Annual Report 2011
For the Year Ended March 31, 2011

ProfileEver since its founding in 1897, Meidensha Corporation has been working on the relentless
pursuit of new technology and product developments, and witnessed steady growth. Our
product offerings cover a wide range, including generators, substation equipment, ­electronicequipment and information equipment. Our mission is not only to provide these products
but also to recommend the best solutions on the basis of what a customer values most ofall. In order to realize these best solutions, we engage in the supply of various products andprovide related services such as engineering, facility management (including operation andmaintenance), repair and product-life support.

Contents
Financial Highlights

01

Message from Management

02

Topics: Steady Progress in Executing Medium-Term Management Plan
POWER 504

At a Glance

05

Review of Operations

06

Research & Development

10

Corporate Governance11

Corporate Social Responsibility

12

Financial Section

13

Independent Auditors’ Report

43

Consolidated Subsidiary Companies

44

Corporate Data

45

Board of Directors

45

Forward-Looking Statements
This annual report contains forward-looking statements regarding the future results and performance of the Meiden
Group. Such statements are based on information available at the time of preparation of this report, and include various
potential risks and uncertainties. As a result, actual results could differ materially from those anticipated by these forward-looking statements.

Financial Highlights
Meidensha Corporation and Consolidated Subsidiaries
Years ended March 31

Thousands of
U.S. dollars(except per
share data)

Millions of yen (except per share data)

For the year:
Orders received
Net sales
Operating income
Net income (loss)
Capital expenditures
Depreciation and amortization
R&D expenses
Per share data (yen and U.S. dollars):
Net income (loss)
Cash dividends
At year-end:
Total assets
Total equity
Number of employees

2007

2008

2009

2010

2011

2011

¥202,044
194,194
6,225
2,314
21,5144,369
6,041¥213,148
203,515
7,586
2,405
14,152
6,334
6,530¥188,803
198,798
4,085(1,083)
8,218
7,797
6,939

¥161,464
173,067
3,322
971
5,514
7,611
6,836

¥168,826
167,729
5,778
1,196
4,530
7,166
7,413

$2,034,048
2,020,831
69,614
14,41054,57886,33789,313

10.18
5.00

10.59
6.00

(4.77)
4.00

4.28
4.00

5.27
4.00

0.06
0.05

223,386
64,135
6,775

236,415
60,175
6,825

214,165
52,702
7,133

206,608
54,132
7,144

206,871
52,722
6,994

2,492,422
635,205–

Notes: 1.	The translations of the Japanese yen amounts into U.S. dollars are included solely for the convenience of readers outside Japan, using the prevailing exchange rate on
March 31, 2011, which was ¥83 to U.S. $1.
2. Figures for employee numbers excludes those employees on temporary contracts.
3.	The cash dividend for 2008 included a special dividend of ¥1.00 to commemorate the 110th anniversary of the establishment of the Company as well as the completion of
the new head office building construction project.

The Company made efforts to reduce costs and cut back on fixed expenses, while implementing
the policies under the medium-term management plan POWER 5.
As a result of these efforts, despite net sales for the Group falling 3.1% year on year to ¥167,729
million, operating income jumped 73.9% to ¥5,778 million (consolidated), and net income climbed
23.2% to ¥1,196 million (consolidated).

Net Sales

Net Income (Loss)

Total Assets(Millions of yen)

(Millions of yen)

(Millions of yen)

250,000

250,000

3,000

236,415200,000

194,194

2,314

203,515 198,798

223,386

2,405

173,067 167,729
150,000

1,000

100,000

0

50,000–1,000214,165

200,000

2,000

1,196
971

206,608

206,871

150,000

100,000

50,000(1,083)00–2,000

2007

2008

2009

2010

2011

2007

2008

2009

2010

2011

2007

2008

2009

2010

2011

Meiden Annual Report 201101

Message from Management

Keiji Kataoka, Chairman

Junzo Inamura, President

We would like to send our sincere condolences and prayers

operations, we would like to positively seek to offer solutions toto those whom were affected by the Great East Japanthe various challenges of our times, such as the global climate­Earthquake on March 11, 2011 and hope for as speedy acontrol problem. Through our contributions to building a morerecovery as possible.

affluent future society, we would like to live up to our social

Meidensha Corporation (“Meiden”) and its consolidated
subsidiary companies (collectively the “Meiden Group” or “theThe Japanese economy in fiscal 2010 saw economic

Company”), share the same corporate philosophy. The ­mission

growth, especially in emerging economies drive increases in

is: “Illuminating a more affluent tomorrow.” The value is: “ForJapanese domestic production and exports with some ­industry

customer peace of mind and satisfaction.” Meiden Group

sectors showing marked improvement in business ­performance.

positively seeks to produce innovations in technology and new

In general, the economy was on a gentle recovery track.

values to realize a more vibrant society and better living condi-­However, it was later hampered by the rise in price of oil andtions in the future. For customer satisfaction and assurance,

commodities, and further disrupted by the earthquake in March,

we produce eco-friendly designs and approaches. We strongly

which caused problems in supply chains and increased overallpromote courteous customer ­support service. With top quality

uncertainty.

products and services, we hope to help our customers in solving their various problems and in realizing their dreams.

02

responsibilities and seek sustainable growth as a company.

Although the Great East Japan Earthquake caused damage
to our sales and maintenance bases in the Tohoku region, weMeiden Group products form a broad spectrum, fromwere fortunate in that all of our employees escaped uninjured,

power systems, substation equipment, and electronic ­products

and that our production hubs in Japan did not suffer significant

to information and communication products. We not only per-damage. Working together as a Group, we are aiding theform the manufacturing and sales of these ­products, but also

recovery of facilities operated by our affected customers andengage in the solutions business in Japan. This process includes

the rebuilding of the region by supplying our power apparatus

ﬁnding customer-driven optimum solutions and offering engi-

in order to support a stable power supply.

neering, system operations, and system maintenance andUnder these economic conditions, the Group made vigor-

management to realize these solutions. Out of our businessous efforts to boost sales, but in spite of such efforts, sales for

Meiden Annual Report 2011

ﬁscal 2010 totaled ¥167,729 million (consolidated basis), a
3.1% decrease from the previous ﬁscal year.

2	Develop business further in the private sector andoverseas markets

With respect to earnings, the Company made efforts to

For business development in private sector markets in Japan

reduce costs and fixed expenses. At the same time, we imple-

and overseas markets, we will strongly promote themented measures to reinforce our existing businesses with­strengthening of new product development, increase our over-growth potential and develop new businesses in line with theseas production, re-align our business organization, including

policies under POWER 5, a new medium-term ­management

Group companies, and further HR development. By increasingplan. As a result, net income before income taxes came toour competitive advantage in these ways, we intend to develop¥2,102 million (consolidated) and net income for the year cameour business in such fields. We are targeting a ratio of overseas

to ¥1,196 million (consolidated).

sales to net sales of 30% by fiscal 2013, the final year of theYear-end dividends were ¥4 per share.

business plan.

With respect to the outlook for the economy, we expect
strong performance overseas on the back of continued growth3	Improve proﬁtability through “selection and focus”

in emerging economies. In contrast however, the ­aftereffects of

We will aim to establish a strong earnings platform by ­focusing

the Great East Japan Earthquake will dampen growth in domes-

our management resources on core businesses such as

tic markets for the foreseeable future. While there is a possibility“component products,” as well as private sector and over-that recovery and reconstruction efforts will breathe some lifeseas markets.

back into the Japanese economy, we anticipate the businessenvironment for the Meiden Group to remain challenging.
Under these conditions, the Company has been solidly
implementing measures in line with the policies under POWER
5, a new medium-term management plan. POWER 5 is a
ﬁve-year business plan, covering the period from March 2010
to March 2014, with the slogan: “The challenge of the Meiden
Group: Contributing to society through the “power” of manufacturing excellence.” We are implementing the policy measures based on the following basic principles:1	Establish high growth and new business development
In preparing for the low-carbon society of the future, we will shiftsome of our unique heavy electrical engineering resources into
new areas. To be specific, we will promote the development of
new businesses based mostly on the component products andnurture said businesses as growth drivers. Such component
products include motor drive units for pure electric vehicles,
power conversion products, electric double layer capacitors,
products for wind turbine applications, vacuum capacitors,
among others. In addition, we will strongly promote new productdevelopments and business development for the smart gridmarket as well as our existing businesses in water processing

4	Enhance the power of manufacturing excellence
We will enhance our overall integrated strength as a­manufacturing company, including R&D, manufacturing,sales & marketing and services. At the same time, we will boost
productivity, cut costs, and reinforce our entire value chain.

5	Constantly promote CSR management
We will try to reduce the effect on the environment of our corporate activities and fulﬁll our corporate social responsibility(CSR) by contributing to society in the environment and energy
fields through our products and services.
By implementing POWER 5, we aim to provide peace ofmind and the best product experience to our customers
through our products and services for social infrastructurebuilding and the general industry. At the same time we aim
to generate high earnings at the same time as being a company where each of our employees can work with pride andhigh job satisfaction.
We ask every shareholder, as well as our customers andbusiness partners to give us your continuous support andadvice.

systems, traction power systems and the ­application of dynamometers in automotive testing systems.

Meiden Annual Report 201103

Topics

2. Originality
The power to create

3. Worldwide
The power
to develop globally

1. Productivity

Steady Progress in Executing
Medium-Term Management Plan

POWER 5The power tomanufacture
Power 5

4. Environment
The power to help addressenvironmental problems

5. Resources
The powerof human resources

The Meiden Group is currently implementing policies outlined in its medium-term management
plan—Power 5. This five-year plan, covering the period from March 2010 to March 2014, isdivided into two phases: Phase I and Phase II. Our goal in Phase I was to build a growth platform
on which we would aim to promote further growth and expansion in the current phase, Phase II.
In order to achieve the overall goal—to generate higher earnings—this plan is based on thefollowing principles.

The Five Basic Principles of POWER 5:
1 Establish high growth and new businesses
2 Develop business further in the private sector and overseas markets

Phase I (FY2009–FY2010)
We anticipate a challenging business environment due to the sluggish
market, but in order to achieve new growth, we will further restructure or

3 Improve profitability through “selection and focus”

downsize our non-performing businesses and establish the quality and4 Enhance the “Power of Manufacturing Excellence”

systems that will allow us to concentrate management resources in the

5 Constantly promote CSR managementbusinesses that we choose to focus on.

Duration and Policy:

Phase II (FY2011–FY2013)

The five years are divided into a period in which we will lay the ground-

Drawing on the growth platform that we built during Phase I, we will con-work in building a future growth platform (Phase I), and a period ofcentrate R&D spending on our core businesses, promote the consolidation

growth and expansion based on that platform (Phase II). On thisof production hubs, and increase facility investment. All of these efforts willbasis, we will endeavor to develop our businesses and reinforce ourcontribute to producing higher earnings.

strengths.

Specific Measures:(1) Focused business development for high growth and a
new business field
We will select and expand component products that can contribute toa low-carbon society.
Electric double-layer
capacitors

Motor drive units for pure
electric vehicles

Products for wind turbines(2) New business development for our existing heavy
electrical equipment businessWe will adopt strategies that allow us to maintain our current level of
earnings in our existing heavy electrical business. We will employ ourrich engineering resources, experience and track record, and ­servicing
abilities in new markets in this industry.

Water processing business systems
Power conversion products

By combining the five (5) power sources of POWER: Productivity,
Organizational power and Worldwide presence, Environmental­problem solving, and Resources (human resources), we aim to­produce a company with “a passion for manufacturing excellence.”
Traction power systems

04

Meiden Annual Report 2011

Dynamometers in automotive testing systems

Vacuum capacitors

At a GlanceSocial Infrastructure Systems
This sector includes business related to the construction of social infrastructure. We provide
solution services of all kinds in relation to electric power quality, energy conservation, andrelated matters, and we engage in the manufacturing and marketing of all types of electricalequipment involved in power generation, transmission, transforming, distribution, and otherrelated functions for power companies, government and other public agencies and offices,
railroads, highways, private facilities, and other such establishments.
We are also involved in the field of water supply and sewerage treatment for local
governments. Our activities include manufacturing and marketing products for the control oftreatment equipment and processes of all kinds, and for the improvement of IT networks. We
are further developing environmental solution services that include contracting for the
maintenance management of water treatment plants, recycling industrial waste, etc.

Industrial Systems
This sector includes business operations related to product systems used in the manufacturingindustry, IT, and other general industry operations. In addition to providing private industry with
automotive testing systems and logistics support systems, we engage in the manufacture andmarketing of motors, inverters, and other products for use in textile machinery, elevators, andother such equipment.
We are active in the information and telecommunications field, manufacturing andmarketing component products for industrial computer and networking systems.

Net Sales

Composition of Sales(Millions of yen)(%)

123,837

This sector provides services relating to the remote management and monitoring of facilities
and the proposal of measures for extending the life of facilities, energy conservation, and othersuch services related primarily to the maintenance of products we supply. We also engage inthe maintenance of semiconductor manufacturing equipment and the reconditioning of used
manufacturing equipment.

2009This sector includes rentals of real estate holdings, including ThinkPark (Osaki, ­Shinagawa
City, Tokyo).

2010

2011

Net Sales

Composition of Sales(Millions of yen)(%)

41,014
26,21430,987

16.4%

2010

2011

Net Sales

Composition of Sales(Millions of yen)(%)

23,294

21,997 22,205

11.8%

2009

Real Estate

105,369

55.9%

2009

Engineering Systems

112,529

2010

2011

Net Sales

Composition of Sales(Millions of yen)

(%)

3,003

3,286

3,290

1.7%

2009

Other
This sector includes marketing companies not tied to specific business fields, and companies
that contract accounting, payroll, and other administrative functions, as well as welfare services
for employees.

2010

2011

Net Sales

Composition of Sales(Millions of yen)(%)

35,21028,38826,679

14.2%

2009

2010

2011

Meiden Annual Report 201105

Review of Operations

Social Infrastructure Systems Business Sector
In fiscal 2010, domestic and overseas markets recovered steadily, driven by demand for capital
investments in energy-efficient systems to reduce CO2 emissions, among others. However,Net Sales

Operating Income(Millions of yen)

(Millions of yen)

123,837

sales in this sector decreased due to a decline in orders received in the previous fiscal year, as

112,529

5,115
105,369

well as production and delivery delays stemming from the Great East Japan Earthquake.

3,543

3,257

As a result, sector sales fell 6.4%, to ¥105,369 million.

2009

2011

2010

2009

2010

2011

Power, Railway & Private Sector Business Segment
The business environment remained challenging amid intense competition with rival firms in
the public sector, including government agencies and local authorities in Japan. In the wake of
the March 11 earthquake, huge changes are possible in both public sector and private sector
markets: mostly on electric power and railways. This possibility for change is creating uncertainty in the business environment.

