Nippon Paper Industries · 2 NIPPON PAPER INDUSTRIES In fiscal 2000, ended March 31, 2000, Nippon...
Transcript of Nippon Paper Industries · 2 NIPPON PAPER INDUSTRIES In fiscal 2000, ended March 31, 2000, Nippon...
Nippon Paper IndustriesAnnual Report 2000
For the Fiscal Year Ended March 31, 2000
NIPPON PAPER INDUSTRIES CO., LTD.
Nippon Paper Industries Co., Ltd. (NPI), is a leading manufacturer of newsprint,
printing and publishing paper, business communication paper, wood pulp, liquid-
packaging cartons, and functional film products. The NPI Group has powerful
businesses spanning the manufacture and sale of paperboard, household tissue,
paper packaging, and lumber as well as transportation and the leisure business.
C O N T E N T S
Consolidated Financial Highlights ............................................................ 1
To Our Shareholders—A Message from the President............................. 2
A Conversation with President Masao Kobayashi .................................... 4
Review of Operations ................................................................................ 10
Business Structure of the Nippon Paper Group ....................................... 12
Financial Section........................................................................................ 13
Corporate Data.......................................................................................... 35
Board of Directors ..................................................................................... 35
Directory .................................................................................................... 36
P R O F I L E
1NIPPON PAPER INDUSTRIES
C O N S O L I D A T E D F I N A N C I A L H I G H L I G H T SNippon Paper Industries Co., Ltd. and Consolidated Subsidiaries Years ended March 31 (Note 2)
Thousands of U.S. dollars
Millions of yen (Note 1)
2000 1999 2000
For the year:
Net sales........................................................................................................................ ¥ 906,041 ¥ 906,513 $ 8,547,557
Gross profit .................................................................................................................... 202,258 179,319 1,908,094
Operating income .......................................................................................................... 30,127 12,166 284,217
Income before income taxes and minority interests ..................................................... 21,626 7,437 204,019
Net income .................................................................................................................... 10,106 1,067 95,340
At year-end:
Total assets.................................................................................................................... ¥1,130,037 ¥1,155,147 $10,660,726
Property, plant and equipment–net ............................................................................... 550,185 554,877 5,190,425
Total investments and other assets............................................................................... 127,838 142,944 1,206,019
Total shareholders’ equity.............................................................................................. 342,367 335,012 3,229,877
Notes: 1. U.S. dollar amounts here and elsewhere in this annual report are translated, for convenience only, at the rate of ¥106=US$1.2. The years stated in the text and graphs are fiscal years, which begin on April 1 of the previous year and end on March 31 of the year indicated.
906.0
’00’99’98’97’96
Net Sales(Billions of Yen)
10.1
’00’99’98’97’96
Net Income(Billions of Yen)
1,130.0
’00’99’98’97’96
Total Assets(Billions of Yen)
2 NIPPON PAPER INDUSTRIES
In fiscal 2000, ended March 31, 2000, Nippon Paper Industries
Co., Ltd. (NPI), strengthened operations and announced its new
management strategy for raising corporate value, making fiscal
2000 an extremely important year for the Company.
Selective and Focused Investment—
Creating a Solid Corporate Structure
From 1998 to 1999, Japan faced its worst recession since World
War II, resulting in a harsh business environment for NPI. To avoid
the risks of such an environment and create a firm corporate struc-
ture that will withstand the cycles of the market, in the spring of
1999 we formulated our second Medium-Term Business Plan for
our Enhanced Emergency Measures Policy (Emergency Measures
Policy), which focuses on restructuring and the efficient use of
assets under the theme “Selective and Focused Investment.”
The main points of the policy include:
(1) the closing of the Miyakojima Mill (Osaka) and the disposal of
six inefficient paper machines by the end of March 2000,
(2) a reduction of 1,300 NPI employees (a total Group reduction
of 2,150) by the end of March 2002,
(3) the implementation of ¥15 billion in cost reductions by the
end of March 2001, and
(4) the reduction of Groupwide interest-bearing liabilities, includ-
ing a ¥50 billion reduction in NPI’s existing ¥400 billion in
interest-bearing liabilities, by the end of March 2001.
Success of the Emergency Measures Policy
With the cooperation of management and employees, we were
able to carry out the closing of the Miyakojima Mill and the dis-
posal of six inefficient paper machines. We are now pursuing activ-
ities to complete the remaining policy measures and expect to
achieve our goals one year early. As a result, during the fiscal year
under review consolidated net sales were approximately the same
as last year’s figure, at ¥906,041 million. Net income also made a
significant jump from the previous fiscal year, increasing 947%, to
¥10,106 million. Due to these favorable conditions, in the period
under review NPI recorded the highest profits in the industry, both
as an independent company and as a group (the Company’s four
competitors in Japan had an average consolidated net income of
¥4.0 billion for the fiscal year). Through continued efforts, we plan
to maintain our hold on the top position in the industry.
The IT Revolution—A New Business Opportunity
In addition to the management changes undertaken by NPI, it is
necessary to outline the major changes that have taken place in the
business environment surrounding the paper industry. In addition
to demand from businesses that print leaflets and catalogs, there
was also strong demand from computer- and mobile phone-related
companies for manuals and books, enabling much stronger growth
than we initially expected. Further, with the growing popularity of
the Internet, the volume of information that people can obtain will
increase significantly, resulting in rapid growth in demand for
paper as an easy and economic recording medium. These changes
are a result of the IT revolution, which is reforming the fundamen-
tal structure of demand patterns in the paper industry, making for
dynamic growth. Since autumn 1999, NPI has been operating at
almost full capacity to deal with the increase in demand generated
by the IT revolution.
Collaboration with Daishowa Paper Manufacturing Co., Ltd.
Responding to increased demand in NPI’s core business—paper—
posed a challenge for the Company in deciding the best method
of expansion. In the past, we have undertaken scrap-and-build
measures to handle increases in demand. However, aiming to
make strategic use of existing facilities, we felt that increasing the
Company’s value was necessary and considered M&A or the inte-
gration of operations with various outside companies.
Daishowa Paper Manufacturing Co., Ltd., is Japan’s fourth
largest pulp and paper manufacturer. The integration of operations
with Daishowa is extremely advantageous for us, as it will enlarge
our retail business and the number of production sites available to
us. Further, Daishowa and NPI manufacture many similar products,
and integrating the operations of the two companies will maximize
productivity through the use of existing equipment, optimize man-
ufacturing and sales operations, and accelerate synergies.
For these reasons, NPI announced plans to integrate business
operations with Daishowa on March 27, 2000, an agreement that
was approved at a meeting of shareholders on June 29, 2000. The
A M e s s a g e f r o m t h e P r e s i d e n t
T o O u r S h a r e h o l d e r s
3NIPPON PAPER INDUSTRIES
integration will be accomplished through a cashless stock transfer
in which all the shares of NPI and Daishowa will be replaced by the
shares of a newly established holding company at the rate of 1000
NPI shares and 1666 Daishowa shares, respectively (together with
certain cash adjustments), for one share of the new holding com-
pany. We now lead Japan’s papermaking industry in sales and
rank sixth in the world in paper sales.
A Holding Company System on the Path to Success
To pursue efficiency in operations of both companies, NPI and
Daishowa will carry out business as an integrated corporation—a
groundbreaking move in Japan’s paper manufacturing industry.
Such corporations are common overseas, but have not been rec-
ognized in Japan in the past. However, in June 1997 the Japanese
government passed Article 9 of the Antimonopoly Act, which
allows the formation of such corporations, which can react quickly
to a changing business environment.
Plans to establish a controlling parent company, Nippon Unipac
Holding, are set for March 2001. We took the name United Paper
Companies to reflect our position in the global market for paper
manufacturing and will promote our goal to promptly increase the
Company’s value and international competitiveness.
We will discuss a concrete plan of action for the merger and
make efforts to implement any measures that can be carried
out beforehand.
Our Responsibility to Our Shareholders
While fulfilling its function of governance, as a corporation the
parent company will serve to centralize and accelerate the estab-
lishment and implementation of strategies that place the highest
priority on raising the value of our stock. We aim to consolidate
the management of our subsidiaries to make them as efficient
and highly competitive as possible.
In the new millennium, we will continue to aim for strategic
operations while making every effort to fulfill the expectations
of our shareholders.
June 2000
Masao Kobayashi
President, Nippon Paper Industries Co., Ltd.
4 NIPPON PAPER INDUSTRIES
1What have been some concrete results of the Emergency
Measures Policy that NPI announced in the spring of 1999?
Because the paper industry has felt the effects
of a worsening business environment, NPI has
had to respond accordingly.
• First, we shut down our Miyakojima Mill
located in the center of Osaka. This mill had
an 85-year history, but we decided to close
it due to the inefficient operations of its
small-scale papermaking machines. We are
discussing alternative uses for the approxi-
mately 98,000 m2 lot, including carrying
out sales.
• As planned, we disposed of six inefficient
papermaking machines (three at the Miyako-
jima Mill and one each at the Yatsushiro,
Iwakuni, and Asahikawa mills). Although the
disposal of these machines translates into a
4.7%, or 167,000 metric ton, loss in produc-
tivity, we plan to greatly improve profitability
by shifting to high-output machines.
• We reduced the number of regular employ-
ees at NPI from 6,800 to 6,009. This resulted
in cost cuts of ¥3.1 billion. The Group overall
reduced its number of employees 463 people
(OTAKE PAPER MFG. CO., LTD., and Kitagami Paper Co., Ltd.,
increased their numbers of employees 530 people; even with the
increase from these two companies included).
Looking at reductions in manufacturing costs, we were able to
make a dramatic cut of ¥15.4 billion by the end of March 2000,
reaching our goal one year early. We plan to make further cuts
in the current term to increase the effectiveness of this goal.
• By the end of March 2000, we had reduced interest-bearing liabili-
ties to ¥352.5 billion. Moreover, we will exceed our goal of ¥350.0
billion by the end of March 2001, one year ahead of schedule.
With selective and focused fundamental policies, we intend to
continue to strive for a firm corporate structure that will withstand
changing market conditions.
2What kind of influence do you think
the IT revolution will have on the
papermaking industry as a whole and NPI
in particular?
• I think that the IT revolution will have an
incredible effect on the demand for paper.
• In IT-related businesses, fiscal 2000 was an
excellent year—with growth in the markets
for such high-tech information tools as per-
sonal computers, digital cameras, and color
printers. Specifically, shipments of comput-
ers reached 10 million units and shipments
of printers increased approximately 20%
compared with the previous fiscal year,
about double that for fiscal 1996.
Miyakojima Mill
A C o n v e r s a t i o n
Reduction of the Number of EmployeesPlanned number of full-time employees
9,000
7,1756,800
6,009
5,500
93.4 98.3 99.2 00.3 02.3(estimated)
0
2,000
4,000
6,000
8,000
10,000
(number)
5NIPPON PAPER INDUSTRIES
• In mid-1999, as a direct
result of the IT revolution,
we experienced significant
growth in demand for paper,
our main market, particularly
for printing and coated
paper. The primary reason for
this jump was an increase in
demand for paper for manuals for IT-related devices. With the
progress of Internet-related businesses and technological advances
in IT equipment, such as i-mode mobile phones, demand in this
industry is expected to continue expanding dramatically.
• The popularity of the Internet will be a primary factor in increased
demand for paper. The information available to people in the past
is almost insignificant compared to the wealth of information one
can obtain today, and we believe that the use of paper as a medium
for recording information will contribute to a rise in paper demand.
• Moreover, NPI will strengthen itself further with such high-value-
added products as ink-jet
and thermal paper that are
directly related to informa-
tion machines.
• The growth in demand
spurred by the IT revolution
is not just a Japanese phe-
nomenon, but something
that is being experienced by
the entire world, and our
competitors recognize this
as well. By making ourselves
internationally competitive,
I think that our main busi-
ness—the paper business—
can evolve to reap the
rewards of continued
IT-related demand.
3Why did you choose to
integrate operations
with Daishowa Paper
Manufacturing Co., Ltd.?
• Integrating our business
operations is extremely
advantageous because we
believe that Daishowa’s management resources are essential to
our strategy for future growth. Through our previous conventional
strategy of selective and focused investment, we have been able
to obtain extensive know-how related to the efficient use of assets,
but to continue our progress in the paper industry, obtaining man-
agement resources that will add value to our Company will be both
integral and necessary. Integrating operations with Daishowa satis-
fies all of our requirements for future growth.
• With integration, the first order of business will be the optimiza-
tion of the manufacture and sale of similar products.
• Also, Daishowa’s plant loca-
tions perfectly complement
our own. With both maritime
and Tokyo area locations, we
will boast the largest produc-
tion network nationwide, and
our locations throughout the
country will contribute to
improved efficiency in the
procurement of materials,
production, sales, and distri-
bution, making us more cost-
competitive than ever.
