Business Results for the Year Ended December 31, 2016
[Japan GAAP] (Consolidated)
February 10, 2017

Company:
The Pack Corporation
Listed on the TSE1
Stock code:
3950
URL: http://www.thepack.co.jp
Representative: Yoshikazu Nakao, President & CEO
Contact:
Keiji Kimori, Senior Managing Director, General Manager of Administration HQ
TEL: +81-6-6972-1221
Expected date of annual shareholders’ meeting:March 30, 2017
Expected starting date of dividend payment:
March 31, 2017
Expected date of filing of annual securities report:
March 30, 2017
Preparation of supplementary financial document:
Yes
Results briefing:
Yes (for institutional investors and securities analysts)(Rounded down to million yen)

1. Consolidated business results for the year ended December 31, 2016
(January 1, 2016 through December 31, 2016)(1) Consolidated results of operations(% change from the previous corresponding period)
Net sales

Operating income

Million yen

Year ended Dec. 31, 2016
Year ended Dec. 31, 2015
(Note) Comprehensive income%

Profit attributable toowners of parent

Ordinary income
Million yen%

Million yen%

89,174
1.3
6,484
4.0
6,825
88,043
2.6
6,232
13.8
6,468
Year ended Dec. 31, 2016: 4,148 million yen (down 7.8%)
Year ended Dec. 31, 2015: 4,502 million yen (down 2.8%)

5.5
13.4

4,540
4,067

11.6
(5.9)

Basic earnings
per share

Million yen

Diluted earnings
per share

Yen%

Return on
equityYen

Year ended Dec. 31, 2016
231.47
Year ended Dec. 31, 2015
205.94(Reference) Investment earnings/loss on equity-method

Ratio of ordinary
Ratio of operating
income to total assets income to net sales%

231.259.7
205.84
9.2
Year ended Dec. 31, 2016: - million yen
Year ended Dec. 31, 2015: - million yen

%

%

9.1
9.0

7.3
7.1

(2) Consolidated financial position
Total assets

Net assets

Million yen

As of Dec. 31, 2016
As of Dec. 31, 2015
(Reference) Owner’s equity

Capital adequacy ratio

Net assets per share%

Yen

Million yen

76,291
48,60363.6
2,474.25
73,14245,41262.0
2,312.73
As of Dec. 31, 2016: 48,533 million yen
As of Dec. 31, 2015: 45,365 million yen(3) Consolidated cash flows
Cash flows fromoperating activities
Year ended Dec. 31, 2016
Year ended Dec. 31, 2015

Cash flows frominvesting activities

Cash flows fromfinancing activities

Cash and cash equivalents
at end of period

Million yen

Million yen

Million yen

Million yen

6,597
4,882

(4,144)(2,840)(995)(1,744)

12,90011,451

2. Dividends
Dividend per share
End of
1Q
Year ended Dec. 31, 2015
Year ended Dec. 31, 2016
Year ending Dec. 31, 2017
(forecasts)

Total
dividends(Total)Dividend
payout ratio(Consolidated)

Ratio of total
dividend to
net assets(Consolidated)

End of2Q

End of
3Q

Yen

Yen

Yen

Yen

Yen

Million yen

%

%

-

25.00
25.00

-

25.00
25.00

50.00
50.00

982
980

24.3
21.6

2.2
2.1

-

25.00

-

25.00

50.00

Year-end

Total

3. Forecast of consolidated business results for the year ending December 31, 201 7(January 1, 2017 through December 31, 2017)(% change from the previous corresponding period)
Net salesFirst half
Full year

Operating income

Profit attributable toowners of parent

Ordinary income

Basic earnings per
share

Million yen%

Million yen%

Million yen%

Million yen%

Yen

42,00091,000

1.6
2.0

2,600
6,700

3.0
3.3

2,800
7,000

2.7
2.6

1,700
4,700

2.0
3.5

86.67
239.61

* Notes(1) Material changes in subsidiaries during this period (Changes in scope of consolidations resulting from change sin subsidiaries): None
(2) Changes in accounting policies, accounting estimates and retrospective restatement
1) Changes in accounting policies based on revisions of accounting standard: Yes
2) Changes in accounting policies other than ones based on revisions of accounting standard: None
3) Changes in accounting estimates: None
4) Retrospective restatement: None

(3) Number of issued and outstanding shares (common stock)1) Number of issued and outstanding shares at the end of year (including treasury shares)
As of Dec. 31, 2016:

19,900,000 shares

As of Dec. 31, 2015:

19,900,000 shares

As of Dec. 31, 2015:

284,512 shares

2) Number of treasury shares at the end of year
As of Dec. 31, 2016:

284,592 shares

3) Average number of sharesYear ended Dec. 31, 2016:

19,615,465 sharesYear ended Dec. 31, 2015:

19,751,043 shares(Reference) Summary of non-consolidated business results
1. Non-consolidated business results for the year ended December 31, 2016
(January 1, 2016 through December 31, 2016)(1) Non-consolidated results of operations(% change from the previous corresponding period)
Operating income
Ordinary income
ProfitNet sales
Million yen%