Traction power system

Under these circumstances, we focused on attracting orders for large-scale projects,
including transformers for Shinkansen lines and other railways, as well as mega solar farmprojects. At the same time, we have been working on attracting orders for new products in
new fields through cost reductions. This cost reduction step includes the overseas productionof dome products.
Mt. Komekura Mega Solar Project

Environmental Engineering Business Segment

Power conditioner

In Japan, the business environment was more challenging than ever with competition increasing, cutbacks in public sector investment, and a decrease in the construction of new drinking
water and sewage treatment plants. Overseas, meanwhile, there is large potential demand forwater and environmental systems against the background of increasing demand for water andserious water quality deterioration problems in emerging economies.
Amid such conditions, the Meiden Group has been working to secure orders in Japan inlarge scale retrofit or replacement projects for systems supplied by us. At the same time, wewill strive to expand sales of new products, including supervisory control systems with

Ceramic membrane

improved wide area control functions in Japan. We are also making a feasibility study on
mass-production of our flatsheet-type ceramic membranes in Singapore, in which we areconducting a demonstrative joint research project using a pilot plant in Singapore. We are also
preparing to establish overseas sales channels for this product.

International Business Segment

Supervisory control system

In Asia, the Middle East, and Europe, we worked to increase sales ofsubstation equipment for power transmission and distribution.
However, it was a challenging environment with regard orders forexport projects. This was due to project plan changes and delays, aswell as the yen’s appreciation.
Under such conditions, we focused on increasing sales of new,specialized products, such as inspection systems for overhead­catenary systems (OCS), in addition to traction substation facilities.
We also worked on boosting sales of products related to renewableenergy, such as solar power.

06

Meiden Annual Report 2011

“Catenary Eye”
(OCS inspection system)

Direct current breaker for railway use

Meiden signed MOU with Singapore’s Public Utilities Board on Water Processing Technology Development
Meiden developed a flat sheet-type ceramic

and the testing site. The parties are working

membrane for water processing systems andhard to develop this water processing tech-entered into a memorandum of understand-nology (sewage and industrial waste watering (MOU) with the Public Utilities Board (PUB)

processing) and realize the earliest possibleof Singapore regarding a joint development of

release of related products.

water processing technology on June 30,

Flat sheet-type ceramic membrane fea-

2010. Following this MOU, Meiden and PUBtures high durability and chemical resistance,

have been conducting demonstrative tests

as well as a long product life and easy main-using a pilot plant in Singapore. Meiden pro-tenance. It allows stable filtration and could

vided the newly developed flat sheet-type

have energy-saving potential. We expect

ceramic membranes and plant control tech-

there will be a broad range of applications fornology while PUB provided the facility man-this product in the water processing field.

agementtechnology,

drawn

from

At the signing ceremony

External view of flat
sheet-type ceramic
membrane unit

theirextensive experience in plant management

Meiden the first Japanese company to be awarded CGC Golden Sun certification
The Company obtained Golden Sun certifi-

satisfies the required quality and perfor-

cation for its new SP100 Series photovoltaic

mance standards for China’s national solar(PV) power conditioner on August 30, 2010.

farm projects.

Meiden became the first Japanese company

Major components used in mega solar
projects in China are required to use Golden

in China to be awarded this certification.
The “Golden Sun Certificate” is a certifi-

Sun mark products. We are striving tocate issued by the China General ­Certification

develop our operations in order to increase

Center (CGC). In China, CGC is currently

the market share of our PV products inthe only accreditation body for PV products.

China.

This certificate certifies that the productPower conditioner

MSL Received Order for an Experimental Power Grid Facility in Singapore
Meiden Singapore Pte., Ltd. (MSL), a Meiden­Experimental Power Grid Center (EPGC)

Group company, received an order for anwhich was established by the Institute ofexperimental power grid facility in Singapore

Chemical and Engineering Sciences (ICES),

on June 3, 2010. The Institute for Chemical

an affiliated organization of A*STAR.

and Engineering Sciences (ICES), a researchThis plant will be able to connect andinstitute under the Agency for Science,

manage a wide range of distributed energy

Technology and Research (A*STAR) of Singa-

resources (DERs) and simulate a wide range

pore placed the order as an EPC (Engineering,of grid conditions and disturbances.
This plant is currently under ­construction

Procurement, and Construction) contract.
beThis demonstrative research plant will

and expected to be completed in September

installed

2011.

on

the

premisesoftheMeiden Annual Report 201107

Industrial Systems Business Sector

Net Sales

Operating Loss

Sales in this sector increased 18.2% year-on-year, to ¥30,987 million, amid steady recovery in(Millions of yen)

(Millions of yen)demand, albeit moderate.

41,01430,987

(932)

2011

2009

(1,496)

26,214(4,276)

2009

2010

2010

2011

Dynamometer and Logistic Systems Business Segment
In the dynamometer systems field, market conditions for testing equipment for auto-related
manufacturers remained challenging. We reinforced our efforts to bolster sales of testing
equipment for eco friendly vehicles, such as pure electric and hybrid cars. We are also actively
working on business development in China, Thailand, India, and other overseas markets

Drive unit

where demand for R&D-related facilities is growing.
With regards to logistics systems, demand for electrical modules for automatic guided
vehicles (AGV) and forklifts are rising gradually. In order to develop business in China andThailand, meanwhile, our subsidiaries in both those nations have started producing kits for

AGV kit MCAT

AGVs.

Component Business Segment
In the second half of fiscal 2010, demand for components in semiconductor markets was in
the doldrums. By contrast, demand for motor drive units used in injection molding machines
and textile machinery is recovering steadily, but competition is also becoming more intense.
Against this background, we have been working on the mass

Low-inertia dynamometerproduction of motor drive units for the iMiEV pure electric vehicle madeby Mitsubishi Motors Corporation. In addition, we are working toincrease sales in the world market for vacuum capacitors, which areused in equipment for making semiconductor devices, solar cellpanels, and other products. In addition, our subsidiary in China isbuilding a plant that will produce inverters locally in addition to its exist-

Motor drive units for pure electric vehicles

ing motor manufacturing operations.

Pulsed power supply unit for excimer laser

Vacuum capacitors

08

Meiden Annual Report 2011

InverterIndustrial computer

Motor for textile machinery

Engineering Systems Business Sector

Net Sales

Operating Income

Despite continuation of intense price competition,(Millions of yen)

(Millions of yen)

2,729

demand for maintenance services is on a recovery path.

23,294

Sales in this sector rose to ¥22,205 million, up 1.0%

21,997 22,205
1,897

from the previous fiscal year.

1,363

In addition to our regular maintenance services, weare stepping up promotion of new services that benefit
customers. These include addition of diagnostic services
for equipment status and remaining useful life.

Analysis of damage status and cause

2009

2010

2011

2009

2010

2011

Live wire diagnosis

Real Estate Business Sector
The Meiden Group is engaged in the real estate leasing ­business,

Net Sales

Operating Income(Millions of yen)

(Millions of yen)centering on ThinkPark Tower, an office and commercial building located in Osaki (Shinagawa City, Tokyo). Sales in this sectorrose to ¥3,290 million, up 0.1% from the previous fiscal year.

3,003

3,290

1,192

1,160

2010

2011

901

2009

Other Businesses Sector

3,286

2010

2011

2009

Net Sales

Operating Income (Loss)

We are also involved in businesses that are not included in the aforementioned sectors and(Millions of yen)

(Millions of yen)their reporting segments. These businesses, which include sales of other products, welfare

35,210services for employees, and provision of chemical products, declined to ¥26,679 million, a568
28,38826,679

2010

2011

315

6.0% decrease from the previous fiscal year.

(170)

2009

2009

2010

2011

Meiden Annual Report 201109

Research & Development

With due consideration to the medium- and long-term market and technological trends, as well as
our future business operations, the Meiden Group conducts R&D on basic core technologies aswell as new product development applying these technologies.

During fiscal 2010, the Group rearranged its R&D-related

In new product development, we have developed a compact,­d epartments to create R&D units covering all functions, from basic

highly efficient photovoltaic power conditioning system (PCS). We

core technology development to new product development, allhave also developed a compact water-cooled converter for wind tur-coordinated under the same organization. By this reorganization,bine generator systems that can be installed inside the nacelle unit on

we were able to accelerate our R&D and enhance the level of our

top of the tower.

core technology.
With respect to the development of core technology, we aredeveloping materials for the global climate control market such asvery wide temperature range denitration catalysts for removing nitrogen oxides from coal-fired facilities in China, and zeolite separation

Research & Development
ExpensesComposition of R&D Expenses(Millions of yen)

(Millions of yen)

6,939

6,836

7,413

membranes that allow the recycling of spent organic solvents. In

82

addition, we are working on the development of power electronics

94

1,511

products that apply next-generation power semiconductor devices.
At the same time, we are also conducting research on a new power
conversion method. In these ways and others we are reinforcing the
R&D of our core technologies.

2,042

2009

2010

2011

n Social Infrastructure Systems
n Industrial Systemsn Engineering Systems
n Othersn Common Expenses

Meiden Started Joint Development of De-NOx Catalyst for Flue Gas

10

In October 2010, the Company started ade-NOx unit for flare gas with the focus on

joint development program for an ammonia

developing a catalyst which is effective in ade-NOx catalyst for flue gas produced bywide temperature range and has a high yetcoal-burning systems which works in a very

stable level of de-NOx performance.

wide temperature range—from 220°C toThis catalyst is originally in powder form

420°C. The other project members include

and is molded into the honeycomb shape

the National Institute of Advanced Industrial

catalyst used previously as a de-NOx unit for

Science and Technology (AIST), Japan and

Meiden diesel generating systems. AIST will

the Institute of Process Engineering (IPE),

evaluate the de-NOx performance of thewhich is affiliated with the Chinese Academy

honeycomb catalyst, IPE will develop theof Sciences. This catalyst will be used for

powder catalyst and test the performance,

facilities burning coal, the main fuel source inand durability of the honeycomb catalyst andChina, such as industrial boilers and fur-

Meiden will establish a processing technol-

naces. This research project includes theogy for molding the catalyst into the honey-

joint development of a de-NOx catalyst andcomb shape.

Meiden Annual Report 2011

At the signing ceremony

3,684

Corporate Governance

The Meiden Group is committed to fair and transparent as well as prompt and efficient management.
We continue to evaluate and improve our framework of internal control and governance to ensure
appropriate operation of the Group’s business.

Corporate Governance System of the Meiden Group
Basic Approach
In order to realize the Group’s philosophy, we considered it essential
to establish a framework for sound internal control and governanceas a Group. To this end, we adopted a “Basic Policy” to evaluate andimprove the governance framework in order to ensure appropriate
operation of the Group’s business at a regular Board of Directors
meeting held in May 2006. We are committed to strengthening corporate governance.
Basic Policy
1. System to ensure the directors’ compliance with laws and Articles ofIncorporation in the performance of their duties.
2. System to manage and store information relating to the duties of thedirectors.
3. System regarding rules and other structures of risk management.
4. System to ensure directors’ efficient execution of their duties.
5. System to ensure employees’ compliance with laws and Articles ofIncorporation in the performance of their duties.
6. System to ensure appropriate business operations by the company andits affiliates.
7. Matters relating to employees who assist corporate auditors with theirduties.
8. Matters relating to the independence from directors of the above
employees assisting corporate auditors.
9. System of reporting to the corporate auditors by directors and employees and system of reporting to the corporate auditors by others.
10. Other systems to ensure effective audit by the corporate auditor.

perform their duties expeditiously while under the supervision of therepresentative directors.
The Company has adopted a corporate auditor system. The
Board of Corporate Auditors consists of four members, two of whom
are outside corporate auditors. The Board of Corporate Auditors
communicates with directors, the internal auditing department, andother departments, while adhering to auditing policies, the division ofduties, and auditing rules for corporate auditors stipulated by the
Board of Corporate Auditors. The corporate auditors attend Board of
Directors Meetings and other important meetings, and audit theduties of directors by means of monitoring the operations and financial conditions of the Group.
We have an Internal Auditors Office to assist the Board of ­Corporate
Auditors which works under the direct control of the Board.
We have an Internal Auditing Unit which reports directly to thepresident. It operates as an internal auditing department, fulfilling therole of performing regular health checks of the Group. This Internal
Auditing Unit conducts internal audits of the efficacy and efficiency
of operations, the reliability of financial reporting, the status of compliance with laws, and the maintenance of assets covering the Company and all Group companies, including overseas companies.
It reports the results of internal audits to the top management,
and also offers advice to the employees under internal audit review on
the execution of their duties.
With respect to requirements regarding the guidance of internal
control system for financial reporting in accordance with the Financial
Instruments and Exchange Law in Japan, the Company adopted
basic policies that conform to the Implementation Guidance for

Implementation­Management Assessment and Audit of Internal Controls over ­Financial

In June 2003, the Company adopted an executive officer system. At

Reporting (ICFR) by Japan’s Financial Services Agency. The Internal

the same time, we sought to reinforce the function of the Board ofAuditing Unit independently audits the effectiveness of improvements

Directors. To this end, we separated the “decision-making and super-

to, and implementation of internal control systems at the Company asvisory functions” and the “business execution function” of the Board

well as at the overall Group level.

of Directors. The former functions were assigned to the Company’s
directors, and the latter to the representative directors and executive
officers who were delegated duties by the representative directors. As
a result, the Board of Directors is responsible for making decisions

Governance Structure: Meiden’s Execution of Duties, Management
Supervision, and Internal Control Systemfrom the standpoint of the entire Group, and for overseeing the overall

General Meeting of Shareholders

management of the Group.
Two of the eight members of the Board of Directors are outside
directors. This structure is designed to reinforce corporate ­governance

Board of Directors(includes two outside directors)

by enhancing the Board’s supervisory function concerning the­execution of duties.

They are responsible for executing their designated duties within thescope of the powers delegated by the representative directors, andAccounting Auditor

Representative
Directors

Executive officers appointed by the Board of Directors comply
with Group management policies decided by the Board of Directors.

Executive Officers

Board of Corporate Auditors(includes two outside auditors)

Internal
Auditing Unit

Business Units

Compliance Committee
Compliance Manager

Compliance Hotline

Meiden Annual Report 201111

Corporate Social Responsibility

Since April 2006, the Meiden Group has been actively promoting corporate social responsibility(CSR) through “CSR management.” The reasons for this approach is to reaffirm our awareness of
the importance of fulfilling our social responsibilities, which we have practiced for more than 110
years since our founding, and to further enhance corporate value.