• Furthermore, I think that
with the cashless stock trans-
fer, NPI shareholders will
benefit greatly.
w i t h P r e s i d e n t M a s a o K o b a y a s h i
Business Integration with Daishowa Paper—Domestic Mills
Asahikawa Mill
Kushiro Mill
Shiraoi Mill
Yufutsu Mill
Ishinomaki Mill
Nakoso Mill
Higashimatsuyama Mill
Fushiki Mill
Komatsushima Mill
Gotsu Mill
Iwakuni MillYatsushiro Mill
Yoshinaga MillSuzukawa MillFuji Mill
Iwanuma Mill
Nippon PaperDaishowa Paper
1999: World’s largest companies in the paper industry by revenue (Consolidated basis)
0 5 10 15 20 25 30
1. International Paper(+Shorewood+Champion)
2. Georgia-Pacific (+Fort James)
3. Stora Enso(+Consolidated Papers)
4. Kimberly-Clark
5. Weyerhaeuser
6. Nippon Paper+Daishowa Paper
(Billions of U.S. Dollars)Source: NPI and company news releases35
6 NIPPON PAPER INDUSTRIES
4What were some products that NPI
developed in fiscal 2000?
We have developed new products from
which we can expect significant contributions
to profits in the near future. Our advanced
technological abilities will be a major advan-
tage in Asian markets and in mapping our
future strategies.
• We would like to capture such IT-related
markets as those for paper for ink-jet printers
and thermal paper. With the growth in sales
of ink-jet printers, we predicted that printing
needs would become more diverse, especially
with advanced graphics, and we began
developing and selling paper for ink-jet print-
ers early on. To satisfy customer needs, in fiscal
2000 we developed two different kinds of
paper for use with ink-jet printers—high-grade
paper for superior, photo-quality images and
economical plain paper—both of which were
favorably received in the market.
• Regarding thermal paper, we developed a
product that allows high preservation func-
tion. We expect most of the demand for this
paper to come from supermarkets and conve-
nience stores in the printing of receipts as
well as from suppliers of handy terminals,
transport services, ATMs, and tickets.
• We succeeded in developing environmentally sound, extremely
lightweight newsprint using fewer resources while maintaining high
quality by making paper with high recycled wastepaper content.
• In paper, NPI developed a low-density (high-bulk), highly opaque
and soft paper that weighs 30% less than standard woodfree
paper, which has a typical density of 0.85g/cm3. This is well suited
for use as book paper, for which market demand is especially high.
We have developed low-density book paper, low-density matte-
coated paper, and low-density gravure paper to meet the various
demands for low-density papers.
• In paper-related products, we developed a
superior polypropylene resin with high recy-
clability. With the trend toward the complete
recycling of automobile parts, we expect high
growth for this product as a material for use
in automobile bumpers.
• In liquid-packaging cartons, we developed
and launched a 500ml gable-top Pure-Pak®
minicarton. With the recycling of both large
and medium-sized PET bottles becoming
increasingly problematic due to storage
considerations, we anticipate demand in
this market to increase.
In addition, we are making progress in the
broad and rapidly expanding field of electron-
ic displays by improving the quality of our
color LCD transfer film and antiglare film.
5The biotechnological development
of a “Supertree” that will yield twice
as much pulp as a regular tree is advanc-
ing. What is NPI’s strategy regarding
this biotechnology?
Simply put, if we can double the amount of
pulp we can obtain from our plantations, we
will cut our lumber costs dramatically. It
sounds unattainable, but NPI is confident it will realize this goal
through the use of biotechnology.
First, we have already developed the MAT Vector® system, with
which we can choose beneficial genes from different plants—for
example, genes for fast growth, cold resistance, and disease resis-
tance—and introduce these genes into the original gene to make
a heartier, higher-yield plant. This epochal technology enables the
repeated introduction of additional genes into a single recombi-
nant plant. AstraZeneca Pharmaceuticals LP, a major biopharma-
ceuticals company, has been licensed by NPI to use this technology.
Paper for ink-jet printers
High-quality newsprint
Thermal paper
7NIPPON PAPER INDUSTRIES
And because these genetically modified plants do not bear marker
genes, they are environmentally safe.
Second, NPI is developing and retains the rights to photo-
autotrophic culture technology, a technology for the mass produc-
tion of high-quality cloned seedlings of superior plants. Third, in
February 2000, we were the first company in the world to develop
a technology for preserving cloned seedlings at low temperatures.
We have developed a cloning system for plants and are one
step closer to creating a “Supertree.”
To advance the latter two technologies,
we are now constructing a cloning research
facility in Western Australia for the mass
production of the high-quality seedlings of
NATURAL ELITE trees. The facility will have
a culture-breeding greenhouse and a four-
hectare test plantation.
Through these activities, we will not only
cut costs related to natural resources; we
will be able to make biotechnology a major
source of profit for the Company.
6What were the circumstances under which NPI
constructed its resource cycle business model?
The paper business is generally called a sustainable resource indus-
try. NPI has constructed a highly sustainable resource cycle busi-
ness model, which is at the forefront of the industry.
NPI obtained ISO 14001 certification in December 1999 at all
mills, and the remaining Group businesses are expected to acquire
certification in the near future.
In addition, we have led the industry
in developing revolutionary technologies.
• We have such resource-conserving tech-
nologies as plant biotechnology, worldwide
plantation technology (the area of which we
plan to increase from 28,000 hectares in
December 1999 to 100,000 hectares by the
end of 2008), and technology for recycling
old magazines.
• We have led the industry in using new tech-
nologies to aid environmental protection efforts; NPI was the first
Japanese company to begin elementary chlorine-free ozone bleach-
ing pulp production.
Preserving cloned seedlings at low temperatures
“Supertree” Project
Standing Tree (m3 basis)
100
� High-bulk density(g/cm3) � High yield
� Rapid growth
155+55%
100
184
100
202
Chip (weight basis) Pulp (weight basis)
Regular tree (as 100)
“Supertree”
+19% +10%
8 NIPPON PAPER INDUSTRIES
• NPI is developing an environment-friendly
and cost-cutting closed system for BKP
production and is currently carrying out
field tests.
• We will collaborate with Asahi Glass Co.,
Ltd., and Kawasaki Kasei Chemical Ltd., in
the technological development of a closed
system for BKP production and are planning
for joint projects to be carried out in 2001.
• Also, we develop and sell paper with high
recycled wastepaper content.
Our adoption of a resource cycle business
model is based on our 1993 Environmental
Charter, which has made us the most envi-
ronmentally conscious company in the
papermaking industry.
NPI revised the contents of the charter in
March 2000, establishing a goal of reducing
final waste to 0.1% or less of product weight, which moves NPI
closer to its goal of completely eliminating discharge.
7Could you describe the reformation of the Company’s
business structure?
Active reorganization is necessary to make NPI an organization that
can meet the needs of this generation.
• In the year under review, we established two new organizations:
in October 1999 an invester relations office, and in November of
the same year the Recycling Fiber’s Department to deal with the
steady and efficient procurement of wastepaper, which will be an
increasingly important material in papermaking in the 21st century.
• In November 1999, we merged our three Tokyo R&D laborato-
ries and placed them in a central location to accelerate R&D and
create synergies in new technology development.
• Since April 2000, we have been revamping our paper business
with the aim of extending and tightening our relationships with
our customers.
• We have reorganized the departments with-
in our sales divisions so that they are divided
by function rather than product, creating such
departments as the Publishers Sales Depart-
ment, Wholesalers Business Department, and
Direct Sales Department—an organization
that will facilitate stronger sales through
improved response to market demands.
• Furthermore, we established the Marketing
Division to coordinate former sales divisions
as a strategic center for our new business.
This division will oversee such issues as the
planning of business strategies, product
development and quality management, the
promotion of digitization, and the promotion
of customer satisfaction through the central-
ized management of such support activities
as product delivery to enable cohesive busi-
ness activity and bring about an overall increase in Group efficiency.
• Our plans also call for further business restructuring. We will con-
tinue with a project that assesses all stages of the papermaking pro-
cess, from receiving orders through the production, stock, and
supply processes. We will reduce inventories and lower delivery
costs by modernizing our distribution methods. We will also com-
mence supply chain management (SCM), which will include the
restructuring of our computer systems. Through these measures,
and the integration of operations with Daishowa in 2001, we
will achieve optimal results throughout the entire Company.
8Could you brief us on your stance on overseas business?
I would like to regard the overseas business activity as one of
the main contributors to our business portfolio in the future. Our
company has established several joint ventures around the world.
Principal overseas joint ventures are North Pacific Paper Corporation
(North America/newsprint), Jujo Thermal Oy (Europe/thermal paper),
Tree farm in Western Australia
9NIPPON PAPER INDUSTRIES
and Shouguang Liben Paper Making Co., Ltd. (China/baseboard
for carbonless copy paper), all of which report satisfactory results.
On the other hand, our exports—mainly in the Asian market—
exceeded 330 thousand metric tons last year, a record high. This
confirms that our strenuous efforts to promote sales activities and
product quality are highly evaluated throughout the world. We
will serve overseas customers by maintaining stable and lasting
relationships with our business partners.
We are currently considering the expansion of local production,
and must consider three things in the pursuit of new customers
and markets: sales power, logistics, and market risk. Therefore,
new business will be set up in the form of joint ventures with exist-
ing partners or through mergers and acquisitions.
Although there is concern that competitiveness and the ease of
technology transfer may pose challenges in expanding into existing
and prospective markets, we are well prepared to face them by
considering a variety of methods suitable for each case.
We will aggressively enter potential markets where we can take
advantage of our advanced technology and business know-how
to become a leading company worldwide.
Overseas Bases and Tree Farms
ChileThe 8th region13,500 hectares
ChinaGuangdong10,000 hectares
Test PlantationMyanmarBago
South AfricaKwaZulu-Natal10,000 hectares
AustraliaVictoriaTotal 14,500 hectares
AustraliaSouth Australia/VictoriaTotal 23,000 hectares
AustraliaWestern AustraliaTotal 22,000 hectares
Branches and officesSubsidiaries and affiliatesTree farms
End of '99: 28,000 hectaresEnd of '08: 100,000 hectares (est.)
Paper-RelatedDivision
Housingand Con-structionMaterialsDivision
OtherDivision
Pulp andPaperDivision
10 NIPPON PAPER INDUSTRIES
1. Business Structure• NPI and Kitagami Paper Co., Ltd., manufacture and sell paper.
Tohoku Paper Co., Ltd., OTAKE PAPER MFG. CO., LTD., and Koyo
Paper Mfg. Co., Ltd., are engaged in the production of paper for
purchase and sale by NPI.
• Tohoku Paper, Kitagami Paper, Koyo Paper, and Japan Paperboard
Industries Co., Ltd., manufacture and sell paperboard. CRECIA
Corporation manufactures and sells household tissue and sanitary
products. NPI and Tohoku Paper manufacture pulp, which is sold
by NPI.
• San-Mic Chiyoda Corporation, Jujo Shoji Co., Ltd., and Kokuei
1. Business Structure• Jujo Central Co., Ltd., produces and markets cartons, packaging, and
wrapping materials. LINTEC Corporation produces and sells adhesive-
related materials. Liquid-packaging cartons are manufactured by Jujo
Central and purchased and sold by NPI.
• Sakurai Co., Ltd., markets both paper and film products manufac-
tured by the NPI Group.
• Chemical products are manufactured by NPI and are sold by NPI,
San-Mic Chiyoda, and SANFLO CO., LTD.
Pulp and Paper Division
R e v i e w o f O p e r a t i o n s
1. Business Structure• NPI, JUJO LUMBER CO., LTD., and SHINYO CO., LTD., sell wood
materials. PAL Co., Ltd., sells construction materials.
• NPI, SHINYO, Kunimoku House Co., Ltd., and NP Development Co.,
Ltd., offer real estate and leasing services.
• Jujo Con-Tech Co., Ltd., and Kokusaku Kiko Co., Ltd., provide
services in machinery design, manufacturing, and repair as well
as civil engineering and construction planning and implemen-
tation services.
1. Business Structure• Nippon Paper Logistics Co., Ltd., NANKO UNYU CO., LTD.,
Kyokushin Transport Co., Ltd., and HOTOKU UNYU CO., LTD.,
are responsible for the transportation and warehousing of Group
products.
• Shikoku Coca-Cola Bottling Co., Ltd., bottles and markets soft drinks
and other beverages. NP Development manages leisure facilities.
Sanwa Printing Co., Ltd., is a printing business.
Sales(Billions of Yen)
64.5
0
10
20
30
40
50
60
70
’00’99
Sales(Billions of Yen)
101.2
0
20
40
60
80
100
120
’00’99
Sales(Billions of Yen)
94.1
0
20
40
60
80
100
’00’99
Sales(Billions of Yen)
646.3
0
100
200
300
400
500
600
700
’00’99
Starting in fiscal 2000, NPI categorized its business into four divisions instead of three, moving liquid-packaging cartons, industrialprocessed paper, and film products from the pulp and paper category to their own category of paper-related products.
Housing and Construction MaterialsDivision
Other Division
Paper-Related Division
11NIPPON PAPER INDUSTRIES
Paper Co., Ltd., market and trade various products supplied by NPI
Group companies.
• Overseas, North Pacific Paper Corporation (NORPAC) manufactures
newsprint and related products, which are imported to and sold in
Japan by NPI.
2. Business Performance in Fiscal 2000• In the Pulp and Paper Division, we maintained our focus on prices,
placing the utmost importance on restoring price levels and reducing
inventories. We were able to increase sales due to higher demand for
the commercial printing of leaflets, catalogs, manuals, and IT-related
printing and informational sheets as well as increased exports to Asia.