Million yen%

Million yen%

Million yen%

80,91280,043

1.1
1.6

5,959
5,661

5.3
13.2

6,395
5,993

6.7
11.5

4,150
3,682

12.7
36.3

Year ended Dec. 31, 2016
Year ended Dec. 31, 2015

Basic earnings per share
Year ended Dec. 31, 2016
Year ended Dec. 31, 2015

Diluted earnings per share

Yen

Yen

211.57186.45211.37186.37(2) Non-consolidated financial position
Total assets

Net assets

Million yen

As of Dec. 31, 2016
As of Dec. 31, 2015
(Reference) Owner’s equity

Capital adequacy ratio

Net assets per share%

Yen

Million yen

71,20946,24767,96543,184As of Dec. 31, 2016: 46,204 million yen

64.9
2,355.51
63.5
2,200.51
As of Dec. 31, 2015: 43,164 million yen

2. Forecast of non-consolidated business results for the year ending December 31, 2017
(January 1, 2017 through December 31, 2017)(% change from the previous corresponding period)
Net salesFirst half
Full year

Ordinary income

ProfitBasic earnings per share

Million yen%

Million yen%

Million yen%

Yen

38,00082,500

1.5
2.0

2,600
6,600

0.1
3.2

1,500
4,300

(1.5)
3.6

76.47
219.21*Implementation status of auditing procedure
This financial summary is not subject to auditing procedure pursuant to the Financial Instruments and Exchange Act. At the ti meof disclosure of this report, the auditing procedure for the consolidated financial statements pursuant to the Financial Instruments
and Exchange Act has not been completed.
*Explanation regarding appropriate use of business forecasts and other special instructions
Note concerning forward-looking statements
Forecasts regarding future performance in these materials are based on assumptions judged to be valid and information availab leto the Company’s management at the time the materials were prepared. These materials are not promises by the Company
regarding future performance. Therefore, actual results may differ significantly from the forecasts due to various factors. P leaserefer to “1. Analysis of Results of Operations and Financial Position, (1) Analysis of Results of Operations” on page 2 for forecast
assumptions and notes of caution for usage.

The Pack Corporation (3950) Financial Report for Fiscal Year 2016

Contents of Attachments
1. Analysis of Results of Operations and Financial Position

2(1) Analysis of Results of Operations

2(2) Analysis of Financial Position

3(3) Basic Policy Concerning the Distribution of Profits and Dividend Distributions for the Fiscal Year
Under Review and the Subsequent Fiscal Year4(4) Business Risks

4

2. The Pack Corporation Group6

3. Management Principles

8(1) Fundamental Management Principles

8(2) Goals and Performance Indicators

8(3) Medium-term Business Strategy

8(4) Important Issues

8

4. Basic Approach for the Selection of Accounting Standards

8

5. Consolidated Financial Statements

9(1) Consolidated Balance Sheet

9(2) Consolidated Statement of Income and Consolidated Statement of Comprehensive Income11(3) Consolidated Statement of Changes in Equity

13(4) Consolidated Statement of Cash Flows

15(5) Notes to Consolidated Financial Statements

16

Going Concern Assumption

16

Changes in Accounting Policies

16

Segment and Other Information

17

Per Share Information

19

Material Subsequent Events

19

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The Pack Corporation (3950) Financial Report for Fiscal Year 2016

1. Analysis of Results of Operations and Financial Position(1) Analysis of Results of Operations
In 2016, the Japanese economy failed to break out of a period of no growth. Government economic stimulus
measures produced no significant benefits. Although the income of employees increased because of Japan’s labor
shortage, consumer spending remained lackluster and people were very reluctant to spend t heir money. At large
retail stores, sales were slow, particularly for apparel, and the upturn in demand from foreign tourists in Japan
peaked.
In the United States, there have been growing expectations regarding a big tax cut and substantial infrastructur einvestments following the victory of Donald Trump in the presidential election in November. These hopes havepushed up stock prices and had other positive effects. However, if the United States implements protectionist
policies, there may be a negative impact on the global economy, including Japan.
During 2016, there were many activities to accomplish the goals of the medium-term management plan under theslogan of “Growth and Innovation.” All group companies were focused on entering new markets and on ac tivities
such as proactive capital expenditures, developing new products and improving quality management in order toincrease earnings.
Net sales increased 1.3% year-on-year to 89,174 million yen, operating income increased 4.0% to 6,484 million yen,ordinary income increased 5.5% to 6,825 million yen, and profit increased 11.6% to 4,540 million yen.
Business segment performance was as follows.
(Paper Products)
The paper products segment accounted for 60.6% of consolidated sales in 2016 . Sales of paper bags, which
accounted for 31.9% of consolidated sales, increased 0.9% to 28,488 million yen. The main reasons were higher
sales of high-end bags to major specialty stores and growth in sales at Chinese subsidiaries.
Sales of paper folding cartons, which accounted for 15.5% of consolidated sales, increased 7.4% to 13,807 million
yen mainly due to sales activities that placed emphasis on raising sales of the paper folding cartons.
Sales of corrugated boxes, which accounted for 10.6% of consolidated sales, increased 5.5% to 9,494 million yen.
This increase was attributable to firm demand for boxes and growth in sales to large manufacturers and direct sale(Internet and catalog) retail companies.
Printing sales, which accounted for 2.5% of consolidated sales, increased 6.1% to 2,224 million yen as orders werestrong at both Keihin Tokushu Printing Corp. and NIKKO PRINT CORPORATION.
Overall, sales in this segment increased 3.5% to 54,015 million yen. Operating income was up 7.4% to 4,869 million
yen.
(Film Packaging)
The film packaging segment accounted for 21.6% of consolidated sales in 2016. Orders for products for disposable
diapers were sluggish in part because the contribution of sales to foreign tourists to demand in this product category
has largely come to an end. As a result, sales decreased 1.4% to 19,301 million yen. Operating income was up 9.8%
to 1,058 million yen.
(Other Businesses)
Other businesses accounted for 17.8% of consolidated sales in 2016. There was a decline in sales of products used inconjunction with the Pack Assortment Service system, which is a comprehensive outsourcing vendor system thatcovers everything from manufacturing and procuring packaging materials and other products to inventory control
and delivery. As a result, sales decreased 2.6% to 15,857 million yen and operating income decreased 8.7% to 1,508
million yen.

