2005 ANNUAL REPORT

1

PROFILE
Ever since its founding in 1897, Meidensha Corporation has beenworking on the relentless pursuit of new technology and productdevelopments and witnessed steady growth. Our product offerings
cover a wide area, such as generators, substation equipment,
electronic equipment and information equipment. Our mission is
not only to provide these products but also to recommend the bestsolutions on the basis of what a customer values best. In order torealize 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 andproduct-life support.

CONTENTS
Financial Highlights ..................................................... 3
Message from Management ......................................... 4
Review of Operations .................................................. 6
R&D Review ............................................................. 12
Financial Section........................................................ 13
Overseas Offices and Affiliates .................................. 37
Consolidated Subsidiary Companies ......................... 38
Corporate Data ........................................................... 39
Board of Directors ..................................................... 39
2005 ANNUAL REPORT

2

FINANCIAL HIGHLIGHTS
Years ended March 31
Thousands of
U.S. dollars

Millions of yen
2005

2004

2003

2005

Net Sales ....................................................................

¥185,442¥181,560¥184,853$1,733,103

Net Income ................................................................

5,113

2,335

924

47,785Net Income Per Share (yen, U.S. dollars) ....................

22.33

10.14

4.58

0.21

Cash Dividends Paid .................................................

682

—

—

6,374

Total Assets ................................................................

180,595

194,163

197,140

1,687,804

Number of Employees ...............................................

6,662

7,278

7,465

—

The consolidated figures in this Annual Report are expressed in yen and solely for the convenience of thereader, translated into United States dollars at the rate of ¥107 = U.S.$1, the approximate exchange rate prevailing on the Tokyo Foreign Exchange Market as of March 31, 2005. See Note 1 to Consolidated Financial Statements.
Net Sales (¥ millions)

Net Income (¥ millions)

250,000

Total Assets (¥ millions)
250,000

200,0 75
200,000

205,221
18 4,853

181,560

200,000

185,442

197,140

194,163
180,595

150,000

150,000
10,000100,000

100,000

5,113
5,000

50,00050,000

2,335
924
0

02

03

04

0

0

05

-5,000-10,000

02

03

04

05

(3,906)

02

03

04

05

2005 ANNUAL REPORT

3

Message from Management
We, at Meidensha Corporation (“Meiden”) andConsolidated Subsidiary Companies (collectively the“Meiden Group” or “Company”), share the philosophy:“Constantly in pursuit of ‘Innovation for New Technologies’
and in Contributing to the Well-being of Society at Large.”
Our basic principles are (1) to provide the best productexperiences to customers through new and innovativetechnologies with the highest quality, (2) to focus on
profitability and (3) to utilize our resources for the benefit
of society. The Meiden Group product portfolio includes awide spectrum of offerings: generators, substationequipment, electronic equipment and information &communications products. We not only offer such products
but also provide optimal customer-driven solutions using
such products for the benefit of customers. Our solutions
business in Japan includes services such as engineering,
operation, and the maintenance and management offacilities which contribute to the enhancement of the asset
value of customers.
We also would like to drive our business growth as anengineering company.
Under these circumstances, the Company continues toimplement the medium-term management plan, “Challenge
and Create Plan,” adopted in July 2003. The Challenge andCreate Plan sets as goals: “Maximizing Corporate Valueand Revamping the Business Models” and adopts thefollowing three fundamental policies to achieve those goals.
(1) Realize early on the elimination of carry-over losses,
resume dividends and maximize corporate value by
improving financial shape;
Eliminating carry-over losses and resuming dividends
were two of the biggest challenges at the Company we’ve
had to face, but these issues were solved during fiscal 2003.
We rebuilt the engineering and servicing operations,improved the financial shape of the Company, andreinforced group-wide strategy. These efforts have put theCompany in better shape, where we aim to maximize groupwide corporate value.
(2) R e i n f o r c e n e w p r o d u c t a n d t e c h n o l o g ydevelopment, carry out product portfolio reviews
and re-align existing products:
We will work hard to produce new and unique products
which incorporate the needs of the customers and to develop
new products and innovative technologies which are both
unique and on the cutting edge of technology. We aim to
produce a new product contribution rate in revenues forfiscal 2005 at around a range of 25%.
In order to reach this goal, the Company will reinforce
R & D and new product business development, using ourown resources. At the same time, we will promote joint

research projects and investments to venture companies.
We are also setting our eyes on M & A opportunities andon the forming of a joint venture. As well, we actively
promote technical licensing opportunities from third parties,
and with respect to the existing product portfolio, we will
review our product offerings (restructuring andstreamlining) after our review of the business model.
(3) Create “a vibrant Meiden Group” by across-theboard group-wide efforts.
We have already implemented a reform of the salaryand benefits scheme and the awarding system into the“Performance-oriented System.” We are promoting asystem under which associates who produce outstanding
results will be recognized and rewarded. We would like tofurther improve our salary and benefits system, and the
productivity of operations, by taking advantage of
information technology. We will also seek to optimize ouroverall organization. This improved working environment
will reinvigorate the overall Meiden Group. We aim to build
a “Vibrant Meiden Group.”
During the first half of fiscal 2004, the Japanese economy
maintained its economic recovery phase driven by exports
and capital investment increases as a result of the economic
growth of the United States and China, and by the boom indigital home electric appliances. However, during the latter
half of fiscal 2004, the Japanese economy showed signs of aslowdown and a sense of economic uncertainty in relation
to the future prevailed, due to concerns over the economic
slowdown in the United States, the increase in inventory
levels of Japanese industry, and the rise of commodity prices.
Under these economic conditions, the Company madevigorous across-the-board efforts to boost sales. Sales forfiscal 2004 totalled 185,442 million yen (consolidated
basis), or 2.1 % up from the previous fiscal year.
We made company-wide efforts to cut expenses, reduce
costs, and raise productivity. As a result of these efforts,
net income before taxes and adjustments was 10,913 million
yen (consolidated basis) and net income was 5,112 million
yen (consolidated basis).
A year-end dividend of 4 yen per share was declared, 1
yen per share up from the previous fiscal year.
Under these conditions, the Meiden Group is putting
forth various actions following the basic policies of the
Challenge and Create Plan, in effect since July 2003. As
discussed above, the main objective of the Challenge andCreate Plan is to secure stable profitability by changing
business models and thereby producing higher corporate
value. In order to reach this objective, we aim to improve
capital efficiency, put the Company into better financial
shape, develop new businesses, and dispose of2005 ANNUAL REPORT