• Price levels were partially restored, but the average price level for
the year under review did not approach that of the previous fiscal
year, resulting in a 1.0% decrease in total sales for the division, to
¥646,267 million.
• Looking at profits, however, due to the effect of cost cuts outlined
by our Emergency Measures Policy and the effect of the stronger
yen on the price of resources, operating income rose significantly, to
¥19,138 million.
• Due to a new consolidation policy, in the year under review OTAKE
PAPER and Kitagami Paper became Group subsidiaries.
2. Business Performance in Fiscal 2000• Such products as Pure-Pak® and Fuji Pack® represent NPI’s liquid-
packaging carton business, in which the slump in sales for packag-
ing for milk was offset by the improved market conditions in
packaging for soft drinks, resulting in sales of approximately the
same level as that of the previous fiscal year.
• In functional materials, the growth in demand for liquid crystal-
related materials contributed to the favorable conditions in sales
of electronic materials.
• Although the stronger yen contributed to a decrease in demand
for chemical products, sales increased in this division due to the
expansion of sales of existing products, entry into new markets, and
the development and launch of such new products as chlorinated
resin, a water emulsion product.
• Sales in this division increased 1.3%, to ¥94,060 million, and oper-
ating income amounted to ¥5,480 million.
2. Business Performance in Fiscal 2000• Despite an upturn in housing starts, the failure of the wood materials
market to show improvement makes the outlook for this division unclear.
• Making a drastic reappraisal of its strategies in this division, NPI
intensified efforts to expand sales and streamline its lineup of con-
struction materials as well as carried out cost-cutting measures,
which resulted in an 8.9% increase in sales, to ¥101,167 million,
and operating income of ¥980 million.
2. Business Performance in Fiscal 2000• Sales in this division decreased due to the exclusion from accounting
of Jujo Service Center Co., Ltd., and the poor condition of leisure
business. Sales amounted to ¥64,544 million and operating income
was ¥4,528 million.
12 NIPPON PAPER INDUSTRIES
B u s i n e s s S t r u c t u r e o f t h e N i p p o n P a p e r G r o u p
Pulp and Paper DivisionPaper-RelatedDivision
Housing andConstructionMaterials Division Other Division
Customers
Sale
Manufactureand Sale
Manufactureand Sale
Sale Sale Sale
Transportation
San-Mic Chiyoda
Kitagami Paper
CRECIA
Japan Paperboard
Manufacture
Tohoku Paper
OTAKE PAPER
Koyo Paper
Manufacture
NORPAC
Manufacture
Machinery Service, Manufacture, and Repair
Jujo Central Jujo Con-Tech
Kokusaku Kiko
Jujo Shoji
Kokuei Paper
Sakurai
SANFLO
JUJO LUMBER
SHINYO
PAL
Kunimoku House
Shikoku Coca-ColaBottling
NP Development
Sanwa Printing
Nippon Paper Logistics
NANKO UNYU
IWAKUNI KAIUN
Kyokushin Transport
HOTOKU UNYU
LINTEC
NPI
13NIPPON PAPER INDUSTRIES
C O N S O L I D A T E D F I V E - Y E A R S U M M A R YNippon Paper Industries Co., Ltd. and Consolidated Subsidiaries Years ended March 31
Millions of yen
2000 1999 1998 1997 1996
Pulp and Paper (Note 1)Total sales of division ................................................... ¥ 647,853 ¥ 654,486 ¥ 851,836 ¥ 885,498 ¥ 879,931Intragroup sales ............................................................ (1,585) (1,678) (216) (254) (556)Total sales—third parties .............................................. 646,267 652,808 851,620 885,243 879,375
Paper-Related (Note 1)Total sales of division ................................................... 102,371 100,405 — — —Intragroup sales ............................................................ (8,310) (7,547) — — —Total sales—third parties .............................................. 94,060 92,858 — — —
Housing and Construction MaterialsTotal sales of division ................................................... 114,688 106,519 106,164 138,118 118,761Intragroup sales ............................................................ (13,521) (13,660) (5,893) (4,537) (4,471)Total sales—third parties .............................................. 101,167 92,859 100,270 133,580 114,289
OtherTotal sales of division ................................................... 81,606 83,152 124,371 97,782 90,738Intragroup sales ............................................................ (17,061) (15,164) (38,199) (23,262) (18,572)Total sales—third parties .............................................. 64,544 67,987 86,172 74,519 72,165
Total salesTotal sales of division ................................................... 946,519 944,564 1,082,372 1,121,399 1,089,431Intragroup sales ............................................................ (40,478) (38,051) (44,308) (28,055) (23,601)Total sales—third parties .............................................. 906,041 906,513 1,038,063 1,093,344 1,065,830
Operating income (Note 2) ............................................... 30,127 12,166 47,517 63,501 76,285Income before income taxes (Notes 2 and 3) .................. 21,626 7,437 38,331 49,074 58,091Net income....................................................................... 10,106 1,067 18,414 28,628 24,105
Total assets ...................................................................... 1,130,037 1,155,147 1,225,910 1,278,316 1,247,858Total current assets .......................................................... 444,081 451,645 513,073 568,048 575,443Property, plant and equipment–net (Note 4) .................... 550,185 554,877 564,621 573,534 541,365Total investments and other assets (Note 5).................... 135,769 148,623 148,215 136,733 131,049Liabilities and others (Note 6) .......................................... 787,669 820,133 881,569 946,434 937,708Total shareholders’ equity ................................................ 342,367 335,012 344,340 331,881 310,149
Amounts per share (yen):Net income
Basic ............................................................................. ¥ 10.65 ¥ 1.13 ¥ 19.41 ¥ 30.18 ¥ 25.41Diluted .......................................................................... 10.61 — 18.62 28.57 24.16
Stockholders’ equity ......................................................... 360.91 353.19 363.02 349.88 326.98
Ratios (%):Operating income to net sales (Note 2)............................ 3.33% 1.34% 4.58% 5.81% 7.16%Net income to net sales ................................................... 1.12% 0.12% 1.77% 2.62% 2.26%Net income to shareholders’ equity ................................. 2.98% 0.31% 5.45% 8.92% 8.00%Equity ratio........................................................................ 30.30% 29.00% 28.09% 25.96% 24.85%
Notes: 1. From 1999, the Pulp and Paper Division was split into the Pulp and Paper Division and the Paper-Related Division.2. Enterprise tax does not include selling, general and administrative expenses.3. Income before income taxes, minority interests, amortisation, and equity in earnings4. Property, plant and equipment–net excludes intangible fixed assets.5. Investments and other assets includes intangible fixed assets and foreign currency translation adjustments.6. Liabilities and others includes minority interests in consolidated subsidiaries.
F I N A N C I A L S E C T I O N
14 NIPPON PAPER INDUSTRIES
C O N S O L I D A T E D F I N A N C I A L R E V I E W
906.0
’00’99’98’97’96
Net Sales(Billions of Yen)
30.1
’00’99’98’97’96
Operating Income(Billions of Yen)
10.1
’00’99’98’97’96
Net Income(Billions of Yen)
SUMMARY OF OPERATIONS
During fiscal 2000, ended March 31, 2000, the Japanese econ-
omy continued to show signs of recovery as a result of govern-
ment efforts to stabilize the financial system and stimulate
economic growth. Although positive economic indicators multi-
plied in the second half of the fiscal year, private consumption
and corporate capital investment remained sluggish, reflecting
continued harsh business conditions.
In the paper industry, sales increased from the previous
fiscal year due primarily to higher computer- and IT-related
demand, which is changing the fundamental structure of
demand patterns in the paper industry. Against this back-
ground, NPI integrated operations with Daishowa Paper
Manufacturing Co., Ltd., Japan’s fourth-largest pulp and paper
manufacturer, enlarging NPI’s retail business and number of
production sites. The Housing and Construction Materials
Division benefited from an increase in housing starts, but the
other areas in this segment failed to show significant growth.
On a consolidated basis, net sales declined 0.1%, to ¥906.0
billion (US$8,547.6 million), and net income jumped ¥9.0 billion,
to ¥10.1 billion (US$95.3 million). Consistent with its policy of
maintaining stable dividends to shareholders, the Company
paid cash dividends of ¥8.00 (US$0.075) per share, the same
level as in the previous fiscal year.
NET SALES
Looking at consolidated performance by operating division,
sales in the Pulp and Paper Division amounted to ¥647.9 billion
(US$6,111.8 million), a 1.0% decrease from the previous fiscal
term. The decline reflects the failure of price levels to approach
those of the previous fiscal term. Sales in the Paper-Related
Division were ¥102.4 billion (US$965.8 million), a 2.0% increase
from the previous fiscal term. Sales in the Housing and Con-
struction Materials Division were ¥114.7 billion (US$1,082.0 mil-
lion), a 7.7% increase compared with the previous fiscal year,
reflecting NPI’s intensified efforts to expand sales while
cutting costs. Sales in the Other Division were down 1.9%,
to ¥81.6 billion (US$769.9 million).
COSTS, EXPENSES AND EARNINGS
Cost of sales declined 3.2%, to ¥703.8 billion (US$6,639.5 mil-
lion), and cost of sales as a percentage of net sales, at 77.7%,
was down 2.5 percentage points from the previous fiscal term.
NPI continued to boost operating efficiency and reduce produc-
tion costs and other expenses in various business divisions.
During the year under review, selling, general and adminis-
trative (SG&A) expenses rose 3.0%, to ¥172.1 billion
(US$1,623.9 million). SG&A expenses as a percentage of net
sales increased 0.6 percentage point from the previous fiscal
year, to 19.0%. Operating income was up ¥18.0 billion, to
15NIPPON PAPER INDUSTRIES
¥30.1 billion (US$284.2 million), and operating income as a per-
centage of net sales rose from 1.3% to 3.3%.
Net other expense increased ¥3.8 billion from the previous
fiscal year, to ¥8.5 billion (US$80.2 million). This change is
attributable primarily to a net loss on devaluation of marketable
securities of ¥2.6 billion (US$24.7 million), compared with no
loss in the previous fiscal year.
As a result of the factors mentioned above, income before
income taxes and minority interests rose ¥14.2 billion, to
¥21.6 billion (US$204.0 million). Net income was up ¥9.0 bil-
lion, to ¥10.1 billion (US$95.3 million). Basic net income per
share increased from ¥1.13 in fiscal 1999 to ¥10.65 (US$0.100)
per share.
FINANCIAL POSITION
Total assets at March 31, 2000 amounted to ¥1,130.0 billion
(US$10,660.7 million), a 2.2% decrease from the previous fis-
cal year-end. Total current assets fell 1.7%, to ¥444.1 billion
(US$4,189.4 million). This decline was due primarily to declines
in marketable securities, other notes and accounts receivable,
loans receivable from unconsolidated subsidiaries and affiliates
as well as inventories, which offset increases in cash and time
deposits and trade notes and accounts receivable.
Higher accumulated depreciation led to a 0.8% decrease
in property, plant and equipment–net, to ¥550.2 billion
(US$5,190.4 million). Total investments and other assets fell
10.6%, to ¥127.8 billion (US$1,206.0 million), reflecting primar-
ily a decrease in investments in and advances to unconsolidat-
ed subsidiaries and affiliates.
On the other side of the balance sheet, total current lia-
bilities fell 3.4%, to ¥459.2 billion (US$4,331.9 million), due
mainly to a ¥40.6 billion decrease in short-term borrowings.
Total long-term liabilities slipped 6.2%, to ¥302.8 billion
(US$2,856.4 million), with long-term debt falling 6.7%, to
¥277.4 billion (US$2,616.8 million).
Total shareholders’ equity expanded 2.2%, to ¥342.4 bil-
lion (US$3,229.9 million), mainly as a result of a ¥7.3 billion
increase in retained earnings. The shareholders’ equity ratio
improved 1.3 percentage points, to 30.3%, and the current
ratio climbed from 0.95 to 0.97.