Approach to CSR
Our approach to CSR programs is: “Each and every employee shallwork to realize the Group’s corporate philosophy so that the Meiden

Corporate Philosophy(1) Definition of CSR
Under the Meiden Group’s definition of CSR, “Each and every employee

Group is needed by society.” The launch of CSR programs in 2006

shall work to realize the Group’s corporate philosophy so that the Meiden

coincided with the updating of the Group’s corporate philosophy. The

Group is needed by society.”new philosophy reflects our thinking: “By providing high quality prod-(2) Code of Conduct

ucts and services, we will help to solve the problems of our customers

This code defines compliance in conducting our CSR programs andand produce the best product experiences for them. Further, throughour business operations, we will positively contribute in solving thechallenges faced by society, such as environmental issues, and we

activities.
(3) President’s CSR Policy Order
This policy sets forth the policy of our CSR programs and activities in themedium term. The Policy Order asks each Group employee to implement

will contribute to the realization of a more affluent society to fulfill our

CSR programs and activities in their daily work. We will draw up specificsocial responsibilities. In order to fulfill these objectives, we need toactions that reflect the given business climate and CSR challenges underkeep solving such challenges.” Sharing such core values among thethe then current stage of the POWER 5 management plan.

Group and implementing these ideas in our daily business is the(4) Meiden Cycle

essence of our CSR programs.
Group Corporate Philosophy
Corporate Mission
Illuminating a more affluent tomorrow
We will constantly strive to create new technologies and value, in order tohelp bring about a more affluent and comfortable society.

Meiden Cycle shows the guiding spirits shared by all members of theGroup in realizing the Group’s corporate philosophy.
Group Corporate
Philosophy

Corporate Slogan
This is a statement
which expresses our philosophy in a simple phrase.

Corporate Mission
Corporate raisond’etre andour mission(1) Definition of CSR

Providing Value(3) President’s
CSR Policy
Order

Offering customers peace of mind and satisfaction
We will work to protect the environment and provide caring businesssupport to give customers peace of mind and satisfaction. We will also
help customers solve their problems and realize their dreams through theProviding Value
Delivering uniquevalue and strengths

Risk Management

into the action program by the departments concerned and we posi-Contribution to Society

tively promote the CSR programs across the board in the Meiden
Group as a part of the Group’s CSR Committee activities.

CSR
OfficeThe CSR Office coordinates the plans and results of each theme

term management plan which we have been working on since fiscal
2009. As in Phase I, the promotion of CSR ­management is set as a key
policy. We will promote CSR as a management strategy and aim to
deeply embed our CSR principles in the everyday actions of eachMove Ahead

Corporate Governancethe officer in charge of Environment & CSR. Each theme is translated

From March 2011, we entered Phase II of POWER 5, the medium-

Think
Big

CSR Promotion Structure

and activities based on 10 promotion themes under the supervision ofaction to increase the Group-wide awareness of CSR.

Keep in
Touch

Have
Fun

At the Meiden Group, we promote the development of CSR programs

and promotes the CSR programs using the PCDA cycle, while taking(4) Meiden Cycle

Build Loyalty

provision of top-quality products and services.

CSR Management Promotion Structure(2) Code of Conduct

Officer in Chargeof Environment& CSR

Compliance
Disclosure
Eco
Quality & Product Safety
Occupational Safety and Health
Safety and HygieneGroup employee.
Employment & Human Rights

12

Meiden Annual Report 2011

ProfileEver since its founding in 1897, Meidensha Corporation has been working on the relentless
pursuit of new technology and product developments, and witnessed steady growth. Our
product offerings cover a wide range, including generators, substation equipment,­electronic equipment and information equipment. Our mission is not only to provide theseproducts but also to recommend the best solutions on the basis of what a customer values
most of all. In order to realize these best solutions, we engage in the supply of various
products and provide related services such as engineering, facility management (including
operation and maintenance), repair and product-life support.

Financial Section

Contents
Five-year Summary

14

Consolidated Financial Review

15

Consolidated Balance Sheets

16

Consolidated Statements of Operations

18

Consolidated Statements of Comprehensive Income

19

Consolidated Statements of Shareholders’ Equity/Changes in Net Assets

20

Consolidated Statements of Cash Flows21

Notes to Consolidated Financial Statements

22

Independent Auditors’ Report

43

Meiden Annual Report 201113

Five-year Summary
Meidensha Corporation and Consolidated Subsidiaries
Years ended March 31

Thousands of
U.S. dollars(except per
share data)

Millions of yen (except per share data)
2007

2008

2009

2010

2011

2011

Orders received¥202,044¥213,148¥188,803¥161,464¥168,826$2,034,048

Net sales

194,194

203,515

198,798

173,067

167,7292,020,831

Operating income

6,225

7,586

4,085

3,322

5,778

69,614

Net income (loss)

2,314

2,405

(1,083)

971

1,196

14,410Capital expenditures

21,514

14,152

8,218

5,514

4,530

54,578Depreciation and amortization

4,369

6,334

7,797

7,611

7,166

86,337

R&D expenses

6,041

6,530

6,939

6,836

7,413

89,313

Net income (loss)

10.18

10.59

(4.77)

4.28

5.27

0.06

Cash dividends

5.00

6.00

4.00

4.00

4.00

0.05

Total assets

223,386

236,415214,165

206,608

206,8712,492,422

Total equity

64,13560,17552,702

54,132

52,722635,205

Number of employees

6,775

6,825

7,133

7,144

6,994

–

For the year:

Per share data (yen and U.S. dollars):

At year-end:

Notes: 1.	The translations of the Japanese yen amounts into U.S. dollars are included solely for the convenience of readers outside Japan, using the prevailing exchange rate on
March 31, 2011, which was ¥83 to U.S. $1.
2. Figures for employee numbers excludes those employees on temporary contracts.
3.	The cash dividend for 2008 included a special dividend of ¥1.00 to commemorate the 110th anniversary of the establishment of the Company as well as the completion of
the new head office building construction project.

14

Meiden Annual Report 2011

Consolidated Financial Review

Outline of Profits and Loss

Financial Conditions

The overall economic climate in Japan experienced a moderate

The amount of total assets on March 31, 2011 increased byyet clear recovery during the current consolidated fiscal year,¥263 million (up 0.1%) compared to the amount of total assets

with domestic production and exports improving on the backat the end of the previous fiscal year, resulting in total assets ofof global economic growth, especially in emerging markets,¥206,871 million.

together with significant recovery in business performance for

Due to a rise in inventories caused by an increase in thesome industries. However, companies are experiencing

volume of orders received, current assets increased bydifficulties in the procurement of some parts and the future¥2,482 million (up 2.3%), resulting in total assets of ¥109,037

economic outlook is again unclear, due to the negative impact

million at the end of the fiscal year under review. Fixed assetsof the Great East Japan Earthquake that occurred in Marchdeclined by ¥2,219 million (down 2.2%) due to a decline in2011 as well as the high prices of crude oil and materials.

the value of investment securities in turn caused by a drop in

Under these conditions, the Meiden Group made company-

the stock prices of securities held by the Company, and thewide efforts to reduce costs and fixed expenses while at thecontinual depreciation of property, plant, and equipment,same time worked at implementing the policies called for by the

resulting in fixed assets of ¥97,834 million at the end of themedium-term management plan, POWER 5.

current fiscal year.

Based on the factors above, results are as follows for the

The amount of total liabilities at the end of the current fiscal

Company and its consolidated subsidiaries. Sales wereyear was ¥154,149 million, an increase of ¥1,673 million (up¥167,729 million (down 3.1% from the previous fiscal year) and1.1%). The amount of current liabilities at the end of the current

operating income was ¥5,778 million (up 73.9% from thefiscal year was ¥94,767 million, a decline of ¥12,955 million

previous fiscal year). As a result, net income increased 23.2%(down 12.0%), due mainly to decreases in short-term borrowings

year on year to ¥1,196 million.

and commercial paper.
The amount of long-term liabilities at the end of the current
fiscal year was ¥59,382 million, an increase of ¥14,628 million(up 32.7%), due mainly to an increase in long-term debt. The
amount of net assets at the end of the current fiscal year was¥52,722 million, a decline of ¥1,410 million (down 2.6%). Thiswas mainly due to a decrease in unrealized gains on securities,
net of taxes, and a foreign currency translation adjustment.
As a result, the capital to asset ratio decreased from 25.2%
to 24.4% at the end of the current fiscal year.

Meiden Annual Report 201115

Consolidated Balance Sheets
MEIDENSHA CORPORATION AND CONSOLIDATED SUBSIDIARIES (as of March 31, 2011 and 2010)

Thousands of
U.S. dollars(Note 1)Millions of yen

AssetsCurrent assets:
Cash and time deposits (Note 17)

2011

2010

2011

¥ 12,067¥ 11,236$  145,386

Receivables:
Trade notes

4,325

2,387

52,108Trade accounts

55,31356,296

666,422

Loans receivable and advances

330

2,703

3,976

Due from unconsolidated subsidiaries and affiliates

772

1,351

9,301

(309)

(656)

(3,723)Inventories (Note 5)

Allowance for doubtful accounts

30,31428,040365,229

Deferred income taxes (Note 15)

3,616

3,044

43,566

Other current assets

2,609

2,154

31,434

Total current assets

109,037

106,555

1,313,699

Land (Notes 8 and 16)

9,365

9,114

112,831

Buildings and structures (Notes 6, 8 and 16)

74,631

74,674

899,169

Machinery and equipment (Note 6)

56,801

56,078684,349

414

633

4,988

(78,174)(77,158)(941,855)

63,037

63,341

759,482

Investment securities (Notes 4 and 8)

13,775

16,553

165,964

Investments in unconsolidated subsidiaries and affiliates (Note 4)

9,233

9,241

111,241

378

384

4,554

Deferred income taxes (Note 15)

5,897

4,857

71,048Other assets

5,580

5,765

67,229Property, plant and equipment:

Construction in progress
Less: Accumulated depreciation
Net property, plant and equipment

Investments and other assets:Long-term loans receivable

Allowance for doubtful accounts
Total investments and other assets
Total assets
See accompanying notes.

16

Meiden Annual Report 2011

(66)

(88)

(795)

34,79736,712419,241¥206,871¥206,608$2,492,422

Thousands of
U.S. dollars(Note 1)Millions of yen

Liabilities and net assets
Current liabilities:
Short-term borrowings (Note 7)

2011

2010

2011

¥ 2,969¥ 13,027

Commercial paper (Note 7)

22,00030,000265,060

Current portion of long-term debt (Notes 7 and 8)

5,664

4,463

68,241$

35,771

Payables:Trade notes

5,553

5,469

66,904

Trade accounts

18,724

18,408225,590

Due to unconsolidated subsidiaries and affiliates

3,713

4,046

44,735

Advances received from customers

8,519

7,930

102,639

Accrued income taxes

1,179

547

14,205

Accrued bonuses for employees

5,080

4,694

61,205
10,422

Provision for product warranties

865

46

Provision for loss on orders

625

494

7,530

Other current liabilities

19,876

18,598239,469

Total current liabilities

94,767

107,722

1,141,771

Long-term debt (Notes 7 and 8)

32,602

19,792392,795

Employees’ severance and retirement benefits (Note 9)

22,44621,148

270,434

110

115

1,325

1,120

551

13,494

Provision for loss on guarantees

16

16

193

Deferred income taxes (Note 15)

20

37

241

Other long-term liabilities

3,068

3,111

36,964

Total long-term liabilities

59,38244,754715,446

Long-term liabilities:

Reserve for retirement allowance for directors and corporate auditors
Provision for environmental measures

Contingent liabilities (Note 11)
Net assets (Note 10):
Common stock
Authorized— 576,000,000 shares

Issued and outstanding — 227,637,704 shares

17,07017,070205,663

Capital surplus

13,197

13,197

159,000

Retained earnings

229,602

19,057

19,244

Less: Treasury stock, at cost

(151)

(145)

(1,819)Unrealized gains on securities, net of taxes

2,515

3,530

30,301

(46)

(51)

(554)
(13,651)

Unrealized losses on hedging derivatives, net of taxes
Foreign currency translation adjustment(1,133)(871)

Minority interests

2,213

2,158

26,663

Total net assets

52,722

54,132635,205¥206,871¥206,608$2,492,422

Total liabilities and net assets

Meiden Annual Report 201117

Consolidated Statements of Operations
MEIDENSHA CORPORATION AND CONSOLIDATED SUBSIDIARIES (years ended March 31, 2011, 2010, and 2009)

Thousands of
U.S. dollars(Note 1)Millions of yen
2011

2010

2009

2011

Net sales (Note 14)¥167,729¥173,067¥198,798$2,020,831

Cost of sales (Note 13)

128,910

134,720

158,403

1,553,133

Selling, general and administrative expenses (Note 13)

33,04135,02536,310398,084

5,778

3,322

4,085

69,614

Operating income
Other income (expenses):
Interest and dividend income

415

418

545

5,000

Interest expense(901)(1,051)(1,322)(10,855)

Equity in net income of affiliated companies

40

428

150

482

Gain on sales of marketable securities and investment securities (Note 4)

8

1

11

96

Loss on devaluation of securities(1,121)

(32)

(288)

(13,506)

Loss on disposal of inventories

(57)

(355)

(326)

(687)

Loss on disposal of fixed assets

(167)

(132)

(133)

(2,012)

Loss on adjustment for changes of the accounting standard for
asset retirement obligations

(25)

–

–

(301)

Gain on sales of fixed assets

7

24

118

84

Provision of allowance for doubtful accounts

(0)

(11)

(487)

(0)

(800)

(220)

(502)

(9,639)Provision for product warranties

–

–

(522)

–

Restructuring charges on a consolidated subsidiary

–

–

(662)

–

(605)

–

–

(7,289)Loss on product warranties

Provision for environmental measures
Early extra retirement payments

(270)

–

–

(3,253)

Others

(200)

(761)

(2,045)(2,409)

2,102

1,631

(1,378)25,325

Income (loss) before income taxes and minority interests
Income taxes (Note 15):
Current

1,399

617

891

16,855

Prior year

239

–

–

2,880

Deferred

(940)

(58)

(1,429)(11,326)

Total

698

559

(538)

8,409

1,404

1,072

(840)

16,916

Income (loss) before minority interests
Minority interests
Net income (loss) (Note 19)208¥ 1,196

¥

101

243

971

¥ (1,083)

14,410U.S. dollars(Note 1)

Yen
2010

2011

2,506
$

2009

2011

Amounts per share of common stock (Note 20):
Net income (loss)
Cash dividends applicable to the year
See accompanying notes.

