a highlevel of development and manufacturing strength.
■ Corporate expansion strategy whereby we have moved
ahead of competitors, for example through aggressive capital
investment in developing our own technologies and in starting
mass production of advanced products.
■ Ability to create market trends by actively tying up withsemiconductor manufacturers, device manufacturers, or
research and development institutes, etc.
■ Comprehensive strength that allows us to respond to rapidlychanging markets and diversifying customer demands by
combining our various strengths and achieving greater
functionality and greater productivity in our products.

Industrial Trends
These days, people have come to use multiple displays in their
daily lives, including displays in televisions, computer monitors,
mobile phones, mobile game machines, and car navigation
systems. In addition, there are more opportunities to project
images on screens, so that there is demand for reproducing
clean and pleasant images under a variety of conditions.
Moreover, it is no longer possible to live without using machinesthat contain electronic devices, such as information devices orhome appliances. This modern world has a need for businesses
that can provide stable supplies of advanced, high added-value
electronic products at competitive prices.

Display Components
The market for LC, plasma, and other flat panel displays
continues to grow by 20 to 30% each year. LCDs in particular
are becoming more diverse as the largest get larger and thesmallest get smaller. As large-screen televisions become
mainstream, the inkjet method has gained importance as
it entails relatively small startup costs and is highly costcompetitive in the manufacturing stage. At the same time,
there is a demand for developing products which makethe most of the special characteristics of photolithographic
methods, making it more important than ever to be able todevelop and manufacture products using both methods.
Regarding other display-related products, there is demandfor increasingly high performance and increasingly low cost.
Meanwhile, organic EL displays that are expected to be thenext generation of flat-panel display have begun appearing
on the market, sparking competitive development to meetdemand for higher-performance color filters and related
products.

Electronic Devices
In 2007, the worldwide photomask market was estimatedat 320.0 billion yen (some 230.0 billion yen of which was
outsourced) and is expected to grow by 5-6% per year
in monetary terms. From the second half of 2007, serious
demand emerged for 65nm products and in the second halfof 2008, mass production of 45nm products is expected to
begin. Currently, development of 32nm products is becoming
active.

Strategic Opportunities
Amidst a harsh business environment, our Electronics
segment is concentrating its management resources andfocusing on the following trends.
Regarding Display Components, the LCD market is expected
to continue to grow. The market is expected to expand greatly,
partly because manufacturers who have been making theirown color filters are expected to start outsourcing them.
Manufacturers will be expected to be able to handle both inkjet
and photolithographic methods.
In the future, we expect to see major market expansion withthe advent of organic EL displays. We look forward to a major
business opportunity that will include providing color filters andother components, as well as modularized panels. In addition,
we expect growth in the market for high added-value products
such as polychrome filters that have a fourth color added to thenormal RGB composition to greatly expand the range of colors
that can be reproduced, and units that combine a color filter
with phase difference film and a polarization plate.
Concerning Electronic Devices, the worldwide market for
semiconductors is expected to continue its stable growth. In
addition to the spread of 65nm products, demand for cuttingedge 45nm products is expected to reach the level of serious
mass production. In the 32nm field, a combination of ArF
immersion and double exposure is a promising candidate to be
the next-generation photolithography technique. In the future,
we expect to see more widespread use of ArF immersion
scanners and a greater demand for 32nm photomasks. Ourability to meet the needs of semiconductor manufacturers as
they become more globalized and rely more on outsourcing will
be important for our continued success.

Segment Information

DNP Annual Report 200877

Electronics

BUSINESS STRATEGIES

Basic Strategies
By accurately assessing market needs and continually refining our advanced technology, DNP maintains its position as
industry leader in the Electronics sector, and remains a top vendor despite rapid changes in the market.
We maintain a good balance between our portfolio of products that encompass every phase of the product life cycle — fromdevelopment, growth and maturity to decline — and our aggressive strategy of technological development and active investment
in more production equipment.

Emphasizing
Technological
Development

With top-class advanced technology as our greatest strength, DNP’s electronics
products have been acclaimed as No.1 in the world in many fields. In order to maintainand further sharpen this competitive edge, we will concentrate more than ever on
research and development, and develop new products by achieving new heights inquality control and micro-fabrication so that we can earn customers’ trust.

Rapid Response to
ChangeWe will continue expanding our business by responding appropriately to rapidlychanging markets and customer needs. This means building flexible production systems
that can operate on an in-plant, by-plant, or other basis and can handle every format
from component supply to modularization.

Concentrated Allocationof Management
Resources

Speeding Up BusinessStartups

78

While giving ample consideration to potential changes in product life cycles and otherbusiness risks, we aim to concentrate our management resources on strategicallyimportant products in order to achieve high profitability.

In order to respond to rapid changes in market demands, we need to accelerate thepace of development of new products, services, and ventures. To accomplish this, wewill always consider possibilities for M&As or other alliances that facilitate cooperation
between strong partners, and do our best to expand our businesses efficiently.

Major Policies
Readiness to Supply a Wide Variety of Products Quickly
Enough to Take Advantage of Product Life Cycles
Due to fast-paced technological development, productlife spans have grown shorter in the electronic display
market, where new types of products are always appearing.
Manufacturers need to accurately predict which product will
dominate the next generation and when the change will occur,and must quickly gear up to prepare for mass production. DNP
avoids the risk of depending excessively on a single productby maintaining a full product lineup and the ability to respondregardless of which product becomes most sought after. Ourbasic strategy is to be prepared to meet demand for all types ofdisplays of every size.
Our sales strategy is geared toward global markets; weseek to disperse risk by engaging in wide-ranging trade withcustomers all over the world, and to secure revenues bymaintaining a steady stream of orders.
Also, we are rapidly researching and developing newtechnologies and new products for the next-generation
display market. By developing the world’s most sophisticatedtechnologies, we plan to maintain our dominant market position.
Flexible Business Models Focused on Profitability
As liquid crystal panel substrates grow larger with the adventof 8th and 10th-generation products, we need to constructbusiness models for our color filter production that enable us torespond flexibly to our customers’ needs and concerns.
In order to keep up with growing substrate sizes, we intend
to continue to respond flexibly to customers’ needs. This
may include installing new equipment, like the 6th-generation
production line that we added at our Kurosaki Plant in
Kitakyushu, or adopting a flexible business model that fitseach customer’s situation, for example by establishing joint
ventures with customers to build “by-plants” adjacent to their
manufacturing facilities or “in-plants” directly connected to acustomer’s production line. As examples of by-plants alreadyunderway, we are building a 10th-generation color filter plant in
Sharp Corporation’s Sakai manufacturing complex and an 8thgeneration color filter plant adjacent to IPS Alpha Technology,
Ltd.’s new Himeji factory. We plan to steadily strengthen ouroperating base by giving priority to profitability as we choose
from a wide array of business models such as M&As, corporate
alliances and royalty businesses.

DNP will strive to supply LCD (liquid crystal display) color
filters that contribute to the development of the industry byfurther developing technology like the inkjet method, whichmakes it possible to deliver both low cost and high quality, andby being among the first to set up production frameworks thatmeet our customer needs and respond to the rapidly changing
market.

Maintaining our Top Share of the World Photomask
Market by Virtue of Technological Strength
Backed by advanced technology that no competitor cancome close to matching, DNP photomasks have been highly
acclaimed for their exceptionally high quality, and DNP
maintains the world’s top share. Currently, more than half ofthe photomasks supplied by DNP have line widths of less than
90 nm. For cutting-edge products with 65 nm line widths inparticular, DNP controls more than half of the world market.
Having already established a factory in Italy through DNP
Photomask Europe SpA, we are currently building a new plantin Hsinchu, Taiwan, with the goal of starting mass production in
March 2009. In the future, we intend to take advantage of theresults of joint development with clients to accelerate the supply
and development of 45 nm products ahead of technologicalroadmap targets, in order to maintain our top share of the global
market.
Cultivating New Mainstays in our Electronic Device
Business, Building a Strong Business Constitution
In addition to photomasks, DNP aims to expand its LSI designbusiness and cultivate new core businesses by developing
and aggressively pushing sales of products that use microfabrication, such as semiconductor packages, build-up
boards, MEMS products and fuel cells. We view the electronic
module sector as a particularly promising growth area where
we should expand participation, and we intend to concentrate
management resources there. Furthermore, we intend to build
a flexible and sound business constitution that is not highly
vulnerable to the ups and downs of the semiconductor market,
by building up our solutions-based business. For example, this
could mean developing an IC tag business in combination withapplication development.

Introducing the World’s First Inkjet Method for Producing
LCD Color Filters
DNP introduced the world’s first inkjet-method color filter
production when we began supplying 8th-generation color
filters at Sharp’s Kameyama No. 2 Plant in Kameyama, Mie
Prefecture. The inkjet method makes it very easy to reduce
manufacturing costs and allows more efficient expansion of
production capacity. It also makes it possible to reproduce highpurity colors.
In addition, we have begun offering larger substrates by startingup an 8th-generation production line at our Kurosaki plant in
Kitakyushu and building a 10th-generation line in Sharp Corp.’s
new plant in Sakai City, Osaka. We expect significant growth in
this business as demand for LCDs is expanding rapidly.

Segment Information

DNP Annual Report 200879

Electronics

FINANCIAL RESULTS

Financial Highlights

Business Environment(¥ billion, %)		

2008.3		

2007.3		

2006.3

Net sales

322.3

291.9

296.7

¥

¥

¥

Operating income

19.8

14.9

37.8

Operating income margin

6.1%

5.1%

12.7%

Net Sales

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

800

120
100

600
80
400

296.7

37.8

40

200

19.8

14.9
0

20
0

06

80

60

322.3

291.9

07

08

In 2007, the number of flat-panel televisions produced
worldwide rose 58% from the previous year to 90,160,000
units. This included 79,430,000 LCD TVs (an increase of 31.8
million from the previous year) and 10,730,000 plasma TVs (up970,000). Year-on-year growth rates have slowed — from 119%to 67% for LCD TVs, and from 57% to 10% for plasma TVs —but overall volumes continued to grow rapidly.
The global semiconductor market remained sound in 2007, as
it was in 2006, driven by demand for mobile phones, household
appliances, notebook computers, wireless communications
devices, and automotive electronic devices. The market
expanded by 3.8% from the previous year to US $273.9 billion.
Worldwide shipments of PCs rose to 271.2 million units, anincrease of 13%, compared to a 7% growth in the previous year.
The number of mobile phones shipped worldwide was 1,144.1
million, remaining above the 1 billion mark reached in 2006, but
the growth rate declined from the previous year’s 25% to 12%.

Performance
Sales of LCD color filters grew sharply in the year throughMarch 2008. Although demand usually drops off in the January
to March quarter, this fiscal term it remained strong throughout
the year, sustained by heavy demand for both computer
monitors and television screens. Photomask sales were alsosolid, as demand for cutting-edge 65nm products picked up in
the second half of the term.
As a result, the segment’s net sales increased by 10.4% or
30.4 billion yen from the previous term to 322.3 billion yen.
Despite higher depreciation expenses, operating income
increased by 4.9 billion yen, or 33.1%, to 19.8 billion yen
thanks to improvement in utilization of color filter production
capacity and increased orders for cutting-edge photomasks.
The operating income margin rose 1 percentage point from theprevious year to 6.1%.
The segment contributed 19.7% of DNP’s total net sales, and20.6% of its operating income.

Display Components
We enjoyed a strong demand for LCD color filters, for use inboth computer monitors and television screens, and operated
our 5th, 6th, and 8th-generation color filter production lines atfull capacity throughout the year. Prices were relatively stable.
The average sale price for the entire term fell only about 10%
from the previous year.
In the future, we expect strong sales of 5th-generation color
filters to be sustained by a brisk demand for LCD panels usedin desktop and notebook computer monitors, mainly from
China and Taiwan. We also expect further growth in demandfor 6th-generation color filters used mainly in televisions. In thefiscal year through March 2009, we plan to invest actively inlarge-scale production equipment for 8th and 10th-generation
products linked directly to our customers’ factories.
Electronic Devices
In photomasks, we expected demand to shift from the 90nm
products that were the mainstay of the market to cutting-edge
65nm products, and we reinforced our production framework
accordingly. There was a steady increase in 65 nm productsin the fiscal year ended March 2008, but semiconductor
applications that require 65 nm products have still not spreadwidely. Because of this and other issues, growth was smaller
than we forecast at the beginning of the term.
Regarding high-density buildup wiring boards, the market
responded well to DNP’s unique B2it (B-square-it)* production
technology, which is excellent for making compact, high-density
printed wiring boards used in increasingly sophisticated mobile
phones that include functions such as high-resolution cameras
and electronic money handling. Sales of B2it boards increased
sharply.
* B2it: A buildup board (a printed board made by piling up insulating layers and wiring layers) made with
DNP’s proprietary technology for connecting the layers (via connections) through bumps (conductive
paste used for electrically conducting the board’s layers) formed by means of screen printing. This
technology allows for a high degree of freedom in chip design, as it leaves more space for mounting
components and connections can be located anywhere on a layer.

Segment Information

DNP Annual Report 200881

Electronics

TOPICS

Color Filters
Establishing the World’s Largest Supply Capacity
DNP has begun building a new 10th-generation (2,850mm x
3,050mm) inkjet-based color filter plant to produce filters for liquid
crystal displays (LCDs) in Sakai City, Osaka.
DNP plans to supply all of the color filters manufactured at the newplant to a facility also now under construction in Sakai City by Sharp
Corporation. DNP will invest approximately 43.5 billion yen in the newplant, which will be able to produce 36,000 sheets of 10th-generation
mother glass per month. The plant is scheduled to begin operating by
March, 2010.
Since 2002, DNP has participated in a collaborative project aimed
at developing inkjet-based color filter production technology, andsuccessfully established such mass production technology jointly with
Sharp, which also participated in the project. In September 2006, DNP
acquired the color filter production line at Sharp’s Kameyama Plant No.
2, and commenced the world’s first inkjet-based mass production of
8th-generation color filters. Sharp was very pleased with the results ofthis endeavor, which spurred DNP to build its new factory adjacent to
Sharp’s new plant in Sakai City.

（ mm ）

2,850

10th Generation

2,160

8th Generation

1,870

7th Generation

1,500

1,100
730
550
370
300

6th Generation
5th Generation
4th Generation
3rd
Generation

400 470 650 920

1,300

1,800 2,200 2,400

Note: Precise sizes vary by manufacturer.

82

170 cm tall

3,050（ mm ）The LCD market is continuing to grow rapidly. Sales of large-scale LC
televisions of 40 inches or more are expected to increase particularly
sharply, so LC panel manufacturers are boosting production capacity
for large panels. Having foreseen this trend, DNP is proceeding onschedule with its own plan to beef up its supply framework by boosting
the capacity of the inkjet-based 8th-generation production line at its
Kurosaki plant in Kita-Kyushu, in addition to building the new factoryin Sakai. With the addition of the new Sakai plant, DNP’s total capacity
for producing 6th-generation-plus color filters, counting plants alreadyin operation — the Kurosaki plant (two 6th-generation lines totaling
60,000 filters per month) and Kameyama plant (8th-generation, 30,000
filters per month) — and the new line expected to start operation by
June 2008 at the Kurosaki plant (8th-generation, 30,000 filters permonth), will amount to 2,244,000 filters (based on 32-inch LC panels)
per month. This will give us the world’s biggest supply capacity for large
LC panels.

Photomasks

Expanding Market Share through Global Mass Production
That Pushes the Edges of Ultra-fine Micro-processing
The photomask market is expected to grow by 5-6% per year inmonetary terms. Mainline product size is expected to shift from thecurrent 90 nm to 65 nm and then to 45 nm. Ever since 1961, when
DNP got into the business of making photomasks (original plates
used in the production of integrated circuits or semiconductors),
we set about to develop comprehensive micro-processing
technologies and have remained a leader in the development of
cutting-edge techniques. We hold roughly 70% of the outsourcing
market for 65 nm products, and we are developing cutting-edge
products including 32 nm products in response to expected future
demand for increasingly compact and multi-functional electronic
devices. Also, in order to meet strong demand from overseas
markets, we are actively expanding our business overseas, forexample by building an advanced photomask plant in Taiwan.
In June 2007, DNP acquired semiconductor photomask
manufacturing and sales businesses from NEC Electronics
Corporation and NEC Fabserve Ltd., which we now operate
through a new subsidiary called DNP Fine Electronics Sagamihara
Co., Ltd. As a result of this acquisition, we aim to bolster ourphotomask development and manufacturing framework, lower
total costs as a result of economies of scale, and expand ourbusiness. Photomasks produced by the new company will be
supplied through DNP to NEC Electronics and other semiconductor
manufacturers.
In addition, in September 2007, we succeeded in developing
patterned nano-imprinting templates suitable for use in the
production of next-generation, 18 nm-class semiconductors.
These templates were successfully used by a semiconductor
manufacturer for transferring patterns to the silicon wafers thatserve as semiconductor substrates, and the technology was
found to be highly reliable. As semiconductor circuits and nanodevices become smaller and smaller, nano imprinting has gainedmuch attention as a new semiconductor manufacturing method.
Our success at making 18 nm-class templates is an importantmilestone on the way to expanding our business. We intend to
make an early entry into a market that promises to grow in the
future by supplying semiconductor and device manufacturers with
templates that they can use in the manufacture of next-generation
semiconductors, magnetic recording media, light-emitting diodes,
display products, and nano devices, etc.

Development of Compact, MPEG-4 Camera Board with Video
Encryption Function for Use in Automobile-mounted Cameras
An increasing number of automobiles, especially taxis, trucks, andother commercial vehicles, are being equipped with cameras that can
provide video evidence of what occurred immediately before and after a
traffic accident, in order to support the testimony of drivers or bystanders
during investigations into the cause of the accident. At the same time,advancements in digital technology have created a new need to prevent
leakage or alteration of video recordings of accidents. In order to improvesecurity, DNP has developed an MPEG-4 camera board for use inauto-mounted cameras that can record data in an encrypted form. In
the event of sudden impact, sudden braking, swerving of the steering
wheel or other disruptions to smooth driving, acceleration sensors
trigger the recording of a maximum of 35 seconds worth of video andaudio data leading up to the triggering event. Encryption improves thereliability of the video data. We plan to step up efforts to market thisproduct to automakers, automotive device manufacturers, and camera
manufacturers, etc.

Special Column: Creating New Markets

DNP Begins Mass Production of the World’s First
Printed Wiring Boards Embedded with Both IC Chips
and Passive Components

Template for nano imprinting

Close-up of nano imprinting template

MEMS/Electronic Modules

Expanding Our Business through Original Technologies
and Alliances
Joint Development of Bio-MEMS through Application of
Semiconductor Technology
Micro-electromechanical systems are devices consisting ofelectronic circuits layered onto a substrate. Demand for these devices
is increasing rapidly for use in many electronic devices where there
is a drive toward increasing miniaturization and multi-functionality.
DNP is applying the micro-processing and fine etching skills that we
cultivated in the course of developing and manufacturing high-precision
semiconductor photomasks to the development of comprehensive
MEMS foundry services ranging from design to prototyping and mass
production. DNP has been active as a MEMS foundry providing avariety of MEMS products. For example, as early as 2006, DNP was the
only company in Japan to have equipment for manufacturing MEMS for
use in eight-inch wafers.
In July 2007, DNP and a research group headed by Tokyo University
Associate Professor Shoji Takeuchi used MEMS technology to develop
a micro flow channel chip. This chip is an example of bio-MEMS thatcan be used to facilitate medical diagnosis or bacteria detection or
to develop medicines. It consists of fine channels and depressions
formed into a pattern on a silicone substrate and is expected to be
useful in such areas as protein function analysis and drug discovery.
DNP plans to build on this success by beginning full-fledged bio-MEMS
prototyping and mass production services.