1,130.0
’00’99’98’97’96
Total Assets(Billions of Yen)
342.4
’00’99’98’97’96
Total Shareholders’Equity(Billions of Yen)
16 NIPPON PAPER INDUSTRIES
C O N S O L I D A T E D B A L A N C E S H E E T SNippon Paper Industries Co., Ltd. and Consolidated Subsidiaries As of March 31, 2000 and 1999
Thousands ofU.S. dollars
Millions of yen (Note 2)
ASSETS 2000 1999 2000
Current assets:
Cash and time deposits .................................................................................................... ¥ 20,891 ¥ 18,291 $ 197,085
Marketable securities (Notes 3 and 5) .............................................................................. 70,398 78,271 664,132
Receivables:
Notes and accounts receivable:
Trade......................................................................................................................... 206,274 194,049 1,945,981
Unconsolidated subsidiaries and affiliates ................................................................ 13,318 16,793 125,642
Other......................................................................................................................... 2,900 8,432 27,358
Loans receivable from unconsolidated subsidiaries and affiliates ................................ 15,354 15,896 144,849
Allowance for doubtful receivables............................................................................... (1,083) (1,281) (10,217)
Inventories (Notes 4 and 5)............................................................................................... 105,770 114,010 997,830
Deferred tax assets (Note 7)............................................................................................. 3,503 — 33,047
Other current assets......................................................................................................... 6,753 7,181 63,708
Total current assets .............................................................................................. 444,081 451,645 4,189,443
Property, plant and equipment (Note 5):
Land .................................................................................................................................. 93,073 85,416 878,047
Buildings and structures ................................................................................................... 273,285 261,649 2,578,160
Machinery and equipment ................................................................................................ 1,085,780 1,034,269 10,243,208
Forests and afforestation.................................................................................................. 12,714 12,887 119,943
Construction in progress................................................................................................... 16,930 21,431 159,717
.......................................................................................................................................... 1,481,784 1,415,655 13,979,094
Less accumulated depreciation ........................................................................................ (931,599) (860,778) (8,788,670)
Property, plant and equipment–net ...................................................................... 550,185 554,877 5,190,425
Investments and other assets:
Investments in and advances to unconsolidated subsidiaries
and affiliates (Notes 3 and 5) .......................................................................................... 65,145 85,315 614,575
Investments in other securities (Notes 3 and 5) ............................................................... 36,276 32,436 342,226
Deferred tax assets (Note 7)............................................................................................. 1,842 — 17,377
Other assets ..................................................................................................................... 25,866 26,320 244,019
Allowance for doubtful receivables................................................................................... (1,292) (1,128) (12,189)
Total investments and other assets...................................................................... 127,838 142,944 1,206,019
Foreign currency translation adjustments ................................................................... 7,931 5,679 74,821
Total assets (Note 11) ..................................................................................................... ¥1,130,037 ¥1,155,147 $10,660,726
See notes to consolidated financial statements.
17NIPPON PAPER INDUSTRIES
Thousands ofU.S. dollars
Millions of yen (Note 2)
LIABILITIES AND SHAREHOLDERS’ EQUITY 2000 1999 2000
Current liabilities:
Short-term borrowings (Note 5) ........................................................................................ ¥ 224,034 ¥ 264,675 $ 2,113,528
Current portion of long-term debt (Note 5) ....................................................................... 30,187 23,577 284,783
Notes and accounts payable:
Trade............................................................................................................................. 104,647 104,920 987,236
Unconsolidated subsidiaries and affiliates .................................................................... 34,074 30,259 321,453
Other............................................................................................................................. 35,210 30,685 332,170
Accrued income taxes (Note 7) ........................................................................................ 10,808 2,357 101,962
Other current liabilities...................................................................................................... 20,222 18,989 190,774
Total current liabilities ........................................................................................... 459,186 475,464 4,331,943
Long-term liabilities:
Long-term debt (Note 5) ................................................................................................... 277,386 297,262 2,616,849
Accrued severance indemnities........................................................................................ 23,923 23,615 225,689
Deferred tax liabilities (Note 7) ......................................................................................... 128 — 1,208
Other long-term liabilities.................................................................................................. 1,343 1,892 12,670
Total long-term liabilities ....................................................................................... 302,780 322,769 2,856,415
Minority interests in consolidated subsidiaries........................................................... 25,703 21,900 242,481
Contingent liabilities (Note 10)
Shareholders’ equity (Notes 8 and 14):
Common stock ................................................................................................................. 104,846 104,830 989,113
Capital surplus .................................................................................................................. 97,375 97,359 918,632
Retained earnings ............................................................................................................. 140,150 132,836 1,322,170
.......................................................................................................................................... 342,372 335,026 3,229,925
Less treasury common stock, at cost............................................................................... (5) (13) (47)
Total shareholders’ equity..................................................................................... 342,367 335,012 3,229,877
Total liabilities and shareholders’ equity ..................................................................... ¥1,130,037 ¥1,155,147 $10,660,726
18 NIPPON PAPER INDUSTRIES
C O N S O L I D A T E D S T A T E M E N T S O F I N C O M E A N D R E T A I N E D E A R N I N G SNippon Paper Industries Co., Ltd. and Consolidated Subsidiaries Years ended March 31, 2000 and 1999
Thousands ofU.S. dollars
Millions of yen (Note 2)
2000 1999 2000
Net sales (Note 11) .................................................................................................................. ¥906,041 ¥906,513 $8,547,557
Cost of sales (Note 11) ............................................................................................................ 703,782 727,193 6,639,453
Gross profit ............................................................................................................................. 202,258 179,319 1,908,094
Selling, general and administrative expenses (Note 11) ..................................................... 172,131 167,153 1,623,877
Operating income (Note 11) ................................................................................................... 30,127 12,166 284,217
Other (expense) income:
Interest expense ...................................................................................................................... (11,426) (13,621) (107,792)
Interest and dividend income ................................................................................................... 2,754 2,725 25,981
Gain on sale of securities ......................................................................................................... 5,323 7,261 50,217
Special retirement benefits ...................................................................................................... (2,704) (1,082) (25,509)
Gain on sales of property, plant and equipment, net of disposals ........................................... 1,625 276 15,330
Amortisation of difference between cost and underlying net equity in consolidated subsidiaries.................................................................................................... 118 123 1,113
Equity in earnings of unconsolidated subsidiaries and affiliates............................................... 567 869 5,349
Loss on devaluation of marketable securities .......................................................................... (2,615) — (24,670)
Other, net ................................................................................................................................. (2,142) (1,279) (20,208)
................................................................................................................................................. (8,500) (4,728) (80,189)
Income before income taxes and minority interests .......................................................... 21,626 7,437 204,019
Income taxes:
Current ................................................................................................................................. (11,791) (5,487) (111,236)
Deferred ............................................................................................................................... 1,520 — 14,340
Minority interests in earnings of consolidated subsidiaries .............................................. (1,249) (883) (11,783)
Net income.............................................................................................................................. 10,106 1,067 95,340
Retained earnings at beginning of year ............................................................................... 132,836 142,166 1,253,170
Adjustments for inclusion or exclusion of certain subsidiaries
in the consolidation ............................................................................................................. 790 3,264 7,453
Adjustment for inclusion or exclusion of subsidiaries and affiliates
in the equity method of accounting, net ........................................................................... — (5,811) —
Cumulative effect of adopting deferred tax accounting..................................................... 4,206 — 39,679
Appropriations:
Cash dividends paid.................................................................................................................. (7,588) (7,588) (71,585)
Bonuses to directors and corporate auditors ........................................................................... (200) (261) (1,887)
Retained earnings at end of year .......................................................................................... ¥140,150 ¥132,836 $1,322,170
U.S. dollarsYen (Note 2)
Amounts per share:
Net income:Basic ......................................................................................................................................... ¥10.65 ¥1.13 $0.100
Diluted ...................................................................................................................................... 10.61 — 0.100
Cash dividends.............................................................................................................................. 8.00 8.00 0.075
See notes to consolidated financial statements.
19NIPPON PAPER INDUSTRIES
C O N S O L I D A T E D S T A T E M E N T O F C A S H F L O W SNippon Paper Industries Co., Ltd. and Consolidated Subsidiaries Year ended March 31, 2000
Thousands ofU.S. dollars
Millions of yen (Note 2)
2000 2000
Operating actionsIncome before income taxes and minority interests.................................................................................... ¥ 21,626 $204,019Adjustments to reconcile income before income taxes, minority intereststo net cash provided by operating activities
Depreciation ............................................................................................................................................. 63,035 594,670Amortisation of difference between cost and underlying net equity in consolidated subsidiaries .......... (118) (1,113)Decrease in allowance for doubtful receivables....................................................................................... (45) (425)Decrease in accrued severance indemnities............................................................................................ (467) (4,406)Interest and dividend income ................................................................................................................... (2,754) (25,981)Interest expense ...................................................................................................................................... 11,426 107,792Equity in earnings of unconsolidated subsidiaries and affiliates............................................................... (567) (5,349)Gain on sale of securities ......................................................................................................................... (5,323) (50,217)Gain on sale of property, plant and equipment, net of disposals ............................................................. (1,625) (15,330)Loss on devaluation of marketable securities .......................................................................................... 2,615 24,670Gain on sale of investments in other securities ....................................................................................... (245) (2,311)Special retirement benefits ...................................................................................................................... 2,704 25,509Changes in operating assets and liabilities:
Receivables .......................................................................................................................................... (11,458) (108,094)Inventories............................................................................................................................................ 10,733 101,255Payables ............................................................................................................................................... 4,931 46,519Accrued consumption taxes................................................................................................................. (621) (5,858)Other current assets ............................................................................................................................ 7,111 67,085Other liabilities...................................................................................................................................... 1,317 12,425Appropriation of bonuses to directors and statutory auditors .............................................................. (220) (2,075)Other .................................................................................................................................................... 1,360 12,830
..................................................................................................................................................................... 103,414 975,604Interest and dividend received ................................................................................................................. 3,055 28,821Interest paid ............................................................................................................................................. (10,321) (97,368)Special retirement benefits paid............................................................................................................... (2,704) (25,509)Income taxes paid .................................................................................................................................... (3,628) (34,226)
Net cash provided by operating activities..................................................................................................... 89,815 847,311
Investing activitiesAcquisitions of time deposits ....................................................................................................................... (2,663) (25,123)Withdrawal of time deposits ........................................................................................................................ 3,147 29,689Acquisitions of marketable securities........................................................................................................... (5,624) (53,057)Proceeds from sale of marketable securities ............................................................................................... 19,876 187,509Acquisitions of property, plant and equipment............................................................................................. (42,674) (402,285)Proceeds from sale of property, plant and equipment ................................................................................. 6,113 57,670Extension of long-term loans........................................................................................................................ (7,074) (66,736)Collection of long-term loans........................................................................................................................ 8,700 82,075Other, net ..................................................................................................................................................... 1,839 17,349
Net cash used in investing activities ............................................................................................................ (18,359) (173,198)
Financing activitiesDecrease in short-term borrowings.............................................................................................................. (42,065) (396,840)Proceeds from issuance of long-term debt .................................................................................................. 27,036 255,057Reduction of long-term debt ........................................................................................................................ (42,146) (397,604)Sales of treasury common stock.................................................................................................................. 271 2,557Purchases of treasury common stock.......................................................................................................... (274) (2,585)Cash dividends to shareholders ................................................................................................................... (7,885) (74,387)
Net cash used in financing activities ............................................................................................................ (65,064) (613,811)Effect of exchange rate changes on cash and cash equivalents.................................................................. (59) (557)
Net increase in cash and cash equivalents................................................................................................... 6,332 59,736Cash and cash equivalents at beginning of year .......................................................................................... 17,956 169,396
Cash and cash equivalents at end of year .................................................................................................... ¥ 24,289 $229,142
See notes to consolidated financial statements.
20 NIPPON PAPER INDUSTRIES
N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T SNippon Paper Industries Co., Ltd. and Consolidated Subsidiaries Years ended March 31, 2000 and 1999
1. Summary of Significant Accounting Policies
(a) Basis of Preparation
The accompanying consolidated financial statements have been pre-pared from the accounts maintained by Nippon Paper Industries Co.,Ltd. (the “Company”) in accordance with the provisions set forth in theJapanese Commercial Code and in conformity with accounting princi-ples and practises generally accepted in Japan, which may differ insome material respects from accounting principles and practises gener-ally accepted in countries and jurisdictions other than Japan.
In addition, the notes to the consolidated financial statements includeinformation which is not required under accounting principles generallyaccepted in Japan but is presented herein as additional information.
Certain amounts in the prior year’s financial statements have beenreclassified to conform to the current year’s presentation.
As permitted, amounts of less than ¥1 million have been omitted. Asa result, the totals shown in the accompanying consolidated financialstatements (both in yen and U.S. dollars) do not necessarily agree withthe sums of the individual amounts.
(b) Consolidation
In accordance with the accounting standards for consolidation issuedby the Business Accounting Deliberation Council of Japan, effectiveApril 1, 1999, the accompanying consolidated financial statementsinclude the accounts of the Company and all its subsidiaries over whichsubstantial control is exerted through either majority ownership of vot-ing stock and/or by other means. All significant intercompany balancesand transactions have been eliminated in consolidation.
Certain foreign subsidiaries are consolidated on the basis of fiscalperiods ending December 31, which differ from that of the Company;however, the necessary adjustments have been made if the effect ofthe difference is material.
Investments in affiliates (companies over which the Company has theability to exercise significant influence) are stated at cost plus equity intheir undistributed earnings or losses. Consolidated net income includesthe Company’s equity in the current net income or loss of such compa-nies, after the elimination of unrealized intercompany profits.
All assets and liabilities of the subsidiaries are revaluated on acquisi-tion, if applicable, and the excess of cost over underlying net assets atthe date of acquisition is amortised over a period of five years on astraight-line basis if such excess is material or charged to income whenincurred if immaterial.
Before the adoption of the new accounting standards, subsidiariesand affiliates included only companies in which the Company held themajority ownership and companies owned 20% to 50% by theCompany, respectively.
(c) Cash and Cash Equivalents
Cash and cash equivalents include all highly liquid investments, general-ly with original maturities of three months or less, that are readily con-vertible to known amounts of cash and are so near maturity that theypresent insignificant risk of changes in value because of changes ininterest rates.
(d) Marketable Securities
Marketable securities are principally stated at cost determined by themoving average method.
(e) Inventories
Inventories are stated at cost principally determined by the movingaverage method or the average method.