18

Meiden Annual Report 2011

¥

5.27
4.00

¥

4.28
4.00

¥

(4.77)
4.00

$

0.06
0.05

Consolidated Statements of Comprehensive Income (Loss)
MEIDENSHA CORPORATION AND CONSOLIDATED SUBSIDIARIES (years ended March 31, 2011, 2010, and 2009)

Thousands of
U.S. dollars(Note 1)Millions of yen

Income (loss) before minority interests

2011

2010

2009

2011

¥ 1,404¥1,072¥ (840)$ 16,916

(998)

1,164

(3,846)(12,024)

Other comprehensive income (loss)
Unrealized gains (losses) on securities, net of taxes
Unrealized gains (losses) on hedging derivatives, net of taxes
Foreign currency translation adjustments
Share of other comprehensive income (loss) of affiliates accounted
for using equity method

5

54

(40)

60

(363)

132

(1,262)(4,374)

32

(1)

(33)

386

(1,324)

1,349(5,181)(15,952)¥

80¥2,421¥(6,021)$Comprehensive income (loss) attributable to owners of the parent

(76)

2,206

(5,889)(916)

Comprehensive income (loss) attributable to minority interests

156

215

(132)

1,880

Total other comprehensive income (loss)
Comprehensive income (loss)

963

Comprehensive income (loss) attributable to:

See accompanying notes.

Meiden Annual Report 201119

Consolidated Statements of Shareholders’ Equity/Changes in Net Assets
MEIDENSHA CORPORATION AND CONSOLIDATED SUBSIDIARIES (years ended March 31, 2011, 2010, and 2009)

Millions of yen

Net assets at April 1, 2008

Unrealized
gains onTreasury stock, securities,
at costnet of taxes

Number ofshares issued

Commonstock

CapitalsurplusRetainedearnings

222,637,704¥17,070¥13,205¥21,625

Effect of changes in accounting
policies applied to foreignsubsidiaries¥ (77)

Unrealized
losses on
hedging
derivatives,
net of taxes¥ 6,241¥(65)

Foreigncurrencytranslation
adjustment¥

3

Minority
interests¥2,173

Total¥60,175

1

1

Net income (loss)(1,083)(1,083)

Cash dividends(1,363)Acquisition of treasury stock(1,363)(64)

Disposal of treasury stock

(8)

(64)

25

Net changes during the year17
(3,840)

(17)

(948)

(176)

(4,981)

Balance at March 31, 2009

222,637,704¥17,070¥13,197¥19,180¥(116)¥ 2,401¥(82)¥ (945)¥1,997¥52,702

Net assets at April 1, 2009

222,637,704¥17,070¥13,197¥19,180¥(116)¥ 2,401¥(82)¥ (945)¥1,997¥52,702

Net income

971

971

Cash dividends

(908)

(908)

Change of scope of equity
method1

Acquisition of treasury stock

1(30)

Disposal of treasury stock

0

(30)

1

Net changes during the year

1
1,129

31

74

161

1,395

Balance at March 31, 2010

222,637,704¥17,070¥13,197¥19,244¥(145)¥ 3,530¥(51)¥ (871)¥2,158¥54,132

Net assets at April 1, 2010

222,637,704¥17,070¥13,197¥19,244¥(145)¥ 3,530¥(51)¥ (871)¥2,158¥54,132

Net income

1,196

1,196

Cash dividends

(908)

(908)

New consolidated investment

(428)

(428)

Change of scope ofequity method(47)

Acquisition of treasury stock

(47)
(6)

Disposal of treasury stock0

Net changes during the year
Balance at March 31, 2011

222,637,704¥17,070¥13,197(6)

0¥19,057¥(151)

0(1,015)

5

(262)

55

(1,217)¥ 2,515¥(46)¥(1,133)¥2,213¥52,722

Thousands of U.S. dollars (Note 1)

Net assets at April 1, 2010

Number ofshares issued

Commonstock

CapitalsurplusRetainedearnings

222,637,704$205,663$159,000$231,855

Unrealized
gains onTreasury stock, securities,
at costnet of taxes$(1,747)$(614)

Foreigncurrencytranslation
adjustment$(10,494)

Minority
interests$26,000

Total$652,193

Net income

14,41014,410Cash dividends(10,940)(10,940)

New consolidated investment(5,157)(5,157)

Change of scope ofequity method(566)

Acquisition of treasury stock

(566)
(72)

Disposal of treasury stock0

Balance at March 31, 2011
See accompanying notes.

Meiden Annual Report 2011

222,637,704$205,663$159,000(72)

0Net changes during the year20

$ 42,530

Unrealized
losses on
hedging
derivatives,
net of taxes$229,602$(1,819)0(12,229)60(3,157)663(14,663)$ 30,301$(554)$(13,651)$26,663$635,205

Consolidated Statements of Cash Flows
MEIDENSHA CORPORATION AND CONSOLIDATED SUBSIDIARIES (years ended March 31, 2011, 2010, and 2009)

Thousands of
U.S. dollars(Note 1)Millions of yen
2011

2010

2009

2011

¥  2,102¥  1,631¥ (1,378)$ 25,325

Depreciation and amortization

7,166

7,611

7,797

86,337

Operating activities:
Income (loss) before income taxes and minority interests
Adjustments to reconcile income before income taxes to net cash
provided by operating activities:
Increase in allowances

2,835

730

4,020

34,157

Interest and dividend income

(415)

(418)

(545)

(5,000)Equity in net income of affiliated companies

(40)

(428)

(150)

(482)

Interest expense

901

1,051

1,322

10,855(96)

Gain on sales of marketable securities and investment securities

(8)

(1)

(11)

Gain on sales of fixed assets

(7)

(24)

(118)

(84)

Loss on disposal of fixed assets

167

132

133

2,012

Loss on devaluation of securities

1,121

32

288

13,506

Decrease (increase) in receivables

(580)

623

6,368

(6,988)Decrease (increase) in inventories(2,381)

9,396

(995)

(28,687)

Increase (decrease) in payables

4,747(3,977)(8,491)

57,193

Other-net

327

1,392

1,239

3,940

Subtotal

191,988

15,93517,7509,479Interest and dividend received

426

438

543

5,133

Interest expense paid

(858)

(1,145)(1,259)(10,337)

Income taxes paid

(793)

(769)

(1,509)(9,554)

14,71016,274

7,254

177,229(1,590)Net cash provided by operating activities
Investing activities:
Purchase of marketable securities and investment securities

(132)

(742)

(786)

Proceeds from sales of marketable securities and investment securities

28

1

20

337

Proceeds from sales of stocks of subsidiaries and affiliates

140

–

–

1,687

(3,727)(4,244)(7,038)(44,904)

121

254

140

1,458

Proceeds from subsidy

1,465

200

–

17,651Other-net(2,213)(980)(1,117)(26,663)(4,318)(5,511)(8,781)(52,024)

Purchase of property, plant and equipment
Proceeds from sales of property, plant and equipment

Net cash used in investing activities
Financing activities:
Increase (decrease) in short-term bank loans(11,597)(29,737)

28,663(139,723)

Increase (decrease) in commercial paper(8,000)30,000(30,000)(96,386)

Proceeds from long-term debt

16,8084,435

50

202,506

Repayment of long-term debt

(5,793)(6,426)(2,435)(69,795)

Cash dividends paid

(906)

(908)

(1,388)(10,916)

Cash dividends paid to minority shareholders

(41)

(19)

(24)

(494)

Other-net
Net cash used in financing activities

(70)

(88)

(49)

(843)

(9,599)(2,743)(5,183)(115,651)

Effects of exchange rate changes on cash and cash equivalents

(164)

37

(336)

(1,976)

Net increase (decrease) in cash and cash equivalents

629

8,057

(7,046)

7,578

11,180

3,123

10,169134,699

Cash and cash equivalents at beginning of year
Increase in cash and cash equivalents due to addition of
consolidated subsidiaries
Cash and cash equivalents at end of year (Note 17)

177

–

–

2,133

¥ 11,986¥ 11,180¥  3,123$ 144,410

See accompanying notes.

Meiden Annual Report 201121

Notes to Consolidated Financial Statements
MEIDENSHA CORPORATION AND CONSOLIDATED SUBSIDIARIES

1. Basis of Presenting Consolidated Financial Statements
The accompanying consolidated financial statements of Meidensha Corporation (“the Company”) and its consolidated subsidiaries have been prepared in accordance with the provisions set forth in the Japanese Financial
Instruments and Exchange Law and its related accounting regulations, and in conformity with accounting principles
generally accepted in Japan (“Japanese GAAP”), which are different in certain respects as to application and disclosure requirements of International Financial Reporting Standards.
Prior to the year ended March 31, 2009, the accounts of consolidated overseas subsidiaries are based on theiraccounting records maintained in conformity with generally accepted accounting principles prevailing in therespective countries of domicile. As discussed in Note 2 v) 1), the accounts of consolidated overseas subsidiaries
for the year ended March 31, 2010 and 2011, are prepared in accordance with either International Financial
Reporting Standards or U.S. generally accepted accounting principles, with adjustments for the specified six items
as applicable.
The accompanying consolidated financial statements have been reformatted and translated into English (withsome expanded descriptions) from the consolidated financial statements of the company and its consolidated
subsidiaries (“the Companies”) prepared in accordance with Japanese GAAP and filed with the appropriate Local
Finance Bureau of the Ministry of Finance as required by the Japanese Financial Instruments and Exchange Law.
Certain supplementary information included in the statutory Japanese language consolidated financial statements
is not presented in the accompanying consolidated financial statements.
The translations of the Japanese yen amounts into U.S. dollars are included solely for the convenience of readers
outside Japan, using the prevailing exchange rate on March 31, 2011, which was ¥83 to U.S. $1. The conveniencetranslations should not be construed as representations of what the Japanese yen amounts have been, could havebeen, or could be in the future when converted into U.S. dollars at this or any other rate of exchange.

2. Summary of Significant Accounting Policiesa) Principles of Consolidation
The accompanying consolidated financial statements include the accounts of the Company and its 39 consolidated
subsidiaries in 2011, 38 consolidated subsidiaries in 2010 and 2009.
Meiden Nuclear Engineering Corporation and Noto Community Wind Power Co., Ltd. have been added to thescope of consolidation from the fiscal year ended March 31, 2011 due to their increased importance.
SHANGHAI MEIDEN SEMICONDUCTOR CO., LTD. was removed from the scope of consolidation following its
liquidation in the fiscal year ended March 31, 2011.
All significant inter-company accounts and transactions have been eliminated in consolidation. 9 unconsolidated
subsidiaries, whose total assets, sales, net income (loss), and retained earnings are not significant in the aggregate
in relation to the comparable figures in the consolidated financial statements, have not been consolidated in 2011.
In the elimination of investments in subsidiaries, the assets and liabilities of the subsidiaries, including the portion
attributable to minority shareholders, are evaluated using the fair value when the Companies acquired control of
the respective subsidiaries.
The fiscal year-end for consolidated overseas subsidiaries is December 31, 2010. In preparing the consolidated
financial statements, the financial statements as of December 31 of these subsidiaries are used. However, adjustments
are made as necessary upon consolidation to reflect any significant transactions from January 1 to March 31.
b) Equity Method
Investments in affiliated companies (all 20% to 50% owned and certain others 15% to 20% owned) are accounted
for by the equity method in the years ended March 31, 2011, 2010, and 2009.
From the fiscal year ended March 31, 2011, the equity method was not applied to MEIDEN ELECTRIC­ENGINEERING SDN. BHD. due to its diminished importance following a resolution to liquidate the company.
The equity method was applied to 3 affiliates during the fiscal year 2011.
From the fiscal year ended March 31, 2011, the equity method was not applied to MHS Konecranes Co., Ltd.
due to the transfer of all shares of this company held by Meidensha Corporation.

22

Meiden Annual Report 2011

The equity method was applied to 4 affiliates and 1 unconsolidated subsidiary during the fiscal year 2010 and
5 affiliates and 1 unconsolidated subsidiary during the fiscal year 2009. Investments in 9 unconsolidated subsidiaries
and 4 other affiliated companies, that would not have material effect on the consolidated financial statements, arestated at cost in 2011.
AE POWER METAL ENGINEERING SDN. BHD, the one of the affiliates, whose financial statements fall on
December 31 and these statements are used to prepare the consolidated financial statements.
<Changes in Accounting Policy>
Effective from the fiscal year ended March 31, 2011, the Companies have applied the “Accounting Standard for
Equity Method of Accounting for Investments” (Accounting Standards Board of Japan (“ASBJ”) Statement No. 16
of March 10, 2008) and the “Practical Solution on Unification of Accounting Policies Applied to Associates
Accounted for Using the Equity Method” (Practical Issues Task Force (“PITF”) No. 24 of March 10, 2008).
The impact of this change is immaterial in the fiscal year ended March 31, 2011.
c) Securities
Securities are classified based on the intent of holding as (a) securities held for trading purposes (hereafter, “trading
securities”), (b) debt securities intended to be held to maturity (hereafter, “held-to-maturity debt securities”), (c)equity securities issued by unconsolidated subsidiaries and affiliated companies, or (d) all other securities that are
not classified in any of the above categories (hereafter, “available-for-sale securities”).
The Companies do not have trading securities and held-to-maturity debt securities. Equity securities issued bysubsidiaries and affiliated companies which are not consolidated or accounted for using the equity method arestated at the moving-average cost. Available-for-sale securities with no available fair market values are stated at
the moving-average cost.
If the market value of equity securities issued by unconsolidated subsidiaries and affiliated companies andavailable-for-sale securities declines significantly, such securities are stated at fair market value and the difference
between fair market value and the carrying amount is recognized as loss in the period of the decline unless thedeclines are considered temporary. If the fair market value of equity securities issued by unconsolidated subsidiaries
and affiliated companies not accounted for on the equity method is not readily available, such securities should be
written down to net asset value with a corresponding charge in the statement of operations in the event net asset
value declines significantly unless the decline is considered as recoverable.
Available-for-sale securities with available fair market values are stated at fair market value. Unrealized gains andunrealized losses on these securities are reported, net of applicable income taxes, as a separate component of net
assets. Realized gains and losses on sale of such securities are computed using the moving-average cost.
d) Derivatives and Hedge Accounting
Derivative financial instruments are stated at fair value, and the Companies recognize changes in the fair value as
gains or losses unless derivative financial instruments are used for hedging purposes.
If derivative financial instruments are used as hedges and meet certain hedging criteria, the Companies defer
recognition of gains or losses resulting from changes in fair value of derivative financial instruments until the corresponding losses or gains on the hedged items are recognized.
However, in cases where forward foreign exchange contracts are used as hedges and meet certain hedging
criteria, forward foreign exchange contracts, and hedged items are accounted for in the following manner:
1. If a forward foreign exchange contract is executed to hedge an existing foreign currency receivable orpayable,(a) the difference, if any, between the Japanese yen amount of the hedged foreign currency receivable or payabletranslated using the spot rate at the inception date of the contract and the book value of the receivable or payable
is recognized in the statement of operations in the period which includes the inception date, and(b) the discount or premium on the contract (that is, the difference between the Japanese yen amount of the contract
translated using the contracted forward rate and that translated using the spot rate at the inception date of thecontract) is recognized over the term of the contract.
2. If a forward foreign exchange contract is executed to hedge a future transaction denominated in a foreign currency, the future transaction will be recorded using the contracted forward rate, and no gains or losses on theforward foreign exchange contract are recognized.