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The Pack Corporation (3950) Financial Report for Fiscal Year 2016

Outlook for 2017
In Japan, establishing a cycle in which “growth of consumer spending fuels more spending that, in turn, produceshigher corporate earnings” will continue to be a difficult task in 2017. Furthermore, there is increasing uncertainty
about the global economy due to the new Trump administration in the United States. The effects of this environment
on Japan are also difficult to predict.
Activities in 2017 are guided by the slogan “Strong Growth through Group Solidarity –Always Cheerful andAppreciative–.” We will proactively invest in equipment, strengthen production capacity and efficiency, and expand
businesses and enter into new markets in Japan and overseas for further growth. Furthermore, we are dedicated to
improving customer satisfaction by focusing on developing products and services and on quality management. At
the same time, we will further streamline our operations. The goal of all of these measu res is more growth in sales
and earnings.
(2) Analysis of Financial Position
1) Balance sheet position
Assets totaled 76,291 million yen at the end of the current fiscal year, up 3,149 million yen from the end of 2015.
The main factors were increases of 1,105 million yen in cash and deposits and 2,901 million yen in securities, anddecreases of 447 million yen in buildings and structures and 278 million yen in investment securities.
Liabilities decreased 41 million yen to 27,688 million yen. The main factors were a decrease of 606 million yen innotes and accounts payable-trade, and an increase of 383 million yen in electronically recorded
obligations-operating.
Net assets increased 3,190 million yen to 48,603 million yen. The main factor was an increase of 3,559 million yen
in retained earnings.
2) Cash flow position
The balance of cash and cash equivalents at the end of the current fiscal year increased 1,448 million yen, or 12.7%
from the end of previous fiscal year to 12,900 million yen.
Cash flows from operating activities
Operating activities provided net cash of 6,597 million yen (up 35.1 % from net cash provided of 4,882 million yen
in the previous fiscal year). The principal factors were profit before income taxes of 6,800 million yen anddepreciation of 1,784 million yen.
Cash flows from investing activities
Investing activities used net cash of 4,144 million yen (net cash used of 2,840 million yen in the previous fiscal
year). The principal factors were outlays of 1,624 million yen for the purchase of property, plant and equipment and10,202 million yen for the purchase of securities, while there were proceeds from sales of securities of 7,601 million
yen.
Cash flows from financing activities
Financing activities used net cash of 995 million yen (net cash used of 1,744 million yen in the previous fiscal year).
This was mainly due to outlays of 980 million yen for the cash dividends paid.

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The Pack Corporation (3950) Financial Report for Fiscal Year 2016

Reference: Cash flow indicators
Fiscal years ended

Dec. 31, 2012 Dec. 31, 2013 Dec. 31, 2014 Dec. 31, 2015 Dec. 31, 2016

Capital adequacy ratio

55.8

60.7

61.0

62.0

64.3

Capital adequacy ratio based on market prices

44.0

57.1

64.8

81.7

67.1

Interest-bearing debt to cash flow ratio

0.3

0.2

0.0

0.0

0.0

340.1

237.6

561.9

5,259.7

7,883.0

Interest coverage ratio(Notes): 1. Cash flow indices are calculated, using consolidated financial figures, as follows:
Capital adequacy ratio: Owner’s equity / Total assets
Capital adequacy ratio based on market prices: Market capitalization / Total assets
Interest-bearing debt to cash flow ratio: Interest-bearing debt / Operating cash flows
Interest coverage ratio: Operating cash flows / Interest payments
2. Market capitalization is calculated by multiplying the closing share price at the end of the period by the number ofissued and outstanding shares at the end of the fiscal year, net of treasury shares.
3. Interest-bearing debt includes all liabilities on the consolidated balance sheet that incur interest.
4. Operating cash flows and interest payments are taken from “Net cash provided by (used in) operating activities” and“Interest expenses paid” on the consolidated statement of cash flows, respectively.

(3) Basic Policy Concerning the Distribution of Profits and Dividend Distributions for the Fiscal Year Under
Review and the Subsequent Fiscal YearThe fundamental policy on dividend payments is to pay a stable dividend continuously while taking into
consideration each year’s performance as well as the need to retain earnings to expand businesses and build a soundbase for growth.
Retained earnings are used to sustain and increase the dividend payments to shareholders by funding initiatives thatare expected to increase earnings in the future, such as strengthening the financial position and paying for
production facilities, R&D programs and other activities.
The Pack Group intends to pay a year-end dividend of 25 yen per share for the fiscal year ended December 31, 2016.
This will make the total dividend distributions 50 yen per share for the fiscal year ended December 31, 2016, asplanned.
In the fiscal year ending December 31, 2017, we plan to pay an interim dividend of 25 yen per share and a year-end
dividend of 25 yen per share, resulting in a dividend per share of 50 yen.
(4) Business Risks
The following risk factors could have a material effect on decisions by investors. Forward-looking statements in thissection are based on the judgments of management as of the end of 2016. The Pack Group is aware that thefollowing events may occur and has taken actions to avoid these problems or respond properly.
1) Decline in domestic demand or lower market prices
Since our operations rely mainly on demand within Japan, sales are greatly influenced by the health of the Japanese
economy. If domestic demand shrinks or market prices fall due to a major recession in Japan, there could be an
adverse impact on the financial position or performance of the Group.
2) Impact of a disasterWe have done everything possible to minimize the impact of a disaster, but there is no guarantee that the effects of adisaster can be prevented or minimized. If the Group is unable to prevent or minimize the effects of a disaster, there
could be an adverse impact on the financial position or performance of the Group caused by a reduction in theGroup’s production capacity or an increase in manufacturing costs.