4

underperforming businesses while restructuring existing
businesses. We would like to invest our management
resources into our core businesses and to reinforce ourearning power.
In order to drive this Challenge and Create Plan forward
as an organizational change, we established Social
Infrastructure Systems Business Group in April 2004, bycombining the Energy Business Group and Environmental
Solutions Business Group.
By this reorganization, we aim to reinforce ourengineering power, competitiveness within the market, as
well as revenue growth. Following this change, we merged
the Information & Communication Business Group into
the Industrial Systems Business Group in June 2004. We
combined the Information Technology product/component
business (where the manufacturing operations and sales &engineering operations work together towards businessgrowth) into the Industrial Systems Business Group as our
focusing efforts. We are further promoting cost reductions
as ways to enhance price competitiveness.
Under the Challenge and Create Plan, one other focus
lies in the reinforcement of Group Strategy. We are actively
promoting various measures and policies which solve eachGroup company’s problems and improve overall efficiency
within the Meiden Group. Such measures include thereorganization or selling of Group companies.
As part of this initiative, we sold the total holding sharesof Shinko Seisakusho Co., Ltd., (“Shinko Seisakusho”)
which amounted to 62.5% of its shares in March 2005.
Shinko Seisakusho’s main products include computer
terminal products (such as industrial printers) and products
for the entertainment industry. Shinko Seisakusho had beena core company for the Information and Communication
Sector of the Meiden Group. However, its computer
terminal products are very much subject to wider seasonal
demand fluctuations and Shinko Seisakusho needed to seek
revenue growth in products for the entertainment industry.
Due to this market change for Shinko Seisakusho, its
product portfolio had less relevance within the Meiden
Group Business. As such, we sold our entire shares of
Shinko Seisakusho.
We also reinforced our new product and businessdevelopment. As a related activity, we founded Meiden
Ecopia Corporation (“Meiden Ecopia”) in September 2004,
the fifth start-up company from Meiden’s Intrepreneurship
Program called “M-Frontier.” Meiden Ecopia offers
consulting services and products in relation to environmental
quality improvement and energy conservation.
With respect to alliances and technical transfers withother companies, we started a fully-owned surge arrester

company called MSA Co., Ltd., in Numazu City, Shizuoka
Prefecture in March 2004, and after our share-transfer,
reestablished it as a joint venture with ABB K.K. in Japan(a subsidiary of Swiss-based ABB Ltd.) in April 2004. We
also seek to actively promote alliances and technical transfer
agreements with other companies.
With respect to overseas business operations, in addition
to our core markets in the Southeast Asian Market, we are
actively promoting alliances and building business basesin North America and China, where we aim to increase
overseas business revenue. As a related measure taken
during fiscal 2004, we established the “China Business
Development Office (CBDO)” within the International
Business Unit in April 2004, to accelerate businessdevelopments in China. Utilizing our available resources
including CBDO, we would like to strengthen our global
business strategy.
On other business, we are proceeding with an officeand commercial building construction project as a joint
undertaking with World Trade Center Building, Inc., aTokyo-based company. The main objective of this project,
the “Osaki West Exit Area Development Project (TentativeName),” is to make best use of the land asset so that it will
best contribute to the revenue growth and brand royalty of
the Company. Under the current plan, the new building will
be constructed in Osaki, Tokyo by August 2007 and will be
an office and commercial building with 30-story and 2
basements.
We ask every shareholder as well as our customers andbusiness partners to continue giving us your continuous
guidance and advice.

Shigeo Seko, Chairman

Keiji Kataoka, President

2005 ANNUAL REPORT

5

Review of Operations

Biogas Power Generating System

PCS for NAS BatteriesWind Power System in Nanao City, Ishikawa PrefectureMeidensha Corporation is promoting various
operations in support of a sustainable andenergy efficient society. In order to reduce thevolume of carbon emissions, we are promoting theuse of renewable energy. We are also actively developing
energy saving, labor-saving and cost-saving systems.
With respect to the use of renewable energy, we havedelivered 8 units of 1500kW wind power systems acrossJapan. We are planning to introduce a 2000kW model infiscal 2005 and promote the procurement of tower from
Korea to reduce the overall costs.
Regarding the use of biomass energy, we are fieldtesting the fuel cell power generation system using
methane gas from livestock (pig and cow) waste as fuel.
We are also developing a methane gas application as afuel for use in a fuel cell system. Under this system, themethane gas produced in the processing of sludge fromwaste water treatment plants will be put into tanks forthe condensation, to be formed into hydrogen gas to be
used as a fuel for the fuel cell system.
With respect to distributed power supply systems, wedeveloped a new power conditioning system (PCS)
which compensates for the frequency and voltage
fluctuations of the distributed power and keeps theseparameter values constant. In these distributed powersystems, the electric grids will be operated with theincreasing number of power generation systems that
distribute energy, like solar power and wind power inthe future. These renewable energy sources have thetendency to fluctuate in power output, being sources ofnatural power. Our PCS is addressing this issue.
Concerning new products, we developed andcommercialized a 6.6kV 2000kVA electric double layer
capacitor (EDLC) called “M-CAP.” EDLC is a clean
energy storage product and can be used as a high voltage
dynamic voltage compensator (DVC) which can supply
power to prevent power interruptions by discharging thestored electric energy in the capacitor in the event of
any short power outages.
Our EDLC demonstrated its DVC capability by
preventing voltage drops in several cases at thecustomer’s factory, and is working continuously. As theapplication of EDLC in a large capacity high voltage
DVC system, this is the world’s first. As an applicationof EDLC, we developed a system to reduce voltage
fluctuations of the traction power line by absorbing any
voltage fluctuations by EDLCs.

2005 ANNUAL REPORT

6

Review of OperationsW

ith respect to the waterworks and sewage
treatment facilities (WSTF) business, ourfocus on development and sales lie in threeareas: (1) to promote the new product supply and an
update of the legacy facilities (2) to enhance facility
management system products and (3) to promote therecycling of the waste produced (such as sludge)
employing carbonizing processing.
In supervisory control technology, we have developed
and delivered a supervisory control system called“OPS9900” for large scale WSTFs. This system has thelargest offering of monitoring and control points in ouroffered system comparison.
With respect to the WSTF management solution
business, we developed the facility WSTF facility
management system called “ASPAC-∑,” which enhanced
features for efficient facility management, such as facility
maintenance planning software, as well as procurement
management and inventory control capabilities.

Using our simulator for analyzing the water
treatment process at sewage treatment plants on thebasis of the water quality data of subject water treatment
plants, we developed an optimal operation mode whichallows the production of stable water treatment andoptimum power savings. For further improvement offacility operations, we are also developing an auto
control mode and the technology to determine thecontrol parameters involved.
Regarding the use of biomass energy, we supplied amicroturbine generation system using the digester gas
from sewage sludge as a fuel. This was the first
installation case in Japan.
With respect to product offerings for waterworks, wehave improved functions of our water supply network
analysis system providing instructions on how to manage
water supply volume unbalances, water shortages, andno water situations.
Another noteworthy new product release is the inside
panel corrosive gas removal product using high-capacity
photocatalytic filters.