Meiden Annual Report 201123

Also, if interest rate swap contracts are used as hedge and meet certain hedging criteria, the net amount to be
paid or received under the interest rate swap contract is added to or deducted from the interest on the assets or
liabilities for which the swap contract is executed.
e) Inventories
Inventories of the Companies are stated at cost determined principally by the weighted-average method as tomaterials and supplies, and the specific identification method as to finished products and work-in-process. In thefollowing paragraph, effective April 1, 2008, the Companies adopted a new accounting standard for measurementof inventories, and the carrying amounts stated on the balance sheet have been calculated after a devaluationreflecting reduced profitability.
<Changes in Accounting Policy>
On July 5, 2006, the Accounting Standards Board of Japan issued ASBJ Statement No. 9, “Accounting Standard
for Measurement of Inventories.” As permitted under the superseded accounting standard, the Companies previously stated inventories at cost. The new accounting standard requires that inventories held for sale in the ordinary
course of business be measured at the lower of cost or net realizable value.
Replacement cost may be used in lieu of the net realizable value, if appropriate.
As a result of the adoption of ASBJ Statement No. 9, operating income decreased by ¥835 million, and loss
before income taxes and minority interests increased by ¥835 million for the year ended March 31, 2009. The
effects on segment information are described in Note 14.
f) Property, Plant and Equipment, and Depreciation
The Companies compute depreciation of the remaining assets principally by the declining-balance method at rates
based on the useful lives and residual values determined in accordance with the Corporation Tax Law of Japan.
However, the Companies compute depreciation by the straight-line method for buildings (exclusive of building
improvements) acquired after March 31, 1998, and building improvements, structures and machinery belonging to
the Company’s Real Estate Division (Osaki, Shinagawa City, Tokyo).
<Additional Information>
Effective from the year ended March 31, 2009, the Company and certain consolidated subsidiaries changed theuseful lives based on the reassessment of the useful lives in light of the change in the Corporation Tax Law of Japan.
As a result, operating income decreased by ¥454 million, and loss before income taxes and minority interests
increased by ¥454 million in the year ended March 31, 2009. The effects on segment information are described in
Note 14.
g) Lease
Property, plant and equipment capitalized under finance lease arrangements are depreciated over the lease termof the respective assets up to no residual values. However, as permitted, finance leases commencing prior to April
1, 2008, which do not transfer ownership of the leased property to the lessee, are accounted for as operatingleases with disclosure of certain “as if capitalized” information.
h) Allowance for Doubtful Accounts
The Companies provide the allowance for doubtful accounts in an amount sufficient to cover possible losses oncollection by estimating individually uncollectible amounts and applying a percentage based on collection experience to the remaining accounts.
i) Accrued Bonuses for Employees
The Companies provide for the payment of employee bonuses, based on the estimated projected amounts for
employee bonus payments.
j) Provision for Product Warranties
The Companies make provision for product warranty by estimating individually the expected charge-free expenses.
k) Provision for Loss on Orders
The Companies make provision for losses on orders by estimating the expected losses incurred after the balance
sheet date.

24

Meiden Annual Report 2011

l) Provision for Environmental Measures
An amount is posted for the expected future amount required to provide for expenditures related to environmental
measures such as the processing of hazardous substances as required by laws and regulations.
m) Provision for Loss on Guarantees
The Company provides for losses on guarantee obligations for its non-consolidated companies, based on theestimated amount of loss, taking into account the financial condition of each non-consolidated company andother factors.
n) Reserve for Retirement Allowance for Directors and Corporate Auditors
Certain consolidated subsidiaries recorded 100% of obligation based on their rules and regulations under theassumption that all directors and corporate auditors retired at the balance sheet date.
o) Employees’ Severance and Retirement Benefits
The Companies provide two types of severance and retirement benefit plans, unfunded lump-sum payment plans
and funded non-contributory pension plans, under which all eligible employees are entitled to benefits based on thelevel of wages and salaries at the time of retirement or termination, length of service, and certain other factors.
The liabilities and expenses for severance and retirement benefits are determined based on the amounts actuarially calculated using certain assumptions.
The Companies provided allowance for employees’ severance and retirement benefits based on the estimatedamounts of projected benefit obligation and the fair value of the plan assets at each balance sheet date.
Prior service costs are recognized in expenses in equal amounts over the average of the estimated remaining
service lives of the employees (10 years), and actuarial gains and losses are recognized in income or expenses
using the straight-line method over the average of the estimated remaining service lives (from 12 to 15 years)
commencing with the following period.
The net transition obligation (¥38,222 million) has been recognized in expenses in equal amounts over 15 years.
<Change in Accounting Policy>
Effective from the year ended March 31, 2010, the Company and its consolidated domestic subsidiaries adopted
the “Partial Amendments to Accounting Standard for Retirement Benefits (Part 3)” (Accounting Standards Boardof Japan (“ASBJ”) Statement No. 19 issued on July 31, 2008). The new accounting standard requires domestic
companies to use the rate of return on long-term government or gilt-edged bonds as of the end of the fiscal year
for calculating the projected benefit obligation of a defined-benefit plan. Previously, domestic companies wereallowed to use a discount rate determined taking into consideration fluctuations in the yield of long-term governmentand gilt-edged bonds over a certain period. This change had no impact on the consolidated financial statements
for the year ended March 31, 2010.
p) Income Tax
The Companies recognize tax effects of temporary differences between the carrying amounts of assets and liabilities
for tax and financial reporting. The provision for income taxes is computed based on the pretax income includedin the consolidated statements of operations. The asset and liability approach is used to recognize expected future
tax consequences of temporary differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes.
The Company and some subsidiaries adopted consolidated tax return system.
q) Amounts per Share of Common Stock
The computation of net income (loss) per share is based on the weighted average number of shares of common
stock outstanding during the year.
For the years ended March 31, 2011, 2010, and 2009, diluted net income per share was not shown since theCompany had no securities with dilutive effect. Cash dividends per share presented in the consolidated statementsof operations represent actual amounts applicable to the respective years.
r) Amortization of Goodwill and Amortization Period
Goodwill is amortized using the straight-line method over a period of effectiveness.

Meiden Annual Report 201125s) Statements of Cash Flows
In preparing the consolidated statements of cash flows, cash on hand, readily-available deposits, and short-term
highly liquid investments with maturities that do not exceed three months at the time of purchase and with insignificant risks of change in value are considered to be cash and cash equivalents.
t) Translation of Foreign Currency Accounts and Financial Statements
Receivables and payables denominated in foreign currencies are translated into Japanese yen at the yearend rates.
Financial statements of consolidated overseas subsidiaries are translated into Japanese yen at the year-end
rate, except that net asset accounts are translated at historical rates and statements of operations items resulting
from transactions with the Companies at the rates used by the Companies.
Foreign currency translation adjustments resulting from translations of foreign currency financial statements
were presented separately in the foreign currency translation adjustment and minority interests in the consolidatedbalance sheets.
u) Reclassifications
Certain prior year amounts have been reclassified and restated to conform to the current year presentation.
These reclassifications and restatements had no effect on previously reported results of operations orretained earnings.
v) Change in Accounting Policies
1) Unification of Accounting Policies Applied to Foreign Subsidiaries for Consolidated Financial Statements
Effective from April, 2008, the Practical Issues Task Force No. 18 “Practical Solution on Unification of Accounting
Policies Applied to Foreign Subsidiaries for Consolidated Financial Statements” (“PITF No. 18”), issued by the
Accounting Standards Board of Japan on March 17, 2006, has been applied to the Companies. PITF No. 18
requires that accounting policies and procedures applied by a parent company and its subsidiaries to similartransactions and events under similar circumstances should, in principle, be unified for the preparation of theconsolidated financial statements. PITF No. 18, however, as a tentative measure, allows a parent company toprepare consolidated financial statements using foreign subsidiaries’ financial statements prepared in accordancewith either International Financial Reporting Standards or U.S. generally accepted accounting principles. In thiscase, adjustments for the following six items are required in the consolidation process so that their impact on net
income are accounted for in accordance with Japanese GAAP unless the impact is not material.
1. Goodwill not subject to amortization
2. Actuarial gains and losses of defined-benefit retirement plans recognized outside profit or loss
3. Capitalized expenditures for research and development activities
4. Fair value measurement of investment properties, and revaluation of property, plant and equipment, andintangible assets
5. Retrospective treatment of a change in accounting policies
6. Accounting for net income attributable to minority interests
2) New Accounting Standards for Lease Transactions as Lessee
Prior to April 1, 2008, the Companies accounted for finance leases that do not transfer ownership of the leased
property to the lessee as operating leases with disclosure of certain “as if capitalized” information in the notes tothe consolidated financial statements.
On March 31, 2007, the Accounting Standards Board of Japan issued Statement No. 13, “Accounting Standard
for Lease Transactions” and Guidance No. 16, “Guidance on Accounting Standard for Lease Transactions.” The
new accounting standards require that all finance lease transactions be treated as capital leases.
Effective April 1, 2008, the Companies adopted the new accounting standards for finance leases commencing
after March 31, 2008, and capitalized assets used under such leases, except for certain immaterial or short-term
finance leases, which are accounted for as operating leases. As permitted, finance leases that commenced prior
to April 1, 2008, and that have been accounted for as operating leases, continue to be accounted for as operatingleases with disclosure of certain “as if capitalized” information.
3) Accounting Standard for Construction Contracts
Effective from the year ended March 31, 2010, the domestic companies adopted the “Accounting Standard forConstruction Contracts” (ASBJ Statement No. 15, issued on December 27, 2007) and the “Guidance on Accounting

26

Meiden Annual Report 2011

Standard for Construction Contracts” (ASBJ Guidance No. 18, issued on December 27, 2007). Accordingly, when
the outcome of individual contracts can be estimated reliably, the domestic companies apply the percentage-ofcompletion method to work commencing in the year ended March 31, 2010. The percentage/stage of completionat the end of the reporting period is measured by the proportion of the cost incurred to the estimated total cost.
As a result of the adoption, sales increased by ¥1,393 million, and operating income and income before income
taxes and minority interests increased by ¥395 million for the year ended March 31, 2010. Effects of the changeon the segment information are described in Note 14.
Changes in Notes to the Consolidated Financial Statements(Adoption of accounting standard for asset retirement obligations)
From the fiscal year ended March 31, 2011, the Companies have adopted the “Accounting Standard for Asset
Retirement Obligations” (ASBJ Statement No. 18 of March 31, 2008) and “Guidance on Accounting Standard for
Asset Retirement Obligations” (ASBJ Guidance No. 21 of March 31, 2008). These changes had a negligible impact
on operating income and segment performance in the fiscal year ended March 31, 2011. As a result of adopting
these standards, “Income before income taxes and minority interests” decreased by ¥25 million ($301 thousand)for the fiscal year ended March 31, 2011.
Change in Presentation Method(Consolidated Statements of Income)
The Companies have adopted the “Cabinet Office Ordinance Regarding Partial Amendment of the Regulation for
Terminology, Forms and Preparation of Financial Statements” (Cabinet Office Ordinance No. 5 of March 24, 2009)
based on the “Accounting Standard for Consolidated Financial Statements” (ASBJ Statement No. 22 of December
26, 2008). As a result, “Income (loss) before minority interests” is included in the financial statements from the fiscal
year ended March 31, 2011.
<Additional Information>
Effective March 31, 2011, the Companies adopted “Accounting Standard for Presentation of Comprehensive
Income” (ASBJ Statement No. 25 on June 30, 2010) and “Revised Accounting Standard for Consolidated Financial
Statements” (ASBJ Statement No. 22, revised on June 30, 2010). As a result of the adoption of these standards,
the Companies have presented the consolidated statement of comprehensive income in the consolidated financial
statements for the fiscal year ended March 31, 2011.

3. Financial Instruments
Information on financial instruments for the year ended March 31, 2011 required pursuant to the revised accounting
standards is as follows:
1. Items relating to condition of financial instruments(1) Policy initiatives for financial instruments
It is Meiden Group policy to limit fund management to short-term deposits, and use bank loans and the issue ofshort-term bonds for financing. Derivatives are used only to hedge the market fluctuation risks described below
and are not used for speculative transactions.
(2) Types of financial instruments and risks
Operating claims such as trade notes and trade accounts receivable are exposed to the credit risk of the customer.
Operating claims denominated in foreign currencies that arise from our business operations overseas are also
exposed to currency rate fluctuation risk. However, in principle, this exposure is hedged through forward exchange
contracts, except for cases in which the claims are less than the balance of operating debt denominated in thesame foreign currency.
Stocks that are investment securities, which mainly consist of stocks of corporations the Companies havebusiness or capital alliances with, are exposed to market value fluctuation risk.
The majority of operating debt such as trade notes and trade accounts payable has payment dates within one
year. In addition there are some foreign currency-denominated notes and accounts payable related to raw materials
purchases that are exposed to currency rate fluctuation risk. Short-term borrowings and commercial paper are mainly
used for financing operations transactions, while long-term debt is used for financing capital investment and operating
capital. Borrowings with a floating rate are exposed to interest rate fluctuation risk. However derivatives transactions
are used as instruments to hedge the fluctuation risk for interest paid and to ensure that a fixed interest rate is paid.
Meiden Annual Report 201127

Derivatives transactions consist of forward exchange contracts to hedge currency fluctuation risk associatedwith foreign currency-denominated operating debt and interest rate swaps to hedge interest rate payment fluctuation risk associated with borrowings.
Refer to Note 2 d) (Derivatives and Hedge Accounting) for information relating to hedge accounting concerning
hedge instruments, hedged items, hedge policies, and the method used for evaluating the effectiveness ofhedges.
(3) Risk management structure for financial instruments(i) Credit risk (risk relating to counterparty not performing contracts, etc.) management
For each counterparty, operating claims balances are managed based on credit management regulations andstructures are in place to allow regular assessment of the creditworthiness of major counterparties.
To reduce the credit risk of contracted financial institutions when using derivatives transactions, transactions are
only conducted with financial institutions with a high credit ranking.
(ii) Market risk (currency and interest rate fluctuation risk) management
Forward exchange contracts are used to hedge future currency rate fluctuation risk associated with foreign currencydenominated operating debt. In addition, interest rate swap transactions are used to control interest rate payment
risk associated with borrowings.
The fair value of investment securities and financial position of the issuer are assessed regularly.
The purposes, types of transactions, and deciding authorities for derivative transactions are stipulated in derivatives transactions management regulations and approval regulations, and conduct and management of thesetransactions is in accordance with even more specific operation rules.
(iii) Management of liquidity risk (risk that payment cannot be conducted on payment date) associated withfinancing
Although operating debt and borrowings are exposed to liquidity risk, this risk is managed through methods suchas preparing and renewing cash flow planning as required.
(iv) Supplementary explanation concerning fair value of financial instruments
The fair value of financial instruments includes amounts based on market value and amounts that have been reasonably estimated when no market value is available. Because the calculation of these amounts incorporate elements
subject to fluctuation, if different preconditions are used the resulting amounts could vary. Please note that for thecontract amounts related to derivatives transactions included in the note “Derivatives and hedge accounting,” theamounts themselves do not indicate the market risk associated with derivatives transactions.
2. Items related to the calculation of fair value of financial instruments and securities and derivatives transactions
Assets(1) Cash and time deposits, (2) Trade notes and trade accounts receivable
These assets are settled in the short-term and fair value is nearly equivalent with book value, so the book value
is used.
(3) Investment securities
The fair value of stocks is the price at the exchange and the fair value of debt securities is the price at the exchangeor price presented by correspondent financial institutions, etc. Refer to Note 4 (Securities) for information by the
purpose of ownership for securities.
(4) Long-term loans receivable
The fair value of long-term loans is calculated by discounting by the interest rate assumed for a new loan of thesame type.
Liabilities(1) Trade notes and trade accounts payable, (2) Short-term borrowings, (3) Commercial paper, (4) Accrued
income taxes
These liabilities are settled in the short-term and fair value is nearly equivalent with book value, so the book value
is used.
(5) Long-term debt
The fair value of long-term debt is calculated by discounting by the interest rate assumed for receiving a new loanof the same type. For the fair value of long-term debt with floating rate interest subject to special treatment withinterest rate swaps, the total of principal and interest that is treated together with the hedged long-term debt is
discounted by the interest reasonably expected to be applied for a similar type of debt.