(f) Property, Plant and Equipment
Property, plant and equipment is stated at cost. Depreciation is gener-ally computed by the declining-balance method over the estimated use-ful lives of the respective assets, except for new buildings acquired afterMarch 31, 1998, on which depreciation is computed by the straight-linemethod. Significant renewals and betterments are capitalised at cost.Maintenance and repairs are charged to income as incurred.
(g) Leases
Noncancelable lease transactions are accounted for as operating leases(whether such leases are classified as operating leases or finance leas-es) except that lease agreements which stipulate the transfer of owner-ship of the leased assets to the lessee are accounted for as financeleases.
(h) Foreign Currency Translation
All assets and liabilities denominated in foreign currencies other thanthose hedged by forward exchange contracts are translated into yen athistorical rates. All revenues and expenses associated with foreign cur-rencies are translated at the rates of exchange prevailing when suchtransactions were made. Translation gains and losses are credited orcharged to income currently.
(i) Bond Issuance Costs
Bond issuance costs are charged to income as incurred.
(j) Severance Indemnities and Pension Plans
Under the severance indemnities plan of the Company, an employeewhose employment is terminated is entitled in most cases to a lump-sum severance payment, the amount of which is determined by refer-ence to the current basic rate of pay, length of service and certain otherfactors. The accrued severance indemnities are stated at 40 per cent.(the maximum rate allowable for income tax purposes) of the amountwhich would be required to be paid if all employees covered bythe plan voluntarily terminated their employment as of the balancesheet date.
Costs with respect to the Nippon Paper Welfare Pension Fund,which covers a certain portion of the benefits under the severanceindemnities plan, are funded as accrued at an amount determined actu-arially. Prior service cost at the inception of the plan is being fundedover a period of 20 years.
The consolidated subsidiaries also have similar severance indemnitiesplans and/or pension plans which cover substantially all their employees.
In addition, directors and corporate auditors of the Company are cus-tomarily entitled to lump-sum payments under an unfunded retirementplan. Provisions for retirement allowances for these officers are madeat estimated amounts.
21NIPPON PAPER INDUSTRIES
(k) Research and Development Costs
Research and development costs are charged to operations as incurred.
(l) Income Taxes
Effective April 1, 1999, the Company adopted deferred tax accountingfor income taxes in accordance with new accounting standards issuedby the Business Accounting Deliberation Council. These standardsrequire recognition of income taxes by the liability method. Under theliability method, deferred tax assets and liabilities are determined basedon the difference between financial reporting and the tax basis of theassets and liabilities and are measured using the enacted tax rates andlaws which will be in effect when the differences are expected toreverse. The cumulative effect of this change is reported as “cumula-tive effect of adopting deferred tax accounting” in the non-consolidatedstatements of income and retained earnings.
Prior to the adoption of deferred tax accounting, income taxes werecalculated on taxable income and charged to income. The effect of thischange was to increase net income ¥11,249 million ($11,783 thousand)and increase retained earnings ¥5,458 million ($51,491 thousand) forthe year ended March 31, 2000.
(m) Appropriations of Retained Earnings
Under the Commercial Code of Japan, the appropriation of retainedearnings with respect to a financial period is made by resolution of the shareholders at a general meeting held subsequent to the close of the financial period, and the accounts for such period, therefore, do not reflect such appropriations. See Note 14.
(n) Amounts per Share
The computation of basic net income per share is based on theweighted average number of shares of common stock outstandingduring each year. Diluted net income per share is computed based onthe weighted average number of shares of common stock outstandingeach year after giving effect to the dilutive potential of common sharesto be issued upon the conversion of convertible bonds.
Cash dividends per share represent the cash dividends declared asapplicable to the respective years.
2. U.S. Dollar Amounts
Amounts in U.S. dollars are included solely for the convenience of thereader. The rate of ¥106=US$1, the approximate rate of exchange onMarch 31, 2000, has been used. The translations should not be con-strued as representations that yen have been, could have been or couldin the future be converted into U.S. dollars at the above or any other rate.
3. Marketable and Investment Securities
The book values and related aggregate market values at March 31,2000 of current and noncurrent marketable securities included in marketable securities, investments in and advances to unconsoli-dated subsidiaries and affiliates and investments in other securities are summarised as follows:
Thousands ofMillions of yen U.S. dollars
Book Market Book Marketvalue value value value
Marketable securities ........ ¥65,302 ¥113,443 $616,057 $1,070,217
Investments in securities, including investments in unconsolidated subsidiaries and affiliates..................... 40,931 40,687 386,142 383,840
4. Inventories
Inventories at March 31, 2000 and 1999 consisted of the following:
Thousands of Millions of yen U.S. dollars
2000 1999 2000
Merchandise and finished products .................................... ¥ 63,512 ¥ 69,139 $599,170
Work in process .......................... 12,889 12,422 121,594
Raw materials and supplies ........ 29,367 32,448 277,047
.................................................... ¥105,770 ¥114,010 $997,830
5. Pledged Assets
Assets pledged as collateral for notes and accounts payable, trade of¥54 million ($509 thousand), other current liabilities of ¥1,461 million($13,783 thousand), short-term borrowings of ¥4,856 million ($45,811 thou-sand), current portion of long-term debt of ¥2,358 million ($22,245 thousand)and long-term debt of ¥41,994 million ($396,170 thousand) at March 31,2000 were as follows:
Thousands of Millions of yen U.S. dollars
Property, plant and equipment,at net book value......................................... ¥246,563 $2,326,066
Marketable securities at net book value ....... 2,378 22,434Investments in other securities .................... 3,781 35,670Other assets ................................................. 533 5,028...................................................................... ¥253,257 $2,389,217
6. Pension Plans
The pension fund assets of the Company and certain consolidated sub-sidiaries, in general, at March 31, 1999, the most recent valuation date,were ¥82,827 million ($781,387 thousand) in the aggregate.
7. Income Taxes
The Company and its domestic consolidated subsidiaries are subject toa number of taxes based on earnings, including corporation tax, inhabi-tants’ taxes and enterprise tax, which, in the aggregate, resulted in
22 NIPPON PAPER INDUSTRIES
statutory tax rates of approximately 49 per cent. and 41.7 per cent. forfiscal 2000 and fiscal 1999, respectively. The effective tax rates reflectedin the accompanying consolidated statements of income and retainedearnings differ from the statutory tax rate primarily due to the effect oftiming differences in the recognition of certain income and expensesfor tax and financial reporting purposes and the effect of permanentnondeductible expenses.
The effective tax rate reflected in the consolidated statements ofincome and retained earnings for the year ended March 31, 2000 dif-fers from the statutory tax rate for the following reasons:
Statutory tax rate .......................................................................... 41.7%Effect of:
Permanent difference—entertainment expense ...................... 4.0Permanent difference—divided income ................................... (1.3)Equity in earnings of affiliated companies ................................ (1.1)Provision for valuation allowance ............................................. 3.6Other, net ................................................................................. 0.7
Effective tax rate .......................................................................... 47.6%
Significant components of the deferred tax assets and liabilities held bythe Company and its consolidated subsidiaries as of March 31, 2000were as follows:
Thousands of Millions of yen U.S. dollars
Deferred tax assets:Accrued bonuses ......................................... ¥ 1,570 $ 14,811Accrued enterprise tax ................................. 901 8,500Accrued severance indemnities ................... 2,759 26,028Accrued officers’ retirement benefits .......... 1,019 9,613Tax loss carryforwards ................................. 6,095 57,500Others .......................................................... 4,628 43,660
......................................................................... 16,975 160,142Valuation allowance......................................... (6,724) (63,434)......................................................................... 10,250 96,698Deferred tax liabilities:
Tax reserves................................................. (4,612) (43,509)Other ............................................................ (420) (3,962)
......................................................................... (5,032) (47,472)Net deferred tax assets.................................... ¥ 5,217 $ 49,217
8. Common Stock
During the years ended March 31, 2000 and 1999, the Company issued1,623 shares and 54,747 shares, respectively, upon conversion of con-vertible bonds.
At March 31, 2000, the authorised and issued shares of commonstock (¥50 par value) of the Company numbered 2,200,000,000 and948,643,152 shares, respectively.
9. Leases
Lessees’ Accounting
a) The following pro forma amounts represent the acquisition costs,accumulated depreciation and net book value of leased property asof March 31, 2000 and 1999 which would have been reflected in thebalance sheet if finance lease accounting had been applied to thefinance lease transactions currently accounted for as operating leases:
Thousands of Millions of yen U.S. dollars
2000 1999 2000
Acquisition costs:Machinery and equipment................ ¥5,525 ¥5,428 $52,123
Accumulated depreciation:Machinery and equipment................ 3,124 2,980 29,472
Net book value:Machinery and equipment................ ¥2,400 ¥2,448 $22,642
The pro forma depreciation portion of lease payments relating tofinance lease transactions accounted for as operating leases for theyears ended March 31, 2000 and 1999 amounted to ¥1,148 million($10,830 thousand) and ¥1,126 million, respectively, which was com-puted assuming the straight-line method over the respective leaseterms of the leased assets.
Future minimum lease payments (including the interest portionthereon) subsequent to March 31, 2000 for finance lease transactionsaccounted for as operating leases are summarised as follows:
Thousands of Millions of yen U.S. dollars
Years ending March 31:2001 ........................................................... ¥ 984 $ 9,2832002 and thereafter.................................... 1,415 13,349
Total ............................................................... ¥2,400 $22,642
b) Future minimum lease payments subsequent to March 31, 2000 fornoncancelable operating leases are summarised as follows:
Thousands of Millions of yen U.S. dollars
Years ending March 31:2001 ........................................................... ¥529 $4,9912002 and thereafter.................................... 343 3,236
Total ............................................................... ¥873 $8,236
Lessors’ Accounting
Future minimum lease income subsequent to March 31, 2000 for non-cancelable operating leases is summarised as follows:
Thousands of Millions of yen U.S. dollars
Years ending March 31:2001 ........................................................... ¥55 $5192002 and thereafter.................................... — —
Total ............................................................... ¥55 $519
10. Contingent Liabilities
The Company and its consolidated subsidiaries had the following con-tingent liabilities at March 31, 2000:
Thousands of Millions of yen U.S. dollars
As endorsers of trade notes discounted with banks.................................................... ¥ 2,364 $ 22,302
As guarantors of indebtedness ofunconsolidated subsidiaries, affiliatesand other companies.................................... 49,453 466,538
......................................................................... ¥51,818 $488,849
23NIPPON PAPER INDUSTRIES
11. Segment Information
The Company and its consolidated subsidiaries are primarily engaged in the manufacture and sale of products in two major industry segments: pulp and paper and building materials.
Business segment information of the Company and its consolidated subsidiaries for the years ended March 31, 2000 and 1999 is as follows:
Millions of yen
Housing and Pulp and Paper- construction Eliminations
2000 paper related materials Other Total or corporate Consolidated
I. Sales and operating income:Sales to third parties .................................................... ¥646,267 ¥ 94,060 ¥101,167 ¥64,544 ¥906,041 — ¥ 906,041
Intragroup sales and transfers ..................................... 1,585 8,310 13,521 17,061 40,478 ¥ (40,478) —
Total sales ............................................................ 647,853 102,371 114,688 81,606 946,519 (40,478) 906,041
Operating expenses..................................................... 628,714 96,891 113,708 77,077 916,392 (40,478) 875,913
Operating income ........................................................ ¥ 19,138 ¥ 5,480 ¥ 980 ¥ 4,528 ¥ 30,127 ¥ — ¥ 30,127
II. Assets, depreciation and capital expenditures:Total assets.................................................................. ¥756,679 ¥ 79,483 ¥ 68,508 ¥66,886 ¥971,558 ¥158,479 ¥1,130,037
Depreciation................................................................. 52,664 4,408 645 5,317 663,035 — 63,035
Capital expenditures .................................................... 34,084 3,630 370 5,060 46,146 — 43,146
Thousands of U.S. dollars
I. Sales and operating income:Sales to third parties ................................................. $6,096,858 $887,358 $ 954,406 $608,906 $8,547,557 — $ 8,547,557
Intragroup sales and transfers .................................. 14,953 78,396 127,557 160,953 381,868 $ (381,868) —
Total sales......................................................... 6,111,821 965,764 1,081,962 769,868 8,929,425 (381,868) 8,547,557
Operating expenses.................................................. 5,931,264 914,066 1,072,717 727,142 8,645,208 (381,868) 8,263,330
Operating income ..................................................... $ 180,547 $ 51,698 $ 9,245 $ 42,717 $ 284,217 $ — $ 284,217
II. Assets, depreciation and capital expenditures:Total assets............................................................... $7,138,481 $749,840 $ 646,302 $631,000 $9,165,642 $1,495,085 $10,660,726
Depreciation.............................................................. 496,830 41,585 6,085 50,160 594,670 — 594,670
Capital expenditures ................................................. 321,547 34,245 3,491 47,736 407,038 — 407,038
Millions of yen
Housing andPulp and Paper- construction Eliminations
1999 paper related materials Other Total or corporate Consolidated
I. Sales and operating income:Sales to third parties ..................................................... ¥652,808 ¥ 92,858 ¥ 92,859 ¥67,987 ¥906,513 — ¥ 906,513Intragroup sales and transfers ....................................... 1,678 7,547 13,660 15,164 38,051 ¥ (38,051) —
Total sales............................................................. 654,486 100,405 106,519 83,152 944,564 (38,051) 906,513Operating expenses ...................................................... 650,301 97,245 107,149 77,702 932,398 (38,051) 894,346
Operating income (loss)................................................. ¥ 4,184 ¥ 3,160 ¥ (629) ¥ 5,450 ¥ 12,166 ¥ — ¥ 12,166
II. Assets, depreciation and capital expenditures:Total assets .................................................................. ¥722,393 ¥ 82,661 ¥ 69,197 ¥65,761 ¥990,014 ¥165,132 ¥1,155,147Depreciation.................................................................. 51,032 4,589 803 4,995 61,421 — 61,421Capital expenditures ..................................................... 36,969 4,750 426 9,327 51,474 — 51,474
24 NIPPON PAPER INDUSTRIES
12. Derivative Transactions
The Company and certain subsidiaries have entered into foreignexchange contracts to reduce exposure to adverse fluctuations in for-eign exchange rates relating to receivables and payables denominatedin foreign currencies.