In January 2008, DNP achieved another global first by beginningmass production of printed wiring boards embedded with IC chips
and passive components such as condensers and resistors. Withthe transition to mass production, we augmented our production
equipment so as to achieve a production capacity of 70 million units
per month (assuming one component per wiring board). We will
market this wiring board mainly for use in various types of modules,
including camera and fingerprint identification modules used in
mobile phones, where there is high demand for miniaturization.
DNP has applied and expanded its unique build-up board
manufacturing technology, known as B2it, in order to respond tomarket demands. Because B2it technology makes it possible tofreely configure connection points between a wiring board’s tiers,
we were able to use it to commence mass production of printed
wiring boards embedded with passive components in April 2006,
and to provide a variety of other products. Then, in response to
manufacturers’ calls for even smaller and more sophisticatedcomponents, DNP established manufacturing technology forembedding printed wiring boards not only with passive components
but also with IC chips.
We started out embedding small chips with relatively few pins,
but went on to develop techniques for embedding chips with larger
surface areas and more pins. We
intend to enlarge this businessby expanding the range ofapplications.

Electronic Module Development Center
A micro flow channel chip compared to a 500yen coin

Glass pieces 100 µm in diameter trapped in flow
channelsAtsushi Takano

Segment Information

DNP Annual Report 2008

83

Sustainable
Development

Based on our management concept of contributing to theemergently evolving society of the 21st century, we establishedthe DNP Group Guidelines for Conduct to specify our
employees mission and responsibilities, and the DNP Group
Vision for the 21st Century to indicate the kind of company wewant to be and the direction we want our businesses to take inthe future.
We believe that actualizing our management concept ̶by acting in good faith in accordance with our DNP Group
Guidelines for Conduct and by actively creating new values
according to our Vision for the 21st Century ̶ will contribute to
the sustainable development of DNP and of society as a whole.

Contents
86

Legal Compliance and Corporate Ethics

88

Information Security

90Managing Intellectual Property

92

Research and Development

93

Product Safety

94

Environmental Protection

97

Creating Safe and Lively Workplaces

100

Contributing to Society

LegalCompliance andCorporate
EthicsOver the years, the DNP Group has cultivated society’s trust.
In order to further solidify that trust, we have continuously
reviewed our plans and efforts aimed at ensuring ethicalcorporate behavior, taking care not to allow those plans andefforts to become outdated or ineffective.
We can win society’s trust when each DNP employee
behaves with integrity. We strive to encourage our employees’autonomy and to convey to them the importance of corporate
ethics from a positive standpoint, i.e. that the DNP Group canonly enjoy sustainable growth if it is trusted.
Throughout the DNP Group, we express and share our basic
attitude towards corporate ethics through three simple words:“continuity, autonomy, and positivity.”

Efforts to Ensure Compliancewith Laws and Corporate Ethics
1991
1992
1993
1994
1997
1998
1999
2002
2003
2004
2005
2006
2007

86

Initiated corporate ethics training
Established Corporate Ethics Committee and enacted
the Dai Nippon Printing Group Corporate Pledge
Established the DNP Group Employee Code of
Conduct
Established corporate ethics committees at eachGroup company
Introduced a self-checking system
Revised the DNP Group Employee Code of Conduct
Began holding conferences of corporate ethics
committee secretaries
Revised the Dai Nippon Printing Group Corporate
Pledge; established the Open Door RoomIntroduced voluntary corporate ethics training
Introduced priority execution plans
Initiated our compliance assessment system; launcheda project team to consider internal controls
Established Basic Compliance Management
Regulations and Open Door Room Regulations
Reviewed the Dai Nippon Printing Group Corporate
Pledge and the Employee Code of Conduct;
established the “DNP Group Code of Conduct”

Broadening and Deepening
the Practice of Corporate Ethics
1. Corporate Ethics Committee
The Corporate Ethics Committee is composed of representatives
from the various departments of the head office. Since its establishment
in 1992, it has met once a month to work at establishing and promoting
knowledge and practice of corporate ethics throughout the entire DNPGroup, to check the effectiveness of these efforts, and to address
new issues. We also established corporate ethics committees withineach department of the head office, in operating divisions, and in eachGroup company, thus creating a framework for the whole Group to
work together.
The Corporate Ethics Committee served as the DNP Group’s
sanctioning body for creating an internal controls system as required by
the new Corporation Law and the Financial Instruments and Exchange
Law. In particular, the committee formed a project team in 2005 toaddress the Financial Instruments and Exchange Law’s requirementfor “enhancing internal control over financial reporting.” As a result of
the project team’s work, construction of the Group’s internal controls
system is complete and we are working hard to be sure the system isimplemented so that all our operations are conducted appropriately.
2. Management by Objective and Evaluation System
Based on the idea that active participation from each employee isessential to establishing and spreading ethical corporate behavior, we
incorporated observance of corporate ethics in our management by
objective and evaluation system (see P98). Each employee is asked
to consider what constitutes acting with integrity, evaluate the resultsof his or her own actions, and confirm those results in twice-yearly
discussions with his or her supervisor.

5. Systematization and Implementation of Corporate Ethics
Training
It is not an exaggeration to say that success in promoting corporate
ethics depends on how firmly we establish compliance awarenessin the mind and heart of every employee. We create occasions forvarious types of training designed to give each employee this kind ofawareness.
Examples of these occasions are regular training sessions by
employee level, including training given to new employees or toemployees who have been newly promoted to the management level,training given directly to subordinates by the head of each operational
division about issues pertinent for that division, and training aimed
at ensuring thorough awareness about a particular theme. Voluntary
corporate ethics training sessions based on the slogan, “It’s yourorganization; take responsibility for protecting it,” whereby the headof each organizational unit raises themes that are relevant for thatparticular unit, have become especially well attended/known to beinteresting, and are gradually producing results.
6. Open Door Room
In 2002, DNP established the Open Door Room as a place where
employees can report or consult about doubts or concerns related tocorporate ethics.
In 2006, we established the “DNP Group Open Door Room
Regulations.” Because these regulations address the laws that protect
whistleblowers and fulfill an important role as part of our internal control
system, we worked hard to make them known throughout the Group.
As a result, more employees came to consult about ethical matters in
the fiscal year through March 2008. Still, we did not find any particular
problems that affected our business operations.

3. Self checking of Compliance with Laws and Regulations
Since 1997, each operational division has been performing a self
check once a year. In 2004, we introduced a “priority execution plan”
whereby each division addresses issues according to their priority forthat particular division.
In 2007, in response to the various changes such as internal controls
and legal regulations within and outside the group, we conducted arisk inventory and assessment and identified major risks. We then
combined the self check with the priority execution plan. This enabled
us to address major risks particularly efficiently, and resulted in amonitoring system that can lead to more concrete results.

Framework for Establishing Corporate Ethics
and Transparency

4. Compliance Assessment System
In contrast to our self-check system, whereby each operation
evaluates and improves itself, under the compliance assessment
system that we initiated in 2005, the Lead Department of the head
office inspects operations to assess areas of significant risk andobjectively assesses each unit’s degree of compliance.
The results of these assessments are reported to the Executive
Management Council. Because these reports are disclosed to the entire
Group, each operational division is concerned about its evaluation
results and works hard to make improvements. This system has beenvery helpful in raising the overall level of compliance throughout the
DNP Group.
In 2007, we reviewed our assessment system in order to make it
more objective. The changes that we made included increasing thenumber of assessment items and increasing the weight of assessment
based on numerical indices.

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

Headquarters
1. Corporate Ethics Committee of each department
at headquarters
6. Open Door Room
2. Management-by-Objective and Evaluation System
4. Compliance Assessment System

Inspection, guidance,
education

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

Plan

Do

ActionCheck

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

Sustainable Development

DNP Annual Report 2008

87

Information
Security

In addition to receiving orders from customers, DNP also
makes effective use of personal information in its own businessby developing and providing services and products that benefit
businesses and consumers. Through this type of businessactivity, we have come to fully appreciate the importance of
personal information and we have protected it appropriately as
we are obviously obliged to do.
We view the maintenance of information security and theprotection of personal data as top-priority management tasks.
We intend to continue maintaining strict control according to
our Personal Information Protection Policies, and to promote
specific projects through appropriate systems and measures.

Personal Information Protection Policies(Established Dec. 1, 1999; revised Feb. 1, 2005 and Dec. 1, 2006)

A variety of companies and organizations entrust DNP withpersonal information so that we can help them provide all typesof services and products for consumers. In addition, we havedeveloped various types of services and products that makeeffective use of personal information in businesses that DNP
operates itself. Through these various businesses, we havebecome well aware of the importance of personal informationand it is obvious to us that we are obligated to provide
appropriate protection for such information.
We will handle personal information appropriately, in line with
DNP’s Personal Information Protection Policies.
1. Strictly comply with laws, national government guidelines, andother regulations related to personal information protection;
strive to protect personal data.
2. Take necessary and appropriate safety precautions to prevent
leakage, loss or destruction of personal data. In the event thata problem should occur, take prompt measures to correct thesituation.
3. Specify reasons for using personal information; acquire, use
and provide personal information in fair and appropriate ways.
Take measures to prevent personal information from being
used for any purpose other than the specific purpose forwhich it was acquired.
4. Respond appropriately to a request for disclosure fromsomeone whose own personal information is being held by
the Company.
5. When the performance of services on behalf of a clientcompany involves the handling of personal information,
use the information only within the scope of the requested
services.
6. Establish in-house regulations concerning the handlingof personal information; build, maintain and continuously
improve related systems.
7. Respond appropriately to complaints or questions fromsomeone whose personal information is being held by theCompany regarding DNP’s handling of personal informationor our systems for protecting personal information.

88Organizational Framework

Educational Programs

1. Establishing Systems
In April 1999, we established a personal information protection
office, which has been working at responding to changes within andoutside the group and at making our information security measuresmore effective than ever. In the year ended March 2008, we formed
an information security headquarters under the auspices of the head
office’s DNP Group Information Security Committee, and significantly
increased the number of people assigned to inspecting and guiding
operational divisions and group companies.

We work hard at raising the awareness of each and every employee,using various methods of education and training including distributing
handbooks, holding lectures and conferences, and offering “Network
Learning” online education programs. In the year ended March 2008,
we held a groupwide conference and explanatory meetings on personal
information protection management systems and seminars about
information security for employees in charge.

Framework for Promoting Information Security
Head Office
DNP Group Information Security Committee Chief, Personal
Information Protection Manager, Committee members
Information Security Headquarters

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

2. Establishing Internal Rules and Regulations
Using the personal information protection regulations that weestablished in 1999 as a base, we reinforced our protection of personal
information by establishing Group-wide rules to serve as more specificstandards. Then, in 2002, we reviewed our information security-related
regulations and established a new Basic Policy on Information Security
and new Basic Regulations Regarding Information Security. In addition
to determining seven standards concerning issues such as document
management, computer access, and areas kept off limits to outsiders,
we rapidly report new risks and establish or revise appropriate rules.
In the year ended March 2008, we established Group-wide rules
related to the handling of personal information in data processing
rooms, personal information related to employees or job applicants,
and laptop computers and mobile phones.

Measures for Strengthening Information Security
and Protection of Personal Information
We implemented the following measures during the year ended
March 2008.
(1) Data processing rooms where personal information is handled.
• Controlled entry and exit through biometric authentication in orderto prevent intrusion by outsiders.
• Installed security cameras to discourage illicit acts.
• Had employees wear uniforms with no pockets to prevent data orother theft, separated locations where data can be copied onto
recording media, and began conducting inspections using metal
detectors.
• Acquired personal information access logs, and reduced thenumber of people (DNP Group employees only) who can transfer
information to data storage media.
(2) Concentrated data input center and call center functions andlocations for sales campaign representative services, which requirea high level of security.
(3) Introduced smart card-based security gate system for employees
at 29 locations, including sales offices, and implemented various
other measures for preventing information leakage. For example, webegan using special, locking transfer cases for transferring highly
confidential documents between major operational bases.
(4) Promoted use of DNP’s original “Gendarme” authentication basedon electronic certificates recorded on smart cards when using acomputer network to transfer customers’ personal information.
In addition, we promoted the encryption of customers’ important
information by developing and marketing “Dreadnote” CD-Rs
containing automatic encryption software for exchanging data via
recording media.
(5) Took measures to provide the same level of protection against
viruses and OS vulnerabilities for computers at major overseas
bases as we do in Japan; constructed a central control system.

3. Establishment of Management System
We are working to ensure that every workplace that handles personal
information complies thoroughly with relevant laws, and to establish
a personal information management system that meets the personal
information protection standards of Japanese Industrial Standard(JIS) Q15001. As of March 31, 2008, we had received Privacy Markcertification for 19 of our operational divisions and ISO/IEC 27001
certification for five divisions. Also, in 2008 we began the process ofacquiring Privacy Mark certification for Dai Nippon Printing Co., Ltd.

Sustainable Development

DNP Annual Report 200889

ManagingIntellectual
Property

Basic Policy

IP Management Activities

In order to make intellectual property (IP) a major source of corporate
revenues, each of DNP’s operating divisions has formulated an
independent IP strategy and has drafted a business strategy that
includes the development and use of promising IP. DNP generates
and cultivates IP through P&I Solutions and through research anddevelopment efforts, improves the “quality” of its technological andcommercial value, and makes maximum use in DNP’s businessactivities of IP for which we have established rights. At the same time,
we actively offer IP-related consulting and legal support services.
Furthermore, by providing all employees with education and training
related to intellectual property, DNP has cultivated a corporate cultureof fairness in which we both assert our own rights when appropriate
and respect the rights of others. We foster a corporate climate whereintellectual property laws are respected, and are establishing systems
for ensuring legal compliance.

1) In order to enhance the DNP Group’s skills related to generation
and use of IP, we have established our own IP training system,
which we operate and review as necessary.
2) We encourage employees to create and use IP by maintaining anappropriate system of IP bonuses.
3) We teach employees to use databases and to research pre-existing
technologies in order to generate IP without infringing on the rights
of other companies.
4) We evaluate the quality of inventions and take whatever measures
are necessary in order to acquire rights related to important
applications.
5) We will create and use systems for appropriately managing rightsthat we have acquired.
6) We will strengthen each important invention by evaluating andorganizing DNP’s intellectual property, and use it to help eachbusiness division achieve its goals.
7) We build portfolios of patents related to themes that grow out ofour various businesses, encourage the use of those portfolios, anddevise strategies for establishing rights.
8) We will support the businesses of our client companies, by holding
lectures concerning IP-related laws that regulate matters such as
copyrights, truth in advertisement and trademarks.
9) We will report to each operational division the results of our review
of various contracts which we expect to bring benefit to thebusiness without creating any compliance problems, and instructthem on the observance of legal regulations and contract terms.
10) We use education about IP to promote a fair and equitablecorporate culture in which we not only justly assert our own rights,
but also guard the rights of others.
11) We dispatch representatives to various IP-related associations(Japan Intellectual Property Association, the Japan Fair Trade
Commission, and Licensing Executives Society Japan), where
they actively make proposals to the industry and work to build abusiness environment that is favorable to the industry.

90

Framework for Promoting IP Rights
DNP’s IP protection framework consists of four sections and employsnine in-house attorneys. The Patented Technology Section addresses
IP issues related to basic research and DNP’s main business segments:
Information Communication, Lifestyle and Industrial Supplies, andElectronics. The Legal and Licensing Section handles contracts andlegal issues related to IP. The Kansai Intellectual Property Section
handles both patent and license-related functions for Kansai and therest of western Japan, combining the functions of the first two sections.
The Management Section proposes IP strategies and operates DNP’spatent information management system.

IP Management Framework
Intellectual Property Section

Patented Technology Section
Information Communication

Lifestyle and Industrial Supplies

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

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

In-house attorneys (9)R&D Center
Technology Development Center
Operational divisions

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

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

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

Applications for Patent Disclosures and Trademarks, and Rights Held (Patents, Utility Models, Designs and Trademarks) by DNP in Japan (2005 - 2007)

1) Number of patent disclosures

2) Number of patents and utility model rights held

3) Number of design rights held

800

2,500

800

700

700

2,000

600
500

600
500

1,500

400

400
1,000

300
200
100
0

300
200

500

05

06

07

Lifestyle and Industrial Supplies
Information Communication
Electronics
Basic ResearchOther4) Number of trademark applications

0

100
05

06

0

07

Lifestyle and Industrial Supplies
Information Communication
Electronics
Basic Research
Other

05

06

07

Lifestyle and Industrial Supplies
Information Communication
Electronics
Basic ResearchOther5) Number of trademarks held

50

1,200

40

1,000
800

30

600
20

400

10
0

200
05

06

07

Lifestyle and Industrial Supplies
Information Communication
Electronics
Basic Research
Other

0

05

06

07

Lifestyle and Industrial Supplies
Information Communication
Electronics
Basic Research
Other

Sustainable Development

DNP Annual Report 200891

Research
andDevelopment

DNP’s management principle is to help create an emergently
evolving, 21st-century society by providing P&I Solutions basedaround printing technologies (PT) and information technologies(IT). An emergently evolving society stimulates various modesof communication, so our Research and Development sectionneeds to use printing technologies and information technologies
and move quickly — before other companies do — to develop
innovative new technologies and materials that facilitate every
process involved in information exchange, from data input
to storage, processing, formatting and output. By quickly
responding to market changes and always staking out positions
in new businesses, we can continue to offer new solutions toclient companies and consumers.

Research & Development Framework
DNP’s research and development framework has five basic researchlaboratories with the Research & Development Center at its core,and seven specialized laboratories belonging to the each operational
division. These laboratories constitute the driving force that allows us toactualize DNP’s “P&I Solutions” concept. By organically connecting theselaboratories, we can generate new products, technologies and systems.
The research facilities are also connected to the technicaldepartments of DNP’s various production facilities, where they help
resolve problems at the front lines at production sites. We havemade use of technology and expertise accumulated through these
relationships in order to develop original DNP production equipment thatallows us to offer even more effective manufacturing technologies.

Controlled by Head Office
Development
supportProduction
technologies;
equipment
development

Controlled by Operations

Corporate R&D Division

Technology Development Center

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

R&D for new products
and technologies

Books and Magazines

Opto-Materials/Industrial Supplies
Information Media Supplies
Display Components

Electronics

Electronic Devices

Technical section of each operations

Lifestyle andIndustrial Supplies

Media Technology Research Center

Packaging
Lifestyle Materials

Nano Science Research Center

Communication and Information

Research & Development Center

IPS/Business Forms

Electronic Module Development Center

Commercial Printing

Information
Communication

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

Commercialization projects

New Business Fields

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

Headquarters
Research Centers

Development term

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

Electronic Module Development Center

Develops technologies, products and services related to electronic modules

Nano Science Research Center

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

Media Technology Research Center

Medium to long term(less than five years)

Ｒesearchｅｓ and ｄevelops core technologies for the information communication field; develops

and refines technologies, products, and services

Technology Development Center

Researches and develops production technologies

Packaging Laboratory

Develops packaging materials and technologies, freshness preservation technologies

Industrial Materials Laboratory

Researches and develops industrial materials

Lifestyle Materials Laboratory

Develops surface materials for interior and exterior building décor

Opto-Materials Research Center

Researches and develops optical materials

Information Media Supplies Laboratory

Develops all kinds of information media

Display Components Laboratory

Researches and develops all kinds of display devices and components

Electronic Devices Laboratory

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

Medium term(less than three years)

New Product Development

Division Laboratories

92

Function

Research & Development Center

Short term(less than one year)

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

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

Product Safety Management System ModelIn May 2007, a revised Consumer Product Safety Law took effect.
The law is aimed at preventing the recurrence of accidents by compilingand providing information about product-related accidents. We
established the DNP Group Product Safety Committee as the body incharge of DNP Group product safety, and we have a system in place
for compiling all relevant information in the unlikely occurrence of an
accident involving one of our products. We have also established “DNP
Group Product Safety Regulations” to facilitate the establishment ofan accident response headquarters, disclosure of information, andthe rapid implementation of other measures to prevent the spread ofdamages should the need arise.
The DNP Group uses its product safety management systems toensure the safety of not just consumer products, but of all our products.