28

Meiden Annual Report 2011

Derivatives transactions
Because the special treatment of interest rate swaps is treated together with the hedged long-term borrowings,
the fair value is stated within the fair value of the relevant long-term borrowings. Because the allocation treatmentof forward exchange contracts is treated together with the hedged foreign currency-denominated account receivable, the fair value is stated within the fair value of the relevant foreign currency-denominated account receivable.
Please refer to Note 2 d) (Derivatives and Hedge Accounting) for information on derivatives transactions.
3. Fair value of financial instruments
Book values and fair values of the financial instruments on the consolidated balance sheet at March 31, 2011 andMarch 31, 2010 are as follows:
Millions of yen

2011

Amount posted

Cash and time deposits

Fair value¥12,067

Trade notes and trade accounts receivable(*1)

Investment securities

Difference¥12,067¥ –60,18460,184–

13,096

13,096–Long-term loans receivable

379

382

3

Total assets¥85,726¥85,729¥ 3

Trade notes and trade accounts payable (*2)

¥ –¥27,989¥27,989

Short-term borrowings

2,969

2,969

–

Commercial paper

22,00022,000–Accrued income taxes

1,179

1,179

–

Long-term debt

38,26738,36497

Total liabilities¥92,404¥92,501¥97

Derivatives transactions

¥

¥

¥ –

(54)

(54)

Millions of yen

2010

Amount posted

Cash and time deposits

Fair value¥11,236

Difference¥11,236¥ ––Trade notes and trade accounts receivable *59,32759,327

Investment securities

15,851

15,851

–

386

401

15

¥86,800¥86,815

¥15
¥ –

( 1)

Long-term loans receivable
Total assets
Trade notes and trade accounts payable *¥27,923¥27,923

Short-term borrowings

13,027

13,027–

Commercial paper

30,00030,000

–

( 2)

547

547

–

Long-term debt

Accrued income taxes

24,25524,32873

Total liabilities¥95,752¥95,825¥73

Derivatives transactions

¥

¥

¥ –

74

74

Thousands of U.S. dollars

2011

Amount posted

Fair value

Difference

Cash and time deposits$$ 145,386$ 145,386

Trade notes and trade accounts receivable (*1)

725,108

725,108–

Investment securities

157,783

157,783

–

4,566

4,602

36

Total assets$1,032,843$1,032,879$36

Trade notes and trade accounts payable (*2)$ 337,217$ 337,217$–

Short-term borrowings

35,77135,771–

Commercial paper

265,060

265,060–

Long-term loans receivable–

Accrued income taxes

14,205

14,205–Long-term debt

461,048462,217

1,157

Total liabilities$1,113,301$1,114,470$1,157

Derivatives transactions

$

$

$

(651)

(651)

–

*1, *2 Those for unconsolidated subsidiaries and affiliates are included.

Meiden Annual Report 201129

<Additional Information>
Effective from the year ended March 31, 2010, the Companies adopted the revised Accounting Standard, “Accounting Standard for Financial Instruments” (ASBJ Statement No. 10, revised on March 10, 2008) and the “Guidanceon Disclosures about Fair Value of Financial Instruments” (ASBJ Guidance No. 19, revised on March 10, 2008).
4. Derivatives and Hedge Accounting(1) Derivatives transactions not subject to hedge accounting
Not applicable for the current fiscal year(2) Derivatives transactions subject to hedge accounting(i) Currency related
2011

Millions of yen
Amount ofcontracts

Amount ofcontracts
over one year

Fair value

Hedge accounting method

Types of derivatives transactions

Major hedged items

Basic accounting method

US dollar-denominatedforward exchange contracts

Accounts receivable(planned transactions)

¥340

¥–

¥311

Basic accounting method

US dollar-denominatedforward exchange contracts

Accounts payable(planned transactions)

11

–

11

Basic accounting method

EUR-denominated forward
exchange contracts

Accounts payable(planned transactions)

68

–

70

Basic accounting method

SG dollar-denominatedforward exchange contracts

Accounts payable(planned transactions)

2

–

2

Allocation treatment offorward exchange contracts

US dollar-denominatedforward exchange contracts

Accounts receivable
11

–

10

Allocation treatment offorward exchange contracts

SG dollar-denominatedforward exchange contracts

Accounts payable
13

–

14

2010

Millions of yen

Hedge accounting method

Types of derivatives transactions

Major hedged items

Basic accounting method

US dollar-denominatedforward exchange contracts

Accounts receivable(planned transactions)

Allocation treatment offorward exchange contracts

US dollar-denominatedforward exchange contracts

Accounts receivable

2011

Amount ofcontracts
over one year

Fair value

¥229

¥229

¥224

125

–

128

Thousands of U.S. dollars
Amount ofcontracts

Amount ofcontracts
over one year

Fair value

Hedge accounting method

Types of derivatives transactions

Major hedged items

Basic accounting method

US dollar-denominatedforward exchange contracts

Accounts receivable(planned transactions)$4,096$–$3,747US dollar-denominatedforward exchange contracts

Accounts payable(planned transactions)

133

–

133

EUR -denominatedforward exchange contracts

Accounts payable(planned transactions)

819

–

843

SG dollar-denominatedforward exchange contracts

Accounts payable(planned transactions)

24

–

24

Allocation treatment offorward exchange contracts

US dollar-denominatedforward exchange contracts

Accounts receivable
133

–

120

Allocation treatment offorward exchange contracts

SG dollar-denominatedforward exchange contracts

Accounts payable
157

–

169

Basic accounting method
Basic accounting method
Basic accounting method<Note> Fair value calculation
Calculation is based on the amount presented by the counterparty financial institution.

30

Amount ofcontracts

Meiden Annual Report 2011

(ii) Interest rate related
2011

Millions of yen

Hedge accounting method

Types of derivatives transactions

Basic accounting method

Interest rate swap transactions Long-term debt

Major hedged items

Special treatment for interest
rate swaps

Interest rate swap transactions Long-term debt

Amount ofcontracts

Amount ofcontracts
over one year

Fair value¥ 2,166¥ 1,987¥ (85)

12,803

10,877

(469)

2010

Millions of yen

Hedge accounting method

Types of derivatives transactions

Basic accounting method

Interest rate swap transactions Long-term debt

Major hedged items

Special treatment for interest
rate swaps

Interest rate swap transactions Long-term debt

2011

Hedge accounting method

Amount ofcontracts

Amount ofcontracts
over one year

Fair value¥ 1,202¥1,077¥ (69)

13,365

2,443

(491)

Thousands of U.S. dollars

Types of derivatives transactions

Major hedged items

Basic accounting method

Interest rate swap transactions Long-term debt

Special treatment for interest
rate swaps

Interest rate swap transactions Long-term debt

Amount ofcontracts

Amount ofcontracts
over one year

Fair value$ 26,096$ 23,940$(1,024)

154,253

131,048(5,651)<Note> Fair value calculation
Calculation is based on the amount presented by the counterparty financial institution.

4. Securities
A. The following tables summarize acquisition costs and book values of securities with fair value as of March 31,
2011 and 2010.
Millions of yen

2011

Acquisition cost

Book value

Difference¥6,030¥10,998¥4,968

6,030

10,998

4,968

Securities with book value (fair value) exceedingacquisition cost:
Equity securities   Subtotal
Securities with book value (fair value) not exceedingacquisition cost:
Equity securities

2,867

2,098

(769)

   Subtotal

2,867

2,098

(769)

Total

¥8,897¥13,096¥4,199<Note> The company recognized shrinkage loss of ¥1,102 million ($13,277 thousand) on its available-for-sale securities for the year ended
March 31, 2011.
Millions of yen

2010

Acquisition cost

Book value

Difference¥7,506¥13,930¥6,424

7,506

13,930

6,424

(569)

Securities with book value (fair value) exceedingacquisition cost:
Equity securities   Subtotal
Securities with book value (fair value) not exceedingacquisition cost:
2,490

1,921

   Subtotal

Equity securities

2,490

1,921

(569)

Total

¥9,996¥15,851¥5,855

Meiden Annual Report 201131

Thousands of U.S. dollars

2011

Acquisition cost

Book value

Difference$ 72,651$132,506$59,855

72,651

132,506

59,85534,542

25,277(9,265)34,542

25,277(9,265)$107,193$157,783$50,590

Securities with book value (fair value) exceedingacquisition cost:
Equity securities   Subtotal
Securities with book value (fair value) not exceedingacquisition cost:
Equity securities   Subtotal
Total

B. The following table summarizes book values of securities with no fair value as of March 31, 2011 and 2010.
(a) Available-for-sale securities;
Book value
Thousands of
U.S. dollars

Millions of yen

2011

Non-listed equity securities

2010

2011

¥702

$8,181¥679(b) Equity securities issued by subsidiaries and affiliated companies;
Book value
Thousands of
U.S. dollars

Millions of yen

Investments in unconsolidated subsidiaries

2011

2010

¥

¥

88

2011

94

$ 1,060

Investments in affiliated companies

9,145

9,147

110,181

Total¥9,233¥9,241$111,241

C. Total sales amounts of available-for-sale securities sold, gains and losses, in the years ended March 31, 2011,2010 and 2009 are as follows:
Thousands of
U.S. dollars

Millions of yen

2010

2011

Sales amount

2009

2011

¥28

¥1

¥21

$337

Gains

8

1

11

96

Losses––––5. Inventories
Inventories as of March 31, 2011 and 2010 were as follows:
Thousands of
U.S. dollars

Millions of yen

2011

2010

2011

Finished products¥ 3,395¥ 3,782$ 40,904

Work-in-process

25,364

22,831

305,590

Materials and supplies

1,555

1,427

18,735¥30,314¥28,040$365,229

Total

6. Subsidies Received from the Japanese Government
The Companies received a portion of the acquisition costs of certain tangible fixed assets from the Japanese government. The aggregated amount of the subsidies deducted from the acquisition costs of the tangible fixed assets asof March 31, 2011 and 2010, were ¥2,815 million ($33,916 thousand) and ¥1,331 million.

32

Meiden Annual Report 2011

7. Short-Term Borrowings, Long-Term Debt, and Commercial Paper
Short-term borrowings are bank loans and represented by notes. The weighted average interest rate was 1.5% asof March 31, 2011 and 1.6% as of March 31, 2010, respectively.
Long-term debt and commercial paper as of March 31, 2011 and 2010 consisted of the following.
Thousands of
U.S. dollars

Millions of yen

1.2% to 7.6% loans from banks and insurance companies
Less: Current portion

2011

2010

2011

¥38,266¥24,255$461,036

5,664

4,463

68,241

Total¥32,602¥19,792$392,795

Commercial paper, bearing interest rates of 0.2%

¥22,000¥30,000$265,060

Millions of yen

Thousands of
U.S. dollars

2012¥5,664$ 68,241

2013

5,857

70,566

The annual maturities of long-term debts as of March 31, 2011 were as follows:Year ended March 31

2014

8,647

104,181

2015

5,914

71,253

2016

4,818

58,0482017 and thereafter

7,366

88,747

Commitment Line Agreement
The Company renewed an agreement with a syndicate of 15 Japanese banks to set up a commitment line bymultiple financial institutions for the Company.
The unexecuted balances of lending commitments for the company as of March 31, 2011 and 2010 wereas follows:
Thousands of
U.S. dollars

Millions of yen

Total lending commitments

2011

2010

2011

¥25,000¥40,000$301,205

Less amounts currently executed
Unexecuted balance–

11,600–¥25,000¥28,400$301,205

8. Pledged Assets
The following assets were pledged as collateral as of March 31, 2011 and 2010.
Thousands of
U.S. dollars

Millions of yen

2011

2010

2011

Land

¥ 1,479¥ 1,479$ 17,819

Buildings and structures

18,974

19,846228,603

Investment securities
Total

21

17

253

¥20,474¥21,342$246,675

Obligations with collateral pledged as of March 31, 2011 and 2010 were as follows:
Millions of yen

Long-term debt (Including current portion of long-term debt)

Thousands of
U.S. dollars

2011

2010

2011

¥9,800¥11,200$118,072

In addition to the above, investment securities of ¥2 million ($24 thousand) as of March 31, 2011 and 2010 were
pledged as collateral for borrowing from financial institutions by an affiliate.
Meiden Annual Report 201133

An affiliate engaged in the wind farm business has a project finance loan that is secured by pledged businessassets amounting to ¥4,921 million ($59,289 thousand) and ¥1,642 million as of March 31, 2011 and 2010,
respectively.
Total business assets of this affiliate are amounting to ¥7,703 million ($92,807 thousand) and ¥2,618 million asof March 31, 2011 and 2010, respectively.