In addition, the Company and certain subsidiaries have entered intointerest rate swap agreements to reduce interest expenses or reduceexposure to adverse fluctuations in interest rates relating to loans and
bonds payable. The total notional principal amounts of these interestrate swap agreements at March 31, 2000 were ¥17,525 million($165,330 thousand), which included the notional principal amounts of¥16,225 million ($153,066 thousand) relating to swap positions whoseterms extend more than one year after the balance sheet date.
Summarised below are the contract amounts and estimated fairvalue of the Company’s financial instruments at March 31, 2000.
Thousands of MIllions of yen U.S. dollars
Contract Estimated Contract Estimatedamount fair value amount fair value
Forward exchange contracts:To buy U.S. dollars..................................................................................................................................... ¥1,940 ¥1,950 $18,302 $18,396To sell U.S. dollars ..................................................................................................................................... 156 156 1,472 1,472To buy euros .............................................................................................................................................. 12 12 113 113
Interest rate swaps:Receive—variable, pay—fixed ................................................................................................................... 4,500 (40) 42,453 (377)Receive—fixed, pay—variable ................................................................................................................... 8,500 85 80,189 802Receive—variable, pay—variable............................................................................................................... 2,800 (46) 26,415 (434)Receive—fixed, pay—fixed........................................................................................................................ 1,725 (23) 16,274 (217)
Interest rate cap:To buy ........................................................................................................................................................ 8,000 169 75,472 1,594
The following methodologies and assumptions were used by theCompany in estimating the fair value of its financial instruments:
Forward exchange contracts: Forward rates for contracts with similar terms
Coupon and interest rate swaps: Estimated fair value provided by financial institutions
The above contract amounts of the forward exchange contractsexcluded contracts entered into to hedge receivables and payablesdenominated in foreign currencies which have been translated andreflected at the corresponding contracted rates in the accompanyingbalance sheets.
13. Research and Development Costs
Included in cost of sales and selling, general and administrative expens-es was ¥6,163 million ($58,142 thousand) of research and developmentcosts for the year ended March 31, 2000.
14. Subsequent Event
The following appropriations of retained earnings of the Company,which have not been reflected in the accompanying consolidated finan-cial statements for the year ended March 31, 2000, were approved at ashareholders’ meeting held on June 29, 2000:
Thousands of Millions of yen U.S. dollars
Year-end cash dividends (¥4.5/$0.04 per share).................................... ¥4,268 $40,264
Bonuses to directors ....................................... 170 1,604......................................................................... ¥4,438 $41,868
25NIPPON PAPER INDUSTRIES
R E P O R T O F I N D E P E N D E N T C E R T I F I E D P U B L I C A C C O U N T A N T S
The Board of Directors
Nippon Paper Industries Co., Ltd.
We have audited the consolidated balance sheets of Nippon Paper Industries Co., Ltd. and consolidated subsidiaries as of March
31, 2000 and 1999, and the related consolidated statements of income and retained earnings for the years then ended, and their
consolidated statement of cash flows for the year ended March 31, 2000, all expressed in yen. Our audits were made in accor-
dance with auditing standards, procedures and practices generally accepted and applied in Japan and, accordingly, included such
tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances.
In our opinion, the accompanying consolidated financial statements, expressed in yen, present fairly the consolidated financial posi-
tion of Nippon Paper Industries Co., Ltd. and consolidated subsidiaries at March 31, 2000 and 1999, and the consolidated results of
their operations for the years then ended and their cash flows for the year ended March 31, 2000 in conformity with accounting prin-
ciples and practices generally accepted in Japan applied on a consistent basis.
As described in Note 1 to the consolidated financial statements, Nippon Paper Industries Co., Ltd. and consolidated subsidiaries
have adopted new accounting standards for consolidation and deferred tax accounting in the preparation of their consolidated finan-
cial statements for the year ended March 31, 2000.
The U.S. dollar amounts in the accompanying consolidated financial statements with respect to the year ended March 31, 2000 are
presented solely for convenience. Our examinations also included the translation of yen amounts into U.S. dollar amounts and, in
our opinion, such translation has been made on the basis described in Note 2 to the consolidated financial statements.
June 29, 2000
See Note 1 to consolidated financial statements, which explains the basis of preparing the consolidated financial statements of
Nippon Paper Industries Co., Ltd. under Japanese accounting principles and practices.
26 NIPPON PAPER INDUSTRIES
N O N - C O N S O L I D A T E D B A L A N C E S H E E T SNippon Paper Industries Co., Ltd. As of March 31, 2000 and 1999
Thousands ofU.S. dollars
Millions of yen (Note 2)
ASSETS 2000 1999 2000
Current assets:
Cash and time deposits .................................................................................................... ¥ 2,610 ¥ 2,219 $ 24,623
Marketable securities (Notes 3 and 6) .............................................................................. 56,477 64,666 532,802
Receivables:
Notes and accounts receivable:
Trade......................................................................................................................... 94,359 86,329 890,179
Subsidiaries and affiliates ......................................................................................... 40,316 36,151 380,340
Other......................................................................................................................... 450 5,606 4,245
Loans receivable from subsidiaries and affiliates ......................................................... 26,910 28,000 253,868
Allowance for doubtful receivables............................................................................... (695) (841) (6,557)
Inventories (Note 4) .......................................................................................................... 62,221 69,652 586,991
Deferred tax assets (Note 8)............................................................................................. 1,562 — 14,736
Other current assets......................................................................................................... 4,433 4,800 41,821
Total current assets .............................................................................................. 288,645 296,584 2,723,066
Property, plant and equipment (Notes 6 and 11):
Land .................................................................................................................................. 48,382 45,559 456,434
Buildings and structures ................................................................................................... 190,406 184,306 1,796,283
Machinery and equipment ................................................................................................ 814,345 806,126 7,682,500
Forests and afforestation.................................................................................................. 12,554 12,727 118,434
Construction in progress................................................................................................... 15,065 19,444 142,123
.......................................................................................................................................... 1,080,754 1,068,164 10,195,792
Less accumulated depreciation ........................................................................................ (721,261) (694,490) (6,804,349)
Property, plant and equipment–net ...................................................................... 359,493 373,673 3,391,443
Investments and other assets:
Investments in and advances to subsidiaries and affiliates (Notes 3, 5 and 6).................... 138,146 135,365 1,303,264
Investments in other securities (Note 3) ............................................................................ 26,322 26,339 248,321
Other assets ..................................................................................................................... 15,396 17,353 145,245
Allowance for doubtful receivables................................................................................... (94) (130) (887)
Total investments and other assets...................................................................... 179,771 178,927 1,695,953
Total assets ..................................................................................................................... ¥ 827,909 ¥ 849,185 $ 7,810,462
See notes to non-consolidated financial statements.
27NIPPON PAPER INDUSTRIES
Thousands ofU.S. dollars
Millions of yen (Note 2)
LIABILITIES AND SHAREHOLDERS’ EQUITY 2000 1999 2000
Current liabilities:
Short-term borrowings (Note 6) ............................................................................................... ¥108,962 ¥135,027 $1,027,943
Current portion of long-term debt (Note 6)............................................................................... 15,997 12,224 150,915
Notes and accounts payable:Trade .................................................................................................................................... 41,957 48,951 395,821
Subsidiaries and affiliates ..................................................................................................... 45,645 32,905 430,613
Construction ......................................................................................................................... 11,105 9,393 104,764
Other .................................................................................................................................... 12,207 12,273 115,160
Accrued expenses.................................................................................................................... 7,783 7,983 73,425
Accrued income taxes (Note 8) ................................................................................................ 7,394 472 69,755
Other current liabilities ............................................................................................................. 734 492 6,925
Total current liabilities................................................................................................... 251,787 259,725 2,375,349
Long-term liabilities:
Long-term debt (Note 6) ........................................................................................................... 227,586 242,904 2,147,038
Accrued severance indemnities (Note 7) ................................................................................. 17,565 18,189 165,708
Deferred tax liabilities (Note 8) ................................................................................................. 1,617 — 15,255
Other long-term liabilities ......................................................................................................... 515 955 4,858
Total long-term liabilities............................................................................................... 247,284 262,048 2,332,868
Contingent liabilities (Note 14)
Shareholders’ equity (Notes 9, 10 and 16):
Common stock ......................................................................................................................... 104,846 104,830 989,113
Capital surplus .......................................................................................................................... 97,375 97,359 918,632
Legal reserve............................................................................................................................ 26,208 26,207 247,245
Retained earnings..................................................................................................................... 100,408 99,014 947,245
Total shareholders’ equity ............................................................................................ 328,838 327,411 3,102,245
Total liabilities and shareholders’ equity ............................................................................. ¥827,909 ¥849,185 $7,810,462
28 NIPPON PAPER INDUSTRIES
N O N - C O N S O L I D A T E D S T A T E M E N T S O F I N C O M E A N D R E T A I N E D E A R N I N G SNippon Paper Industries Co., Ltd. Years ended March 31, 2000 and 1999
Thousands ofU.S. dollars
Millions of yen (Note 2)
2000 1999 2000
Net sales.................................................................................................................................. ¥559,801 ¥561,310 $5,281,142
Cost of sales............................................................................................................................ 434,045 447,371 4,094,764
Gross profit ............................................................................................................................. 125,756 113,938 1,186,377
Selling, general and administrative expenses..................................................................... 109,502 109,271 1,033,038
Operating income................................................................................................................... 16,254 4,667 153,340
Other (expense) income:
Interest expense ...................................................................................................................... (6,977) (8,578) (65,821)
Interest and dividend income ................................................................................................... 3,896 3,738 36,755
Other, net (Note 12) ................................................................................................................. 2,625 7,114 24,764
................................................................................................................................................. (455) 2,274 (4,292)
Income before income taxes ................................................................................................. 15,798 6,941 149,038
Income taxes (Note 8):
Current ................................................................................................................................. 6,600 1,800 62,264
Deferred ............................................................................................................................... (682) — (6,434)
................................................................................................................................................. 5,918 1,800 55,830
Net income.............................................................................................................................. 9,880 5,141 93,208
Retained earnings at beginning of year ............................................................................... 99,014 101,661 934,094
Cumulative effect of adopting deferred tax accounting..................................................... (737) — (6,953)
Appropriations:
Cash dividends paid.................................................................................................................. (7,588) (7,588) (71,585)
Bonuses to directors and corporate auditors ........................................................................... (160) (200) (1,509)
Retained earnings at end of year .......................................................................................... ¥100,408 ¥ 99,014 $ 947,245
U.S. dollarsYen (Note 2)
Amounts per share:
Net income:Basic ......................................................................................................................................... ¥10.42 ¥5.42 $0.098
Diluted ...................................................................................................................................... 10.38 5.42 0.098
Cash dividends.............................................................................................................................. 8.00 8.00 0.075
See notes to non-consolidated financial statements.
29NIPPON PAPER INDUSTRIES
N O T E S T O N O N - C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T SNippon Paper Industries Co., Ltd. Years ended March 31, 2000 and 1999
1. Summary of Significant Accounting Policies
(a) Basis of Preparation
Nippon Paper Industries Co., Ltd. (the “Company”) maintains itsaccounting records and prepares its financial statements in accordancewith accounting principles and practices generally accepted in Japan.
The accompanying non-consolidated financial statements have beenprepared from the accounts maintained by Nippon Paper Industries Co.,Ltd. in accordance with the provisions set forth in the JapaneseCommercial Code and in conformity with accounting principles andpractices generally accepted in Japan, which may differ in some materi-al respects from accounting principles and practices generally acceptedin countries and jurisdictions other than Japan.
In addition, the notes to the non-consolidated financial statementsinclude information which is not required under accounting principlesgenerally accepted in Japan but is presented herein as additional infor-mation.
Certain amounts in the prior year’s financial statements have beenreclassified to conform to the current year’s presentation.
The accompanying non-consolidated financial statements relateto the Company only, with investments in subsidiaries and affiliates(companies owned 20 per cent. to 50 per cent.) being substantiallystated at cost.
As permitted, amounts of less than ¥1 million have been omitted. Asa result, the totals shown in the accompanying non-consolidated finan-cial statements (both in yen and U.S. dollars) do not necessarily agreewith the sums of the individual amounts.