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The Pack Corporation (3950) Financial Report for Fiscal Year 2016

3) Risks involving legal and regulatory requirements or litigation
Our business activities are subject to a variety of legal and regulatory requirements, including environmental
regulations and intellectual property laws, and there could be a risk of litigation in connection with these legal andregulatory requirements.
There could be an adverse impact on the financial position or performance of the Group based on the outcome ofsuch litigation.
4) Product liability
In connection with its products, the Group is subject to claims for damages based on product liability.
At present the Group has not received any major claim for damages, but there could be a claim in the future.
The Group has product liability insurance, but it is conceivable that this insurance could be insufficient to a liability
payment that the Group may be required to make.
5) Procuring raw materials and merchandise
We constantly work on maintaining stable supplies and prices for raw materials and merchandise that we procure byusing a variety of Japanese and foreign manufacturers. Nevertheless, if a surge in the price of oil upset the balanceof supply and demand, there could be an adverse impact on the financial position or performance of the Group.
6) Impairment accounting
There may be asset impairment losses that result from how the Group uses non-current assets.
7) Counterparty credit risk
There are risks associated with the payments received by the Group from counterpartie s. We use commercial credit
insurance and other measures to manage credit risk. However, if the financial soundness of a large customer
deteriorated, there could be an adverse impact on the financial position or performance of the Group.

-5-The Pack Corporation (3950) Financial Report for Fiscal Year 2016

2. The Pack Corporation Group
There are eight companies in the Pack Group: the parent company and seven consolidated subsidiaries. The primarybusiness activities are the manufacturing and selling of paper products, film packaging and other products, as well
as research, distribution and services associated with these businesses.
The activities of the Group and information about each business segment are shown in the following table.

Name of businesssegment

Businesses

Company name

Paper products

Manufacturing, purchasing and selling paperbags, printed paper folding cartons, corrugatedboxes and other products

Film packaging

Manufacturing, purchasing and selling plastic
bags, garment bags and other products

Other businesses

Manufacturing, purchasing and selling gifts,
clothing, supplies, price tags, calendars, designer
creations, promotional goods and other products

The Pack Corporation
Keihin Tokushu Printing Corp.
NIKKO PRINT CORPORATIONPACK TAKEYAMA CO., LTDNISHINIHON PRINTING CO., LTD.
THE PACK AMERICA CORP.
The Pack (Shanghai) Corporation
The Pack (Changshu) Corporation
The Pack Corporation
PACK TAKEYAMA CO., LTD
THE PACK AMERICA CORP.
The Pack (Shanghai) Corporation
The Pack Corporation
PACK TAKEYAMA CO., LTDNISHINIHON PRINTING CO., LTD.
THE PACK AMERICA CORP.

THE PACK AMERICA CORP. is incorporated in the United States. Sales are mainly within the United States andCanada.
The Pack (Shanghai) Corporation mainly sells products to customers in China and the parent company in Japan. The
Pack (Changshu) Corporation manufactures paper bags for sale in China. Both companies are incorporated in China.

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The Pack Corporation (3950) Financial Report for Fiscal Year 2016

(Purchasing and selling paper
products, film packaging, gifts andother products)* THE PACK AMERICA CORP.

Finished products(Manufacturing, purchasing andselling paper products, gifts andother products)

Outsourced production* NISHINIHON PRINTING CO.,LTD.

Purchase of finished andsemi-finished products

Finished products

Outsourced
production
Outsourced production(Manufacturing, purchasing, andselling paper products, film
packaging, gifts and other products)

Purchase of finished andsemi-finished products

Finished products* PACK TAKEYAMA CO., LTD
Purchase of
semi-finished products

Outsourced
production
Outsourced production(Printing of paper products)
Finished products* Keihin Tokushu Printing Corp.
* NIKKO PRINT CORPORATION

Purchase of
semi-finished products(Selling paper products and film
packaging)

Finished products

Finished products* The Pack (Shanghai) Corporation

Outsourced
production

Purchase of finishedproducts(Manufacturing paper products)* The Pack (Changshu) Corporation(Note) * Consolidated subsidiaries-7-

Customers

The Pack Corporation(Manufacturing, purchasing and selling paper products, film packaging, gifts and other products)