9. Employees’ Severance and Retirement Benefits
The Companies adopted the accounting standard for employees’ severance and retirement benefits, under which
the liabilities and expenses for severance and retirement benefits are determined based on the amounts obtainedby actuarial calculations.
The liabilities for severance and retirement benefits included in the liability section of the consolidated balance
sheets as of March 31, 2011 and 2010 consist of the following.
Thousands of
U.S. dollars

Millions of yen

Projected benefit obligation

2011

2010

2011

¥ 53,432¥ 54,386$ 643,759

Unrecognized prior service costs

725

1,062

8,735

Unrecognized actuarial differences(6,782)(6,760)(81,711)

Less fair value of pension assets(18,144)(19,058)(218,602)

Less unrecognized net transition obligation(6,785)(8,482)(81,747)

Liability for severance and retirement benefits¥ 22,446¥ 21,148$ 270,434

Included in the consolidated statements of income for the years ended March 31, 2011, 2010, and 2009 areseverance and retirement benefit expenses comprising the following.
Thousands of
U.S. dollars

Millions of yen

2011

2010

2009

2011

Service costs—benefits earned during the year

¥2,412¥2,326¥2,287$29,060
17,084

Interest cost on projected benefit obligation

1,418

1,431

1,392

Expected return on plan assets

(543)

(327)

(575)

(6,542)

Amortization of prior service costs

(338)

(337)

(337)

(4,072)

Amortization of net transition obligation

1,698

1,697

1,697

20,458

Amortization of actuarial differences
Severance and retirement benefit expenses

728

859

593

8,771

¥5,375¥5,649¥5,057$64,759

The discount rate and the rate of expected return on plan assets used by the Companies are 2.7% and 3.0%
for 2011, and 2.7% and 2.0% for 2010 and 2.7% and 3.0% for 2009, respectively.
The estimated amount of all retirement benefits to be paid at the future retirement date is allocated equally toeach service year using the estimated number of total service years. (i) Severance and retirement benefit expensesof consolidated subsidiaries using the simplified method are included in the “Service Costs” above, excluding theamortization of net transition obligation. (ii) Major expenses of the universally established welfare program service
are included in the “Service Costs” above.

10. Net Assets
Under Japanese laws and regulations, the entire amount paid for new shares is required to be designated as common
stock. However, a company may, by a resolution of the Board of Directors, designate an amount not exceeding
one-half of the price of the new shares as additional paid-in capital, which is included in capital surplus.
Under the Law, in cases where a dividend distribution of surplus is made, the smaller of an amount equal to
10% of the dividend or the excess, if any, of 25% of common stock over the total of additional paid-in-capital andlegal earnings reserve must be set aside as additional paid-in-capital or legal earnings reserve. Legal earnings
reserve is included in retained earnings in the accompanying consolidated balance sheets.
Under the Code, companies were required to set aside an amount equal to at least 10% of the aggregate amountof cash dividends and other cash appropriations as legal earnings reserve until the total of legal earnings reserve
and additional paid-in capital equaled 25% of common stock.

34

Meiden Annual Report 2011

Under the Code, legal earnings reserve and additional paid-in capital could be used to eliminate or reduce a
deficit by a resolution of the shareholders’ meeting or could be capitalized by a resolution of the Board of Directors.
Under the Law, both of these appropriations generally require a resolution of the shareholders’ meeting.
Additional paid-in capital and legal earnings reserve may not be distributed as dividends. Under the Code,however, on condition that the total amount of legal earnings reserve and additional paid-in capital remained equal
to or exceeded 25% of common stock, they were available for distribution by resolution of the shareholder’s meeting.
Under the Law, all additional paid-in-capital and all legal earnings reserve may be transferred to other capital surplus
and retained earnings, respectively, which are potentially available for dividends.
The maximum amount that the Company can distribute as dividends is calculated based on the unconsolidated
financial statements of the Company in accordance with Japanese laws and regulations.
At the annual shareholders’ meeting held on June 24, 2011, the shareholders approved cash dividends amounting to ¥908 million ($10,940 thousand). Such appropriations have not been accrued in the consolidated financial
statements as of March 31, 2011. Such appropriations are recognized in the period in which they are approved by
the shareholders.

11. Contingent Liabilities
Contingent liabilities as of March 31, 2011 and 2010, were as follows:
Thousands of
U.S. dollars

Millions of yen

2010

2011

Repurchase of note discounted and endorsed

¥ 67

¥ 51

$  807

Guarantees of loans from banks to employees andunconsolidated subsidiaries and affiliates

151

183

1,819

2011

12. Lease Information(1) Prior to April 1, 2008, finance leases, which do not transfer ownership of properties to lessees, are not capitalized and are accounted for in the same manner as operating leases. Certain related information are summarized
as follows:(i) Assumed amounts (inclusive of interest) of acquisition cost, accumulated depreciation, and net book value as ofMarch 31, 2011 and 2010, are summarized as follows:
Thousands of
U.S. dollars

Millions of yen

2011

2010

2011

¥ 981

¥1,045$11,819

15

97

181

Assumed acquisition cost
Machinery and equipment
Others
Accumulated depreciation

(560)

(604)

(6,747)

Net book value¥ 436¥  538$ 5,253(ii) Future minimum lease payments, inclusive of interest, as of March 31, 2011 and 2010 totaled ¥436 million($5,253 thousand) and ¥538 million, including ¥76 million ($916 thousand) and ¥101 million due within one year,
respectively.
(iii) Lease payments, which are equal to assumed depreciation charges for the years ended March 31, 2011, 2010
and 2009, were ¥101 million ($1,217 thousand), ¥127 million and ¥179 million, respectively.
(iv) Assumed depreciation charges are computed using the straight-line method over lease terms assuming noresidual value.
(2) Future lease receivables under non-cancelable operating leases as lessor as of March 31, 2009 totaled ¥14
million due within one year, respectively.
As discussed in Note 2 v), effective for the year ended March 31, 2009, the Companies adopted the new accounting
standard for leases to recognize leased property and lease obligations on the balance sheet. Finance leases commencing prior to April 1, 2008, which do not transfer ownership of the leased property to the lessee, are accounted
for as operating leases.
Meiden Annual Report 201135

13. Research & Development Expenses
Research and development expenses are charged to income as incurred. The amounts charged to income for theyears ended March 31, 2011, 2010, and 2009 were ¥7,413 million ($89,313 thousand), ¥6,836 million and ¥6,939
million, respectively.

14. Segment Information
General information about reportable segments
Each reportable segment of the Companies is a business unit within the Companies, for which discrete financial
information is available. Reportable segments are reviewed periodically at the Board of Directors Meeting in order todetermine distribution of management resources and evaluate business results by each reportable segment.
The Companies position segments identified by products and services, propose comprehensive strategies withrespect to products and services, and operate its business activities.
The Companies position segments identified by products and services, including “Social Infrastructure Systems,”“Industrial Systems,” “Engineering,” and “Real Estate.”
Description of business of each reportable segment is as follows:
Reportable segments

Description of businessSocial Infrastructure Systems This segment includes business related to the construction of social infrastructure.
Industrial Systems

This segment includes business operations related to product systems used in
the manufacturing industry, IT, and other general industry operations.

Engineering

This segment provides service relating to the remote management andmonitoring of facilities and so on.

Real EstateThis segment includes rentals of real estate holdings.

Basis of measurement about reported segment profit or loss, segment assets, segment liabilities, and othermaterial items
Accounting methods for each reportable segment are the same as statements on “Basis of Presenting Consolidated
Financial Statements.”
The operating income (loss) for each reportable segment is in conformity to the operating income of consolidated
statements of operations.
Inter-segment sales and transfers are based on market prices.
Information about reported segment profit or loss, segment assets, segment liabilities, and other material items.
Segment information for the year ended March 31, 2011 is as follows:
Millions of yen
Year ended March 31, 2011

Social Infrastructure Systems

Industrial
Systems

Engineering

Real Estate¥100,686¥26,356¥21,770¥ 3,026

Subtotal

OthersTotal¥151,838¥15,891¥167,729

Adjustments

Consolidated

Net sales:
Outside customers
Inter-segment¥–¥167,729

4,683

4,631

435

264

10,013

10,78820,801(20,801)–   Total¥105,369¥30,987¥22,205¥ 3,290¥161,851¥26,679¥188,530¥(20,801)¥167,729

Operating income (loss)¥ 3,543¥(1,496)¥ 2,729¥ 1,160¥   5,936¥   315¥   6,251

¥

(473)

¥   5,778

Identifiable assets¥ 76,064¥36,045¥12,983¥21,818¥146,910¥ 7,721¥154,631¥ 52,240¥206,871

Depreciation andamortization

2,157

1,462

217

885

4,721

441

5,162

2,004

7,166

Capital expenditures

1,527

1,291

105

55

2,978

182

3,160

1,370

4,530

Other items

36

Meiden Annual Report 2011

Thousands of U.S. dollars
Year ended March 31, 2011

Social Infrastructure Systems

Industrial
Systems

Engineering

Real Estate

Subtotal

OthersTotal$1,213,084$317,542$262,289$ 36,458$1,829,373$191,458$2,020,831

56,422

55,795

5,241

3,181

120,639

129,976

250,615

Adjustments

Consolidated$–$2,020,831(250,615)–

Net sales:
Outside customers
Inter-segment   Total$1,296,506$373,337$267,530$ 39,639$1,950,012$321,434$2,271,446$(250,615) $2,020,831

Operating income (loss)$$(18,024) $ 32,879$ 13,976$

71,518$ 3,795$$ (5,699) $

Identifiable assets$ 916,434$434,277$156,422$262,867$1,770,000$ 93,024$1,863,024

42,68775,313$ 629,398

69,614$2,492,422

Other items
Depreciation andamortization

25,98817,614

2,615

10,66356,8805,313

62,19324,14486,337

Capital expenditures

18,39815,5541,265

663

35,8802,192

38,072

16,50654,578<Notes>1. “Others” segment comprises business operations that are not included in the reporting segments. These operations include other product sales, employee welfare
and benefit services, and the provision of chemical and other products.
2. Segment operating income (loss) is reconciled with operating income reported on the consolidated financial statements.
3. “Adjustments” for segment operating income (loss) of ¥(473) million ($(5,699) thousand) includes eliminations of inter-segment sales transfers of ¥1,082 million ($13,036
thousand), adjustments for Inventories of ¥(44) million ($(530) thousand), and corporate operating expenses of ¥(1,511) million ($(18,205) thousand) that are notallocated to the reportable segments. The corporate operating expenses mainly include R&D expenses incurred at the fundamental research laboratory and otherfacilities that are not affiliated with the reportable segments.
4. “Adjustments” for segment assets of ¥52,240 million ($629,398 thousand) includes eliminations of inter-segment receivables and other assets of ¥(14,051) million($(169,289) thousand), and corporate assets of ¥66,291 million ($798,687 thousand) that are not allocated to the reportable segments. Corporate assets mainly
include cash and time deposits, investment securities, and the assets related to the fundamental research laboratory and other facilities that are not affiliated with thereportable segments.
5. “Adjustments” for capital expenditures of ¥1,370 million ($16,506 thousand) mainly include investments for corporate information systems that are not affiliated withthe reportable segments.

Segment information for the years ended March 31, 2010 and 2009, which is restated in conformity with therequirements of the Standard, is as follows:
Millions of yen
Social Infrastructure Systems

Industrial
Systems

Engineering

Real Estate¥108,599¥22,297¥21,576

3,930

3,917

421

   Total¥112,529¥26,214

Operating income (loss)¥   5,115¥(4,276)

Identifiable assets¥ 75,729

Depreciation andamortization
Capital expenditures

Year ended March 31, 2010

Subtotal

Others

Total

Adjustments

Consolidated¥ 3,022¥155,494¥17,573¥173,067–¥173,067

264

8,532

10,815

19,347(19,347)–¥21,997¥ 3,286¥164,026¥28,388¥192,414¥(19,347)¥173,067¥ 1,897¥ 1,192¥   3,928¥ (171)¥   3,757¥ (435)¥   3,322¥31,909¥12,665¥22,775¥143,078¥ 8,477¥151,555¥ 55,053¥206,608

2,236

1,521

258

901

4,916

456

5,372

2,239

7,611

1,570

2,265

67

228

4,130

442

4,572

942

5,514

Adjustments

Consolidated

Net sales:
Outside customers
Inter-segment¥Other items

Millions of yen
Year ended March 31, 2009

Social Infrastructure Systems

Industrial
Systems

Engineering

Real Estate¥114,653¥36,307¥22,859

9,184

4,707

435

Subtotal

OthersTotal¥ 2,740¥176,559¥22,239¥198,798

263

14,58912,971

27,560Net sales:
Outside customers
Inter-segment¥–¥198,798(27,560)–   Total¥123,837¥41,014¥23,294¥ 3,003¥191,148¥35,210¥226,358¥(27,560)¥198,798

Operating income (loss)¥   3,257¥ (932)¥ 1,363¥   901¥   4,589¥   568¥   5,157¥ (1,072)¥   4,085

Identifiable assets¥ 76,415¥43,104¥13,395¥23,824¥156,738¥12,688¥169,426¥ 44,739¥214,165

Depreciation andamortization

2,618

1,264

305

927

5,114

442

5,556

2,241

7,797

Capital expenditures

1,639

3,100

156

442

5,337

601

5,938

2,280

8,218

Other items<Notes>1. “Others” segment comprises business operations that are not included in the reporting segments. These operations include other product sales, employee welfare
and benefit services, and the provision of chemical and other products.
2. Segment operating income (loss) is reconciled with operating income reported on the consolidated financial statements.