Efforts to maintain product safety must be continual. We conduct
risk assessments on all of our products twice each year. In line with theresults, we make any design changes or technical improvements thatare necessary for ensuring safety.
We have been conducting product liability training since 1994. In
the year ended March 2001, we began using our corporate Intranet
system for this training. The number of employees who completed this“Network Learning,” which we began offering in the fiscal year ended
March 2001, has reached 15,600.
Product designchanges, Production
technology
improvements

Product Safety Management System Model

During new product development
When a complaint is received

Risk
assessment

Continual
improvements

Creation of
product
safety standards
document

Twice each year, for every product

Manufacturing
based on standards
document

Sustainable Development

DNP Annual Report 200893

Environmental
Protection

The DNP Group helps make a sustainable, recycling-oriented society a reality by developing products that put the least possible
strain on the environment, and by working to generate demand for such products from businesses and consumers. In 1972, DNP
became the first Japanese printing company to establish an environment department, and in 1993 we built our unique Eco-Report
System of managing progress related to environmental protection. In 2000, we created the DNP Group Environmental Committee,
which has worked proactively at such tasks as promoting sales of eco-friendly products, reducing industrial wastes, preventing global
warming, and reducing emission of harmful substances.

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

94

Development and Sales of Eco-friendly Products
In order to minimize pressure on the environment throughout
each product’s lifecycle, the DNP Group has adopted guidelines fordeveloping and selling products that are eco-friendly from the design
stage. In order to realize a sustainable, recycling-oriented society, we
provide solutions tailored to each business field for minimizing products’environmental impact.
In the year ended March 2008, our sales of environmentally friendly
products amounted to 315.4 billion yen, compared to 265.8 billion
yen the previous year. We enjoyed increased sales of LC color filtersthat use a plastic film black matrix instead of a black matrix containing
heavy metals, cards made of PET-G (which does not contain vinyl
chloride), and printed materials made from paper that is certified by the
Forest Stewardship Council (FSC) as being derived from forests underecologically sound management.

President
DNP Group Environmental Committee
11 persons

Environmental protection promotion office
28 persons

Environmental Committees of each business division292 persons

Environmental protection promotion office
169 persons(1) Discusses and determines DNP Group environmental policies, goals, and plans, etc.
(2) Approves operational division groups’ activity policies, goals, and plans(3) Checks to see how well the operational divisions’ environment committees are executing their plans and achieving their goals(1) Proposes DNP Group environmental policies, goals, and plans, and reports to the Group Environmental Committee(2) Informs all operational divisions’ environment committees of environmental policies, goals, and plans determined by the
DNP Group Environment Committee; checks the status of their implementation and supports their activities(3) Checks progress of operational divisions’ environment committees (results, degree of implementation, etc.) and reports to
the DNP Group Environment Committee(1) Considers and decides environmental policies, goals, and plans for the business division group(2) Checks to see how well the operational division group’s environment committee is executing its plans and achieving its goals(3) Holds regular committee meetings(1) Proposes operational division group environmental policies, goals, and plans, and reports to the DNP Group Environment
Committee(2) Informs all workplaces of environmental policies, goals, and plans determined by the business division group’s environment
committee; checks the status of their implementation and supports their activities(3) Checks progress at all workplaces (results, degree of implementation, etc.) and reports to the business division group’s
environment committee

Technical/industrial group

Eco-friendly products development group

Regional action groups

Environmental protection
VOC countermeasures group

Office/labor environment group

833 persons

Industrial waste reduction group
Energy conservation group

Operational division groups: 59 locations

Assessment of Past Performance and Future Goals
Related to Environmental Protection

Based on our environmental policies, DNP has establishedenvironment-related goals that are appropriate for our businessactivities, and we have been steadily achieving these goals. The tablebelow shows the goals that the DNP Group’s Environment Committee
adopted for the fiscal year ended March 2008, along with actual results.

Category

Goals

Achievements

Global warming prevention

Reduce carbon dioxide emissions (CO 2 emissions volume/production volume) by 15% from theyear ended March 1991 level (by the year through March 2011)

Compared to the year ended March 1991: down 2.3%

Reduce greenhouse gas emissions by 10% from the year ended March 2006 level (by the year
through March 2021)

Aim to achieve in the year through March 2009

Reduction of environmental
damage from transportation

Reduce amount of fuel used for transportation and specific consumption by 1% each year; reduce fuel Compared to the year ended March 2001: down 7.9% (Achieved)
consumption in fiscal year through March 2011 by 4% from fiscal year ended March 2007

Volatile organic compounds(VOCs)

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

Compared to the year ended March 2003: down 47.9%

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

Compared to the year ended March 2001: down 42.3%

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

Compared to the year ended March 2001: down 27.1%

Achieve recycling rate (volume of waste recycled/total volume of general waste generated) of 98% Recycling rate in the year ended March 2008: 99.8% of paper,
95.8% of plastic wastes, 98.2% of waste metals and 75.7% ofby processing waste from main raw materials (by the year through March 2011)glass waste (Achieved)
Final disposal site usage rate in the year ended March 2008: 1.7%

Achieve zero emissions throughout the DNP Group (by the year ended through 2011)
Development and sale ofeco-friendly products

Increase net sales of eco-friendly products by 10% over previous year, to reach 300 billion yen (by Net sales of eco-friendly products in the year ended March 2008:
315.4 billion yen (up 18.6% from a year earlier) (Achieved)
the year ended through 2011)

Green purchasing

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

Raw materials costs relative to the cost of all raw materials
purchased in the year ended March 2008: 39.3% (Achieved)

Increase ratio of amount spent on products that are officially recognized as being environmentally Percentage of green materials and supplies purchased in the year
ended March 2008: 47.0% (Achieved)
friendly (Eco-mark products, etc.) relative to total amount spent for general supplies (officesupplies and equipment, etc.) to 50% (by the year through March 2011)
Environmental preservation

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

Achievement rate in the year ended March 2008: (relative to
DNP’s own standard): 95% (Achieved)

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

Achievement rate in the year ended March 2008: (relative to
DNP’s own standard): 97% (Achieved)

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

Achievement rate in the year ended March 2008: (relative to
DNP’s own standard): 95% (Achieved)

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

Achievement rate in the year ended March 2008: (relative to
DNP’s own standard): 61%

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

Achievement rate in the year ended March 2008: (relative to
DNP’s own standard): 100% (Achieved)

Office environment

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

Percentage of used paper sorted and collected in the year ended
March 2008: 76.7% (Achieved)

Environmental Management
SystemConduct environmental audits at all workplaces

Conducted at all workplaces in the year ended March 2008
(Achieved)
Sustainable Development

DNP Annual Report 2008

95

DNP Group Environmental Management System

For a sustainable society

Effective useof resources

Environmental
protection

Prevention of
global warming

Caution regarding
harmful chemicals

Concern forbio-diversity

Air

DNP Group
Limiting waste output throughimproved production efficiency

Reducing emissions of substances
tracked by pollutant release andtransfer registers (PRTRs)

Reducing air and water pollutants

Reducing negative impact on theenvironment

Shifting to clean (low CO 2
emissions) energy

Observing chemical handlingregulations (e.g. RoHS and
REACH)

Reducing greenhouse gas
emissions

Reducing emissions of VOCs into
atmosphere

Introducing renewable energy
sources

Using energy efficiently

Introduction of hybrid cars

Environmental protection management
through voluntary standards

Shifting to more eco-friendly
modes of transportation

Increasing efficiency of distribution

Encouraging the purchase of green
products

Manufacturing
divisions

Raw materials

Supplyingeco-friendly
products

Water

Soil

Distribution
divisionsIN

Providingsocietywith value

OUT

Energy/water

ResearchdivisionsEco-friendly
products

Sales planning
divisionsManagement of chemicals used as
raw materials

Installation of equipment for
reducing negative environmental
impact (water treatment
equipment, deodorizing
equipment, solvent recycling
equipment, etc.)

Development of eco-friendly
products

Promoting sales of eco-friendly
products and raising awareness ofenvironmental concerns

Life cycle assessment

Sorting and collection of used
office paper

Reuse

Collection and reuse of solvents

Environmental accounting

Collection and reuse of waste heat

Waste

Promotion of zero emissions

Reuse of water

Formulation of voluntary plans

The DNP Group s Original Environmental Management System (Eco-Report System)s Eco-Report s Workplace Eco-Report s Eco-auditing s Environmental education

96

Recycling

DisposalCreating Safe and Lively
Workplaces

Human Resource Policies
Each DNP Group employee acquires specialized knowledge and skills and acts independently according to our Code of Conduct — which centersaround the practice of taiwa cited in the DNP Group’s “21st Century Vision” — and according to the DNP Group Guidelines for Conduct, in order torealize both our corporate vision and his or her own potential for growth.
DNP creates the best possible environments, mechanisms, and organizations in order to cultivate an emergently evolving corporate culture that
supports each employee as an autonomous individual in fulfilling his or her role as well as possible and achieving growth and self-development.

Labor and Human Resources Development Mechanisms
21st Century Vision

Management Creed/Business Vision/Guidelines for Conduct
Code of Conduct

Human Resources Training and Development Vision

Training systems and mechanisms
Training sponsored by operational division
or group company

On-the-job
training

Outsideseminars

Collective
training
Internships

Personnel/organizations/systems/measures

Training sponsoredby head office
Collective
training,
Network
Learning

Correspondence
courses

Cultivation through placement and transfers

Self-reporting system

Job grade system

Employee evaluation system

Careerchangetraining
Appointee
training

Management-by-objective
and evaluation system
In-house venture system

Open recruiting system
Certification support program

Career Consulting Center

Self-development

People who aspire to be professionals
capable of working independently
and cooperatively

Realization of our 21st Century Vision

Transparent and Fair Hiring Practices

Code of Conduct observance

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

Types of hiring

Description

Results

New hiring

We inform candidates of the type of person we are looking for, the steps in our hiring process, the timing of Employees newly hired in the year ended March 2008
each step, and what we are looking for in each interview. In order to avoid mismatches, we assign young (Dai Nippon Printing Co., Ltd.)
employees as recruiting partners to give candidates a real-life picture of our company.
Regular employees: 168 (110 men, 58 women)
Technical staff:
267 (212 men, 55 women)

Mid-career hiring

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

Mid-career hires in the year ended March 2007
(Dai Nippon Printing Co., Ltd.): 74

Internships (arranged jointlywith group companies)

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

August-September 2007:
104 interns accepted in 83 categories

Sustainable Development

DNP Annual Report 2008

97

Appropriate Evaluation and Compensation
SystemDescription

Results

Evaluation/compensation
systems (management-by
objective system, etc.)

Each employee meets privately with his or her supervisor and engages in taiwa to establish objectives
and evaluate performance. We build mutual understanding regarding evaluations as a means ofpromoting self-development on the part of the employee. We strive to make this system acceptableto both managers and their subordinates, for example by offering training sessions attended by both.
Furthermore, evaluation results are directly reflected in wages and bonuses.

Expanded the scope of application to almost all
employees by October 2003
Expanded feedback of evaluation results to include
general employees, as of 2005 winter bonus payment
time■ In addition, we have job grade/salaries scales, award systems, etc.

Flexible Working Styles
SystemDescription

Life Plan Consulting
Center

Provides information about pensions, employment insurance, motivation for living , lifelong education, etc. In the year ended March 2008: 1,800 consultations
to assist individuals with planning for life after retirement

Results

Career Consulting Center

Provides counseling and guidance regarding career development

In the year ended March 2008: 196 employees usedthe center■ In addition, we have programs that allow employees to adjust their work hours, take holidays, family care leave, as well as a consulting center, life planning promotion program, mutual aid program, etc.

Respect for Diversity
SystemDescription

Hiring people withdisabilities

We achieved the legally mandated ratio of disability employment, based on a goal of normalization.*In the year ended March 2008: disabled
Working together with people without disabilities promotes the feeling that work is worthwhile. We provide employee rate: 1.74%
workplace leaders with the education they need to be able to understand employees’ special needs.
(Dai Nippon Printing Co., Ltd.)• Development of jobs that can be performed by disabled workers; facility improvement• Solicitation of new hires all year long
• Normalization training for managers of workplaces where there are disabled workers

Results

Hiring seniors(Senior Staff System)

Even after reaching retirement age, people who want to remain active as professionals can consult with In the year ended March 2008: 77.3% of eligible
employees chose to work as senior staff
the company and work as “senior staff.”* The premise that people with disabilities should ideally be able to function normally in society■ Rehiring of retirees (re-work system)

In order to support the development of future generations of workers, and to enable people to enjoy family life and work at the same time, we are improving such systems as the “Return to Work
Program,” and shortened work hour programs. Two years ago, the DNP Group created mechanisms that make it possible to rehire people who want to go back to work and make the most of theirprevious experience after choosing to temporarily stop working for reasons such as marriage, childbirth, childcare, or caring for a disabled family member. Currently about 70 employees are registered inthis program.
In order to smooth the process of taking leave and returning to the workplace, we operate a DNP Group “employment agency” that provides information about positions available within the DNP Groupand serves as an address for consultations.
As in past years, people who registered with our Group “employment agency” succeeded in finding positions in the fiscal year ended March 2007, and we expect that the number of re-hires will increasein the future.

Support for the Careers of Female Employees
SystemDescription

Results

Eliminating gender bias
from the workplace• Seminars
We held a “kickoff meeting” attended by female employees and their supervisors, and “network
meetings” where female employees considered how to build careers that allow for life events particular
to women.
• e-Learning
We offered a course for management-level employees in “Supporting Women in Active Careers.”• Seminar participation in the year ended March 2008:· Managers (male and female): 223· Female employees: 266• e-Learning
Participants in “Supporting Women in Active Careers”· 2,038 managers (total since June 2003)

98

Support for the Nurturing of Future Generations
SystemDescription

Results

Childcare leave• Until April 30 of the child’s second year, or until a child is 18 months old• Up to twice per child, within the period in which childcare leave is allowed
Revised April 2005

In the year ended March 2008: 86 employees took
leave under this system(Dai Nippon Printing Co., Ltd.)

Support Program for Employees
Returning to the Workplace afterChildcare Leave

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

As of March 2008, there were 84 people registeredwith our online “wiwiw” program(Dai Nippon Printing Co., Ltd.)As of January 2008, the “Kangaroo Club” had 40
members in Tokyo and 6 members in Osaka

Securing Safety in Our Workplaces
SystemDescription

Results

Creation of guidelines

The Central Safety and Hygiene Committee determines safety and hygiene-related
policies each year. Each operational division and group company then determines
its own policies, based on the central committee’s policies and taking into accountthe characteristics of each workplace.

<Major standards and guidelines>
1) Workplace environment improvement
Workplace environment standards, guidelines for preventing noise in theworkplace, guidelines for tobacco smoking
2) Preventing work-related accidents
Guidelines for preventing industrial accidents caused by machinery, etc.

Improving skills

The safety and hygiene committees play the leading role in promoting activities that The figures below show the number of employees as of March 31, 2008.
are tailored to each workplace, and in improving employees’ skills when necessary Certified hygiene managers
437
to allow the committees to function effectively.
Certified work supervisors
2,581
Completed training in restricted operations
6,403
Completed special educational seminar
2,692

Accident prevention

Analyze potential causes of accidents, identify risk factors that contribute toworkplace accidents, develop activities that promote evaluation and reduction of
those risks.

DNP’s accident rate is low compared to the all-industry average and evencompared to the average for all types of printing industries.
Jan. – Dec. 2007: Industrial accident rate (the number of employees who
missed work due to a work-related accident divided by the total number ofhours worked in units of 1 million hours): 0.47%

Programs for Supporting Career Advancement
SystemDescription

Open recruiting system

We advertise positions requiring specialized knowledge and positions in new businesses or new
In the year ended March 2008:
product development. Anyone with ability, experience and the desire to be challenged is free to apply. Number of positions offered: 119
The goal is to match business divisions that need human resources with employees who want to
Number of employees reassigned: 47
develop their potential.

Results

In-house venture system

We provide training, financing and other types of support for employees who have entrepreneurial
aspirations and want to start an independent new business. Generally, we appoint the person who
proposed the idea for a new company to be its president.

Apr. 2002: CP Design Consulting Co., Ltd.
Sep. 2003: M’s Communicate Co., Ltd.
Sep. 2004: At Table Co., Ltd.
Jan. 2005: Mobile Impulse Co., Ltd.
Jan. 2006: YouToo Co., Ltd.

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

Increased the number of employees who are certified forspecialized knowledge or skills related to IT or other areas
pertinent to their work
783 employees certified in the year ended March 2008

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

A total of 47 employees recognized as of March 2008

Special skills recognition
program

Employees with advanced specialties, whose talents are recognized particularly widely both inside
the company and outside, receive special compensation.

• Senior researcher/Senior planner
Three employees recognized in the year ended March2008
As of March 2008, 16 employees had been recognized• Fellowships
One employee designated in the year ended March 2008

Self-reporting system

We survey employees regarding their desire to change positions or workplaces in order to further their In the year ended March 2008: 312 employees
careers, and regarding any other requests they may have related to their life plans. When the company participated in self report interviews; 150 of them changed
positionsapproves such a request, the employee is transferred to the desired position or workplace.

Sustainable Development

DNP Annual Report 200899

Contributing to Society
Promoting Cultural Activities
Printing is based on the art of making reproductions, which DNP sees as a new kind of creative technology that can contribute to thedevelopment of art and culture. DNP is engaged in highly original cultural activities centered around supporting graphic arts.

Our two galleries — one in Tokyo and one in Osaka — hold exhibitions ofcreative works that highlight graphic design and printing, by artists and groups
from Japan and abroad.