Finished products

The Pack Corporation (3950) Financial Report for Fiscal Year 2016

3. Management Principles(1) Fundamental Management Principles
With “management that values and nurtures people” as our guiding principle, we aim to create “a management
culture that is capable of adapting to any type of change in our markets.” Furthermore, while keeping in mind our
responsibilities to society, such as addressing global environment issues, as an integrated packaging company wewill strive to achieve even better performance and meet the expectations of our shareholders while contributing to
the development and prosperity of society.
(2) Goals and Performance Indicators
We are committed to building a sound financial base in order to increase profitability in each business and maintainstable relationships with all of our stakeholders, including business partners, employees and, foremost, shareholders.
For this reason, our current goal is to increase our capital adequacy ratio and return on equity. We also placeemphasis on the dividend yield and dividend payout ratio.
(3) Medium-term Business Strategy
We have established a medium-term management plan with the goals of raising consolidated sales to 100 billion yen,ordinary income to 10 billion yen and the capital adequacy ratio to 70%. To accomplish these goals, we are pursuingthe 3S Vision, which consists of Scale, Speed and Save. All employees have established their own targets in order tocontribute to reaching the overall goals of the medium-term management plan.
(4) Important Issues
The packaging industry is viewed as a mature industry that has no prospects for major growth in sales and earnings
just by relying on the current customer base and product lineup. Due to this situation, we have been taking
numerous actions to expand operations beyond our traditional core products. We have entered new markets andadded more products. Examples include rice bags, products for disposable diapers and cartons for food products. We
will continue to target new markets and develop products where there is a potential for solid demand and will makesubstantial investments in the equipment required to achieve this growth.
Prices of raw materials and imported materials have continued to rise during the past few years in Japan due to theweaker yen and other reasons. In response, we have been working on selling products at adequate prices byimproving customer satisfaction. This involves using sales activities that include offering ideas to customers andmaking quality management even more rigorous. At the same time, we plan to build a more powerful profit structureby using reforms to further streamline operations. By taking these actions, we are determined to make ste ady
progress in line with our medium to long-term management principles and to continue increasing sales and earnings.
4. Basic Approach for the Selection of Accounting Standards
The Pack Group will continue to prepare consolidated financial statements using Japanese accounting standards forthe time being to permit comparisons with prior years and with the financial data of other companies. We will takesuitable actions with regard to the application of International Financial Reporting Standards (IFRS) b y taking into
account associated factors in Japan and other countries.

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The Pack Corporation (3950) Financial Report for Fiscal Year 2016

5. Consolidated Financial Statements(1) Consolidated Balance Sheet
Previous fiscal year
(As of December 31, 2015)(Million yen)
Current fiscal year
(As of December 31, 2016)

AssetsCurrent assets
Cash and deposits

8,589

9,695

Notes and accounts receivable-trade

23,50623,562

Securities

6,399

9,300

Merchandise and finished goods

5,145

5,149

Work in process

713

787

Raw materials and supplies

748

660

Deferred tax assets

205

263

Other

639

474

Allowance for doubtful accounts

(11)

(27)

45,93649,868

Buildings and structures, net

7,709

7,262

Machinery, equipment and vehicles, net

5,261

5,044

Total current assets
Non-current assets
Property, plant and equipment

Tools, furniture and fixtures, net

185

163

8,066

8,066

231

267

21,45320,804143

124

Investment securities

4,561

4,283

Deferred tax assets

419

647

Other

688

684

Allowance for doubtful accounts

(60)

(120)

Land
Construction in progress
Total property, plant and equipment
Intangible assets
Investments and other assets

Total investments and other assets
Total non-current assets
Total assets

-9-

5,608

5,494

27,20526,42373,142

76,291

The Pack Corporation (3950) Financial Report for Fiscal Year 2016

(Million yen)
Current fiscal year
(As of December 31, 2016)

Previous fiscal year
(As of December 31, 2015)
Liabilities
Current liabilities
Notes and accounts payable-trade

14,94014,334

Electronically recorded obligations-operating

4,115

4,499

Income taxes payable

1,305

1,303

Provision for bonuses

186

269

Provision for directors’ bonuses

43

47

Other

2,879

2,664

Total current liabilities

23,471

23,119

348

314

3,727

4,077

182

177

4,258

4,568

27,72927,688

Capital stock

2,553

2,553

Capital surplus

3,167

3,167

Retained earnings

39,09542,654

Treasury shares

(739)

(739)

Total shareholders’ equity

44,07747,636

1,763

1,595

Non-current liabilities
Deferred tax liabilities
Net defined benefit liability
Other
Total non-current liabilities
Total liabilities
Net assets
Shareholders’ equity

Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges

(5)

33

(114)

(190)

Remeasurements of defined benefit plans

(355)

(541)

Total accumulated other comprehensive income

1,287

896

20

43

Foreign currency translation adjustment

Subscription rights to shares
Non-controlling interests
Total net assets
Total liabilities and net assets- 10 -

27

26

45,412

48,60373,142

76,291

The Pack Corporation (3950) Financial Report for Fiscal Year 2016

(2) Consolidated Statement of Income and Consolidated Statement of Comprehen sive Income
Consolidated Statement of Income

Net sales
Cost of sales

Previous fiscal year
(from January 1, 2015 to
December 31, 2015)
88,04367,836(Million yen)
Current fiscal year
(from January 1, 2016 to
December 31, 2016)
89,174
68,158Gross profit

20,20721,015

Selling, general and administrative expenses

13,975

14,531

Operating income

6,232

6,484

100
83
62
48

109
88
62
72
46

294

379

0
9
3
15
29

0
15
4
17

58

38

6,468

6,825

6
20

0
0

26

0

1
16
0
44

0
12
0
12
-

Non-operating income
Interest income
Dividend income
Rent income
Foreign exchange gains
Other
Total non-operating income
Non-operating expenses
Interest expenses
Cost of lease revenue
Loss on sales of accounts receivable
Foreign exchange losses
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of non-current assets
Gain on sales of investment securities
Total extraordinary income
Extraordinary losses
Loss on sales of non-current assets
Loss on retirement of non-current assets
Loss on valuation of investment securities
Loss on valuation of membership
Compensation expenses
Total extraordinary losses

63

25

Profit before income taxes

6,432

6,800

Income taxes-current
Income taxes-deferred

2,246
117

2,392
(134)

Total income taxes

2,364

2,257

Profit

4,068

4,542

Profit attributable to non-controlling interests
Profit attributable to owners of parent- 11 -