Meiden Annual Report 201137

<Changes in Accounting Policy>
As noted in “Notes to Consolidated Financial Statements” 2 v), the Companies have applied the “Accounting Standard
for Asset Retirement Obligations” (ASBJ Statement No. 18, issued on March 31, 2008) and the “Guidance on
Accounting Standard for Construction Contracts” (ASBJ Guidance No. 18, issued on March 31, 2008). These changes
had a negligible impact on segment operating income (loss) for the year ended March 31, 2011.
As noted in “Notes to Consolidated Financial Statements” 2 o), the Companies have applied the “Partial Amendments to Accounting Standard for Retirement Benefits (Part 3)” (ASBJ Statement No. 19, issued on July 31, 2008),
effective from the year ended March 31, 2010. This change had no impact on the consolidated financial statements
for the year ended March 31, 2010.
As noted in “Notes to Consolidated Financial Statements” 2 v), the Companies have applied the “AccountingStandard for Construction Contracts” (ASBJ Statement No. 15, issued on December 27, 2007) and the “Guidanceon Accounting Standard for Construction Contracts” (ASBJ Guidance No. 18, issued on December 27, 2007) ,effective from the year ended March 31, 2010. Accordingly, when the outcome of individual contracts can be
estimated reliably, the domestic companies apply the percentage-of-completion method to work commencing in
the year ended March 31, 2010. The percentage of completion at the end of the reporting period is measured by
the proportion of the cost incurred to the estimated total cost. As a result of the adoption, sales increased by ¥1,393
million, and operating income increased by ¥395 million for the year ended March 31, 2010.
As noted in “Notes to Consolidated Financial Statements” 2 e), the Companies have applied “AccountingStandard for Measurement of Inventories,” effective from the year ended March 31, 2009. As a result, operating
income in this consolidated accounting period decreased by ¥654 million in “Social Infrastructure Systems”
business, ¥130 million in “Industrial Systems” business, ¥50 million in “Engineering” business, and ¥1 million in“Others” business.
<Additional Information>
Effective April 1, 2010, the Companies adopted “Accounting Standard for Disclosures about Segments of anEnterprise and Related Information” (ASBJ Statement No. 17 on March 27, 2009) and “Guidance on AccountingStandard for Disclosures about Segments of an Enterprise and Related Information” (ASBJ Guidance No. 20, issued
on March 21, 2008).
As noted in “Notes to Consolidated Financial Statements” 2 f), with the revision of the Corporation Tax Law in
FY2008 from the beginning of the current consolidated accounting period, the depreciation method for property,
plant, and equipment acquired on or after April 1, 2008 has been changed to one based on the revised Corporation
Tax Law. As a result, operating income decreased by ¥266 million for “Social Infrastructure Systems” business,¥138 million for “Industrial Systems” business, ¥17 million for “Engineering” business, ¥1 million for “Others” business, and ¥33 million for “Adjustments” for the year ended March 31, 2009.
Related information
Related information about geographic areas:
Information about geographic areas for the years ended March 31, 2011, 2010, and 2009 are as follows:
Millions of yen
Year ended March 31, 2011

Net sales

Japan

Asia

¥140,411¥23,939

Other Areas

Japan

Asia

¥141,490¥27,186

Japan

Asia

¥167,145¥27,393¥3,379

Total¥167,729

Millions of yen
Year ended March 31, 2010

Net sales

Other Areas¥4,391

Total¥173,067

Millions of yen
Year ended March 31, 2009

Net sales

Other Areas¥4,260Total¥198,798

Thousands of U.S. dollars
Year ended March 31, 2011

Net sales

38

Meiden Annual Report 2011

Japan

Asia

Other Areas

Total$1,691,699$288,422$40,710$2,020,831

15. Income Taxes
The Companies are subject to a number of taxes based on income, which in aggregate, resulted in normal statutory
tax rates of approximately 39.69% for the years ended March 31, 2011, 2010, and 2009, respectively.
The following table summarizes the significant differences between the statutory tax rate and the Companies’
effective tax rate for financial statement purposes for the years ended March 31, 2011 and 2010.
2011

2010

2009

Statutory tax rate

39.69%

39.69%

39.69%

Permanent difference (social expenses, etc.)

3.63

2.04

Per capital inhabitant tax

5.13

6.69

Net changes in valuation allowance

4.61

11.28
(10.41)

Intentionallyomitted

|(0.76)(13.06)

Statutory tax rates variance of overseas subsidiaries(9.99)(18.72)

Effects due to reclaiming taxes

3.61

–

Other-net

0.36

3.71

Effective tax rate

33.22%

34.28%|^    

Equity in loss (income) of affiliated companies
Tax deduction^

39.05%

Notes for 2009, on the above table were omitted due to the immaterial differences between the statutory tax
rate and the Companies’ effective tax rate.
Significant components of deferred tax assets and liabilities of the Companies as of March 31, 2011 and 2010
are as follows:
Thousands of
U.S. dollars

Millions of yen

2011

2010

2011

Deferred tax assets:
Net operating loss carry forwards
Allowance for retirement benefits

¥

962
8,315

¥

931

$ 11,590

7,813

100,181Bonuses

1,952

1,786

23,518Others

3,346

2,940

40,313   Gross deferred tax assets

14,575

13,470175,602

Less: Valuation allowance(1,666)(1,637)(20,072)

Total deferred tax assets

12,90911,833

155,530

Deferred tax liabilities:
484

391

5,831

Unrealized gains on securities, net of taxes

Reserve for special depreciation

1,669

2,326

20,108Deferred gain from division of corporation

1,131

1,131

13,627

132

121

1,591

3,416

3,969

41,157¥ 9,493¥ 7,864$114,373

Others   Gross deferred tax liabilities   Net deferred tax assets

Meiden Annual Report 201139

16. Investment and Rental Property
The Company owns some rental office buildings and rental commercial facilities for the purpose of earning rent
income in Tokyo and other regions. Pursuant to the new requirements, information about fair value of investment
and rental property is disclosed as follows:
Millions of yen

Rental real estate2010 end-ofyear balance

Increase (decrease)during 2011

2011 end-ofyear balance2011 fair value¥20,197¥(800)¥19,397¥46,945<Notes>1. Figures stated above are the amount after accumulated depreciation is deducted from the cost of acquisition.
2. The decrease in investment and rental property during the year ended March 31, 2011, is mainly attributable to depreciation ¥800 million($9,638 thousand).
3. The fair value at March 31, 2011 shows the appraisal value from an independent real estate appraiser.
Millions of yen

Rental real estate2009 end-ofyear balance

Increase (decrease)during 20102010 end-ofyear balance2010 fair value¥20,979¥(782)¥20,197¥46,954<Notes>1. Figures stated above are the amount after accumulated depreciation is deducted from the cost of acquisition.
2. The decrease in investment and rental property during the year ended March 31, 2010, is mainly attributable to depreciation ¥782 million.
3. The fair value at March 31, 2010 shows the appraisal value from an independent real estate appraiser.
Thousand of U.S dollars

Rental real estate2010 end-ofyear balance

Increase (decrease)during 2011

2011 end-ofyear balance2011 fair value$243,337$(9,638)$233,699$565,602

The profits and losses associated with rental real estate and real estate that contains portions that are used asrental real estate for the fiscal years ended March 31, 2011, 2010, and 2009 are described below.
Millions of yen
Year ended March 31, 2011

Rental real estate

Operating income

Operating cost

Operating profit¥3,290¥2,130¥1,160Millions of yen
Year ended March 31, 2010

Rental real estate

Operating income

Operating cost

Operating profit¥3,286¥2,094¥1,192Millions of yen
Year ended March 31, 2009

Rental real estate

Operating income

Operating cost

Operating profit¥3,003¥2,102¥901

Thousands of U.S. dollars
Year ended March 31, 2011

Rental real estate

Operating income

Operating cost

Operating profit$39,639$25,663$13,976<Additional Information>
Effective from the fiscal year ended March 31, 2010, the Companies adopted the “Accounting Standard for Disclosures about Fair Value of Investment and Rental Property” (ASBJ Statement No. 20, issued on November 28,2008) and “Rental Property” (ASBJ Guidance No. 23, issued on November 28, 2008) for the years ending on orafter March 31, 2010.

40

Meiden Annual Report 2011

17. Cash and Cash Equivalents
Reconciliations of cash and time deposits shown in the consolidated balance sheets and cash and cash equivalents
shown in the consolidated statements of cash flows as of March 31, 2011 and 2010 are as follows:
Thousands of
U.S. dollars

Millions of yen

Cash and time deposits
Time deposits with maturities exceeding three months
Cash and cash equivalents

2011

2010

2011

¥12,067¥11,236$145,386

(81)

(56)

(976)

¥11,986¥11,180$144,410

18. Related Party Transactions
Information on related party transactions for the years ended March 31, 2011, 2010, and 2009, and the related
amounts as of those dates are summarized as follows:
Millions of yen

Year ended March 31, 2011

Japan AE Power Systems Corporation

Purchaseof finishedproducts

Accounts
payable¥9,840¥2,890Millions of yen

Year ended March 31, 2010

Japan AE Power Systems Corporation

Purchaseof finishedproducts

Accounts
payable¥9,635¥2,762Millions of yen

Year ended March 31, 2009

Purchaseof finishedproducts

Japan AE Power Systems Corporation¥11,272

Year ended March 31, 2011

Purchaseof finishedproducts

Accounts
payableJapan AE Power Systems Corporation$118,554$34,819

Accounts
payable¥3,233Thousands of U.S. dollars<Note>
The amount of purchase of finished products and accounts payable is based on market price.

<Additional Information>
ASBJ Statement No. 11, “Accounting Standard for Related Party Disclosures” and ASBJ Guidance No. 13,“­Guidance on Accounting Standard for Related Party Disclosures” issued by the Accounting Standards Board ofJapan on October 17, 2006, require certain additional related party disclosures effective for years beginning on orafter April 1, 2008. Even pursuant to the new accounting standard, applicable related parties within the new definitionof additional related party disclosures remain unchanged from the previous year as per above.

Meiden Annual Report 201141

19. Net Income (Loss) per Share
The basis of per share amount calculation for the years ended March 31, 2011, 2010, and 2009 were as follows:
Thousands of
U.S. dollars

Millions of yen

2010

2011

2009

2011

Basic earnings per share:
Net income (loss)
Earnings not attributable to common shareholders
Net income (loss) allocated to common stocks¥1,196¥971¥(1,083)

–

–

–

–

1,196

971

(1,083)

14,410$14,410

Diluted net income per share is not presented, since the Company has never issued any dilutive securities.
Thousands of shares

Weighted-average number of common stocks

2011

2010

2009

226,956

226,983

227,110

20. Subsequent Events
The following appropriation of retained earnings at March 31, 2011 was approved at the annual meeting of theCompany’s shareholders held on June 24, 2011.

Cash dividends, ¥4.0 ($0.05) per share

42

Meiden Annual Report 2011

Millions of yen

Thousands of
U.S. dollars¥908$10,940

Independent Auditors’ Report

Meiden Annual Report 201143

Consolidated Subsidiary Companies

JAPAN• MEIDEN SHOJI Co., Ltd.
	Sales of electric products and components
Capital ¥300 million• Kofu Meidensha Electric Mfg. Co., Ltd.
	Manufacture and sales of electric motors
Capital ¥400 million• Meiden Plant Systems Corporation
	Constructing service
Capital ¥400 million• MEIDEN CHEMICAL CO., LTD.
	Insulating varnish and molded
instrument transformer
Capital ¥95 million• MEIDEN KOHSAN CO., LTD.
	Sales of products and materials, and agent
service of insurance
Capital ¥100 million• MEIDEN SOFTWARE CORPORATION	Engineering and programming of software
Capital ¥50 million• MEIDEN FOUNDRY
INDUSTRIAL Co., Ltd.
	Casting
Capital ¥50 million• MEIDEN SYSTEMENGINEERING Co., Ltd.
	System engineering of plants
Capital ¥50 million• Meiden Kankyo Service Co., Ltd.
	Maintenance and control service of water
treatment equipment
Capital ¥100 million• Meiden Sheet Metal
Products Corporation
	Manufacture and sales of sheet metal
Capital ¥90 million• MSA Co., Ltd.
	Manufacture and sales of surge arresters
Capital ¥40 million• Meiden System Technology Co., Ltd.
	Engineering and programming software
Capital ¥30 million• DONGGUAN MEIDEN ELECTRICAL
ENGINEERING CO., LTD.
	Manufacture and sales of switchgears andsales of electric products and components
Capital HK$8.4 million• MEIDEN HANGZHOUDRIVE SYSTEMS CO., LTD.
	Manufacture and sales of electrical motors
Capital US$11.6 million• MEIDEN ASIA PTE. LTD.
	(MALAYSIA BRANCH OFFICE)SINGAPORE• MEIDEN ASIA PTE. LTD.
	Business management for Southeast Asia
operations
Capital S$5 million• MEIDEN SINGAPORE PTE. LTD.
	Manufacture and sales of transformers,
switchgears and circuit-breakers andrelated engineering and constructing service
Capital S$25.4 million

THAILAND• THAI MEIDENSHA CO., LTD.
	Engineering and constructing service
Capital TB20 million• MEIDEN ELECTRIC (THAILAND) LTD.
	Manufacture and sales of switchgears
Capital TB70 million

THE UNITED KINGDOM• MEIDEN ZHENGZHOUELECTRIC CO., LTD.
	Manufacture and sales of surge arresters
Capital RMB40 million• MEIDEN SHANGHAI CO., LTD.
	Sales of electric products and components
Capital ¥320 million

HONG KONG• MEIDEN PACIFIC (CHINA) LTD.
	Sales of electric products and components,
and constructing service
Capital HK$10 million• MEIDEN SYSCON Co., Ltd.
	Manufacture and sales ofswitchgear and relays
Capital ¥20 million

INDONESIA

Meiden Annual Report 2011

MALAYSIACHINA• HOKUTO DENKO CORPORATION	Manufacture and sales of electric sensors
Capital ¥25 million• Meiden Kiden Kogyo Co., Ltd.
	Machining and repairing service
Capital ¥20 million

44• MEIDEN MEDIAFRONT CORPORATION
	Printing and copy service
Capital ¥40 million• P. T. MEIDEN ENGINEERING INDONESIA	Engineering and constructing service
Capital US$320 million• MEIDEN EUROPE LTD.
	Sales of electric products and components
Capital €750 thousand

THE UNITED STATES• MEIDEN AMERICA, INC.
	Sales of dynamometer products and­engineering and consulting services
Capital US$16.5 million• MEIDEN TECHNICAL CENTER NORTHAMERICA LLC
	Testing service of engine and drive train
Capital US$16.2 million
Plus 10 domestic subsidiaries

Corporate Data

CORPORATE NAMECOMMON STOCKMEIDENSHA CORPORATION(Kabushiki Kaisha Meidensha)

Authorized 576,000,000 shares
Issued 227,637,704 shares¥17,070 million ($205,663 thousand)HEAD OFFICE
ThinkPark Tower, 2-1-1, Osaki,
Shinagawa-ku, Tokyo 141-6029 JapanSHAREHOLDERS

FOUNDED

TRANSFER AGENT

1897

The Sumitomo Trust & Banking Co., Ltd.

26,074

Board of Directors(As of June 24, 2011)

CHAIRMANPRESIDENT

Keiji Kataoka

Junzo Inamura

EXECUTIVE VICE PRESIDENTEXECUTIVE VICE PRESIDENTEXECUTIVE VICE PRESIDENTEXECUTIVE VICE PRESIDENT

Hiroshi Sugiyama

Noriyasu Nagai

Yuji Hamasaki

Kozo Masaki

DIRECTORS AND SENIORMANAGING EXECUTIVE OFFICERS

Shuji Yamamoto
Atsushi Kubota

SENIOR CORPORATE AUDITORS

Kazuo Hosoya
Kaoru Sutou
CORPORATE AUDITORSDIRECTORS

Tetsuro Kawakami
Botaro Hirosaki

Hideo Fujii
Sanpei Nozaki

Meiden Annual Report 201145

Meidensha Corporation Annual Report 2011

This report was printed using vegetable oil ink and a waterless printing process.

Printed in Japan