Ginza Graphic Gallery (ggg)
Opened in 1986
URL： http://www.dnp.co.jp/gallery/ggg/• Number of events held: 261• Aggregate number of visitors: 870,000
Location: DNP Ginza Bldg. 1F, 7-7-2 Ginza,
Chuo Ward, Tokyo, Japan 104-0061
Telephone: 03-3571-5206
Open 11:00 - 19:00 (till 18:00 on Saturdays);closed Sundays and holidays
Admission free of charge

ddd Gallery
Opened in 1991
URL： http://www.dnp.co.jp/gallery/ddd/• Number of events held: 158• Aggregate number of visitors: 230,000
Location: Nanba SS Bldg. 1F, 1-17-28 Minamihorie,
Nishi Ward, Osaka, Japan 550-8508
Telephone: 06-6110-4635
Open 11:00 - 19:00 (till 18:00 on Saturdays);closed Sundays, Mondays and holidays
Admission free of charge

The Center for Contemporary
Graphic Art
Opened in 1995
URL： http://www.dnp.co.jp/gallery/ccga/
The Center for Contemporary Graphic Art is the home of the Tyler Graphics
Archive Collection, produced at the renowned U.S. print workshop, Tyler
Graphics Ltd. In addition to holding regular showings of its permanent collection,
the Center also introduces a wide variety of contemporary graphic art.
Number of exhibitions held: 44･ Aggregate number of visitors: 61,000
Location: 1 Miyata, Shiota, Sukagawa-shi, Fukushima,
Japan 962-0711
Telephone: 0248-79-4811
Open 10:00 - 17:00 (Admission until 16:45); closed
Mondays (unless Monday is a public holiday), the day
after public holidays, (except when this falls on Saturdayor Sunday), and exhibit changes, between late
December and the end of February
Admission ¥300; ¥200 for students (free for children 12
and under, seniors over 65, and handicapped-certificate
holders)

Web site
DNP Museum Information Japan
artscape
URL： http://www.dnp.co.jp/artscape/News and information about exhibitions at art museums throughout Japan andother art-related events is updated twice a month and broadcast as a Web
Magazine. DNP received the 2005 “Mécénat Award for Information Communication
Culture of the Arts” for continuing to provide specific information on the arts. In 2006, weadded an English-language version.

Maison des Musées de France(MMF) Opened in 2003
URL： http://www.museesdefrance.org/
This facility provides a wide array of information about museums throughout
France, to help visitors get to know French culture and art.
• Total number of seminars given: 40• Total number of seminar participants: 1,800
Location: DNP Ginza Annex 7-7-4 Ginza, Chuo Ward,
Tokyo, Japan 104-0061
Telephone: 03-3574-2382
Open 11:00 - 19:00, closed Sundays and holidays

100• Updated:Japanese-language version: twice monthly
English-language version: once monthly• Hits: about 1.3 million page views per month
A museum information site, Museum Information Japan(MIJ), which was established in 1995, is the predecessorof Artscape.

The Louvre - DNP Museum Lab
URL： http://www.museumlab.jp
The Louvre - DNP Museum Lab is a joint project between the Musée du Louvre and
Dai Nippon Printing that has been exploring new approaches to art appreciation since
October 2006. The project combines DNP’s expertise in information technology andstate-of-the-art digital imaging with the Louvre’s expertise in educating the public
about cultural assets. Between 2006 and 2009, the Museum Lab is scheduled tohold six exhibitions at DNP’s Gotanda Building, with each exhibition lasting aroundfive months.
The facility is open to the general public. Visitors are given a ticket containing an IC
tag and a PDA system that allows them to get information about the works of art on
display and the artists who created them, according to pre-registered preferencessuch as language (Japanese, French or English) and method of viewing.

©Photo DNP

Location: DNP Gotanda Bldg. 1F, 3-5-20 Nishi-Gotanda, Shinagawa Ward, Tokyo,
Japan 141-8001 Telephone: 03-5435-0880
Open 17:00-19:00 on Mondays, Tuesdays and Thursdays, 17:00-20:30 on
Wednesdays and Fridays, 11:00-17:30 on Saturdays; closed Sundays andholidays
Admission free of charge©Photo DNPThird exhibition: The Madonna of the Rabbit - A Sacred Poem
October 27, 2007 – March 1, 2008

Fourth exhibition: The City of Susa and Its Ceramics in the First Centuries of Islam
April 5, 2008 – September 27, 2008

Kidzania Tokyo, DNP Pavilion (Print shop)
URL： http://www.dnp.co.jp/kidzania/index.html
Kidzania Tokyo is Japan’s first “Edutainment Town,” giving
children the chance to experience various kinds of worknormally reserved for adults. It opened October 5, 2006 in
Toyosu, Koto Ward. DNP opened a “Print shop” pavilion wherechildren can try their hand at graphic design by producing
posters.
The children use computers to compose their own designs,
which may include text, photographs and illustrations, etc. The
children can print out their poster and take it home.
This activity is designed to make children aware of printing’srole in “communicating information to people,” and to allow
them to practice self-expression and design that is appropriate
for a particular purpose.
By passing on technology and expertise that DNP has
cultivated through printing, and by opening up possibilities forchildren’s futures, DNP contributes broadly to society.

Sustainable Development

DNP Annual Report 2008

101

Financial Section

Contents
104 Management s Discussion and Analysis
112 Selected Financial Data
114 Consolidated Financial Statements
119 Notes to Consolidated Financial Statements
131 Independent Auditors ReportManagement’s
Discussion
andAnalysis104

OPERATING RESULTS
Business Environment
In the fiscal year ended March 2008, greater capitalspending linked with improved corporate profits and a solid
trend in personal consumption were among the indicatorsthat showed the Japanese economy continued to gradually
recover. Uncertainties increased in the second half, however,owing to the sharp rise in oil prices and the financial market
volatility and the U.S. economic slowdown stemming fromthe subprime crisis.
The business environment surrounding the printing
industry remained harsh, due to such factors as material
cost increases from soaring crude oil prices and unit pricedeclines stemming from intensified competition.
In Information Communication, the publishing industry
saw an increase in free newspapers and magazines. The
number of new magazines launched also increased, but
the sales fell below the previous-year level for the 10thconsecutive year. Overall publishing industry sales declined
3.1% from the previous year. Advertising revenue from April
2007 until March 2008 rose 1.1% year on year, marking four
consecutive terms of a year-on-year increase. Advertisingexpenses for the four major types of media that support
printing demand slightly declined, but Internet advertisingexpenses rose. In the business forms sector, demand
related to IPS (information processing service), such as
invoice issuing, increased further, and the smart card market
expanded solidly. Management conditions worsened further,
however, because of the sharp increase in material costswith greater unit price declines stemming from an intensifiedcompetition for orders.
In Lifestyle and Industrial Supplies, demand was solidfor packaging, mainly for food, helped by solid domestic
personal consumption. In the lifestyle materials sector,
demand rose for environmentally friendly products, but
overall demand dropped largely because the number ofhousing starts decreased by 19.4% over the previous year,
owing to the revised Building Standards Act, which tookeffect in July 2007. In the industrial supplies sector, demand
for functional optical films, such as antiglare film used inliquid crystal displays, was strong thanks to an increased
demand for larger flat-panel televisions.
In the Electronics segment, worldwide production offlat-panel televisions exceeded 90 million units in 2007,
providing evidence of continued growth in demand,
especially for LC televisions. Also, there was double-digit
growth in worldwide shipments of personal computers in2007 (to 270 million units) and of mobile phones (to 1.14
billion phones). As a result, there was a strong demand for
LCD color filters, for use in both computer monitors andtelevisions.

Overview		

Net sales (¥ million)

2008.3		

¥ 1,616,053

2007.3		

¥ 1,557,802

2006.3¥1,507,505

Gross profit margin (%)

17.8%

18.6%

20.3%

Operating income margin (%)

5.4%

6.2%

8.0%

Ordinary income margin (%)

5.4%

6.5%

8.3%

Net income margin (%)

2.8%

3.5%

4.3%

Net income per share (¥) ¥

67.08

¥

78.10

¥

91.22

The DNP Group strove to secure good results by engaging
in dynamic sales activities to provide products and services
developed in response to customer needs, and by making
a Group-wide push to implement “Production 21” costcutting measures. Consolidated net sales increased 3.7%
over the previous year. By segment, net sales from Information
Communication rose 1.7% as roughly level sales fromcommercial printing and increases in sales from business forms
outweighed a decline in publishing-related sales. Net sales
from Lifestyle and Industrial Supplies rose 4.3% as industrial
material sales growth and the expansion of the photographyrelated businesses acquired from the Konica Minolta Group
more than offset packaging and lifestyle material sales declines.
In Electronics, net sales climbed 10.4% thanks to an increased
demand for LCD color filters and solid growth in sales of 65nm
photomasks. The Beverages segment’s sales suffered from
intensified competition and slipped 0.8% from the previous
year.
Operating income declined 9.4% and ordinary income fell
14.6% from a year earlier owing to material cost increases,
unit price declines resulting from intensified competition andcustomer demands, and increased depreciation.
The operating income margin declined 0.8 percentage points
to 5.4%, and the ordinary income margin fell 1.1 percentage
points to 5.4%.
As can be seen from the above, this fiscal year’s results
reflect a very harsh situation. Net income also declined, by
17.6% from a year earlier.

Net Sales
Net sales this term increased by 58.3 billion yen, or 3.7%,
to 1,616.1 billion yen, renewing the Group’s record high forthe fifth year in a row. However, the decline in unit prices waseven more severe than the previous year due to intensifiedcompetition. Lower unit prices cost us about 28 billion yen in
net sales.
In Information Communication, sales from the publishingof free newspapers and magazines increased, but sales fromthe publishing of books and magazines declined. Commercial
printing sales were strong. Sales from pamphlets and materials
for event planning and managing promotional campaigns werestrong, but sales from flyers, POP advertising, and premiums
declined. In the business forms sector, sales of smart cards and
IPS (information processing services) rose solidly.
In Lifestyle and Industrial Supplies, sales of flexible packaging
and paper cups increased, but sales of preformed bottles andpaper containers declined. Lifestyle material sales fell, hurt
by a decline in housing starts. In Industrial Supplies, sales ofantiglare film for LCDs increased. Konica Minolta increasingly
sold DNP-brand photo products, and the ID photo businessgained name recognition.
In Electronics, sales increased substantially thanks to verystrong demand throughout the year for LCD color filters formonitors and televisions. Sales of photomasks, particularly
cutting-edge ones, increased, and sales of high-density buildup circuit boards rose considerably.

Net Sales by Consolidated Segment (year ended March 2008)(%)

Beverages
4.5%

Electronics
19.7%
Information
Communication
41.7%

Lifestyle andIndustrial Supplies
34.1%

Financial Section

DNP Annual Report 2008

105

Cost of Sales
DNP’s cost of sales increased by 59.8 billion yen, or 4.7%,
over the previous fiscal year to 1,327.9 billion yen. The grossmargin declined by 0.8 percentage points from 18.6% to 17.8%.
Prices of raw materials, such as petrochemicals and printing
paper, rose this fiscal term, as they did last term. This increased
our costs by roughly 11.8 billion yen. Compared to the impact
of materials cost increases in the previous year, this year’s effectwas bigger by 2.1 billion yen, or 21%.
Gross Profit Margin
(%)
25

20.8

21.3

20.3
18.6

20

17.8

Operating Income
This fiscal year, DNP’s operating income was strongly
affected by lower unit prices and increased raw material costs.
Operating income declined by 9.0 billion yen, or 9.4%, to 87.1
billion yen. We were able to pass on to customers about 50%of the raw material cost increases, but the remainder took asignificant bite out of our income, as we were unable to fully
offset the impact internally. As a result, our operating income
margin dropped from 6.2% in the previous fiscal year to 5.4%.
By segment, operating income from Information
Communication declined 15.5%, or 7.9 billion yen, to 43.1
billion yen. In Lifestyle and Industrial Supplies, it declined
4.4 billion yen, or 12.1%, to 31.9 billion yen. In Electronics,
operating income increased 4.9 billion yen, or 33.1%, to 19.8
billion yen. In Beverages, operating income surged by 686
million yen, or 107.2%, to 1.3 billion yen.

15

Operating Income Margin

10

(%)

5

10

0

8

8.5

04

05

06

07

Selling, General and Administrative Expenses
Selling, general and administrative expenses this fiscal year
increased by 7.5 billion yen, or 3.9%, to 201.1 billion yen. The
percentage of these expenses relative to sales was 12.4%, thesame as in the previous fiscal year.
Our continued efforts at containing costs by using information
technology to boost operational efficiency and by improving
budget management in order to reduce variable costs resulted
in 1 billion yen worth of savings, representing an increase of
25%, or 200 million yen, over the previous fiscal year.
SGA Expenses to Net Sales
(%)
15

12.9

04

05

12.3

12.4

12.4

06

07

08

12

9

6

3

0

106

8.0

08

In order to offset the impact of material cost increases,
DNP has been focusing groupwide since April 2002 on“Production 21” cost-cutting measures, such as improving
process efficiency, improving yields, reducing material losses,
and shortening preparation and lead times. This term, we
successfully applied measures horizontally throughout theGroup, and strove to raise standards for the manufacturing
division as a whole. Thanks to these activities, this fiscal year
we reduced production costs by 34 billion yen.

13.2

7.6

6.2
5.4

6

4

2

0

04

05

06

07

08

Nonoperating Income (Expenses) and Extraordinary
Income (Expenses)
This fiscal year, nonoperating income totaled 10.1 billion yen,down 587 million yen, or 5.5%, and nonoperating expenses
10.7 billion yen, up 5.2 billion yen, or 96.8%, from the previous
year. As a result, net nonoperating expenses totaled 603 million
yen, down 5.9 billion yen from the previous year.
Ordinary income decreased by 14.8 billion yen, or 14.6%,
from the previous fiscal year to 86.5 billion yen.
Extraordinary gains totaled 19.7 billion yen, up 8.5 billion
yen, or 75.4%, and extraordinary losses 17.7 billion yen, up 4.1
billion yen, or 30.1%, from the previous year. As a result, net
extraordinary gains totaled almost 2.0 billion yen, versus net
extraordinary losses in the previous fiscal year of 2.4 billion yen.
The main reason for this turnaround was an absence of theprevious fiscal year’s losses and provisions for compensation
damages.
As a result of the above, income before income taxes andminority interests totaled 88.5 billion yen, down 10.5 billion yen,or 10.6%, from the previous fiscal year.
Net Income
Net income totaled 45.2 billion yen, down 17.6%, or 9.7
billion yen, from the previous fiscal year.
Net income per share dropped to 67.08 yen, compared to78.10 yen a year earlier.
ROE
(%)
8
7
6

5.5

6.0

6.3
5.1

5

4.4

4
3
2
1
0

04

05

06

07

08

LIQUIDITY AND CAPITAL RESOURCES
In order to expand our business, DNP’s management
believes that it is important to steadily expand cash flow
generated through aggressive operating activities and toconcentrate investments in strategic areas. In addition, we
believe that financial strength is indispensable to stable growthin the medium and long terms, so we have worked hard toenhance our company’s financial position.
Cash Flow2008.32007.32006.3

Cash flows from operating activities¥ 157,283¥ 123,011¥ 141,673

Cash flows from investing activities（122,523） （150,717） （151,780）

Free cash flow

¥ 34,760¥（27,706） ¥（10,107）（ ¥ million ）This fiscal year, cash flow generated by operating activities
increased by 27.9%, or 34.3 billion yen, from the previous fiscal
year to 157.3 billion yen. The main reasons for this increase
were a decrease of nearly 27.0 billion yen in trade receivables,
a 61.2 billion yen improvement from the increase in the previous
year, and a decrease of almost 3.0 billion yen in inventories, a21.0 billion yen improvement from the previous year’s increase.
Cash flow used in investing activities decreased by 18.7%, or
28.2 billion yen, to 122.5 billion yen.
Cash flow used in financing activities increased 73.1%, or
31.1 billion yen, to 73.7 billion yen. Major uses of this cash
included expenditures of 58.6 billion yen for share buybacks
and 24.3 billion yen for dividend payments.
As a result of these activities, DNP’s cash and cash
equivalents at the end of the fiscal year amounted to 130.7
billion yen, down 39.8 billion yen, or 23.3%, from a year earlier.
This fiscal year, free cash flow — i.e. cash flow generated byoperating activities minus cash flow used in investing activities— was 34.8 billion yen, versus the previous fiscal year’s -27.7
billion yen, mainly because we reduced investments in facilities
and equipment.
Interest-bearing Debt to Cash Flow
(%)
0.8

0.6

0.6

0.5

0.5
0.4

0.4

0.4

04

05

0.2

0

06

Financial Section

07

08

DNP Annual Report 2008107

Capital Expenditures, Research and Development
Expenditures, etc.
For five fiscal years in a row, from the year ended March
1997 to the year ended March 2001, DNP invested more than
100 billion yen per year in capital expenditures. For the next
four fiscal years, however, from April 2001 until March 2005,
we reduced capital expenditures and worked at concentrating
investments on strategic areas and making the most effective
use of existing facilities and equipment. In the fiscal year ended
March 2006, we resumed active investments in plant andequipment — including new production lines for color filtersand optical films, both strategic products, and smart card
capacity increases — in order to respond to increased demand
accompanying the economic recovery and to prepare for the
expanding markets of the future. Capital investment in theprevious fiscal year totaled 162.9 billion yen.
This fiscal year, we reduced total capital expenditures andcontinued to focus spending on strategic areas with strong
growth potential, such as gravure coating systems for the
optical film production lines at the opto-materials plant in Mihara(Hiroshima), increased the 6th-generation production capacity
at the LCD color filter plant in Kurosaki, and photomask
lithography systems. Capital expenditures amounted to 116.1
billion yen, representing a decrease of 46.7 billion yen, or
28.7%, over the previous year’s figure.
By segment, capital expenditures for Information
Communication decreased 14.6 billion yen over the previous
year to 26.5 billion yen, constituting 23% of our overall capital
expenditures. Capital expenditures for Lifestyle and Industrial
Supplies amounted to 31.8 billion yen, down 8.1 billion yen year
on year and amounting to 27% of the total. For Electronics,
we invested 46.0 billion yen, a decrease of 30 billion yen, and
40% of the total. Capital expenditures for other businessesrose 6.1 billion yen from the previous year to 11.8 billion yen,representing 10% of the total.
Research and development expenditures totaled 35.6 billion
yen, an increase of 5.4 billion yen or 18.1% from the previous
fiscal year.

The Balance Sheet
Since our mission is to increase DNP’s corporate value, we
try to maintain the liquidity that we need while increasing capitalefficiency in order to implement our business strategies in a
flexible manner and promptly adapt to changes in the businessenvironment.
		

Total assets (¥ million)

2008.3		

¥ 1,601,193

2007.3		

¥ 1,700,250

2006.3¥ 1,662,377

Current ratio (%)

157%

166%

178%

Working capital-to-net sales (%)

16%

20%

23%

8

6

6

Debt-to-equity ratio
Book value per share (yen)¥1,516.35¥

1,544.02¥

1,507.89

DNP’s total assets at the end of this fiscal year
amounted to 1,601.2 billion yen, representing a decreaseof 99.1 billion yen, or 5.8%, from the previous fiscal year.
Among current assets, cash and cash equivalents decreased
by 23.3%, or 39.8 billion yen, from the previous fiscal year to
130.7 billion yen. Trade receivables decreased by 4.2%, or 20.2
billion yen, to 456.9 billion yen. Marketable securities holdings
increased 11.1%, or 1.1 billion yen, to 11.1 billion yen, andinventories increased 1.2%, or 1.1 billion yen, to 96.4 billion
yen. As a result, total current assets decreased by 85.3 billion
yen, or 10.7%, to 715.0 billion yen.
Current Ratio
(%)
200

197

186

178

166

157

150

100

50

0

04

05

06

07

08

Capital Expenditures and Free Cash Flow(¥ billion)
200
162.9

150

136.0
116.1

100

86.0
69.8 66.7
52.1

50

34.8
-10.1

-27.7

0

-50

04

05

Capital expenditures

108

06

07
Free cash flow

08

Among long-term assets, property, plant and equipment
increased by 0.6%, or 3.6 billion yen, to 639.3 billion yen. The
main factors behind this increase were year-on-year increases
in the value of buildings (by 6.1 billion yen or 3.0%), landholdings (5.7 billion yen, 4.6%) and construction in progress (1.3billion yen, 3.8%), and a decrease in the value of machinery andequipment (9.6 billion yen, 3.9%).
Intangible assets increased by 40.0%, or 10.1 billion yen, to35.4 billion yen. Total investments and other assets decreasedby 11.5%, or 27.4 billion yen, to 211.5 billion yen. Within thiscategory, investment securities decreased by 22.7%, or 44.1
billion yen, to 150.1 billion yen, but long-term loans increased
28.5%, or 985 million yen, to 4.4 billion yen and deferred tax
assets rose 120.2%, or 10.2 billion yen, to 18.6 billion yen. As aresult, intangible assets decreased by 1.5%, or 13.8 billion yen,
to 886.2 billion yen.