0

1

4,067

4,540

The Pack Corporation (3950) Financial Report for Fiscal Year 2016

Consolidated Statement of Comprehensive Income
Previous fiscal year
(from January 1, 2015 to
December 31, 2015)
Profit(Million yen)
Current fiscal year
(from January 1, 2016 to
December 31, 2016)

4,068

4,542

Valuation difference on available-for-sale securities

654

(167)

Deferred gains or losses on hedges

(44)

38

Other comprehensive income

Foreign currency translation adjustment

(41)

(78)

Remeasurements of defined benefit plans, net of tax

(134)

(186)

Total other comprehensive income
Comprehensive income

434

(393)

4,502

4,148

4,503

4,149

(0)

(0)

Comprehensive income attributable toComprehensive income attributable to owners of parent
Comprehensive income attributable to non-controllinginterests- 12 -

The Pack Corporation (3950) Financial Report for Fiscal Year 2016

(3) Consolidated Statement of Changes in Equity
Previous fiscal year (from January 1, 2015 to December 31, 2015)(Million yen)
Shareholders’ equity
Capital stock
Balance at beginning ofcurrent period
Cumulative effects ofchanges in accounting
policies
Restated balance

Total shareholders’equityCapital surplus Retained earnings Treasury shares

2,553

3,167

36,330(6)

42,045

(314)
2,553

3,167

(314)

36,016(6)

41,731

Changes of items during
periodDividends of surplus

(989)

(989)

Profit attributable toowners of parent

4,067

4,067

Purchase of treasury shares
Disposal of treasury shares
Net changes of items otherthan shareholders’ equity
Total changes of items
during period
Balance at end of current
period

0

(732)

(732)

0

0
-

-

0

3,078

(732)

2,345

2,553

3,167

39,095(739)

44,077(Million yen)

Accumulated other comprehensive income
Valuation
Total
SubscripNonDeferred Foreign RemeasureTotal net
difference on
accumulatedtionrightscontrolling
gains or currency
ments ofassetsavailableotherto shares interests
losses on translation
definedfor-salecomprehensive
hedges adjustment benefit planssecurities
incomeBalance at beginning ofcurrent period
Cumulative effects ofchanges in accounting
policies
Restated balance

1,108

39

(74)

(220)

852

-

27

1,108

39

(74)

(220)

852

42,926
(314)

-

27

42,612

Changes of items during
periodDividends of surplus

-

(989)

Profit attributable toowners of parent

-

4,067

Purchase of treasury shares

-

(732)

Disposal of treasury shares-0

Net changes of items otherthan shareholders’ equity
Total changes of items
during period
Balance at end of current
period

654

(44)

(40)

(134)

435

20

(0)

454

654

(44)

(40)

(134)

435

20

(0)

2,800

1,763

(5)

(114)

(355)

1,287

20

27

45,412- 13 -

The Pack Corporation (3950) Financial Report for Fiscal Year 2016

Current fiscal year (from January 1, 2016 to December 31, 2016)(Million yen)
Shareholders’ equity
Capital stock
Balance at beginning ofcurrent period
Cumulative effects ofchanges in accounting
policies
Restated balance

Capital surplus Retained earnings

2,553

3,167

Treasury shares

Total shareholders’equity(739)

44,07739,095

2,553

3,167

39,095(739)

44,077

Changes of items during
periodDividends of surplus

(980)

(980)

Profit attributable toowners of parent

4,540

4,540

Purchase of treasury shares

(0)

(0)

Disposal of treasury shares
Net changes of items otherthan shareholders’ equity
Total changes of items
during period
Balance at end of current
period

-

-

3,559

(0)

3,559

2,553

3,167

42,654(739)

47,636(Million yen)

Accumulated other comprehensive income
Valuation
RemeasureTotal
SubscripNonDeferred Foreign
Total netdifference onments ofaccumulatedtionrightscontrolling
gains or currency
assetsavailabledefinedotherto shares interests
losses on translation
for-salebenefit comprehensive
hedges adjustment
securities
plans
incomeBalance at beginning ofcurrent period
Cumulative effects ofchanges in accounting
policies
Restated balance

1,763

(5)

(114)

(355)

1,287

20

27

1,763

(5)

(114)

(355)

1,287

45,412-20

27

45,412

Changes of items during
periodDividends of surplus

-

(980)

Profit attributable toowners of parent

-

4,540

Purchase of treasury shares-(0)

Disposal of treasury shares--

Net changes of items otherthan shareholders’ equity
Total changes of items
during period
Balance at end of current
period

(167)

38

(76)

(186)

(391)

23

(0)

(368)

(167)

38

(76)

(186)

(391)

23

(0)

3,190

1,595

33

(190)

(541)

896

43

26

48,603- 14 -

The Pack Corporation (3950) Financial Report for Fiscal Year 2016

(4) Consolidated Statement of Cash Flows(Million yen)
Current fiscal year
(from January 1, 2016 to
December 31, 2016)

Previous fiscal year
(from January 1, 2015 to
December 31, 2015)
Cash flows from operating activities
Profit before income taxes

6,432

6,800

Depreciation

1,777

1,784

Increase (decrease) in allowance for doubtful accounts

(5)

75

Increase (decrease) in provision for bonuses

582

Increase (decrease) in provision for directors’ bonuses

83

Increase (decrease) in net defined benefit liability

23

98

(183)

(198)

Interest expenses

00

Loss (gain) on sales of non-current assets(4)0Interest and dividend income

Loss on retirement of non-current assets

16

12

Loss (gain) on sales of investment securities

(20)

(0)