(b) Marketable Securities
Marketable securities are stated at cost determined by the movingaverage method.
(c) Inventories
Inventories are stated at cost determined by the moving average method.
(d) Property, Plant and Equipment
Property, plant and equipment is stated at cost. Depreciation is com-puted by the declining-balance method over the estimated useful livesof the respective assets, except for new buildings acquired after March31, 1998, on which depreciation is computed by the straight-linemethod. Significant renewals and betterments are capitalised at cost.Maintenance and repairs are charged to income as incurred.
(e) Research and Development Costs
Research and development costs are charged to operations as incurred.
(f) Leases
Noncancelable lease transactions are accounted for as operating leases(whether such leases are classified as operating leases or finance leas-es) except that lease agreements which stipulate the transfer of owner-ship of the leased assets are accounted for as finance leases.
(g) Investments in Other Securities
Investments in other securities are substantially stated at cost.
(h) Foreign Currency Translation
All assets and liabilities denominated in foreign currencies other thanthose hedged by forward exchange contracts are translated into yen
at historical rates. All revenues and expenses associated with foreigncurrencies are translated at the rates of exchange prevailing when suchtransactions were made. Translation gains and losses are credited orcharged to income currently.
(i) Bond Issuance Costs
Bond issuance costs are charged to income as incurred.
(j) Severance Indemnities and Pension Plans
Under the severance indemnities plan of the Company, an employeewhose employment is terminated is entitled in most cases to a lump-sum severance payment, the amount of which is determined by refer-ence to the current basic rate of pay, length of service and certain otherfactors. The accrued severance indemnities are stated at 40 per cent.(the maximum rate allowable for income tax purposes) of the amountwhich would be required to be paid if all employees covered bythe plan voluntarily terminated their employment as of the balancesheet date.
Costs with respect to the Nippon Paper Welfare Pension Fund, whichcovers a certain portion of the benefits under the severance indemni-ties plan, are funded as accrued in an amount determined actuarially.Prior service cost of the plan is being funded over a period of 20 years.
In addition, directors and corporate auditors are customarily entitledto lump-sum payments under an unfunded retirement plan. Provisionsfor retirement allowances for these officers are made at estimatedamounts.
(k) Income Taxes
Effective April 1, 1999, the Company adopted deferred tax accountingfor income taxes in accordance with new accounting standards issuedby the Business Accounting Deliberation Council. These standardsrequire recognition of income taxes by the liability method. Under theliability method, deferred tax assets and liabilities are determined basedon the difference between financial reporting and the tax basis of theassets and liabilities and are measured using the enacted tax rates andlaws which will be in effect when the differences are expected toreverse. The cumulative effect of this change is reported as “cumula-tive effect of adopting deferred tax accounting” in the non-consolidatedstatements of income and retained earnings.
Prior to the adoption of deferred tax accounting, income taxes werecalculated on taxable income and charged to income. The effect of thischange was to increase net income ¥682 million ($6,434 thousand) andincrease retained earnings ¥2,851 million ($26,896 thousand) for theyear ended March 31, 2000.
(l) Appropriations of Retained Earnings
Under the Commercial Code of Japan, the appropriation of retainedearnings with respect to a financial period is made by resolution of theshareholders at a general meeting held subsequent to the close of thefinancial period, and the accounts for such period, therefore, do notreflect such appropriations. See Note 17.
(m) Amounts per Share
The computation of basic net income per share is based on the weight-ed average number of shares of common stock outstanding duringeach year. Diluted net income per share is computed based on theweighted average number of shares of common stock outstanding
30 NIPPON PAPER INDUSTRIES
5. Investments in and Advances to Subsidiaries and Affiliates
Investments in and advances to subsidiaries and affiliates at March 31,2000 and 1999 were as follows:
Thousands of Millions of yen U.S. dollars
2000 1999 2000
Investments............................... ¥116,651 ¥113,526 $1,100,481
Advances ................................... 21,494 21,838 202,774
................................................... ¥138,146 ¥135,365 $1,303,264
6. Short-Term Borrowings and Long-Term Debt
At March 31, 2000 and 1999, short-term borrowings consisted of the following:
Thousands of Millions of yen U.S. dollars
2000 1999 2000
Loans from banks ...................... ¥ 87,962 ¥102,527 $ 829,830
Commercial paper ..................... 21,000 32,500 198,113
................................................... ¥108,962 ¥135,027 $1,027,943
Loans from banks are unsecured and represented generally by 365-day notes. The weighted average interest rates of short-term bank loansoutstanding at March 31, 2000 and 1999 were 1.15 per cent. and 0.56per cent., respectively.
Long-term debt at March 31, 2000 and 1999 is summarised as fol-lows:
Thousands ofMillions of yen U.S. dollars
2000 1999 2000
Loans from banks, insurancecompanies and others at ratesranging from 1.32 per cent. to 7.2 per cent. due through 2034:
With collateral...................... ¥ 21,855 ¥ 28,515 $ 206,179
Without collateral................. 62,390 67,243 588,585
2.5 per cent. unsecurednotes in yen due 2003 ............. 30,000 30,000 283,019
2.975 per cent. unsecurednotes in yen due 2005 ............. 25,000 25,000 235,849
2.25 per cent. unsecurednotes in yen due 2003 ............. 25,000 25,000 235,849
1.675 per cent. unsecured notes in yen due 2002 ............. 15,000 15,000 141,509
2.075 per cent. unsecured notes in yen due 2004 ............. 15,000 15,000 141,509
2.12 per cent. unsecured notes in yen due 2004 ............. 20,000 20,000 188,679
1.8 per cent. unsecured convertible bonds in yen due 2002 ....................... 695 724 6,557
2.3 per cent. convertible mortgage bonds due 2002 ...... 23 26 217
1.8 per cent. unsecured convertible bonds due 2003 .... 28,620 28,620 270,000
................................................... 243,583 255,129 2,297,953
Less current portion .................. (15,997) (12,224) (150,915)
................................................... ¥227,586 ¥242,904 $2,147,038
each year after giving effect to the dilutive potential of common sharesto be issued upon the conversion of convertible bonds.
Cash dividends per share represent the cash dividends declaredas applicable to the respective years.
2. U.S. Dollar Amounts
Amounts in U.S. dollars are included solely for the convenience of thereader. The rate of ¥106=US$1, the approximate rate of exchange onMarch 31, 2000, has been used. The translations should not be con-strued as representations that yen have been, could have been or couldin the future be converted into U.S. dollars at the above or any other rate.
3. Marketable and Investment Securities
Marketable securities at March 31, 2000 and 1999 were as follows:
Thousands of Millions of yen U.S. dollars
2000 1999 2000
Equity securities ............................. ¥56,177 ¥64,559 $529,972
Bonds and other securities ............. 300 106 2,830
........................................................ ¥56,477 ¥64,666 $532,802
Investments in other securities at March 31, 2000 and 1999 were asfollows:
Thousands of Millions of yen U.S. dollars
2000 1999 2000
Unlisted stocks ............................... ¥25,302 ¥25,319 $238,698
Bonds.............................................. 9 9 85
Other............................................... 1,010 1,010 9,528
........................................................ ¥26,322 ¥26,339 $248,321
The book values and related aggregate market values at March 31,1999 of current and noncurrent marketable securities included in mar-ketable securities, investments in and advances to subsidiaries and affili-ates and investments in other securities are summarised as follows:
Millions of yen
1999
Book Marketvalue value
Marketable securities.............................................. ¥64,666 ¥107,686Investments in securities,
including investments in subsidiaries and affiliates ...................................... 28,267 62,413
4. Inventories
Inventories at March 31, 2000 and 1999 consisted of the following:
Thousands of Millions of yen U.S. dollars
2000 1999 2000
Merchandise and finished products........................................ ¥35,661 ¥40,531 $336,425
Work in process.............................. 7,910 7,993 74,623
Raw materials and supplies ............ 18,650 21,126 175,943
........................................................ ¥62,221 ¥69,652 $586,991
31NIPPON PAPER INDUSTRIES
Convertible bonds, unless previously redeemed, are convertible intoshares of common stock of the Company as follows:
Current conversion
price Conversion periodper share (up to and including)
1.8 per cent. convertible bonds due 2002 ........................... ¥615.80 September 27, 2002
2.3 per cent. convertible bonds due 2002 ........................... 391.60 March 28, 2002
1.8 per cent. convertible bonds due 2003 ........................... 872.70 September 29, 2003
At March 31, 2000, if all the outstanding convertible bonds had beenconverted, approximately 33,982 thousand new shares would havebeen issuable.
Under the provisions of these issues, the conversion prices are subject to adjustment in certain cases which include stock splits.
Long-term debt maturities subsequent to March 31, 2000 aresummarised as follows:
Thousands of Years ending March 31 Millions of yen U.S. dollars
2001.............................................................. ¥ 15,997 $ 150,9152002.............................................................. 12,403 117,0092003.............................................................. 30,051 283,5002004 ............................................................. 94,157 888,2742005 and thereafter ...................................... 90,973 858,236...................................................................... ¥243,583 $2,297,953
The assets pledged as collateral for long-term debt at March 31,2000 were as follows:
Thousands of Millions of yen U.S. dollars
Property, plant and equipment,at net book value......................................... ¥167,139 $1,576,783
Marketable securities at net book value ....... 2,370 22,358Investments in and advances to
subsidiaries and affiliates ............................ 436 4,113...................................................................... ¥169,946 $1,603,264
7. Severance Indemnities and Pension Plans
Charges to income for the severance indemnities and pension plans forthe years ended March 31, 2000 and 1999 were as follows:
Thousands of Millions of yen U.S. dollars
2000 1999 2000
Provision for severance indemnities ..................................... ¥ 3,638 ¥3,182 $ 34,321
Pension cost .................................... 7,426 6,496 70,057
.......................................................... ¥11,064 ¥9,678 $104,377
The pension fund assets of the Company at March 31, 1999, themost recent valuation date, were ¥67,679 million ($638,481 thousand).
8. Income Taxes
The Company is subject to a number of taxes based on earnings, includ-ing corporation tax, inhabitants’ taxes and enterprise tax, which, in theaggregate, resulted in statutory tax rates of approximately 49 per cent.and 41.7 per cent. for 2000 and 1999, respectively. The effective taxrates reflected in the accompanying non-consolidated statements ofincome and retained earnings differ from the statutory tax rate primarilydue to the effect of timing differences in the recognition of certainincome and expenses for tax and financial reporting purposes and theeffect of permanent nondeductible expenses.
The effective tax rate reflected in the non-consolidated statement ofincome for the year ended March 31, 2000 differs from the statutorytax rate for the following reasons:
Statutory tax rate .......................................................................... 41.7%Effect of:
Permanent difference—entertainment expense ...................... 2.4Permanent difference—divided income ................................... (5.2)Provision for valuation allowance ............................................. 0.6Other, net ................................................................................. (2.0)
Effective tax rate .......................................................................... 37.5%
Significant components of the Company’s deferred tax assets andliabilities as of March 31, 2000 were as follows:
Thousands ofMillions of yen U.S. dollars
Deferred tax assets:Accrued bonuses ........................................... ¥ 937 $ 8,840Accrued enterprise tax................................... 625 5,896Accrued severance indemnities..................... 1,743 16,443Accrued officers’ retirement benefits ............ 783 7,387Others............................................................ 117 1,104
Deferred tax assets ........................................... 4,205 39,670
Deferred tax liabilities ........................................ (4,260) (40,189)
Net deferred tax liabilities .................................. ¥ (55) $ (519)
9. Common Stock
During the years ended March 31, 2000 and 1999, the Company issued1,623 shares and 54,747 shares, respectively, upon conversion of con-vertible bonds.
At March 31, 2000, the authorised and issued shares of commonstock (¥50 par value) of the Company numbered 2,200,000,000 and948,643,152 shares, respectively.
10. Legal Reserve
In accordance with the provisions of the Commercial Code of Japan,the Company has provided a legal reserve by appropriating retainedearnings. The legal reserve may be used to reduce or eliminate a deficit ormay be transferred to stated capital (common stock) through suitableshareholders’ or directors’ action, but is not available for dividends.
32 NIPPON PAPER INDUSTRIES
11. Depreciation
Depreciation of property, plant and equipment for the years endedMarch 31, 2000 and 1999 was as follows:
Thousands of Millions of yen U.S. dollars
2000 1999 2000
........................................................ ¥41,093 ¥43,760 $387,670
12. Other (Expense) Income–Other, Net
The components of “Other income (expense)–Other, net” for the yearsended March 31, 2000 and 1999 were as follows:
Thousands of Millions of yen U.S. dollars
2000 1999 2000
Gain on sales of securities .................. ¥4,848 ¥7,223 $45,736
Gain on providing technical support .... — 6 —
Rental income, net .............................. 871 993 8,217
Gain on sales of property,plant and equipment ......................... 4,543 2,739 42,858
Special retirement benefits ................. (2,264) — (21,358)
Loss on disposal of property, plant and equipment ......................... (1,918) (617) (18,094)
Loss on devaluation of marketable securities ........................ (802) — (7,566)
Loss on liquidation of certain subsidiaries............................ (1,030) (1,701) (9,717)
Other, net............................................ (1,621) (1,529) (15,292)
............................................................ ¥2,625 ¥7,114 $24,764
13. Leases
Lessees’ Accounting
(a) The following pro forma amounts represent the acquisition costs,accumulated depreciation and net book value of leased property as ofMarch 31, 2000 and 1999 which would have been reflected in the bal-ance sheet if finance lease accounting had been applied to the financelease transactions currently accounted for as operating leases:
Thousands of Millions of yen U.S. dollars
2000 1999 2000
Acquisition costs:Machinery and equipment ................ ¥1,769 ¥1,949 $16,689
Accumulated depreciation:Machinery and equipment ................ 969 1,144 9,142
Net book value:Machinery and equipment ................ 800 805 7,547
The pro forma depreciation portion of lease payments relating tofinance lease transactions accounted for as operating leases for theyears ended March 31, 2000 and 1999 amounted to ¥414 million($3,906 thousand) and ¥396 million, respectively, which were comput-ed assuming the straight-line method over the respective lease termsof the leased assets.