Current liabilities decreased by 5.8%, or 28.1 billion yen,
to 454.4 billion yen. The main reason for this decrease wasa decrease in trade payables by 5.8%, or 19.7 billion yen, to317.9 billion yen.
Long-term liabilities decreased by 9.9%, or 11.7 billion yen,
to 106.7 billion yen mainly because our liability for retirement
benefits declined by 14.9 billion yen to 40.3 billion yen. Thebalance of outstanding corporate bonds was 50.1 billion yen,
an increase of 100 million yen from the previous fiscal year.
Total liabilities decreased by 6.6%, or 39.8 billion yen, to561.1 billion yen.
DNP has been repurchasing its shares since February 2003.
This fiscal year, we purchased 32,680,000 shares for 58.3
billion yen, bringing the cumulative totals to 96,210,000 sharesand 161.4 billion yen. This term we also retired 20 million
shares on November 20, 2007, for 35.1 billion yen and another10 million shares on February 20, 2008, for 17.5 billion yen,bringing the cumulative totals of retired shares to 59 million
shares and 96.8 billion yen.
As a result, this fiscal year’s outstanding amount of treasury
stock increased by nearly 6.0 billion yen over the previous
year’s 60.6 billion yen to 66.6 billion yen, which was a factor
that reduced net assets. Retained earnings decreased by 3.8%,
or 31.4 billion yen, to 797.3 billion yen, and net unrealized gains
on available-for-sale securities decreased by 74.3%, or 30.7
billion yen, to 10.6 billion yen. These factors also reduced net
assets.
As a result of the above factors, DNP’s total net assets at theend of the fiscal year decreased by 5.4%, or 59.3 billion yen, to
1,040.1 billion yen.
Equity Ratio
(%)
80

64.7

63.0

64.0

63.0

61.8

04

05

06

07

08

60

40

20

0

Financial Section

DNP Annual Report 2008

109

RISK MANAGEMENT
The performance and the results of DNP could be significantly affected by a variety
of factors and circumstances that might arise in the future. Because DNP is aware ofthese risk factors, our policy is to strive to minimize their potential effects.
As of the time that we issue this annual report, the following are the major factorsthat the DNP management views as risks.
The Japanese Economy and Consumption Trends
DNP engages in a wide range of businesses with an extremely large number ofcustomers. We conduct our business so as not to be overly dependent on specificcustomers. The primary market where we do business is centered on the Japanese
domestic market, whereas our overseas sales constitute about 17% of net sales.
Therefore, if individual consumption and other aspects of domestic demand shouldslow down due to fluctuations in the Japanese economy, our corporate performance
could be affected by decreased orders, lower unit sale prices, or other effects of sucha downturn.
Changes in the Electronics Market
We expect our electronics segment to be highly profitable and we believe it has
good growth potential. We position it as a strategic sector which we aim to expand in
the future. We intend to secure steady profits from it by focusing on building businessstrategies based on a careful compilation of information and the development ofhighly competitive, high-added-value products. However, the market for display
components and electronic devices is subject to sudden changes. It is possible that
DNP’s performance could be affected by sudden changes affecting products that we
handle, such as dramatic fluctuations in demand or a plunge in unit prices.
Fluctuations in Raw Material Procurement
We procure raw materials such as printing paper and film from multiple suppliersin Japan and overseas. We work hard to secure stable supplies and maintain
optimal prices. However, there is some potential for temporary imbalances between
supply and demand due to factors like spikes in petroleum prices or sudden surges
in demand from the Chinese market. We intend to cope with such instances bynegotiating with our customers. However, if it should become extremely difficult
to secure supplies, or if prices rise markedly, it is possible that our corporate
performance could be affected.
Development of New Products and Technologies
DNP adapts printing technologies in order to develop new products andtechnologies that meet the needs of our customers and the market. We provide
products and services to a wide range of industrial sectors. In recent years, the paceof technological innovation has become faster than ever, and customers’ needs havebeen rapidly diversifying. We believe that in the future, competition in the area of
product development will become more intense than ever before, and it is possiblethat our performance could fluctuate significantly due to unforeseeable changes inmarket trends or a shortening of product life cycles.
Currency Fluctuations
Particularly in such fields as electronics, we are expanding our dealings in products
and services with customers, suppliers and others overseas. Because we expect theeffects of currency rates to gradually become more important, we use such means
as foreign exchange forward contracts to hedge the risks of market fluctuations.
Nevertheless, it is possible that radical swings in currency values could have a more
serious effect on our corporate performance.

110Legal Regulations, etc.
We conduct our business based on strict compliance with the law. Wherever we
operate, in Japan or overseas, we are subject to a wide variety of legal regulations
and restrictions, including laws related to product liability, environmental protection
and recycling, monopoly prohibitions, patents, taxes, imports and exports, etc. We
can imagine that in the future such regulations could become even more restrictive. If
that should occur, it is possible that DNP’s business performance could be affectedby limitations on our business activities or increased costs.
Information System Security
Now that the Internet and other computer networks and information systems areplaying an increasingly significant role in business, the construction of information
systems and security measures that protect them have become indispensable to thecontinuation of business activities. In recent years, DNP has become increasingly
vulnerable to computer-related risks, such as the possibility that information systems
could be shut down by software or hardware trouble, computer viruses, etc., orthat customer information could be leaked outside the company. DNP takes every
possible measure to maintain and control computer systems and data throughincreasingly sophisticated security and employee education. However, in the unlikely
event that an accident should occur, it is possible that our business activities could
be affected.
Disaster
We take steps to protect our production equipment and other major facilities frombeing damaged by disasters such as fires or earthquakes. In addition, we divide ourwork among multiple production bases and make every effort to prevent disasters
from causing production stoppages or disturbances in our ability to supply products.
However, it is possible that our business performance could be seriously affectedin the event of unforeseeable situations, such as production stoppage or massive
damage to or destruction of our corporate infrastructure resulting from an event suchas a huge earthquake or terrorist attack.

Financial Section

DNP Annual Report 2008111

Selected Financial Data (unaudited)
2008

2007

2006

2005

Income Statement Data (¥ million)¥

1,507,505¥

1,424,942¥

1,616,053¥

1,557,802

Cost of sales		

1,327,872

		

1,268,072

1,202,159

1,121,373

Gross profit		288,181		

289,730

305,345

303,569

Selling and administrative expenses

		

201,077		

193,585

184,676

183,041

Operating income		

87,104

		

96,145

120,669

120,528

Ordinary income		86,502

		

101,348

124,715

120,485

Income before income taxes and minority interests		88,469		

98,950114,639

107,686

Net income		45,172

		

54,842

65,18759,936¥

1,601,193¥

1,700,250

Property, plant and equipment ̶ net

		

639,343		

635,784

568,965

528,008

Long-term liabilities		

106,691		

118,437

118,287

115,801

Total liabilities

		

561,058		

600,811571,170

566,796

Total stockholders equity

		

–

		

–

1,063,308

1,007,943

Stockholders equity

		990,122		

1,027,475

		

–

		

–

Total net assets

		

1,040,135

		

1,099,439

		

–

		

–

¥

116,139¥

162,886¥

136,059¥

86,057

Depreciation expenses

		

109,902		

100,161

87,26380,440R&D expenditures		35,556

		30,113

28,692

26,386

¥

67.08

¥

78.10

Earnings per share ̶ fully diluted

		

–

		

–

–

–

Dividends paid per share

		

36.00

		

32.00

26.00

24.00

Book value per share		

1,516.35

		

1,544.02

1,507.89

1,409.18

No. of common shares outstanding ̶ primary 		

661,366,377

694,226,171

704,972,101

715,076,830

Net sales

Balance Sheet Data (¥ million)
Total assets¥

1,662,377¥

1,600,129

Other Selected Data (¥ million)
Capital expenditures

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

¥

91.23

¥

82.56

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

17.83%

18.60%

20.25%

21.30%

Selling, general and administrative expenses

12.44

12.43

12.25

12.85

Operating income

5.39

6.17

8.00

8.46

Income before income taxes and minority interests

5.47

6.35

7.60

7.56

Net income

2.80

3.52

4.32

4.21

Return on equity

4.35

5.14

6.29

6.03

Current ratio

157

166

178

186

8

6

6

7

Debt-to-equity ratio

112

2004
¥

¥

¥

¥

2003

1,354,101¥

2002

1,309,002¥

2001

1,311,934¥

2000

1,342,035¥

1999

1,286,703¥

1,269,543

1,073,118

1,043,456

1,071,163

1,091,386

1,039,006

1,033,926

280,983

265,546

240,771

250,649

247,697

235,617

178,545

175,665

168,529

164,708

161,811

166,008

102,438

89,881

72,242

85,941

85,886

69,60997,276

88,177

74,77592,34987,97677,996

93,13742,244

26,15069,116

79,19977,70352,971

28,774

15,60933,40939,03430,493

1,513,734¥

1,450,027¥

1,432,458¥

1,489,871¥

1,451,700¥

1,445,293

513,175

540,874

543,962

561,017561,898

570,860

119,277

66,82179,01386,012

77,637

100,695

510,970

484,581460,691

522,105

495,541

518,323

978,736

942,083

946,998

939,441925,646

898,646

–

–

–

–

–

–

–

–

–

–

–

–

69,834¥73,789¥85,096¥103,050¥

113,858¥

119,372

85,182

89,23994,87094,312

94,58882,80026,05024,09723,367

24,664

23,571

n.a.

71.49

¥

37.80

¥

20.55

¥

43.99

¥

51.40

¥

40.15

–

37.67

20.53

43.45

50.47

39.54

21.00

19.00

18.00

18.00

18.00

18.00

1,348.40

1,270.81

1,246.99

1,236.96

1,218.79

1,183.24

725,677,422

741,161,150

759,480,693

759,480,693

759,480,693

759,480,693

20.75%

20.29%

18.35%

18.68%

19.25%

18.56%

13.19

13.42

12.85

12.27

12.58

13.08

7.57

6.87

5.51

6.40

6.67

5.48

6.88

3.23

1.99

5.15

6.16

6.12

3.91

2.20

1.19

2.49

3.03

2.40

5.52

3.02

1.65

3.58

4.28

3.42

197

171

181

165

160

159

7

6

7

8

9

10

Financial Section

DNP Annual Report 2008113

Consolidated Balance Sheets
Financial Statements

Thousands of U.S. dollars(Note 3)

Millions of yen

2007

2008

Dai Nippon Printing Co., Ltd. and Consolidated Subsidiaries March 31, 2008 and 2007

2008

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

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

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

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

114¥

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

170,489
25,107
9,992
477,157(5,210)95,24627,493
800,274$

1,306,950
3,630
111,030
4,569,320(52,840)
963,930
247,750
7,149,770

20,059135,726
1,676
157,461

8,197
190,857
1,424
200,478

200,590
1,357,260
16,7601,574,610

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

124,916
463,864
1,015,758
34,125
1,638,663(1,002,879)
635,784

1,306,550
4,845,780
10,624,990
354,130
17,131,450(10,738,020)
6,393,430

89,412

63,714894,120

1,601,193¥

1,700,250$

16,011,930

Thousands of U.S. dollars(Note 3)

Millions of yen

2007

2008

Dai Nippon Printing Co., Ltd. and Consolidated Subsidiaries March 31, 2008 and 2007

2008

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

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

21,9693,286
317,856
39,26916,912–55,075454,367

¥

9,512
3,121
337,590
40,33618,0342,400
71,381
482,374$

219,690
32,8603,178,560
392,690
169,120–
550,750
4,543,670

54,95040,34911,392
106,691

56,59755,276
6,564
118,437

549,500
403,490
113,920
1,066,910

114,464
144,898
797,317

114,464
144,898
828,708

1,144,640
1,448,980
7,973,170(66,557)
990,122(60,595)
1,027,475(665,570)
9,901,220

10,6107
2,121
12,73837,275
1,040,135

41,332(4)
3,094
44,422
27,542
1,099,439

106,100
70
21,210127,380
372,750
10,401,350

Contingent liabilities (Note 17)
Net assets
Stockholders’ equity
Common stock Authorized : 1,490,000,000 shares;
Issued : 700,480,693 shares in 2008 and 730,480,693 shares in 2007 (Note 9)
Capital surplus (Note 9)
Retained earnings (Note 9)
Treasury stock, at cost
39,114,316 shares in 2008 and 36,254,522 shares in 2007 (Note 9)
			 Total stockholders’ equity
Valuation and translation adjustments
Net unrealized gains on available-for-sale securities
Net deferred gains (losses) on derivatives
Foreign currency translation adjustments
			 Total valuation and translation adjustments
Minority interests
			 Total net assets

Total liabilities and net assets¥

1,601,193¥

Financial Section

1,700,250$

16,011,930

DNP Annual Report 2008

115

Consolidated Statements of Income
Financial Statements

Thousands of U.S. dollars(Note 3)

Millions of yen

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

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

Income before income taxes and minority interests

Income taxes (Note 13) :Current
Deferred

Minority interests		Net income		

2007

2008

Dai Nippon Printing Co., Ltd. and Consolidated Subsidiaries Years ended March 31, 2008 and 2007¥¥

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

1,557,802
1,268,072
289,730

2008$

16,160,530
13,278,720
2,881,810

201,077
87,104

193,585
96,1452,010,770
871,040

4,646(1,310)(1,441)(3,419)
8,537
7,311
2,787
(6,554)(1,757)(697)(1,397)(3,300)(2,041)
1,365
88,4693,785(1,307)(100)(5,136)
8,043
–
–
–
(385)
(3,324)–(1,283)2,512
2,805
98,95046,460(13,100)(14,410)(34,190)
85,37073,11027,870(65,540)(17,570)(6,970)(13,970)(33,000)(20,410)
13,650884,690

31,791
10,10341,894
46,57536,8586,150
43,00855,942

317,910
101,030
418,940
465,750(1,403)45,172¥(1,100)54,842

Yen$(14,030)
451,720

U.S. dollars (Note 3)

2007

2008

2008

Net assets per common share¥

1,516.35¥

1,544.02$

15.16

Net income per common sharePrimary

¥

67.08

¥

78.10

$

0.67

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

116

Consolidated Statements of Changes in Net Assets
Financial Statements

Millions of yen
Stockholders’ equity

Valuation and translation adjustments

Dai Nippon Printing Co., Ltd. and Consolidated
Subsidiaries
Years ended March 31, 2008 and 2007

Number ofsharesissued (inthousands)

Commonstock

CapitalsurplusRetainedearnings

Treasurystock,
at costBalance at March 31, 2006
Changes of items during the period
Net income
Cash dividends paid
Bonuses to directors and corporate auditors
Net increase resulting from changes in
consolidated subsidiaries
Purchases of treasury stock
Disposal of treasury stock
Retirement of treasury stock
Changes in unrealized gains on availablefor-sale securities
Changes in deferred losses on derivatives
Changes in foreign currency translation
adjustments
Changes in minority interests
Total changes of items during the period
Balance at March 31, 2007
Changes of items during the period
Net income
Cash dividends paid
Bonuses to directors and corporate auditors
Net increase resulting from changes in
consolidated subsidiaries
Net increase resulting from changes of fiscal
year end in consolidated subsidiaries
Purchases of treasury stock
Disposal of treasury stock
Retirement of treasury stock
Changes in unrealized gains on availablefor-sale securities
Changes in deferred gains on derivatives
Changes in foreign currency translation
adjustments
Changes in minority interests
Total changes of items during the period
Balance at March 31, 2008

740,480

114,464

144,909806,447(57,451)

55,489

–
–
–

–
–
–

–
–
–

54,842(19,052)
(283)

–
–
–

–
–
–
(10,000)

–
–
–
–

–
–
2
(13)

3,236
–
–
(16,482)

–
–

–
–

–
–

–
–
(10,000)
730,480–––
114,464–––

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

Foreigncurrencytranslation
adjustmentsinterests

–

(549)

27,898

–
–
–

–
–
–

–
–
–

–
–
–

–
(19,663)
24
16,495

–
–
–
–

–
–
–
–

–
–
–
–

–
–
–
–

–
–

–
–

(14,157)
–

–
(4)

–
–

–
–

–
–
(11)
144,898––
22,261
828,708––(3,144)(60,595)––(14,157)
41,332

–
–
(4)
(4)

3,643
–
3,643
3,094

–
(356)
(356)
27,542

–
–
–

–
–
–

45,172(23,931)
–

–
–
–

–
–
–

–
–
–

–
–
–

–
–
–

–

–

–

–

–

–

–

–

–

–
–
–
(30,000)

–
–
–
–

–
–
–
–

17
–
(2)
(52,647)–(58,643)
34
52,647

–
–
–
–

–
–
–
–

–
–
–
–

–
–
–
–

–
–

–
–

–
–

–
–

–
–

(30,722)
–

–
11

–
–

–
–

–
–
(30,000)
700,480–––
114,464–––
144,898––(31,391)
797,317––(5,962)(66,557)––(30,722)
10,610

–
–
11
7

(973)
–
(973)
2,121

–
9,733
9,733
37,275

MinorityThousands of U.S. dollars (Note 3)

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

Stockholders’ equity

Valuation and translation adjustments

Number ofsharesissued (inthousands)

Commonstock

CapitalsurplusRetainedearnings

Treasurystock,
at cost730,480

1,144,640

1,448,980

8,287,080(605,950)

–
–
–

–
–
–

–
–
–

451,720(239,310)
–

–

–

–

–

–
–
–
(30,000)

–
–
–
–

–
–
–
–

–
–

–
–

–
–

–
–
(30,000)
700,480–––
1,144,640–––
1,448,980

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

Foreigncurrencytranslation
adjustmentsinterests

413,320(40)

30,940275,420

–
–
–

–
–
–

–
–
–

–
–
–

–
–
–

–

–

–

–

–

–
170
– (586,430)
340(20)(526,470) 526,470

–
–
–
–

–
–
–
–

–
–
–
–

–
–
–
–

–
–

(307,220)
–

–
110

–
–

–
–

–
–
–
–
–
–
(313,910) (59,620) (307,220)
7,973,170 (665,570) 106,100

–
–
110
70

(9,730)–(9,730)21,210–97,33097,330372,750––

Minority

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

DNP Annual Report 2008

117

Consolidated Statements of Cash Flows
Financial Statements

Thousands of U.S. dollars(Note 3)

Millions of yen

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)		Equity in losses of associated companies		
Amortization of consolidation goodwill (net)		Interest and dividend income		Interest expenses
		Net gain on sales of marketable securities and investment securities
		
Loss on devaluation of investment securities		
Net loss on disposal of property, plant and equipment
		(Increase) decrease in trade receivables		(Increase) decrease in inventories
		
Increase (decrease) in trade payables
		
Other
			
Sub-total		
Payments of income taxes			Net cash provided by operating activities
Cash flows from investing activities :Net decrease in time deposits
Payments for purchases of marketable securities
Proceeds from sales of marketable securities
Payments for purchases of property, plant and equipment
Proceeds from sales of property, plant and equipment
Payments for purchases of investment securities
Proceeds from sales of investment securities
Interest and dividend received
Other
			
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
Interest paid
Dividend paid
Payments for purchases of treasury stocks
Other
			
Net cash used in financing activities			
Effect of exchange rate changes on cash and cash equivalents			Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents of newly consolidated subsidiaries
Cash and cash equivalents at end of year 			The accompanying notes are an integral part of these consolidated financial statements.