Loss (gain) on valuation of investment securities-

0Compensation expenses

44

-

(637)

(143)

58

3

Increase (decrease) in notes and accounts payable-trade

(261)

(169)

Other, net

(161)

505

Subtotal

7,089

8,855

177

188

Interest expenses paid

(0)

(0)

Payments for compensation

(44)

-

Income taxes paid

(2,338)(2,445)

Net cash provided by (used in) operating activities

4,882

6,597

-

(83)

Decrease (increase) in notes and accounts receivable-trade
Decrease (increase) in inventories

Interest and dividend income received

Cash flows from investing activities
Payments into time deposits
Proceeds from withdrawal of time deposits

57

114

Purchase of securities(5,400)(10,202)

Proceeds from sales of securities

4,100

7,601

(7)

(4)

Payments of loans receivableCollection of loans receivable
Purchase of property, plant and equipment
Proceeds from sales of property, plant and equipment

17

126

(1,636)(1,624)8

6Purchase of intangible assets

(25)

(30)

Purchase of investment securities

(48)

(28)

Proceeds from sales of investment securities

42

0

Other, net
Net cash provided by (used in) investing activities

52

(19)

(2,840)(4,144)

(989)

(980)

Cash flows from financing activities
Cash dividends paid
Other, net
Net cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalents

(755)

(14)

(1,744)

(995)

9

(8)

Net increase (decrease) in cash and cash equivalents

305

1,448

Cash and cash equivalents at beginning of period

11,145

11,451

Cash and cash equivalents at end of period

11,451

12,900- 15 -

The Pack Corporation (3950) Financial Report for Fiscal Year 2016(5) Notes to Consolidated Financial Statements
Going Concern Assumption
Not applicable.
Changes in Accounting Policies
Application of the Accounting Standard for Business Combinations, etc.
The Company has applied the “Accounting Standard for Business Combinations” (Accounting Standards Board ofJapan (ASBJ) Statement No. 21, September 13, 2013), “Accounting Standard for Consolidated Financial
Statements” (ASBJ Statement No. 22, September 13, 2013), “Accounting Standard for Business Divestitures”(ASBJ Statement No. 7, September 13, 2013), etc. from 2016. Accordingly, difference arising from changes in the
Company’s ownership interests in subsidiaries in cases where control is retained is recognized in capital surplus, andthe costs associated with the acquisition of shares are recognized as expenses in the fiscal year in which they arise.
Regarding business combinations that take place on or after the beginning of 2016, the Company has revised themethod to reflect reviewed allocation of the acquisition costs arising from determination of the provisional
accounting treatment on the consolidated financial statements to which the date of the business combination belongs.
In addition, the presentation of net income and other items has been revised, and the minority interests item has beenrenamed non-controlling interests. For consistency with these changes, the consolidated financial statements for2015 have been revised.
The Company has adopted these accounting standards, etc. from the beginning of 2016, in accordance with thetransitional accounting treatments set forth in Article 58-2 (4) of the Accounting Standard for Business
Combinations, Article 44-5 (4) of the Accounting Standard for Consolidated Financial Statements, and Article 57 -4(4) of the Accounting Standard for Business Divestitures.
In the consolidated statement of cash flows of 2016, cash flows associated with purchase or sales of shares ofsubsidiary not resulting in changes in the scope of consolidation are included in cash flows from financing activities.
On the other hand, cash flows associated with acquisition costs of shares of subsidiary r esulting in changes in thescope of consolidation or expenses arisen from purchase or sales of shares of subsidiary not resulting in changes inthe scope of consolidation are included in cash flows from operating activities.
There is no impact on the consolidated financial statements and per-share information for 2016.
Application of Practical Solution on a Change in Depreciation Method due to Tax Reform 2016
Following the revision of the Corporation Tax Act, the Company has applied the “Practical Solution on a Change inDepreciation Method due to Tax Reform 2016” (ASBJ Practical Issues Task Force (PITF) No. 32, June 17, 2016)
from 2016, and changed the depreciation method for facilities attached to buildings and structures acquired on orafter April 1, 2016, from the declining-balance method to the straight-line method.
The effect of this change on the consolidated financial statements for 2016 is insignificant.
Application of Implementation Guidance on Recoverability of Deferred Tax Assets
The Company has applied the “Implementation Guidance on Recoverability of Deferred Assets” (ASBJ Statement
No. 26, March 28, 2016) from 2016 because the application of this guidance is allowed starting with consolidated
financial statements as of the end of 2016. As a result, parts of the accounting method for determining therecoverability of deferred tax assets have been revised.
The application of this guidance had no effect on the amount of deferred tax assets and retained earnings at the
beginning of 2016.

- 16 -

The Pack Corporation (3950) Financial Report for Fiscal Year 2016

Segment and Other Information
Segment Information
1. Segment overview
The reportable segments of the Pack Group are the smallest units for which separate financial information can beobtained and for which regular examinations are performed by the Board of Directo rs in order to determine resource
allocation and evaluate results of operations.
The Group is engaged primarily in the manufacture and sale of paper bags, paper folding cartons, corrugated boxes
and plastic bags.
Therefore, based on the nature of products, there are two reportable segments: “Paper products” and “Filmpackaging.”
The Group’s major products are paper bags, paper folding cartons, corrugated boxes and printing in the “Paper
products” segment and plastic bags and garment bags in the “Film packaging” segment.
2. Method to determine net sales, profit or loss, assets, liabilities and other items by reportable segment
Accounting methods used for the reportable segments are generally the same as the methods used for the preparationof the consolidated financial statements with the exception of the standard for the valuation of inventories.
Profit for reportable segments is stated on an operating income basis.
3. Information concerning net sales, profit or loss, assets, liabilities and other items by reportable segment
Previous fiscal year (from January 1, 2015 to December 31, 2015)
Reportable segment
Paper
products
Net sales
Sales to externalcustomerInter-segment sales andtransfers
Total