ASPAC–∑ Formulating Plants Screen

Removal ofCorrosive Gases

Biogas Generating System

2005 ANNUAL REPORT

7

Review of Operations

Industrial Controller, µPIBOC–I

M

eidensha Corporation is producing heavy-duty
and highly reliable information andcommunications equipment and is a supplierof related individual units. We also promote an IT
technology-based solutions business.
With respect to Information and Communications
products, we developed a new µPIBOC-I Model 800
industrial controller featuring a disk mirroring system anda DVD combo drive. We have also developed a wall-hungmodel. Our newly developed µPIBOC-C2 is capable ofrunning at an operating temperature of 55°C, without acooling fan, and can use 100V AC power. These features
broaden its applications in the industrial controller markets.
With respect to geographic information systems(GISs), we enhanced the performance of our GIS-based
Spatio-Temporal Information Management System (JSTIMS) in relation to the management capability ofgeodata changes over time and improved system
programming tools. We also developed a “GPS Express”
system combining a global positioning system (GPS)Spatio-Temporal Information
Management System, J–STIMS Ver.2

with a Linux-based embedded PC, to provide highly
accurate measurement capability. This has added various
capabilities that are unavailable with conventional GPS
systems. This means more efficient location surveying,
operation management of mobile vehicles like cars andtrucks, the security management of people, and so on.
In the area of image processing technology, we havedeveloped a product that uses train on-board cameras to
identify abnormalities in the alignment between
pantographs and trolley lines using the graphical image
analysis of the captured images. This product wasdelivered to the Shinkansen “Bullet Train” in Kyushu.
The product has made it possible to conduct overheadcontact system inspections during normal train business
operating hours using normal trains, instead of speciallydedicated trains foroverhead contact systeminspections.

Line camera
Area camera 1

GPS Express

Area camera 2

Camera Sensor

2005 ANNUAL REPORT

8

Review of Operations

Meidensha Corporation is developing anelectromotive power applications andlogistics solutions businesses.
In the industrial motor market, there are many
applications using the permanent magnet synchronous
motor (PM motor) since it is highly efficient and energy
saving and has the potential for a more compact design.
We are developing PM motors and are improving our
product portfolio of variable speed systems which
combines the inverter and PM motors. We havedeveloped a new 500kW “GORIKI Series” PM servo
motor, up from the 200kW model.
In the field of gearless traction elevator systems, wehave made a slim gearless traction machine with PM
motor, allowing a minimal traction machine installation
space and machine room-less configuration. We supplied
many such slim gearless traction machines with PM
motor for machine room-less solutions.
With respect to the textiles industry, we developed acompact type THYFREC-VT630MS unit for the Chinese
Textile Market.
With respect to induction heating systems, we shipped
two units of 250kHz, 800kW induction heating systems, ofwhich capacity is the largest class within the Japanese market.
With regard to dynamometers, we are developing
high-output, high-torque dynamometers. We constructeda Dynamometer Systems R & D Laboratory at our
MEIDEN Ohta Works, Gunma Prefecture, Japan. This
new facility will enhance our field-testing capability of
new systems and can undertake many performance testsof our dynamometer products.
With respect to logistics systems, we have supplied
many laser-guided automatic guided vehicles (AGV). In
the field of logistics system solutions business, we havedeveloped new warehouse management system (WMS)
software to increase productivity in the warehousingbusiness. We received the first order for this new WMS
software-based solution.

PM Servo Drive, GORIKI Series

PM Servo Motor
PM Servo Driver,
THYFREC–PMD410

Dynamometer
Systems Researchand Development
Building

Inverter for Synthetic Fiber
Machine, THYFREC–VT630MS

AGV for Axle Housing

Chassis Dynamometer2005 ANNUAL REPORT

9

Review of OperationsW

ith respect to our “Digital Maternity Hospital
System (DMHS), ” we developed a new
DMHS featuring our signature dual monitor
clinicalstation with such maternity hospital-specific applications
like baby due date calculation software, pregnancy
calendars, etc. In other digital hospital applications, wehave also developed a system for pay nursing homes,
called “Senior Citizen’s House Management System,”with management functions such as patient management,
individual medical care management, meal management,
nursing home accounting, and staff worker management
systems, etc.

IT System for Obstetrics

We are developing maintenancetechnologies and products necessary forfacility maintenance management and
we are providing associated energy-saving
p r o d u c t s . We h a v e d e v e l o p e d r e m o t emaintenance systems for facility maintenance, as
well as new products including a low cost system
for measuring and data-logging the energy
consumption of factories. We are also promoting
the business of extending facility life by
conducting product life analysis and performing
timely maintenance.

Recording System of Using Energy

2005 ANNUAL REPORT

10

Review of Operations

During the fiscal year 2004 the global economy saw
a over 4% growth driven by the substantial tax cut
in the United States and the further integration ofChina in the world economy. The rise of oil prices
produced an adverse impact and remained volatile. The
East Asian Market, which is Meidensha Corporation’s
major market, showed the stable over 6% growth spurredby the export, private consumption and investment. The
tragic tsunami incident in December had little impact on
the region’s growth.
In the US power sector, it saw a more than 2% increasein the demand for electricity. There was a same levelgrowth in power generation brought by the new installationof gas-fired power plants and the more efficient operationof nuclear power plant and its upgrades.
In the automotive market in the US, which has a big
impact on our dynamometer systems sales, the industry
saw the soaring gas prices hurt the demand for the largest
sedans and big truck-based sport utility vehicles and there
was an increasingly high demand for mid-size andsmaller fuel-efficient vehicles. The US auto sales of fiscal
year 2004 were at the level of 16 million vehicles.
The major products ordered in the fiscal year 2004
were as follows:
In the field of substations, we received orders for 23
units of mobile substations from a power utility in the
Middle East.
In the power generation field, GE Aero Energy
Products in Texas placed orders for 14 units of generator
for GE LM6000 gas turbine. We received an order for 2
units of gas turbine generator for Powertron Resource
Sdn. Bhd., an independent power provider in Malaysia.
In the North American market, a Japanese major
automobile manufacturer placed orders for engine driven
transmission test system and simulation system for its
technical center.