118

2007

2008

Dai Nippon Printing Co., Ltd. and Consolidated Subsidiaries Years ended March 31, 2008 and 2007¥¥

88,469¥98,950

2008$

884,690109,9023,300(69)(16,823)
1,441
2,050
(4,646)
1,310(8,537)
1,745
3,419
26,965
2,989(27,496)
6,929
190,948(33,665)
157,283

100,161
1,283(1,036)(4,708)100
1,476(3,785)
1,307(8,043)385
5,136(34,238)(18,043)
15,211
16,220170,376(47,365)
123,011

1,099,020
33,000(690)(168,230)
14,41020,500(46,460)
13,100(85,370)
17,45034,190269,650
29,890(274,960)
69,2901,909,480(336,650)
1,572,830

24,9040
10,000(124,128)
1,901(32,706)
18,412
4,679(25,585)(122,523)

5,008
(502)
7,202
(153,995)
2,140(13,887)
16,988
3,917(17,588)(150,717)

249,0400100,000(1,241,280)
19,010(327,060)
184,120
46,790(255,850)(1,225,230)

12,535
1,254(3,479)(1,310)(24,346)(58,647)
265(73,728)(3,266)
4,731(4,365)(1,311)(19,686)(19,663)970(42,590)

125,350
12,540(34,790)(13,100)(243,460)(586,470)
2,650(737,280)(825)(39,793)
170,488–
130,695

1,493(68,803)239,22270
170,489(8,250)(397,930)
1,704,880
1,306,950¥$

Notes to Consolidated Financial Statements
Dai Nippon Printing Co., Ltd. and Consolidated Subsidiaries March 31, 2008 and 2007
1. Basis of Presenting the Consolidated Financial Statements
Dai Nippon Printing Co., Ltd. (hereinafter referred to as the “Company”) and its domestic subsidiaries maintain their books of account and prepare theirfinancial statements in conformity with accounting principles and practices generally accepted in Japan, and its foreign subsidiaries in conformity withthose of the countries of their domicile.
The accompanying consolidated financial statements for the year ended March 31, 2008 have been compiled from the consolidated financial
statements filed with the Financial Services Agency of Japan as required by the Financial Instruments and Exchange Law of Japan. The accompanying
consolidated financial statements for the year ended March 31, 2007 have been compiled from the consolidated financial statements as required by
the Securities and Exchange Law of Japan. The Financial Instruments and Exchange Law became effective September 30, 2007 and replaced the
Securities and Exchange Law of Japan. Certain reclassifications of accounts and modifications have been made in the accompanying consolidated
financial statements to facilitate understanding by readers outside Japan. Certain reclassifications have also been made in the 2007 financial statements
to conform with current classifications. In addition, the notes to the consolidated financial statements include additional information which is also not
required for disclosure under accounting principles and practices generally accepted in Japan.

2. Significant Accounting Policies
Consolidation
The accompanying consolidated financial statements include the accounts of the Company and its significant majority-owned subsidiaries. All significant
intercompany accounts and intercompany transactions have been eliminated in consolidation.
The fiscal year-end of the consolidated subsidiaries is the same as that of the Company except for twenty six subsidiaries whose fiscal years end
December 31. Significant transactions between December 31 and March 31 are reflected in the consolidated financial statements.
Investments in non-consolidated subsidiaries are stated at cost and, for valuation of such investments, the equity method has not been applied sincethese investments are considered immaterial in the aggregate. However, investments are devalued if the decline in value is judged to be other than
temporary.
Investments in 20% to 50% associated companies are accounted for by the equity method.
The differences between costs and underlying net assets at the date of investment in consolidated subsidiaries are included in other assets or otherlong-term liabilities and are amortized over a period not exceeding 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 theexchange rates at the balance sheet date. Revenues and expenses denominated in foreign currencies are translated at the exchange rates prevailing
during the year. The resulting translation gains (or losses) are included in other income (or expenses).
The translation of foreign currency financial statements of foreign consolidated subsidiaries into Japanese yen has been made for consolidation
purposes in accordance with the translation method prescribed in the accounting standard for foreign currency transactions. The balance sheet
accounts of the foreign consolidated subsidiaries are translated at the exchange rates in effect at the balance sheet date, except for common stock andcapital 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 valuationand translation adjustments in the consolidated balance sheets.
Cash and cash equivalents
Cash and cash equivalents include all highly liquid investments, generally with original maturities of three months or less, that are readily convertible to
known amounts of cash and are so near maturities that they present insignificant risk of changes in value because of changes in interest rates.
Inventories
Inventories are stated at cost which is determined substantially by the average method.
Marketable securities and investment securities
Marketable and investment securities are classified and accounted for, depending on management’s intent, as follows: i) held-to-maturity debt securities,
which are expected to be held to maturity with the positive intent and ability to hold to maturity, are reported at amortized cost and ii) available-forsale securities are reported at fair value, with unrealized gains and losses, net of applicable taxes, reported in a separate component of valuation andtranslation 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, maintenance and repairs arecharged to income when incurred. Interest expenses on capital expenditures during the construction stage are not capitalized.
Depreciation of property, plant and equipment is principally computed by the declining-balance method at rates based on estimated useful lives.
However, depreciation of buildings acquired on or after April 1, 1998 is computed by the straight-line method.
The estimated useful lives for depreciation purposes range as follows:
Buildings
Machinery and equipment

3 to 50 years
2 to 13 years
Financial Section

DNP Annual Report 2008

119

Assets with an acquisition cost of ¥100,000 ($1,000) or more per unit and less than ¥200,000 ($2,000) per unit, acquired on or after April 1, 1998, aredepreciated over three years on a straight-line basis, whereby one-third of such acquisition cost may be taken as depreciation expense each year.
According to the amendment of the corporation tax law, effective April 1, 2007, property, plant and equipment of the Company and domestic
consolidated subsidiaries which have been acquired on or before March 31, 2007 and have been depreciated up to 95% of acquisition cost with a 5%
residual value are to be fully depreciated on the straight-line method over a five-year period starting in the following year in which they reached thedepreciable limit (i.e. the 5% residual value). The effect of this change was to decrease operating income and income before income taxes and minority
interests for the year ended March 31, 2008 by ¥3,193 million ($31,930 thousand), and ¥3,215 million ($32,150 thousand), respectively.
Intangible assets
Intangible assets included in other assets are carried at cost less accumulated amortization calculated by the straight-line method over their estimateduseful lives. Software development costs for internal use included in intangible assets are amortized by the straight-line method over five years.
Impairment of fixed assets
The Company and its subsidiaries review fixed assets for impairment whenever events or changes in circumstance indicate the carrying amount ofan asset or asset group may not be recoverable. An impairment loss would be recognized if the carrying amount of an asset or asset group exceeds
the sum of the undiscounted future cash flows expected to result from the continued use and eventual disposition of the asset or asset group. The
impairment loss would be measured as the amount by which the carrying amount of the asset exceeds its recoverable amount, which is the higher ofthe discounted cash flows from the continued use and eventual disposition of the asset or the net selling price at disposition.
Liability for retirement benefits
The Company and several domestic significant consolidated subsidiaries applied the accounting standard for employees’ retirement benefits. Under
the accounting standard, accrued pension and liability for employees retirement benefits has been provided based on the estimated amounts ofprojected pension and severance obligation and fair value of plan assets at the end of the fiscal year. Prior service cost is being amortized as incurredby the straight-line method over the period within the average remaining service periods of the eligible employees. Actuarial gains and losses have beenamortized from the following fiscal year by the declining balance method over the periods within the average remaining service periods of the eligible
employees.
Research and development expenses
Research and development expenses are charged to income as incurred.
Accounting for leases
Finance leases other than those which are deemed to transfer the ownership of the leased assets to lessees are accounted for in the same manner as
operating leases under generally accepted accounting principles in Japan.
Income taxes
The asset and liability approach is used to recognize deferred tax assets and liabilities for the expected future tax consequences of temporary differences
between the carrying amounts and the tax bases of assets and liabilities. Deferred taxes are measured by applying currently enacted tax laws to thetemporary differences.
Income taxes on undistributed earnings have been provided for foreign subsidiaries, but not for domestic companies, as such earnings, if distributed in
the form of dividends, are not taxable under the current Japanese tax laws.
Derivatives and hedging activities
The Company and certain consolidated subsidiaries use derivative financial instruments (“derivatives”) for foreign currency forward contracts to manage
their exposures to fluctuations in foreign exchange associated with certain accounts receivable and payable, including forecasted transactions,denominated in foreign currencies. The Company and its subsidiaries do not enter into derivatives contracts for speculative purposes.
While the trade accounts receivable and payable denominated in foreign currencies of the Company and domestic subsidiaries which arecomprehensively covered by foreign currency forward contracts are translated at the exchange rate at the balance sheet date, such forward contracts
are recognized as assets or liabilities and measured at fair value, and the related gains or losses are currently recorded in the statement of income.
The trade accounts receivable and payable denominated in foreign currencies of the Company and domestic subsidiaries which are individually coveredby 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.
The forward contracts for forecasted transactions such as export sales and import purchases are measured at the fair value, but the unrealized gains/losses are deferred until the underlying transactions are completed.
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, 2008 and 2007,
respectively.
Primary amounts of net income per share were computed on the average number of shares of common stock outstanding after deducting treasury
stocks during each year. Fully diluted net income per share is not disclosed because the Company has not issued any dilutive securities.
Change in accounting policies
Retirement benefits for directors and corporate auditors
According to the report on the accounting treatment for retirement benefits for directors and corporate auditors, which was issued by the Auditing
and Assurance Practice Committee of the Japanese Institute Certified Public Accountants on April 13, 2007, the retirement benefits for directors and120corporate auditors of certain consolidated subsidiaries, which had previously been expensed when paid, are to be recognized on an accrual basis
beginning in the year ended March 31, 2008.
The liability for retirement benefits for directors and corporate auditors has been provided based on the Company’s pertinent rules and calculated as
the estimated amount which would be payable if all directors and corporate auditors were to retire at the balance sheet date. Any amounts payable todirectors and corporate auditors upon retirement are subject to approval at the general stockholders’ meeting.
The effect of this change was to decrease operating income and income before income taxes and minority interests by ¥220 million ($2,200 thousand)and ¥1,617 million ($16,170 thousand), respectively.
Change in depreciation method
According to the amendment of the corporation tax law, all property and equipment of the Company and domestic consolidated subsidiaries acquiredon or after April 1, 2007 are depreciated by the declining-balance method at rates of 250% of those under the straight-line method. The effect of thischange for the year ended March 31, 2008 was to decrease operating income and income before income taxes and minority interests by ¥3,139 million($31,390 thousand) and ¥3,158 million ($31,580 thousand), respectively.

3. Basis of Translating Financial Statements
The consolidated financial statements are expressed in Japanese yen in accordance with accounting principles and practices generally accepted inJapan. The Japanese yen amounts have been translated into U.S. dollar amounts, solely for the convenience of the reader, at the rate of ¥100=U.S. $1,
the approximate exchange rate on the Tokyo Foreign Exchange Market at March 31, 2008. 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, 2008 and 2007 were comprised of the following:Thousands of U.S. dollars(Note 3)

Millions of yen

2007

2008
Cash and deposits(excluding time deposits with a maturity over three months)¥

130,695¥

170,4892008$

1,306,950

5. Marketable Securities and Investment Securities
The acquisition cost and aggregate fair value of marketable and investment securities classified as available-for-sale securities as of March 31, 2008 and2007 were as follows:
Millions of yen

March 31, 2008

Acquisition cost

Unrealized gains

Unrealized losses

StocksOthers
Total

¥

¥

¥

March 31, 2008

Acquisition cost

Unrealized gains

Unrealized losses

StocksOthers
Total

$

$

$

March 31, 2007

Acquisition cost

Unrealized gains

Unrealized losses

StocksOthers
Total

¥

¥

¥

¥

84,60324,024
108,627¥

25,600525,605

7,450
137
7,587

¥

Fair value¥¥

102,753
23,892
126,645

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

846,030
240,240
1,086,270$

256,000
50
256,050$

74,5001,370
75,870Fair value$$

1,027,530
238,920
1,266,450

Millions of yen¥

70,63334,049104,682¥

71,703
11
71,714

¥

1,785
156
1,941

Fair value¥¥

140,551
33,904
174,455

The proceeds from sales of available-for-sale securities for the years ended March 31, 2008 and 2007 were ¥12,283 million ($122,830 thousand)and ¥14,770 million, respectively. The gross realized gains on these sales for the years ended March 31, 2008 and 2007 were ¥8,737 million ($87,370
thousand) and ¥10,162 million, respectively, and the gross realized losses on these sales for the years ended March 31, 2008 and 2007 were ¥200
million ($2,000 thousand) and ¥2,121 million, respectively.

Financial Section

DNP Annual Report 2008

121

The following summarizes carrying amounts of securities with no fair value as of March 31, 2008 and 2007:

Thousands of U.S. dollars(Note 3)

Millions of yen

2007

2008
Held-to-maturity debt securitiesNon-listed foreign securities
Corporate bonds
Available-for-sale securitiesNon-listed equity securities
Corporate bonds
Others

2008

¥

–
14

¥

3,000
–

$

–
140

¥

18,797
180
1,191

¥

23,262–
133$

187,970
1,800
11,910

The redemption schedules for securities with maturities classified as held-to-maturity debt securities and other securities at March 31, 2008 and 2007
were as follows:
Millions of yen

Due in one
year or lessMarch 31, 2008

Government bonds
Corporate bonds
Other bonds¥¥

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

Due after five years
through ten years

¥

¥

–
164
–
164

¥

¥

–
30
9,000
9,030

Thousands of U.S. dollars (Note 3)

Due in one
year or lessMarch 31, 2008

Government bonds
Corporate bonds
Other bonds$$

100,130––
100,130

Due after one year
through five years

Due after five years
through ten years

$

$

$

–
1,640
–
1,640

$

–
300
90,00090,300Millions of yen

Due in one
year or lessMarch 31, 2007

Government bonds
Corporate bonds
Other bonds

¥

¥

9,997
–
–
9,997

Due after one year
through five years

Due after five years
through ten years

¥

¥

¥

10,041––
10,041¥–30
12,00012,0306. Inventories
Inventories at March 31, 2008 and 2007 consisted of the following:Thousands of U.S. dollars(Note 3)

Millions of yen

2007

2008
Finished products
Work in process
Raw materials

¥

¥

122

40,49936,66919,22596,393¥¥34,16735,47225,607
95,246

2008$$

404,990366,690
192,250
963,930

7. Short-term Bank Loans and Long-term Debt
Short-term bank loans at March 31, 2008 and 2007 were represented by bank loans and bank overdrafts, etc. bearing interest at an average rate of
1.97% per annum for 2008 and 1.54% per annum for 2007.
Long-term debt at March 31, 2008 and 2007 consisted of the following:Thousands of U.S. dollars(Note 3)

Millions of yen

2007

2008
Unsecured debentures
1.67% due 2014
0.50% due 2009
0.30% due 2010¥

Mortgage loans, maturing 2008-2012
Unsecured loans, maturing 2008-2013
Current portion of long-term debt¥

50,000
100
100
3,176
4,860
58,236(3,286)54,950¥¥50,000
–
–
4,073
5,645
59,718(3,121)
56,5972008$$

500,000
1,000
1,000
31,76048,600582,360(32,860)
549,500

Mortgage loans were secured by property, plant and equipment and other assets amounting to ¥6,912 million ($69,120 thousand) and ¥7,143 million
at March 31, 2008 and 2007, respectively.
With minor exceptions, interest rates on mortgage loans ranged from 2.87% to 5.67% per annum for 2008 and were 6.31% per annum for 2007, whileinterest rates on unsecured loans ranged from 0.44% to 1.90% per annum for 2008 and from 0.44% to 1.30% per annum for 2007.
The aggregate annual maturities of long-term debt after March 31, 2008 were as follows:Year ending March 31

Millions of yen

¥

2009
2010
2011
2012
2013
2014 and thereafter

¥

3,286
2,127
1,378
740
490
50,21558,236

Thousands of U.S. dollars(Note 3)$$32,86021,27013,7807,400
4,900
502,150
582,360

8. Retirement Benefits
The Company and its domestic subsidiaries have several defined benefit retirement plans covering all of their employees, i.e. corporate pension plan, taxqualified non-contributory pension plan, a governmental welfare contributory pension plan, lump-sum retirement plan and defined contribution pension
plan. Upon retirement or termination of employment for reasons other than the cause of dismissal, employees are entitled to lump-sum payments basedon the current rate of pay, length of services and accumulated number of points determined based on the employment services.
Under the Defined Benefit Pension Plan Law, the Company has established new defined benefit pension plans on March 1, 2005 under which ninety
percent of the retirement benefit liability of the Company is covered by the employees’ pension fund.
In October 2007, several domestic consolidated subsidiaries made a change in the retirement benefit plans for employees, which included abolishmentof retirement payments in a lump-sum and a transfer, in part, from a defined benefit pension plan to a defined contribution pension plan. Accordingly,
prior service costs of ¥2,787 million ($27,870 thousand) identified during the current period have been recognized as other income for the year ended
March 31, 2008, in accordance with the ASBJ Guidance No.1, Accounting for Transfer between Retirement Benefit Plans.
The liability for employees’ retirement benefits at March 31, 2008 and 2007 consisted of the following:Thousands of U.S. dollars(Note 3)

Millions of yen

2007

2008
Projected benefit obligation
Fair value of plan assets
Unrecognized actuarial gain/loss
Unrecognized prior service cost
Prepaid pension cost
Net liability¥¥

158,731(106,268)(10,280)(6,866)
5,032
40,349¥¥Financial Section

156,427(95,896)
2,280(9,174)
1,639
55,276

2008$$

1,587,310(1,062,680)(102,800)(68,660)
50,320403,490

DNP Annual Report 2008

123

The components of net periodic benefit costs were as follows:

Thousands of U.S. dollars(Note 3)

Millions of yen

2007

2008
Service cost
Interest cost
Expected return on plan assets
Actuarial gain/loss
Amortization of prior service cost
Gain on contribution of investment securities to pension trust
Gain on revision of retirement benefit plan
Net periodic benefit costs

¥

¥

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

¥

¥

9,249
3,693
(2,014)
350
2,292
–
–
13,5702008$$

94,40037,530(22,740)(9,770)22,940(73,110)(27,870)
21,380Assumptions used for the years ended March 31, 2008 and 2007 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

2008

2007

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

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

9. Net Assets
Since May 1, 2006, Japanese companies are subject to the Corporate Law of Japan (the “Corporate Law”), which reformed and replaced theCommercial Code of Japan. The significant provisions in the Corporate Law that affect financial and accounting matters are summarized below:(a) Dividends
Under the Corporate Law, companies can pay dividends at any time during the fiscal year in addition to the year-end dividend upon resolution at thestockholders meeting. For companies that meet certain criteria such as; (1) having the Board of Directors, (2) having independent auditors, (3) having
the Board of Corporate Auditors, and (4) the term of service of the directors is prescribed as one year rather than two years of normal term by its articles
of incorporation, the Board of Directors of such company may declare dividends (except for dividends-in-kind) at any time during the fiscal year if thecompany has prescribed so in its articles of incorporation. The Company meets all the above criteria. However, its articles of incorporation have notstipulated that the Board of Directors may declare dividends at any time during the fiscal year.
The Corporate Law permits companies to distribute dividends-in-kind (non-cash assets) to stockholders subject to a certain limitation and additional
requirements.
Semiannual interim dividends may also be paid once a year upon resolution by the Board of Directors if the articles of incorporation of the company
so stipulate. The Corporate Law provides certain limitations on the amounts available for dividends or the purchase of treasury stock. The limitation isdefined as the amount available for distribution to the stockholders, but the amount of net assets after dividends must be maintained at no less than ¥3
million.
Cash dividends of ¥20.00 ($0.2) per share, aggregating ¥13,241 million ($132,410 thousand) were approved at the general stockholders’ meeting heldin June 2008 with respect to the year ended March 31, 2008.
(b) Increases /decreases and transfer of common stock, reserve and surplus
The Corporate Law requires that an amount equal to 10% of dividends must be appropriated as a legal reserve (a component of retained earnings) or
as additional paid-in capital (a component of capital surplus) depending on the equity account charged upon the payment of such dividends until the
total of aggregate amount of legal reserve and additional paid-in capital equals 25% of the common stock. Under the Corporate Law, the total amountof additional paid-in capital and legal reserve may be reversed without limitation. The Corporate Law also provides that common stock, legal reserve,
additional paid-in capital, other capital surplus and retained earnings can be transferred among the accounts under certain conditions upon resolution of
the stockholders.