Film
packaging

Subtotal

Otherbusinesses(Note) 1

Total(Million yen)Amount posted in
Adjustment the consolidated(Note) 2 financial statements(Note) 3

52,186

19,57571,761

16,281

88,043-88,043

-

-

-

-

-

-

-

52,186

19,57571,761

16,281

88,043-88,043

Segment profit

4,535

963

5,498

1,651

7,150

(917)

6,232

Segment assets

37,052

10,38847,4407,642

55,08318,05973,142Other items
Depreciation
1,526
199
1,726
31
1,758
19
1,777
Increases in property,
plant and equipment and
1,471
212
1,684
9
1,694
1,694
intangible assets(Notes) 1. “Other businesses” includes supplies and other goods.
2. The adjustments are as follows.
(1) The -917 million yen adjustment to segment profit includes elimination of inter-segment transactions of 12 million yenthat are not allocated to reportable segments and corporate expenses of -930 million yen. Corporate expenses are mainly
related to the parent company’s Administrative Department.
(2) The 18,059 million yen adjustment to segment assets is corporate assets that are not allocated to reportable segments.
Corporate assets mainly include the parent company’s surplus assets under management (cash and deposits of 6,589
million yen and securities of 6,399 million yen), long-term investments (investment securities of 4,561 million yen) andthe parent company’s land of 508 million yen.
(3) The adjustments to depreciation and increases in property, plant and equipment and intangible assets are related to theparent company’s head office assets.
3. Segment profit is adjusted for consistency with operating income in the consolidated statement of income.

- 17 -

The Pack Corporation (3950) Financial Report for Fiscal Year 2016

Current fiscal year (from January 1, 2016 to December 31, 2016)
Reportable segment

Net sales
Sales to externalcustomerInter-segment sales andtransfers
Total(Million yen)Amount posted in
Adjustment the consolidated(Note) 2 financial statements(Note) 3

Subtotal

Otherbusinesses(Note) 1

Total

19,301

73,31615,857

89,174-

89,174

-

-

-

-

-

-

-

Paper
products

Film
packaging

54,01554,015

19,301

73,31615,857

89,174-

89,174

Segment profit

4,869

1,058

5,927

1,508

7,435

(951)

6,484

Segment assets

37,5309,813

47,344

6,802

54,147

22,14476,291Other items
Depreciation
1,549
200
1,749
29
1,779
5
1,784
Increases in property,
plant and equipment and
990
119
1,110
14
1,124
0
1,124
intangible assets(Notes) 1. “Other businesses” includes supplies and other goods.
2. The adjustments are as follows.
(1) The -951 million yen adjustment to segment profit includes elimination of inter-segment transactions of 12 million yenthat are not allocated to reportable segments and corporate expenses of -964 million yen. Corporate expenses are mainly
related to the parent company’s Administrative Department.
(2) The 22,144 million yen adjustment to segment assets is corporate assets that are not allocated to reportable segments.
Corporate assets mainly include the parent company’s surplus assets under management (cash and deposits of 7,999
million yen and securities of 9,300 million yen), long-term investments (investment securities of 4,283 million yen) andthe parent company’s land of 560 million yen.
(3) The adjustments to depreciation and increases in property, plant and equipment and intangible assets are related to theparent company’s head office assets.
3. Segment profit is adjusted for consistency with operating income in the consolidated statement of income.

- 18 -

The Pack Corporation (3950) Financial Report for Fiscal Year 2016

Per Share Information(Yen)
Previous fiscal year
(from January 1, 2015 to
December 31, 2015)
Net assets per share

Current fiscal year
(from January 1, 2016 to
December 31, 2016)

2,312.73

2,474.25

Basic earnings per share

205.94231.47

Diluted earnings per share

205.84231.25(Notes) 1. The basis of calculating the basic earnings per share and diluted earnings per share is as follows.

Item(Million yen)
Current fiscal year
(from January 1, 2016 to
December 31, 2016)

Previous fiscal year
(from January 1, 2015 to
December 31, 2015)

Basic earnings per share
Profit attributable to owners of parent

4,067

4,540

-

-

4,067

4,540

19,751

19,615

-

-

8

18

( 8)

( 18)

Amounts unavailable to common shareholders
Profit attributable to owners of parent related tocommon shares
Average number of shares outstanding during theperiod (thousand shares)
Diluted earnings per share
Adjustment to profit attributable to owners ofparentIncrease in the number of common shares(thousand shares)(of which subscription rights to shares (thousand
shares))2. The basis of calculating the net assets per share is as follows.

Item(Million yen)
Current fiscal year
(As of December 31, 2016)

Previous fiscal year
(As of December 31, 2015)

Total net assets

45,412

Deduction on total net assets

48,60347

70(of which subscription rights to shares)

( 20)

( 43)

(of which non-controlling interests)

( 27)

( 26)

Net assets applicable to common shares

45,36548,533

Number of common shares used in calculation of net
assets per share (thousand shares)

19,615

19,615Material Subsequent Events
Not applicable.

* This financial report is solely a translation of summary of “Kessan Tanshin” (in Japanese, including attachments), which has
been prepared in accordance with accounting principles and practices generally accepted in Japan, for the convenience ofreaders who prefer an English translation.

- 19 -