Braking
Resistor Unit
for Traction
Substation

Computer System MEIDACS-DY600P
for an Automotive Simulation System

As for Asian market of automobile dynamometers,
we received an order for dynamometer systems to a major
Japanese auto maker’s technical center in Thailand.
The major products manufactured and shipped during
fiscal year 2004 were as follows:
In the field of electric railroad substations, we
supplied and installed traction substations for Civil
Aviation Authority, Singapore. We also shipped AC
power supply units for traction substations for Taiwan
High Speed Train Project (“Taiwan Shinkansen Project”)
by Taiwan High Speed Rail Corporation.
In the dynamometer field in the North America, we
supplied and installed engine driven transmission test
system and simulation system for a Japanese automaker’s
technical center.
As for Asian market of automobile dynamometers,
we supplied dynamometer systems to a major Japanese
auto maker’s technical center in Thailand.
Another noteworthy events in our overseas
operations, we established Meiden Asia Pte. Ltd. in April,2004 in Singapore to oversee the management of AsianMEIDEN Group companies and to assist the engineering
services in the region. Further, we renamed SP System
Pte. Ltd. as Meiden Power Solutions (Singapore) Pte. Ltd.
in January 2005. Meiden Power Solutions (Singapore)
Pte. Ltd. is a dynamic
voltage compensator
manufacturing company
which we acquired fromSingapore Power Pte.
Ltd., Singapore in
February 2004.
Dynamic Voltage
Compensator2005 ANNUAL REPORT

11

Development of High-Purity Continuous Ozone GeneratorWe have developed a high-purity continuous ozone generator (Pure Ozone Generator
MPOG-SM2D1) applicable to semiconductor mass production process systems(Fig.1). The generator, with dimensions of W900 × H1800 × D700 mm,
is able to continually generate high-purity ozone at a flow rate of 100sccm. The unit also
incorporates fail-safe safety and automatic operation functions, already employed in thecompact unit used for research purposes.
This project was commissioned by the New Energy and Industrial Technology Development
Organization (NEDO) as part of its Key Technological Research Promotion program.
Fig. 1 High-Purity Continuous Ozone Generator

Development of Electric Double Layer Capacitor (EDLC) Type Dynamic Voltage Compensators

E

DLC type dynamic voltage compensators are highly
durable with repeated charging and discharging,deliver high output, and are easy to maintain. We
have exploited these characteristics in developing two
types of dynamic voltage compensators in a joint projectwith Chubu Electric Power Co. Table 1 shows the
specifications of the units, and Figs. 2 and 3 show exterior
views. Maintenance costs have been cut through the useof capacitors, the employment of a normally ON
commercial power supply system has enabled theachievement of a higher level of efficiency in commercial
operation, and both units feature high-speed switching.
In addition, the units offer a choice, depending on thenature of the application. The high-capacity 2000kVA unit
can instantaneously supply a high load, such as might berequired by a factory, etc.; the 50kVA unit can provide
compensation for 60 sec. At present, both units areundergoing field tests, and have provided power supply
compensation several times. In the future we will expand
the range of units and increase their commercial availability.
Fig.2
2000kVA 2 sec
Dynamic Voltage
Compensator

Fig.3
50kVA 60 sec
Dynamic Voltage
Compensator

Table 1 Specifications of Capacitor-type Dynamic Voltage Compensators
Item

Capacity/Com pensation time
Input/Output
Circuit system
Switching time when power fails
Efficiency
Storage system
Dimensions
Mass
Use environment

Equipment specif ication
2000kVA, 2 sec
50kVA, 60 sec
3-phase 210V (can be set within 200-220V range)
3-phase 6600V
Constantl y on commer cial power supply system
Switching wit hout instantaneous shutdown (switching time less than 0.002 sec)
More than 98% (during commer cial operation) More than 97% (during commercial operation)
Electric double-la yer capacitors
W13.5 ×H3.4×D2.9 m
W2.6 ×H2.0×D0.8 m
33 t
1600 kg
Installation: Outdoors
Temperature range: 10°C to +40°C

2005 ANNUAL REPORT

12

FINANCIAL SECTION
Consolidated Financial Review ......................................... 14
Consolidated Financial Review ...................................... 14
Five-Year Summary .......................................................... 14
Five-Year Summary ........................................................ 14
Operational Review .......................................................... 15
Operational Review ........................................................ 15
Consolidated Balance Sheets ............................................ 16
Consolidated Balance Sheets .......................................... 16
Consolidated Statements of Income ................................. 18
Consolidated Statements of Income ............................... 18
Consolidated Statements of Shareholders’ Equity ............. 19
Consolidated Statements of Shareholders’ Equity .......... 19
Consolidated Statements of Cash Flows ........................... 20
Consolidated Statements of Cash Flows ......................... 20
Notes to Consolidated Financial Statements ..................... 21
Notes to Consolidated Financial Statements................... 21
Independent Auditors’ Report .......................................... 36
Independent Auditors’ Report ......................................... 36
2005 ANNUAL REPORT

13

CONSOLIDATEDFINANCIAL REVIEW
Outline of Profits and Losses
During this consolidated fiscal year, the Japanese
economy maintained its upward momentum in thefirst half, driven by exports and capital investment
due to positive overseas business trends in the UnitedStates and China together with a surge in digital home
appliances. In the second half, however, concern overa slowdown in the United States economy, increased
inventory, and sharp rises in resource prices brought
a continuing slowdown, and there is a growing moodof uncertainty regarding the future.
Net sales totaled 185,442 million yen, a 2.1%
increase over the previous term. Business sector-based
net sales stood at 49.2% for the Social Intrastructure
Systems Sector, 34.4% for the Industrial Systems
Sector, 8.6% for the Engineering Sector, and 7.8% for
Others.
The cost of sales totaled 142,617 million yen, a 1.0%
increase over the previous term. Selling, general andadministrative expenses totalled 35,014 million yen,a 0.2% decrease. Operating income, therefore, stood
at 7,811 million yen.
The final result was a net income of 5,113 million
yen for this term.
Financial Conditions
Total assets at the end of March 2005 amounted
to 180,595 million yen, a decrease of 13,568 million
yen. As a result of decreased Inventories, current
assets stood at 109,347 million yen, a decrease of 5,517
million yen. Property, plant and equipment amounted
to 35,838 million yen, an decrease of 7,377 million
yen. Total current liabilities amounted to 92,252 million yen, a decrease of 19,224 million yen, and shareholders’ equity stood at 52,821 million yen, an increase of 5,052 million yen. As a result, the shareholder capital ratio increased 4.7 points from 24.6%
to 29.3%.