(c) Treasury stock and treasury stock acquisition rights
The Corporate Law also provides for companies to purchase treasury stock and dispose of such treasury stock by resolution of the Board of Directors.
The amount of treasury stock purchased cannot exceed the amount available for distribution to the stockholders which is determined by specificformula.
Under the Corporate Law, stock acquisition rights, which were previously presented as a liability, are now presented as a separate component of net
assets.
The Corporate Law also provides that companies can purchase both treasury stock acquisition rights and treasury stock. Such treasury stockacquisition rights are presented as a separate component of net assets or deducted directly from stock acquisition rights. At present, the Company has
not issued such stock acquisition rights.

124

Upon approval by the resolution of the Board of Directors, the Company purchased 32,771 thousand shares of common stocks at aggregate cost of¥58,454 million ($584,540 thousand) and 10,658 thousand shares at ¥19,475 million during the year ended March 31, 2008 and 2007, respectively.
Furthermore, the Company retired 30,000 thousand shares of common stocks at aggregate cost of ¥52,647 million ($526,470 thousand) and 10,000
thousand shares at ¥16,495 million during the year ended March 31, 2008 and 2007, respectively.

10. Accounts with Non-consolidated Subsidiaries and Associated Companies
Account balances with non-consolidated subsidiaries and associated companies as of March 31, 2008 and 2007 were summarized as follows:
Thousands of U.S. dollars(Note 3)

Millions of yen

2007

2008
Trade receivables
Other current assets
Investment securities (stock)
Long-term loans
Other investments
Trade payables
Accrued expenses
Other current liabilities

¥

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

¥

2008

8,680
72
3,340
4,631
226
205
304
464

$

95,6805,030
143,31055,010
2,260
2,980
3,960
6,200

11. Selling, General and Administrative Expenses
Selling, general and administrative expenses for the years ended March 31, 2008 and 2007 consisted of the following:Thousands of U.S. dollars(Note 3)

Millions of yen

2007

2008
Transportation expenses
Salaries and allowances
Accrued bonuses
Provision for retirement benefits
Depreciation
Research and development expenses
Other

¥

¥

21,704
53,1296,494
2,614
10,06632,84074,230201,077

¥

¥

2008

20,20554,529
6,743
3,476
9,150
27,78571,697
193,585$$

217,040
531,290
64,94026,140100,660
328,400
742,300
2,010,770

Total research and development expenses (including manufacturing costs) amounted to ¥35,556 million ($355,560 thousand) and ¥30,113 million for2008 and 2007, respectively.

12. Other Income
The following types of income from non-consolidated subsidiaries and associated companies were included in other income.
Thousands of U.S. dollars(Note 3)

Millions of yen

2007

2008
Interest and dividend income
Leasing fees

¥

67
253

¥

Financial Section

2008
55
367

$

DNP Annual Report 2008

670
2,530

125

13. Income Taxes
The Company and its domestic consolidated subsidiaries are subject to a number of different taxes based on income, which, in the aggregate, resulted
in a normal effective statutory tax rate of approximately 40.7% for the years ended March 31, 2008 and 2007, respectively.
The actual effective tax rate reflected in the accompanying consolidated statements of income differs from the normal effective statutory tax rate
primarily due to the effect of permanently non-deductible expenses, current operating losses of subsidiaries and different tax rates applicable to foreignsubsidiaries, etc.
The following is a reconciliation of the difference between the normal effective statutory tax rate and the actual effective tax rate for the years ended
March 31, 2008 and 2007, respectively.

Normal effective statutory tax rate
Expenses not deductible for income tax purposes
Change in valuation allowance
Amortization of consolidation goodwill
Undistributed earnings of foreign subsidiaries
Special tax credit
Other
Actual effective tax rate

2008

2007

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

40.7%
1.7
1.9
1.1
0.9
(2.9)
0.1
43.5%

Net deferred tax assets at March 31, 2008 and 2007, resulting from temporary differences between the carrying amounts and the tax bases of assets
and liabilities, were reflected on the accompanying consolidated balance sheets under the following captions:Thousands of U.S. dollars(Note 3)

Millions of yen

2007

2008
Prepaid expenses and other current assets
Other assets
Other current liabilities
Other long-term liabilities
Net deferred tax assets¥¥

12,99318,601(19)(2,799)28,776¥¥

14,2178,448(19)(5,547)
17,0992008$$

129,930
186,010(190)(27,990)
287,760

Significant components of deferred tax assets at March 31, 2008 and 2007 were as follows:
Thousands of U.S. dollars(Note 3)

Millions of yen

2007

2008
Deferred tax assets:
Excess provision for retirement benefits
Loss on devaluation of investment securities
Excess provision for doubtful receivables
Accrued bonuses
Operating loss carryforwards
Intercompany profits
Enterprise tax payable
Impairment loss on fixed assets
Other
Total deferred tax assets
Less: valuation allowance		
Total
Deferred tax liabilities:
Unrealized gain on available-for-sale securities
Undistributed earnings of subsidiaries
Other
		
Total
Net deferred tax assets:

126

17,151
14,917
5,620
7,272
8,904
1,424
1,456
3,394
8,793
68,931(21,808)
47,123¥¥¥(7,318)(9,520)(1,509)(18,347)¥

28,776

¥

¥

¥

2008

23,00813,743
4,965
6,537
7,533
2,113
1,458
2,724
5,777
67,858(11,772)
56,086$$¥(28,465)(9,049)(1,473)(38,987)$(73,180)(95,200)(15,090)(183,470)¥

17,099$287,760¥$

171,510
149,170
56,20072,72089,04014,24014,56033,94087,930689,310(218,080)
471,230

14. Impairment Loss on Fixed Assets
The Company and its consolidated subsidiaries reviewed the fixed assets for impairment for the years ended March 31, 2008 and 2007. Fixed assets
were, in principle, grouped at the business unit for impairment testing purposes. Idle assets were grouped in each asset. Loss on impairment of fixed
assets for the year ended March 31, 2008 was recognized in the amount of ¥3,300 million ($33,000 thousand) including the losses on impairment ofassets of a U.S. subsidiary. The losses on impairment of fixed assets for the years ended March 31, 2008 and 2007 were as follows:
Thousands of U.S. dollars(Note 3)

Millions of yen

2007

2008
Land
Machinery and equipment
Buildings
Goodwill and others
Total

¥

¥

46
1,554
653
1,047
3,300

¥

¥

–
–
–
1,283
1,283

2008
$

$

460
15,5406,530
10,47033,00015. Leases
Where finance leases do not transfer ownership of the leased property to the lessee during the lease terms, the leased property is not capitalized and therelated lease expenses are charged to income in the period incurred, as per the statement issued by the Business Accounting Deliberation Council ofJapan.
Pro forma information such as acquisition cost, accumulated depreciation and net book value of the leased properties for such finance lease purposes
was as follows:
Thousands of U.S. dollars(Note 3)

Millions of yen

2007

2008
Acquisition cost
Accumulated depreciation
Net book value¥¥

46,882(23,226)
23,656¥¥42,186(19,814)
22,372

2008$$

468,820(232,260)
236,560

Lease expenses on finance lease contracts without ownership-transfer amounted to ¥11,415 million ($114,150 thousand) and ¥10,439 million for theyears ended March 31, 2008 and 2007, respectively.
The amounts of outstanding future payments under finance leases due on March 31, 2008 and 2007, including the portion of interest thereon, weresummarized as follows:
Thousands of U.S. dollars(Note 3)

Millions of yen

2007

2008
Future lease payments:
One year or lessMore than one year

¥
¥

9,758
13,89823,656¥¥

8,493
13,87922,372

2008$$

97,580138,980
236,560

The amounts of outstanding future payments under operating leases due on March 31, 2008 and 2007 were also summarized as follows:
Thousands of U.S. dollars(Note 3)

Millions of yen

2007

2008
Future lease payments:
One year or lessMore than one year

¥
¥

706
2,539
3,245

¥
¥

Financial Section

756
2,747
3,503

2008
$
$

7,060
25,39032,450DNP Annual Report 2008127

16. Derivative Financial Instruments
Nature of Derivative Financial Instruments:
The Company and certain consolidated subsidiaries enter into derivative financial instruments (“derivatives”) for foreign currency forward contracts tohedge foreign exchange risks associated with certain accounts receivable and accounts payable, including forecasted transactions, denominated inforeign currencies. The Company and its subsidiaries do not hold derivatives for speculative purposes.
Derivatives are subject to market risks and credit risks. Because the counterparties to those derivatives are limited to major international financial
institutions, the Company and its subsidiaries do not anticipate any losses arising from credit risks. The basic policies for the use of derivatives are
established in the Company’s internal regulations and the execution and control of derivatives are controlled by the Accounting Department.
Fair value of Derivative Financial Instruments:
The contracted amount and fair value of derivatives for foreign currency forward contracts at March 31, 2008 and 2007 were as follows:
Millions of yen

Contracted
amountMarch 31, 2008

Receivables:
U.S. dollars
Euro

¥
¥

4,927
367
5,294

Fair value

¥
¥

4,679
367
5,046

Unrealized gain

¥
¥

248
0
248

Thousands of U.S. dollars (Note 3)

Contracted
amountMarch 31, 2008

Receivables:
U.S. dollars
Euro

$
$

49,2703,670
52,940Fair value$$

46,7903,670
50,460

Unrealized gain

$
$

2,480
0
2,480

Millions of yen

Contracted
amountMarch 31, 2007

Receivables:
U.S. dollars
Euro

¥
¥

8,785
602
9,387

Fair value

¥
¥

8,832
608
9,440

Unrealized loss

¥
¥

47
6
53

Fair value was determined based on the foreign currency forward exchange market rates. Foreign currency forward contracts which qualified for hedge
accounting for the years ended March 31, 2008 and 2007 and were assigned to the associated assets and liabilities or deferred until completion of theforecasted transactions were excluded from disclosure of the above fair value information.

17. Contingent Liabilities
The Company was guarantor of bank loans of another company, amounting to approximately ¥91 million ($910 thousand) and ¥100 million at March 31,
2008 and 2007, respectively. It is common practice in Japan for companies, in the ordinary course of business, to receive promissory notes in settlementof trade accounts receivable and to subsequently discount such notes at banks. At March 31, 2008 and 2007, the Company and its consolidated
subsidiaries were contingently liable on trade notes discounted in the amount of ¥820 million ($8,200 thousand) and ¥820 million, respectively. Notes
discounted were accounted for as sales.

18. Business Segment Information
Industry segments:
The Company and its consolidated subsidiaries’ primary business industries principally consist of Printing and Beverage operations. The Printing
business includes three segments : Information Communication, Lifestyle and Industrial Supplies, and Electronics.
The following tables present certain financial information, including net sales, costs and expenses, operating income, assets, depreciation, impairment
loss and capital expenditures regarding the Company’s industry segments at March 31, 2008 and 2007 and for the years then ended.

128

Millions of yen

For 2008 :Net sales :Outside customers
Inter-segment
		 Total
Costs and expenses
		 Operating income
Assets, depreciation, impairment loss andcapital expenditures :AssetsDepreciation
Impairment loss
Capital expenditures

Information
Communication¥¥¥

Printing
Lifestyle andIndustrial
Supplies

Electronics

Beverages

Elimination
and/orcorporate

Total

Consolidated

672,772 ¥
7,125
679,897
636,82143,076 ¥547,567 ¥8,225
555,792
523,929
31,863 ¥322,264 ¥48
322,312302,494
19,818 ¥73,450 ¥ 1,616,053 ¥
15,44345
1,631,496
73,495
1,535,413
72,16996,083 ¥1,326 ¥

– ¥ 1,616,053–(15,443)
1,616,053(15,443)
1,528,949(6,464)
87,104(8,979) ¥557,532 ¥23,27953
26,539532,230 ¥
28,5881,051
31,819427,402 ¥51,7172,153
45,98444,335 ¥ 1,561,499 ¥
107,249
3,665
3,300
43
108,034
3,692

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

Thousands of U.S. dollars (Note 3)

For 2008 :Information
Communication

Printing
Lifestyle andIndustrial
Supplies

Electronics

Beverages

Elimination
and/orcorporate

Total

Consolidated

Net sales :Outside customers
Inter-segment
		 Total
Costs and expenses
		 Operating income$ 6,727,720 $ 5,475,670 $ 3,222,640 $480
82,25071,2503,223,120
5,557,920
6,798,970
3,024,940
5,239,290
6,368,210
198,180 $318,630 $$
430,760 $

734,500 $ 16,160,530 $
154,430450
16,314,960
734,950
15,354,130
721,690
960,830 $13,260 $– $ 16,160,530–(154,430)(154,430) 16,160,530(64,640) 15,289,490
871,040(89,790) $Assets, depreciation, impairment loss andcapital expenditures :AssetsDepreciation
Impairment loss
Capital expenditures$ 5,575,320 $ 5,322,300 $ 4,274,020 $
517,170
285,880
232,790
21,53010,510530
459,840
318,190
265,390443,350 ¥ 15,614,990 $
1,072,490
36,65033,000430
1,080,340
36,920396,940 $ 16,011,930
1,099,020
26,53033,000–1,161,390
81,050Millions of yen

For 2007 :Net sales :Outside customers
Inter-segment
		 Total
Costs and expenses
		 Operating income
Assets, depreciation, impairment loss andcapital expenditures :AssetsDepreciation
Impairment loss
Capital expenditures

Information
Communication¥¥¥

Printing
Lifestyle andIndustrial
Supplies

Electronics

Beverages

Elimination
and/orcorporate

Total

Consolidated

662,887 ¥5,955
668,842
617,884
50,958 ¥528,918 ¥
3,795
532,713496,461
36,252 ¥291,911 ¥5
291,916
277,024
14,892 ¥74,086 ¥ 1,557,802 ¥
9,791
36
1,567,593
74,122
1,464,851
73,482
102,742 ¥640 ¥– ¥ 1,557,802–(9,791)
1,557,802(9,791)
1,461,657(3,194)
96,145(6,597) ¥539,222 ¥
20,862–
41,107522,162 ¥
24,733
1,283
39,919438,746 ¥
49,633–75,996

41,354 ¥ 1,541,484 ¥
98,797
3,569
1,283
–
160,153
3,131

158,766 ¥ 1,700,250
100,161
1,364
1,283
–
162,886
2,733

Financial Section

DNP Annual Report 2008

129

Information by geographic area:
Disclosure of information by geographic area was not required as domestic sales and assets exceeded 90% of consolidated sales and assets, respectively,
before elimination, for all segments for the years ended March 31, 2008 and 2007.
Overseas sales:
Overseas sales of the Company and its consolidated subsidiaries for the years ended March 31, 2008 and 2007 were as follows:
Thousands of U.S. dollars(Note 3)

Millions of yen

2007

2008
AmountOverseas sales (a)
Asia
Other
Total
			
Consolidated net sales (b)

130

¥
¥

195,093
84,445279,538¥

1,616,053

Ratio:(a)/(b)
12.1%
5.2%
17.3%

Amount¥¥177,71378,567
256,280¥

1,557,802

2008
Ratio:(a)/(b)
11.4%
5.1%
16.5%

$
$

1,950,930
844,450
2,795,380$

16,160,530

Independent Auditors’ Report
To the Board of Directors of
Dai Nippon Printing Co., Ltd.
We have audited the accompanying consolidated balance sheets (expressed in Japanese yen) of Dai Nippon Printing Co.,
Ltd. and consolidated subsidiaries as of March 31, 2008 and 2007, and the related consolidated statements of income,changes in net assets, and cash flows for the years then ended. These consolidated financial statements are the responsibilityof the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements basedon our audits.
We conducted our audits in accordance with auditing standards generally accepted in Japan. Those standards require thatwe plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free ofmaterial misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial
position of Dai Nippon Printing Co., Ltd. and consolidated subsidiaries as of March 31, 2008 and 2007, and the resultsof their operations and cash flows for the years then ended in conformity with accounting principles generally accepted inJapan.
Our audits also comprehended the translation of Japanese yen amounts into U.S. dollar amounts and, in our opinion, suchtranslation has been made in conformity with the basis stated in Note 3 to the consolidated financial statements. Such U.S.
dollar amounts are presented solely for the convenience of readers outside Japan.

Tokyo, Japan
June 17, 2008

MEIJI AUDIT CORPORATION

Financial Section

DNP Annual Report 2008131

Appendix
Printing Process and its Basic Technologies

Printing can be defined as a generic term for techniques of transferring
ink from an image on a form plate to another object in order to reproduce
the original image. It entails five main processes 1) planning, 2) film
making, 3) plate making, 4) printing and 5) binding/post-processing.
Through these five main processes, we have cultivated a truly wide rangeof skills and expertise.
First, planning: this requires an amalgamation of knowledge and skills
related to various fields, including marketing, media selection, planningand the collection, editing and processing of information. The preparationof form plates, including film making and platemaking, requires skills
like sophisticated digital image processing, color management, optics
and micro-processing. The actual printing process entails skills andknowledge related to paper, film or other material to be printed, ink anda wide range of other materials, application techniques for fixing ink,
and the mechanical skills required for the smooth operation of printingpresses. Binding and post-processing involves skills needed to finish avariety of printed products, including bound-in sleeves, CD-ROM/DVD
bindings, packaging material productions, and the formation of cups andPET bottles.
As the reader can see, printing is a complex process with both softand hard aspects. It requires the integration of content, all types of
media, materials and control of mechanical systems.

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

PT (Printing Technology)
Materials Technology

Patterning Technology

Converting Technology

Printing Process
Manuscript

Data processing

Texts. graphics,
animations and audios, etc.

Data entry, data creation,
resolution with scanner, etc.