Future minimum lease payments (including the interest portion there-on) subsequent to March 31, 2000 for finance lease transactionsaccounted for as operating leases are summarised as follows:
Thousands of Years ending March 31 Millions of yen U.S. dollars
2001 ..................................................................... ¥312 $2,9432002 and thereafter.............................................. 487 4,594
Total.................................................................. ¥800 $7,547
(b) Future minimum lease payments subsequent to March 31, 2000 fornoncancelable operating leases are summarised as follows:
Thousands of Years ending March 31 Millions of yen U.S. dollars
2001 ..................................................................... ¥508 $4,7922002 and thereafter.............................................. 308 2,906
Total.................................................................. ¥817 $7,708
Lessors’ Accounting
Future minimum lease income subsequent to March 31, 2000 for non-cancelable operating leases is summarised as follows:
Thousands of Years ending March 31 Millions of yen U.S. dollars
2001 ...................................................................... ¥55 $5192002 and thereafter............................................... — —
Total .................................................................. ¥55 $519
14. Contingent Liabilities
The Company was contingently liable at March 31, 2000 as guarantorof indebtedness of subsidiaries and affiliates and others in the amountof ¥98,445 million ($928,726 thousand).
33NIPPON PAPER INDUSTRIES
15. Derivative Transactions
The Company has entered into foreign exchange contracts to reduce itsexposure to adverse fluctuations in foreign exchange rates relating toreceivables and payables denominated in foreign currencies.
In addition, the Company has entered into interest rate swap agree-ments to reduce its interest expense or reduce its exposure to adversefluctuations in interest rates relating to loans and bonds payable. Thetotal notional principal amount of these interest rate swap agreementsat March 31, 1999 was ¥11,000 million, which included the notionalprincipal amounts of ¥8,000 million relating to swap positions whoseterms extend more than one year after the balance sheet date.
Summarised below are the contract amounts and estimated fair value of the Company’s financial instruments at March 31, 1999:
Millions of yen
1999
Carrying Estimatedamount fair value
Forward exchange contracts:To buy U.S. dollars...................................................... ¥ 985 ¥1,005To sell U.S. dollars ...................................................... 10 11
Interest rate swaps:Receive fixed; Pay-variable .......................................... 9,000 45Pay variable;
Receive variable ....................................................... 2,000 (24)
The following methodologies and assumptions were used by theCompany in estimating the fair value of its financial instruments:
Forward exchange contracts: Forward rates for contracts with similar terms
Interest rate swaps: Estimated fair value provided by financial institutions
The above contract amounts of the forward exchange contractsexcluded contracts entered into to hedge receivables and payablesdenominated in foreign currencies which have been translated andreflected at the corresponding contracted rates in the accompanyingbalance sheets.
16. Research and Development Costs
Included in selling, general and administrative expenses was ¥5,622million ($53,038 thousand) of research and development costs for theyear ended March 31, 2000.
17. Subsequent Event
The following appropriations of retained earnings, which have not beenreflected in the accompanying non-consolidated financial statementsfor the year ended March 31, 2000, were approved at a shareholders’meeting held on June 29, 2000:
Thousands of Millions of yen U.S. dollars
Year-end cash dividends (¥4.5/$0.04 per share)....................................... ¥4,268 $40,264
Bonuses to directors .......................................... 170 1,604............................................................................ ¥4,438 $41,868
34 NIPPON PAPER INDUSTRIES
R E P O R T O F I N D E P E N D E N T C E R T I F I E D P U B L I C A C C O U N T A N T S
The Board of Directors
Nippon Paper Industries Co., Ltd.
We have audited the non-consolidated balance sheets of Nippon Paper Industries Co., Ltd. as of March 31, 2000 and 1999, and
the related non-consolidated statements of income and retained earnings for the years then ended, all expressed in yen. Our
audits were made in accordance with auditing standards, procedures and practices generally accepted and applied in Japan
and, accordingly, included such tests of the accounting records and such other auditing procedures as we considered necessary
in the circumstances.
In our opinion, the accompanying non-consolidated financial statements, expressed in yen, present fairly the financial position
of Nippon Paper Industries Co., Ltd. at March 31, 2000 and 1999, and the results of its operations for the years then ended in
conformity with accounting principles and practices generally accepted in Japan applied on a consistent basis.
As described in Note 1 to the non-consolidated financial statements, Nippon Paper Industries Co., Ltd. has adopted new accounting
standards for deferred tax accounting in the preparation of their non-consolidated financial statements for the year ended March 31,
2000.
The U.S. dollar amounts in the accompanying non-consolidated financial statements with respect to the year ended March 31, 2000
are presented solely for convenience. Our examinations also included the translation of yen amounts into U.S. dollar amounts and,
in our opinion, such translation has been made on the basis described in Note 2 to the non-consolidated financial statements.
June 29, 2000
See Note 1 to the non-consolidated financial statements, which explains the basis of preparing the non-consolidated financial
statements of Nippon Paper Industries Co., Ltd. under Japanese accounting principles and practices.
35NIPPON PAPER INDUSTRIES
B O A R D O F D I R E C T O R S(As of June 29, 2000)
C O R P O R A T E D A T A(As of March 31, 2000)
HEADQUARTERS
Shin Yurakucho Building, 1-12-1 Yurakucho, Chiyoda-ku, Tokyo 100-0006, JapanPhone: +81-(0)3-3218-8000 Fax: +81-(0)3-3216-4753
DATE OF ESTABLISHMENT
August 1, 1949(Jujo Paper Co., Ltd.)
PAID-IN CAPITAL
¥104,846 million
COMMON STOCK
Issued and outstanding: 948,643,152 shares
NUMBER OF SHAREHOLDERS
50,982
MAJOR SHAREHOLDERS % of totalshares issued
Nippon Life Insurance Company 4.2The Industrial Bank of Japan, Ltd. 4.2The Sakura Bank, Ltd. 4.2Mitsui Mutual Life Insurance Co. 3.1The Fuji Bank, Ltd. 2.7The Dai-Ichi Mutual Life Insurance Company 2.1
NUMBER OF EMPLOYEES
6,009
SECURITIES TRADED
Tokyo Stock Exchange and other major Japanese stock exchanges
TRANSFER AGENT AND REGISTRAR
The Mitsui Trust & Banking Co., Ltd.2-1-1 Nihonbashi-Muromachi, Chuo-ku, Tokyo 103-0022, Japan
AUDITOR
Century Ota Showa & Co.
CHAIRMAN
Takeshiro Miyashita
PRESIDENT
Masao Kobayashi
EXECUTIVE VICE PRESIDENTS
Yasuhiko KurosawaKiichiro Sakai
SENIOR MANAGING DIRECTORS
Souji BanTakahiko MiyoshiMasahiro SawasakiAkira Machihara
MANAGING DIRECTORS
Sachio MaruchiIkuo KuwajimaAkira YokoyamaIwao NakajimaKatsuo Kobayashi
DIRECTORS
Yoshinari InoueHirofumi OobaMasatomo NakamuraKazuaki WatanabeNobuyuki OotsukiToshio YamamotoTakaji ItasakaFumio TogouNoboru HasegawaTsunemasa WakamatsuTakeo Hashimoto
CORPORATE AUDITORS
Hiroe MisawaKeiji IwamotoHideo Yamada
36 NIPPON PAPER INDUSTRIES
MILLS
Kushiro Mill
2-1-47 Tottori-Minami, Kushiro, Hokkaido 084-0905Phone: 0154-52-7605 Fax: 0154-51-3525
Asahikawa Mill
505-01 Pulp-cho, Asahikawa, Hokkaido 070-8611Phone: 0166-25-9730 Fax: 0166-25-9775
Yufutsu Mill
143 Yufutsu, Tomakomai, Hokkaido 059-1395Phone: 0144-56-0111 Fax: 0144-56-0485
Ishinomaki Mill
2-2-1 Nanko-cho, Ishinomaki, Miyagi 986-8555Phone: 0225-95-0111 Fax: 0225-93-6060
Nakoso Mill
1 Kubota-jujo, Nakoso-machi, Iwaki,Fukushima 979-0192Phone: 0246-65-3111 Fax: 0246-65-6375
Fushiki Mill
1-1-1 Fushiki, Takaoka, Toyama 933-0193Phone: 0766-44-8100 Fax: 0766-44-6380
Iwakuni Mill
2-8-1 Iida-machi, Iwakuni, Yamaguchi 740-0003Phone: 0827-24-6222 Fax: 0827-24-6390
Komatsushima Mill
1 Toyoura-cho, Komatsushima, Tokushima 773-0019Phone: 08853-7-2121 Fax: 08853-8-2017
Yatsushiro Mill
1-1 Jujo-machi, Yatsushiro, Kumamoto 866-8602Phone: 0965-33-2111 Fax: 0965-35-1227
Higashimatsuyama Mill
1551 Higashidaira, Higashimatsuyama, Saitama 355-0002Phone: 0493-22-0960 Fax: 0493-22-5130
Gotsu Mill
1280 Gotsu-cho, Gotsu, Shimane 695-0011Phone: 0855-52-6003 Fax: 0855-52-6029
OVERSEAS OFFICES/BRANCHES
Concepción Office
(Forestry Dept.)
Ejército 399, Concepción, ChilePhone: +56-41-244-300
Pietermaritzburg Office
(Forestry Dept.)
c/o The Central Timber Cooperative Ltd.,P.O. Box 495, 171 Burger Street 3200,Pietermaritzburg 3200, Republic of South AfricaPhone: +27-33-3451-388
Seattle Office
(International Dept.)
Two Union Square,601 Union Street, Suite 5535,Seattle, WA 98101, U.S.A.Phone: +1-206-622-8724
Atlanta Branch
3700 Mansell Road, Suite 220, Alpharetta, GA 30022, U.S.A.Phone: +1-770-625-5177
Longview Branch
(NORPAC)
3001 Industrial Way, Longview, WA 98632, U.S.A.Phone: +1-360-414-3526
Shanghai Office
(International Dept.)
Room 707, C Seats, Orient International Plaza No. 85,Lou Shan Guan Road,Shanghai 200336, ChinaPhone: +86-21-6278-7581
Vancouver Office
(Foreign Lumber Marketing Dept.)
Suite #820-999, West Broadway,Vancouver, B.C., V5Z 1K5 Canada Phone: +1-604-873-5358
Seattle Branch
Two Union Square,601 Union Street, Suite 5535,Seattle, WA 98101, U.S.A.Phone: +1-206-682-4698
Jakarta Office
(Barito Project Office)
14th Floor, Nusantara Bldg. JL.M.H.,Thamrin No. 59, Jakarta, IndonesiaPhone: +62-21-337-993
OVERSEAS SUBSIDIARIES
AND AFFILIATES
Jujo Thermal Oy
P.O. Box 92, FIN27501 Kauttua, FinlandPhone: +358-28-3932900
North Pacific Paper Corporation
(NORPAC)
Box 2069, Longview, WA 98632, U.S.A.Phone: +1-360-636-6400
Pan Pac Forest Products Limited
1161 S.H.2, Wairo-a Road, Whirinaki,Napier, New ZealandPhone: +64-6-831-0100
Volterra S.A.
Ejército 399, Concepción, ChilePhone: +56-41-244-300
FRR Fax Roll
3, Zaytseva St.,198096, St. Petersburg, RussiaPhone: +7-812-183-21-56
Nippon Paper Treefarm Australia
Pty. Ltd.
Level 24, Bourke Place, 600 Bourke Street,Melbourne, Victoria 3000, AustraliaPhone: +61-3-9605-8891
Shouguang Liben Paper Making
Co., Ltd.
No. 403, Shengchend Road, Shouguang City, Shandong Pro, ChinaPhone: +86-536-523-6112
Shanghai JP Co., Ltd.
No. 173, Hongcao Road, Shanghai, ChinaPhone: +86-21-6408-9900
D I R E C T O R Y
Investor Relations Corporate Planning Div.Shin Yurakucho Building, 1-12-1 Yurakucho, Chiyoda-ku, Tokyo 100-0006, JapanPhone: +81-(0)3-3218-8831 Fax: +81-(0)3-3213-6762
URL: http://www.npaper.co.jp/
Printed in Japan
Cover: NPi Premium Dull 125.0 g/m2
Text: NPi Coat Land 100 (M) 76.5 g/m2
NIPPON PAPER INDUSTRIES CO., LTD.