FIVE-YEAR SUMMARY
MEIDENSHA CORPORATION AND CONSOLIDATED SUBSIDIARIES
Years ended March 31

2005

2004

¥185,442¥181,560

Net income (loss)

5,113

Net income (loss) per share (Yen)

22.33
682

Net sales

Cash dividends paid
Depreciation and amortization

Millions of yen
2003

2002

2001

¥184,853¥200,075¥196,983

2,335

924

(3,906)(2,645)

10.14
—

4.58
—

(19.34)(13.09)

—

—

4,262

4,921

4,861

5,102

Total assets

180,595

194,163

197,140

205,221212,105

Net property, plant and equipment

35,83843,21540,40640,89939,496

Shareholders’ equity per share (Yen)232.19209.91

182.36

176.74

192.502005 ANNUAL REPORT

14

OPERATIONAL REVIEWSocial Infrastructure Systems
This segment includes business related to the construction of social infrastructure. We provide solution servicesof all kinds in relation to electric power quality, energy conservation, and related matters, and we engage in the manufacturing and marketing of all types of electrical equipment
involved in power generation, transmission, transforming,
distribution, and other related 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 andsewerage treatment for local governments. Our activities
include manufacturing and marketing products for thecontrol of treatment 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, environmental recycling, and so on.
Industrial Systems
This segment includes business operations related to
product systems used in the manufacturing industry, IT,
and other general industry operations. In addition toproviding private industry with power substations, motor
vehicle testing systems, and physical distribution systems,
we engage in the manufacture and marketing of motors,
inverters, and other products for use in textile machinery,elevators, and other such equipment.
We are active in the information and telecommunications field, manufacturing and marketing component products for industrial computer and networking systems. We
also provide IT solutions in an effort to promote the greater
operational sophistication and efficiency of corporations
and local governments through the use of IT.

(Millions of yen)Social Infrastructure Systems
49.2%

91,30005

Industrial Systems
34.4%
54,05704

63,72405

Engineering
8.6%

04

15,43905

15,898Engineering Systems
This segment provides services relating to the remotemanagement and monitoring of facilities and the proposalof measures for extending the life of facilities, energy conservation, and other such services related primarily to themaintenance of products we supply. We also engage in themaintenance of semiconductor manufacturing equipment
and the reconditioning of used manufacturing equipment.
OthersThis segment includes marketing companies not tiedto specific business fields, and companies that contract accounting, payroll, and other administrative functions, as wellas welfare services for employees.

96,73404

Others7.8%
04

15,33005

14,5202005 ANNUAL REPORT

15

CONSOLIDATEDBALANCE SHEETSMEIDENSHA CORPORATION AND CONSOLIDATED SUBSIDIARIESMarch 31, 2005 and 2004

Millions of yen
2005
2004

Thousands of
U.S. dollars (Note 1)
2005

AssetsCurrent assets:
Cash and time deposits (Note 15) ...................................................
Marketable securities (Note 3 and 15) ...........................................
Receivables:
Trade notes...................................................................................
Trade accounts .............................................................................
Loans and advances .....................................................................
Due from unconsolidated subsidiaries and affiliates ................
Allowance for doubtful accounts ...............................................
Inventories (Note 4) .........................................................................
Deferred income taxes (Note 14) ...................................................
Other current assets .........................................................................
Total current assets ................................................................

¥10,892
153¥9,255409$101,794
1,430

5,795
53,986
1,525
7,156
(478)
21,392
3,740
5,186
109,347

6,047
60,197
812
1,527
(203)
27,116
4,143
5,561
114,864

54,159504,542
14,252
66,879(4,467)
199,925
34,95348,4681,021,935

8,083
42,00856,116887(71,256)
35,838

11,77243,49764,623
1,413(79,249)
42,05675,543
392,598
524,4498,290(665,945)
334,935

Investment securities (Notes 3 and 7) ............................................
Investments in unconsolidated subsidiaries and affiliates (Note 3) ..
Long-term loans ................................................................................

17,7239,857
125

16,163
11,267
169

165,636
92,121
1,168

Deferred income taxes (Note 14) ...................................................
Other assets (Note 7) .......................................................................
Allowance for doubtful accounts ....................................................

—
7,773
(68)
35,410

4,058
5,924
(338)
37,243—72,645(636)
330,934¥180,595¥194,163$1,687,804

Property, plant and equipment (Note 7):
Land ...................................................................................................
Buildings and structures ..................................................................
Machinery and equipment ...............................................................
Construction in progress .................................................................
Less: Accumulated depreciation......................................................

Investment and other assets:

See accompanying notes.

2005 ANNUAL REPORT

16

Millions of yen
2005
2004
Liabilities and shareholders’ equity
Current liabilities:
Short-term borrowings (Notes 5 and 7) .........................................
Current portion of long-term debt (Notes 6 and 7) ......................
Payables:Trade notes...................................................................................
Trade accounts .............................................................................
Due to unconsolidated subsidiaries and affiliates.....................
Advances received from customers .................................................
Accrued income taxes ......................................................................
Accrued bonuses ..............................................................................
Other current liabilities ...................................................................
Total current liabilities ................................................................
Long-term debt (Notes 6 and 7) ..........................................................
Employees’ severance and retirement benefits (Note 8) .......................
Reserve for retirement allowance for directors
and corporate auditors ....................................................................
Deferred income taxes (Note 14) .................................................
Deferred income tax on revaluation reserve for land .......................
Other long-term liabilities ...................................................................
Minority interests .................................................................................
Contingent liabilities (Note 10)
Shareholders’ equity (Note 9):
Common stock ...................................................................................
Authorized— 576,000,000 shares
Issued and outstanding — 246,252,704 shares
Capital surplus ..................................................................................
Retained earnings .............................................................................
Revaluation reserve for land, net of tax..........................................
Net unrealized holding gains on securities ....................................
Foreign currency translation adjustment .......................................
Less: Treasury stock ..........................................................................
Total shareholders’ equity ...........................................................

Thousands of
U.S. dollars (Note 1)
2005¥15,8724,726¥34,184
5,264$148,336
44,16810,357
21,274
6,120
10,889470
4,178
18,36692,252

11,23624,923
5,462
9,646
238
4,482
16,041
111,476

96,794
198,82257,196
101,767
4,393
39,047
171,645862,168

16,51015,347

14,432
17,377

154,299
143,430

682
716
—
603
1,664

581
—
469
58
2,001

6,374
6,692
—
5,636
15,551

17,07017,070159,533

14,362
17,550
—
5,419
(409)
(1,171)
52,821

14,362
13,148
433
4,299
(394)
(1,149)47,769134,224
164,019—
50,645(3,823)(10,944)493,654¥180,595¥194,163$1,687,804

2005 ANNUAL REPORT

17

CONSOLIDATED STATEMENTS OF
INCOMEMEIDENSHA CORPORATION AND CONSOLIDATED SUBSIDIARIES
Years ended March 31, 2005, 2004 and 2003

2005

Millions of yen
2004

2003

Thousands of
U.S. dollars (Note 1)
2005

Net sales (Note 13) ..........................................

¥185,442¥181,560¥184,853$1,733,103

Cost of sales (Notes 12 and 13) ......................
Selling, general and administrative
expenses (Notes 12 and 13) .....................

142,617

141,187

145,113

1,332,869

35,01435,06836,322327,234

Operating income ..................................