Data Processing
Technology

FilmmakingPlate making

Printing

Processing

Distribution

ＨＭＩTechnology（Human Media Interaction）

Information Security
Technology

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

132

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

Technologies and Their Applications

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

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

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

Application Example 1

Application Example 2

Development of User-Oriented Media

Responding to the Need for Advanced Information Security

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

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

Left: Traditional Shueitai font

Right: Shueitai font adapted for easy reading on digital display

Appendix

DNP Annual Report 2008133

Technologies and Their Applications

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

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

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

Application Example 1

Application Example 2

Display Components/Color Filters for LCDs

Electronic Devices/Photomasks

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

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

134

Technologies and Their Applications

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

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

Application Example 1

Application Example 2

High-function Optical Film

Ink Ribbons for Digital Photo Printers

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

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

Appendix

DNP Annual Report 2008135

Technologies and Their Applications

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

processes like sealing film packages and forming plastic. Eventually, we ended
up developing and improving forming technologies for a variety of materials,
including laminated tubes and PET bottles.
In these processes, we must pay as much attention to the functionality ofthe end product as we do to the aesthetics of the printing. We must think
not only about durability and other types of strength, but also about the easeof use. When we are binding a very thick book like a computer manual, we
must bind it very firmly. At the same time, we find a way to allow the manual
to stay open at the desired page even when the reader has both hands on thecomputer. Because we seek maximum functionality in the arena of daily life,
our post-processing technologies must also reflect consideration for aspects
like environmental impact and universality of design.
The products that we make by applying these post-processing technologies
are the result of matching DNP’s technological strengths with what it is that ourcustomers want.

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

Application Example 1

Application Example 2

Designing in Functionality and Comfort

Aseptic Filling System that Does Not Harm Delicate Flavors

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

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

136

Glossary

General Terms
3-D illustration (touch picture)
A 3-dimensional picture or diagram made withconcave and convex parts so that people who are
visually handicapped can understand it by touching.
Anti-glare film
Film that is attached to the surface of the display indevices such as computers and televisions, in orderto prevent outside light or interior light from causing
glare on the screen.
Aseptic filling system
A system for filling PET plastic bottles or othercontainers with beverages or food in an aseptic
environment at room temperature.
By-plant
A factory that is built adjacent to a customer’s
factory in order to efficiently supply that customer
with components.

Phase differential film
A material used for optical compensation in liquid
crystal displays. It is used to prevent coloration orother display problems caused by optical distortiondue to multiple refraction or by unusual tones
resulting from the direction of the optic angle. This
material is used to prevent dependence on theviewing angle.
Photolithography
A technology for forming patterns on a surface thatis painted with photosensitive material by exposing
it to light.
Semiconductor photomask
An original plate used in the process ofmanufacturing semiconductor devices. A circuit
pattern drawn onto a glass substrate is transferred
to a light-sensitive film applied to the surface of asemiconductor wafer, generally by means of light,
and etching or some similar process is used to form
the desired pattern on the wafer.

Dye-sublimation thermal transfer recording
media
Consists of ink ribbon with the three primary colors
of ink (Y,C,B - yellow, magenta, and cyan) andspecial receiver paper. Heat from thermal heads
transfers ink to the receiver paper. This media can
express smooth color tones, and is good for photo
printing among other applications.

SIM (Subscriber Identification Module) card
A smart card that can be inserted in a mobile
phone used with a GSM (Global System for Mobile
Communication) network. It stores a service
subscriber key that identifies the phone number ofthe device that contains it.

Inkjet method
A method of printing directly onto a substrate media
by spraying droplets of ink through nozzles piercedwith tiny holes.

Contrast improvement film
A film that is applied to the front glass substrate ofa plasma display panel. It is usually used in highadded-value products in order to improve color
tone.

In-plant
A production facility that is built inside a customer’s
factory in order to efficiently supply that customer
with components.
Interactive content
Content that can be manipulated by the user rather
than being broadcast unilaterally, and responds
interactively in very close to real time.
LC color filter
A component used to colorize liquid crystal
displays. It consists of colorization layers with red,green, and blue (RGB, the three primary colors oflight) pigments arrayed in patterns on a substrate.
Lead frameThin metal plate that is mainly used for the internal
wiring of semiconductor packages.

DNP Product and Service Names

Innovative Barrier (IB) Film
Wrapping material that excels in terms of bothtransparency and barrier properties, and also has
good heat resistance. It is mainly used to wrap foodproducts.
Micro Electromechanical Systems (MEMS)
Devices that integrate tiny components made withsemiconductor microprocessing technology.
“Monozukuri 21” Activities(Production 21 Activities)
Activities that create a framework for responding
flexibly and rapidly to customers’ requirements.
This is accomplished by making continuous
improvements aimed at eliminating waste,increasing quality and efficiency, and loweringcosts. It is based on Total Productive Maintenance(TPM), and entails a return to our monozukuri(manufacturing) roots.
Roll to Roll
A technique for printing on rolled paper or otherprinting media and re-rolling the material after it
has been printed. This method is well-suited tomass production because it reduces the number oftimes that material has to be supplied, and makes it
possible to manufacture products with stable quality
at high speed.
Taiwa
Talking freely together until something new iscreated. Taiwa starts with listening to what theother person has to say, and leads to a sharedunderstanding.

Expansion Printing
Expanding our business by applying and developing
technologies — primarily the printing technologies
that we have cultivated since our founding — in avariety of fields.
In 1951, we entered the packaging and building
materials fields, and later we entered the electronics
field after succeeding in the development of
shadow masks in 1958 and in the development ofphotomasks in 1959. In the early 1970s, we began
digitizing texts and images, and since the 1980s
we have been increasingly involved in information
services using such media as CD-ROMs andInternet communication.
Information Processing Services (IPS)
A type of service whereby we process, produce,ship and deliver invoices or similar printed materials
within a secure environment, in response tocustomers’ need for quick and accurate processingof large amounts of data including personal or otherconfidential information.

Appendix

DNP Annual Report 2008

137

Major Subsidiaries and Affiliates

Printing
DNP Hokkaido Co., Ltd.
DNP Tohoku Co., Ltd.
DNP Tokai Co., Ltd.
DNP Nishinippon Co., Ltd.
DNP Shikoku Co., Ltd.

Capital(¥ million)

Photoengraving, printing, bookbinding, production and sales of packaging
Photoengraving, printing, bookbinding, production and sales of packaging
Photoengraving, printing, bookbinding and production of packaging
Photoengraving, printing, bookbinding, production and sales of packaging
Photoengraving, printing, bookbinding, production and sales of packaging

Ownership ratio
(%)

350
350
120
400
50

100.0
100.0
100.0
100.0
97.0

350
200
180
100
80
80
50
40
(S$1,000)
4,600

100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0

200
100
100
100
50

100.0
100.0
100.0
100.0
100.0

100
100
80
25
20
(Euro 1,000)
37

100.0
100.0
100.0
100.0
100.0
100.0

100
100
100
100
340
60
50
50
50
40
30
30
10

100.0
100.0
100.0
100.0
57.4
100.0
100.0
100.0
100.0
92.5
95.0
95.0
83.0

430
380
300
280
200
200
100
100
80
($1,000)
26,000

100.0
100.0
100.0
100.0
100.0
90.0
100.0
100.0
100.0
51.0

300
300
200

100.0
50.0
100.0

6,080
300
300
100
100
100
100
50

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

Information Communication
Books and Magazines

DNP Seihon Co., Ltd.
Bookbinding
DNP Offset Co., Ltd.
Offset printing
DNP Media Art Co., Ltd.
Photoengraving
DNP Total Process Maebashi Co., Ltd.
Photoengraving
DNP Techtas Ichigaya Co., Ltd.
Bookbinding
DNP Uniprocess Co., Ltd.
Photoengraving
DNP Total Process Nagaoka Co., Ltd.
Photoengraving
DNP Butsuryu Systems Ichigaya Co., Ltd.
Warehousing and packaging of books and magazines
Tien Wah Press (Pte.) Ltd.
Photoengraving, printing and bookbinding		Commercial Printing

DNP Media Create Kansai Co., Ltd.
DNP Graphica Co., Ltd.
DNP Media Create Co., Ltd.
DNP Multi Print Co., Ltd.
DNP Butsuryu Systems Shouin Co., Ltd.

Planning, production, photoengraving, printing and bookbinding
Printing and bookbinding
Planning, designing and photoengraving
Photoengraving, printing and bookbinding
Warehousing and packing of commercial printing

Business Forms

DNP Data Techno Co., Ltd.
Production and sales of plastic cards with magnetic stripes, IC chips and others
DNP Data Techno Kansai Co., Ltd.
Production of business forms and plastic cards
DNP Total Process Warabi Co., Ltd.
Photoengraving and machine plate activities
NexantiS Corporation*
Sales of smartcard related software and products
DNP Techtas Warabi Co., Ltd.
Enclosing, sealing, and logistics for business forms related products
DNP France SAS*
Smart card and security business research		Communication and Information

DNP Archives.com Co., Ltd.
DNP AV Center Co., Ltd.
DNP Digitalcom Co., Ltd.
DNP Space Design Co., Ltd.
am3* Inc.
Maison de DNP Ginza Co., Ltd.*DNP Corporate History Center Co., Ltd.
Trans Art Inc.*
YouToo Co., Ltd.*CP Design Consulting Co., Ltd.*
M’s Communicate Co., Ltd.*At Table Co., Ltd.*
MyPoint.com Japan Co., Ltd.

Planning, producing and sales of art objects and contents
Planning, production, editing and sales of TV broadcasting, movies and video software
Planning and production of digital media contents
Planning and designing shops, exhibition booths and other commercial spaces
Planning, production and sale of visual contents, etc.
Sales of Maison des Musées de France art products
Planning and production of corporate history archives
Procurement and sales of art objects
Provision of information over the Internet and mobile phones
Consultation for privacy protection and crisis management
Consultation for customer relationship management
Research, consulting and planning for sales promotions for grocery supermarkets
Marketing system planning and operations for Internet advertisements

Lifestyle and Industrial Supplies
Packaging

DNP Technopack Tokai Co., Ltd.
Photoengraving and production of packaging
DNP Techno Film Co., Ltd.
Production and processing of composite resins
DNP Technopack Co., Ltd.
Photoengraving and production of packaging
DNP Technopack Yokohama Co., Ltd.
Photoengraving and production of packaging
DNP Technopack Kansai Co., Ltd.
Photoengraving and production of packaging
Sagami Yoki Co., Ltd.
Production of laminated tubes
Aseptic Systems Co., Ltd.
Sales and consultation for aseptic systems for beverages
DNP Techno Polymer Co., Ltd.
Molding, processing and printing of plastic containers
DNP Hoso Co., Ltd.
Filling and processing of packages
PT DNP Indonesia
Production and sales of packaging products
		Lifestyle Materials

DNP Lifestyle Materials Marketing Co., Ltd.
DNP Ellio Co., Ltd.
DNP Lifestyle Materials Co., Ltd.

Sales of lifestyle products
Printing and processing of steel and other metal plates
Photoengraving and production of lifestyle products

Industrial Supplies

DNP Photo Imaging Co., Ltd.
DNP IMS Odawara Co., Ltd.
DNP PrintRush Co., Ltd.
DNP IMS Co., Ltd.
DNP OptoMaterials Co., Ltd.
DNP Fine Chemical Co., Ltd.
DNP Photo Marketing Co.,Ltd.
DNP ID Imaging Co., Ltd.

138

Holding company
Production and sales of photographic materials
Sales of digital photo printing systems and photographic materials
Production and sales of TTRs and ST materials
Manufacturing of optical products for displays
Production and sales of chemicals for photography
Sales of photo-related products
ID photographing and sales of ID photographs

Capital(¥ million)

DNP Denmark A/S
Manufacturing and sales of projection screens		
DNP Electronics America, LLC
Manufacturing and sales of projection screens		
DNP Photo Imaging America Corporation
Sales of digital photo printing systems and photographic materials
		
DNP Photo Imaging Corporation SAS
Investment in business corporations
		
DNP Photo Imaging Europe SAS
Sale of photo-related products		
DNP IMS America Corporation
Production and sales of TTRs and ST materials		Compagnie de Découpe de l’Ouest·CDO SAS
Production and sales of TTRs and ST materials
		
DNP IMS France SAS*
Sales of TTRs and ST materials
		

Ownership ratio(%)(Dkr1,000)
135,000(US$1,000)
15,045(US$1,000)
45,898(Euro 1,000)
50(Euro 1,000)
2,422(US$1,000)
53,320(Euro 1,000)
3,040(Euro 1,000)
300

100.0
(100.0)100.0(98.9)
98.9(66.0)
66.0(100.0)100.0(100.0)
100.0
23.4
100.0

Electronics
Display Components

DAP Technology Co., Ltd.
Production and sales of PDP back plates
DNP Color Techno Kameyama Co., Ltd.
Production and sales of color filters for LCDs
DNP Precision Devices Co., Ltd.
Production of display related components
DNP Display Technology Taiwan Co., Ltd.
Sales of display components and technological consultation		

12,0002,500
450(NT 1,000)
30,000

65.0
100.0
100.0
(99.0)
100.0

490
300
100
100
40
(Euro 1,000)
47,200(NT 1,000)
2,900,000

65.0
100.0
100.0
100.0
100.0
80.6

2,000
2,000
626
480
266
100
100
96
80
60

83.4
25.6
100.0
100.0
46.5
100.0
94.3
55.0
100.0
48.3

250
200
100
100
90
33
30
20

100.0
99.6
100.0
100.0
100.0
88.8
100.0
100.0

(US$1,000)
100(US$1,000)
54,378(US$1,000)
100(Euro 1,000)
92( £1,000)
120(A$1,000)
70(S$1,000)
350(Krw1,000)
500,000(NT 1,000)
10,000(US$1,000)
2,000(100.0)
100.0
(8.2)
100.0
(100.0)
100.0
100.0

Hokkaido Coca-Cola Bottling Co., Ltd.
Manufacturing and sales of soft drinks
2,935
			

(4.4)
57.6

Electronic Devices

DT Fine Electronics Co., Ltd.
Production and sales of components for manufacturing of semiconductor components
DNP Fine Electronics Co., Ltd.
Production and sales of components for manufacturing of semiconductor components
DNP LSI Design Co., Ltd.
Logical circuit designs for ICs and LSIs and layout designs
DNP Fine Electronics Sagamihara Co., Ltd.
Manufacturing of electronics precision parts
DNP Micro Technica Co., Ltd.
Inspection and packing of semiconductor components
DNP Photomask Europe S.p.A.
Manufacturing and sales of photomasks		
DNP Photomask Technology Taiwan Co., Ltd.
Manufacturing and sales of photomasks
		

(0.5)
100.0

OthersThe Inctec Inc.
Maruzen Co., Ltd.*DNP Logistics Co., Ltd.
Waseda Management Publishing Co., Ltd.
TRC, Inc.
D.N.K. Co., Ltd.
DNP Trading Co., Ltd.
Direc Co., Ltd.
DNP SP Tech Co., Ltd.
Kyoiku Shuppan Co., Ltd.

Development and sales of ink, varnish, pigments and dyes
Sale of books, magazines and stationaries
Packing, shipping operations and warehouse management
Operation of private cramming school
Sales of books and creation of data
Manufacturing, sales and repair of printing equipment and machine tools
Sales of paper and other products
Sales of publishing and educational equipment
Planning and production of promotional material
Publishing of educational books

Personnel Welfare, Facility Service and Others

Dai Nippon Kaihatsu Co., Ltd.
Shiobara Green Village Co., Ltd.*DNP Facility Services Co., Ltd.
DNP Information Systems Co., Ltd.
DNP Human Services Co., Ltd.
Uzumine Country Club Co., Ltd.*DNP Accounting Services Co., Ltd.
DNP Techno Research Co., Ltd.*Sales of real estate and maintenance of buildings and parking facilities
Management of leisure facilities
Management and operation of buildings and welfare facilities
Planning, designing, development, management and operation of information systems
Planning, management and data processing activities related to personnel plans
Management of golf courses
Accounting and consulting services
Studies related to patents and the preparation of contracts

Overseas Sales

DNP America, LLC
Sales of printing solutions, electronic components, and lifestyle materials
		
DNP Corporation USA
Holding company
		
DNP Holding USA Corporation
Holding company
		
DNP Europa GmbH*
Sales of displays, semiconductor components and lifestyle materials
		
DNP UK Co., Ltd.*Sales of lifestyle materials
		
Dai Nippon Printing Co. (Australia) Pty. Ltd.*Sales of printed materials and building materials
		
DNP Singapore Pte. Ltd.*Sales of displays, semiconductor components and lifestyle materials
		
DNP Korea Co., Ltd.*Sales of displays and semiconductor components
		
DNP Taiwan Co., Ltd.
Sales of displays and semiconductor components		
DNP International Trading (Shanghai) Co., Ltd.*Sales of printing solutions and packaging products
		

100.0
100.0
100.0
100.0
100.0
100.0

Beverages
Beverages

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

DNP Annual Report 2008139

Sources of Information about DNP

Reports■ “Yuho” Annual Securities Report (Japanese)

Submitted twice a year to the Finance Ministry in accordance with Article 24 of the
Securities Exchange Law (half-year report submitted in December, full year reportsubmitted in June). We submit a wide range of information, including consolidated financial
statements with an attached auditor’s report, non-consolidated financial statements,
summary of financial results, and information on outstanding shares and directors, etc.
■ “Tanshin” Earnings Release (Japanese, partially in English)

In accordance with Tokyo Stock Exchange rules, we prepare earnings releases for eachquarter. (We began making quarterly releases after the rules were amended in March
2003.) In addition to consolidated and non-consolidated financial statements, we reporton the status of sales, etc.

Publications■ Annual Report (Japanese, English)

Around August or September every year, we release a Japanese version and an English
version. In addition to consolidated financial statements, the report contains a message
from the president, business strategies, summaries of financial results, news from eachbusiness sector, financial analysis, etc.
■ “DNP Report” Report to Shareholders (Japanese)

This report is issued quarterly, in September, December, March and June, and is mailed toshareholders. Examples of its content include summaries of business reports, interviews
with management, information about new businesses, and information about shares.
■ Data Book (bilingual: Japanese and English)

Issued around August or September of every year, the Data Book contains values fromfinancial statements of the past 10 years, financial analysis values presented in the form oftables and graphs, etc. Financial statement values are taken from securities reports.
■ DNP Group CSR Report (Japanese, English version available as PDF file)

Issued around August or September of every year, the report covers corporate social
responsibility from the standpoint of the economy, society and the environment. Since weissued our “Eco-report” in 1998, we have continued to report under different names such
as “Environment Report” or “Sustainability Report.”■ Corporate Information (Japanese, English)

In order to give the public a better understanding of our operations, we published apamphlet about our company. It introduces each division and addresses aspects like
products, services, sales, planning, research and development, production facilities,
company history, and a summary of our activities.

140

Web Site
English: http://www.dnp.co.jp/index_e.html
We maintain a web site as a portal for communication with a large number of stakeholders.
In addition to general corporate information and news updates, we also offer PDF versionsof various reports and publications, introduce products, services and bases of operations inJapan and overseas, and receive inquiries. The site also has links to DNP Group companies.
■ Major features of our web site

• News releases• Information for investors: Financial highlights, bonds and rating report, disclosure policy,
share information, etc.
• PDF files: Annual “Yuho” Securities Reports, “Tanshin” Earnings Releases, “Koukoku”
Public Notices of Account Settlement, Annual Reports, DNP Reports, Data Books, DNPGroup CSR Reports, Corporate Information, etc.
• Introduction to each division’s business: Lists of products and services• Personal information protection• Materials procurement• Hiring information• Events and gallery information• Contact information, etc.

*Any DNP product or service trademarks mentioned in this annual report are registered in Japan.

DNP Annual Report 2008141