7,811

5,305

3,418

73,000417(701)(1,626)

545
(907)
(127)

420
(1,020)
(158)

3,897
(6,551)(15,196)

5(72)(1,556)(911)
12,080
—
—

971
(1)
(404)
(191)
23
—
—

4
(2,633)
—
(134)
8
7,263
(3,197)47(673)(14,542)(8,514)
112,897
—
—

825

225

—

7,710

(2,289)(2,996)—(1,223)—(2,968)(21,393)(28,000)

10,987

4,216

1,003

102,682

Minority interests ....................................................

1,165
4,232
5,397
477

347
1,183
1,530
351

858
(901)
(43)
122

10,88839,55150,4394,458

Net income ............................................

¥5,113¥2,335¥924$47,785

2005

Yen
2004

2003

U.S. dollars (Note 1)
2005¥22.33
4.00¥10.14
3.00

¥4.58
—

$0.21
0.04

Other income (expenses):
Interest and dividend income ............................
Interest expense..................................................
Equity in net loss of affiliated companies .........
Gains on sales of marketable securities andinvestment securities ......................................
Write-down of securities ....................................
Loss on disposal of inventories ..........................
Loss on disposal of fixed assets ..........................
Gain on sales of property, plant and equipment ...
Gain from division of corporation (Note 16) ...
Loss from division of corporation (Note 17) ....
Gains on the release from the substitutional
portion of government Welfare Pension
Insurance Scheme (Notes 2 and 8) .................
Development expenses for the
district around Osaki station west exit ...........
Others ..................................................................
Income before income taxes
and minority interests ......................
Income taxes (Note 14):
Current ................................................................
Deferred ..............................................................

Amounts per share of common stock (Note 2):
Net income..........................................................
Cash dividends applicable to the year ...............
See accompanying notes.

2005 ANNUAL REPORT18

CONSOLIDATED STATEMENTS OF
SHAREHOLDERS’ EQUITY
MEIDENSHA CORPORATION AND CONSOLIDATED SUBSIDIARIES
Years ended March 31, 2005, 2004 and 2003

Number ofsharesissuedCommonstock

CapitalsurplusMillions of yen
Retained RevaluationNet
earnings reserve for unrealized
land, net holding gainsof taxon securities

Foreigncurrencytranslation
adjustment

Treasurystock

Balance at March 31, 2002 .........................................
Net income ............................................................
Bonuses to directors and corporate auditors ......
Increase in retained earnings due toaddition of affiliated companies ........................
Increase in retained earnings due toaddition of consolidated subsidiaries ................
Adjustments from translation of foreign
currency financial statements ............................
Increase in treasury stock .....................................
Increase in revaluation reserve for land, net of tax
Decrease in net unrealized holding gains on
securities ..............................................................

202,025,158——¥17,070——¥12,751——¥4,665
924
(46)

¥423
—
—

¥1,159——¥(362)
—
—

¥(3)
—
—

—

—

—

16

—

—

—

—

—

—

—

197

—

—

—

—

—
—
—

—
—
—

—
—
—

—
—
—

—
—
10

—
—
—

46
—
—

—
(9)
—

—

—

—

—

—

(14)

—

—

Balance at March 31, 2003 .........................................
Increase (decrease) due to merger .....................
Net income ............................................................
Bonuses to directors and corporate auditors ......
Decrease in retained earnings due to reductionof affiliated company ..........................................
Adjustments from translation of foreign
currency financial statements ............................
Increase in treasury stock .....................................
Increase in net unrealized holding gains on
securities ..............................................................

202,025,158
44,227,546——

17,070———12,751
1,611
—
—

5,756
5,061
2,335
(1)

433
—
—
—

1,145
(117)
—
—

(316)
—
—
—

(12)
(1,114)
—
—

—

—

—

(3)

—

—

—

—

—
—

—
—

—
—

—
—

—
—

—
—

(78)
—

—
(23)

—

—

—

—

—

3,271

—

—

Balance at March 31, 2004 .........................................
Net income ............................................................
Cash dividends .......................................................
Bonuses to directors and corporate auditors ......
Decrease due to reduction of consolidated ........
subsidiary .............................................................
Adjustments from translation of foreign
currency financial statements ............................
Increase in treasury stock .....................................
Increase in net unrealized holding gains on
securities ..............................................................

246,252,704———

17,070———14,362———

13,148
5,113
(682)
(29)

433
—
—
—

4,299
—
—
—

(394)
—
—
—

(1,149)
—
—
—

—

—

—

—

(433)

(0)

—

—

—
—

—
—

—
—

—
—

—
—

—
—

(15)
—

—
(22)

—

—

—

—

—

1,120

—

—

Balance at March 31, 2005 .........................................

246,252,704¥17,070¥14,362¥17,550—¥5,419Number ofsharesissuedCommonstock

Thousands of U.S. dollars (Note 1)
CapitalRetained RevaluationNet
surplusearnings reserve for unrealized
land, net holding gainsof taxon securities

Balance at March 31, 2004 .........................................
Net income ............................................................
Cash dividends .......................................................
Bonuses to directors and corporate auditors ......
Decrease due to reduction of consolidated ........
subsidiary .............................................................
Adjustments from translation of foreign
currency financial statements ............................
Increase in treasury stock .....................................
Increase in net unrealized holding gains on
securities ..............................................................

246,252,704———$159,533———$134,224 $122,879—
47,785—(6,374)
—
(271)

—

—

—

—
—

—
—

—

Balance at March 31, 2005 .........................................

246,252,704¥(409) ¥(1,171)

Foreigncurrencytranslation
adjustment

Treasurystock$4,047———$40,178———$(3,682) $(10,738)
—
—
—
—
—
—

—

(4,047)

(0)

—

—

—
—

—
—

—
—

—
—

(141)
—

—
(206)

—

—

—

—

10,467——$159,533$134,224$164,019—$50,645$(3,823) $(10,944)

2005 ANNUAL REPORT

19

CONSOLIDATED STATEMENTS OF CASH FLOWSMEIDENSHA CORPORATION AND CONSOLIDATED SUBSIDIARIES
Years ended March 31, 2005, 2004 and 2003

2005

Millions of yen
2004

2003

Thousands of
U.S. dollars (Note 1)
2005¥10,987¥4,216¥1,003$102,682

3,906
1,239
(417)
1,626
701
(5)
(12,080)
911
–
–
73
–
(138)
3,613
(515)
1,994
11,895

4,262
2,078
(545)
127
907
(971)
(23)
191
–
–
1
25
1,318
(185)
(3,996)
1,865
9,270

4,921
894
(420)
158
1,020
–
(2)
134
(7,263)
3,197
2,633
118
10,474(1,744)2,494(2,883)
14,73436,505
11,580(3,897)
15,1966,551(47)(112,897)
8,514
–
–
682
–
(1,290)33,766(4,813)
18,636111,168

Interest and dividend received
424
Interest expense paid(694)
Income taxes paid
167
Merger expense paid–
Net cash provided by operating activities
11,792
Investing activities:
Acquisition of marketable securities and investment securities(653)
Proceeds from sales of marketable securities
and investment securities
966
Additions to property, plant and equipment(3,691)
Proceeds from sales of property, plant and equipment
13,291
Proceeds from sales of securities issued by subsidiaries
which caused the change of consolidation scope(411)
Other-net(2,270)Net cash provided by (used in) investing activities
7,232
Financing activities:
Decrease in short-term bank loans(18,253)
Proceeds from long-term debt
9,610
Repayment of long-term debt
(6,819)Cash dividends paid
(673)
Other-net(1,090)Net cash used in financing activities(17,225)
Effects of exchange rate changes on cash
(10)
Net increase (decrease) in cash and cash equivalents
1,789
Cash and cash equivalents at beginning of year
9,255
Increase due to change in consolidated subsidiaries–
Cash and cash equivalents at end of year (Note 15)¥11,044
See accompanying notes.

566
(907)
(544)
(25)
8,360

422
(1,042)(480)(101)
13,533

3,963(6,486)
1,561–
110,206

(650)

(779)

(6,103)

3,580(4,375)93983(8,801)
34

9,028(34,495)
124,215–(646)(1,998)(306)
10(8,859)(3,841)(21,215)
67,589(10,135)
9,579(6,984)–(453)(7,993)(33)(1,664)
10,919–¥9,255(2,137)
2,744(9,179)–(1,273)(9,845)(22)(5,193)
15,581531¥10,919(170,589)
89,813(63,729)(6,290)(10,186)(160,981)(94)
16,72086,495–$103,215

Operating activities:
Income before income taxes and minority interests
Adjustments to reconcile income before income
taxes and minority interests to net cash provided byoperating activities:
Depreciation and amortization
Increase in allowancesInterest and dividends income
Equity in net loss of affiliated companies
Interest expense
Gains on sales of investment securities
Gains on sales of property, plant and equipment
Loss on disposal of fixed assets
Gain from division of corporation
Loss from division of corporation
Write-down of securities
Merger expense
Decrease (increase) in receivables
Decrease (increase) in inventories
Increase (decrease) in payables
Other-net
Sub-total

2005 ANNUAL REPORT20

NOTES TO CONSOLIDATEDFINANCIAL STATEMENTS
MEIDENSHA CORPORATION AND CONSOLIDATED SUBSIDIARIESMarch 31, 2005, 2004 and 2003

1. Basis of Presenting Consolidated
Financial Statements
The accompanying consolidated financial statements
have been prepared in accordance with the provisions
set forth in the Japanese Securities and Exchange Law
and its related accounting regulations, and in conformity with accounting principles generally accepted inJapan (“Japanese GAAP”), which are different in certain respects as to application anddisclosure requirements of International Financial Reporting Standards.
The accounts of overseas subsidiaries are based on
their accounting records maintained in conformity
with generally accepted accounting principles prevailing in the respective countries of domicile. The accompanying consolidated financial statements havebeen restructured and translated into English (withsome expanded descriptions and the inclusion of consolidated statements of shareholders’ equity) from theconsolidated financial statements of the Company
prepared in accordance with Japanese GAAP and filedwith the appropriate Local Finance Bureau of the
Ministry of Finance as required by the Securities andExchange Law. Some supplementary information
included in the statutory Japanese language consolidated financial statements, but not required for fairpresentation, is not presented in the accompanying
consolidated financial statements.
In the year ended March 31, 2005, the Company
and its consolidated subsidiaries did not adopt early
the new accounting standard for impairment of fixed
assets (“Opinion Concerning Establishment of Accounting Standard for Impairment of Fixed Assets”
issues by the Business Accounting Deliberation Coun-cil on August 9, 2002) and the implementation guidance for accounting standard for impairment of fixed
assets (the Financial Accounting Standard Implementation Guidance No. 6 issued by the Accounting Standards Board of Japan on October 31, 2003). The new
accounting standards are to be adopted effective
April 1, 2005. The Company and its consolidated
subsidiaries cannot currently estimate the effects ofadopting the new accounting standards, because they
have not yet completed their analyses.
The translation of the Japanese yen amounts into
U.S. dollars are included solely for the convenienceof readers outside Japan, using the prevailing exchange
rate at March 31, 2005, which was ¥107 to U.S. $1.
The convenience translations should not be construed
as representations that the Japanese yen amounts havebeen, could have been, or could in the future be, converted into U.S. dollars at this or any other rate ofexchange.

2. Summary of Significant Accounting
Policiesa) Principles of Consolidation
The accompanying consolidated financial statements include the accounts of the Company and its
29 consolidated subsidiaries in 2005 (28 in 2004 and28 in 2003). All significant intercompany accounts
and transactions have been eliminated in consolidation. The Company’s remaining subsidiaries, whose
total assets, sales, net income and retained earnings
are not significant in the aggregate in relation to thecomparable figures in the consolidated financial statements, have not been consolidated.

2005 ANNUAL REPORT21

In the elimination of investments in subsidiaries, theassets and liabilities of the subsidiaries, including the
portion attributable to minority shareholders, are evaluated using the fair value when the Company acquired
control of the respective subsidiaries.

b) Equity Method
Investments in affiliated companies (all 20% to 50%
owned and certain others 15% to 20% owned) areaccounted for by the equity method in the years ended
March 31, 2005, 2004 and 2003.
Investments in five affiliated companies are accounted for by the equity method in 2005 and 2004,
and investments in an affiliated company areaccounted for by the equity method in 2003. Investments in all unconsolidated subsidiaries and otheraffiliated companies, that would not have material
effect on the consolidated financial statements, arestated at cost.

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-tomaturity debt securities”), (c) equity securities issued
by non-consolidated 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 Company and its consolidated subsidiaries
do not have trading securities and held-to-maturity
debt securities. Equity securities issued by subsidiaries and affiliated companies which are not consolidated or accounted for using the equity method arestated at the moving-average cost. Available-for-salesecurities with no available fair marker values arestated at the moving-average cost.
If the market value of equity securities issued byunconsolidated subsidiaries and affiliated companies
and available-for-sale securities declines significantly,
such securities are stated at fair market value and thedifference between fair market value and the carrying amount is recognized as loss in the period of thedecline unless the declines are considered temporary.
If the fair market value of equity securities issued byunconsolidated 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 thestatement of income 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 and unrealized losses on these securities are reported, net of applicable income taxes, as a separate
component of shareholders’ equity. 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 fairvalue, and the Company and its consolidated subsidiaries recognize changes in the fair value as gains orlosses unless derivative financial instruments are used
for hedging purposes.
If derivative financial instruments are used as hedges
and meet certain hedging criteria, the Company andits consolidated subsidiaries 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
2005 ANNUAL REPORT

22

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 executedto hedge an existing foreign currency receivable orpayable,(a) the difference, if any, between the Japanese yenamount of the hedged foreign currency receivableor payable translated using the spot rate at the inception date of the contract and the book value ofthe receivable or payable is recognized in the statement of income 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 the contract) is recognized over
the term of the contract.
2. If a forward foreign exchange contract is executed tohedge a future transaction denominated in a foreign currency, the future transaction will be recorded using thecontracted forward rate, and no gains or losses on theforward foreign exchange contract are recognized.
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 are stated at cost, which is mainly determined by the average method as to raw materials
and supplies and the specific identification method
as to finished products, semi-finished products andwork in process.

f ) Property, Plant and Equipment andDepreciation
Depreciation is mainly computed using the declining-balance method over estimated useful lives except
for buildings acquired after March 31, 1998, which
are depreciated based on the straight-line method overestimated useful lives.

g) Allowance for Doubtful Accounts
The Company and its consolidated subsidiaries
provide the allowance for doubtful accounts in an
amount sufficient to cover possible losses on collection by estimating individually uncollectible amounts
and applying a percentage based on collection experience to the remaining accounts.

h) Employees’ Severance and Retirement
Benefits
The Company and its consolidated subsidiaries
provide two types of severance and retirement benefit plans, unfunded lump-sum payment plans andfunded non-contributory pension plans, under which
all eligible employees are entitled to benefits basedon the level 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 theamounts actuarially calculated using certain assumptions.
The Company and its consolidated subsidiaries
provided allowance for employees’ severance and retirement benefits based on the estimated amounts ofprojected benefit obligation and the fair value of theplan assets at the balance sheet date.
Prior service costs are recognized in expenses inequal amounts over the average of the estimated re2005 ANNUAL REPORT

23

maining service lives of the employees, and actuarial
gains and losses are recognized in income or expenses
using the straight-line method over the average of theestimated remaining service lives commencing with thefollowing period.
Employees of Japanese companies are compulsorily included in the Welfare Pension Insurance Scheme
operated by the government. Employers are legallyrequired to deduct employees’ welfare pension insurance contributions from their payroll and to pay themto the government together with employers’ own contributions. For companies that have established theirown Employees’ Pension Fund which meets certain
legal requirements, it is possible to transfer a part oftheir welfare pension insurance contributions (referred to as the “substitutional portion” of thegovernment’s Welfare Pension Insurance Scheme) totheir own Employees’ Pension Fund under thegovernment’s permission and supervision.
Based on the newly enacted Defined Benefit Corporate Pension Law, the Company and some domestic consolidated subsidiaries decided to restructure
their Employees’ Pension Fund and were permitted
by the Minister of Health, Labor and Welfare on October 29, 2003 to be released from their future obligation for payments for the substitutional portion of
the Welfare Pension Insurance Scheme. Pension assets for the substitutional portion maintained by the
Employees’ Pension Fund are to be transferred backto the government’s scheme.
The Company and some domestic consolidated
subsidiaries applied the transitional provisions as prescribed in paragraph 47-2 of the JICPA Accounting
Committee Report No. 13, “Practical Guideline for
Accounting of Retirement Benefits (Interim Report)”, and the effect of transferring the substitutional
portion was recognized on the date permission wasreceived from the Ministry of Health, Labor and Welfare. As a result, in the year ended March 31, 2004,
the Company and some consolidated domestic subsidiaries recorded gains on the release from the substitutional portion of the government’s Welfare Pension Insurance Scheme amounting to ¥225 million,
which was calculated based on the amount of the substitutional portion of the projected benefit obligations
as of the permission date, the related pension assets
determined pursuant to the government formula, andthe related unrecognized items.
On October 1, 2004, the Company and some domestic consolidated subsidiaries received approval
from the Minister of Health, Labor and Welfare withrespect to transfer of the substitutional portion of thebenefit obligation and related pension plan assets
funded in previous years, and on March 16, 2005,
transferred the related portion of the liability reservesto the Japanese government. As a result, the Company and some domestic consolidated subsidiaries recognized a gain of ¥826 million ($ 7,720 thousand) for
the year ended March 31, 2005 as the difference between the estimated amount of the transfer and theactual balance transferred.

i) Income Tax
The Company and its consolidated subsidiaries 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 included in the consolidated statement of income. 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 theamounts used for income tax purposes.
2005 ANNUAL REPORT

24

The Company and some subsidiaries adopted consolidated tax return system.

j) Amounts Per Share of Common Stock
The computation of net income per share is basedon the weighted average number of shares of common stock outstanding during the year.
For the years ended March 31, 2005, 2004 and 2003,
diluted net income per share was not shown since theCompany had no securities with dilutive effect.
Cash dividends per share presented in the consolidated statements of income represent actual amounts
applicable to the respective years.

k) Statements of Cash Flows
In preparing the consolidated statements of cash
flows, cash on hand, readily-available deposits andshort-term highly liquid investments with maturities
that do not exceed three months at the time of purchase, are considered to be cash and cash equivalents.

l) Reclassifications
Certain prior years’ amounts have been reclassified to conform to 2005 presentation. These changes
had no impact on previously reported results of operations or shareholders’ equity.

3. Securities
A. The following table summarizes acquisition
costs and book values of securities with fairvalue as of March 31, 2005 and 2004.
(a) Available-for-sale securities;
Millions of yen
Acquisition Book Difference
2005
cost
value
Securities with book value (fair value) exceedingacquisition cost:
Equity securities¥7,266 ¥16,296 ¥9,030
Others2
3
1
Total¥7,268 ¥16,299 ¥9,031
Securities with book value (fair value) not exceedingacquisition cost:
Equity securities
¥709
¥672
¥(37)
Bonds
100
92
(8)
Total
¥809
¥764
¥(45)
Millions of yen
Acquisition Book Difference
2004
cost
value
Securities with book value (fair value) exceedingacquisition cost:
Equity securities¥7,357 ¥14,574¥7,217
Bonds
517
531
14
Total
¥7,874 ¥15,105 ¥7,231
Securities with book value (fair value) not exceedingacquisition cost:
Equity securities
¥635
¥543
¥(92)
Bonds
110
100
(10)
Total
¥745
¥643 ¥(102)Thousands of U.S. dollars
Acquisition Book Difference
2005
cost
value
Securities with book value (fair value) exceedingacquisition cost:
Equity securities$67,906 $152,299 $84,393
Others
19
28
9
Total
$67,925 $152,327 $84,402
Securities with book value (fair value) not exceedingacquisition cost:
Equity securities$6,626 $6,280 $(346)
Bonds
935
860
(75)
Total
$7,561$7,140 $(421)2005 ANNUAL REPORT25

B. The following table summarizes book values of securities with no fair value as of March 31,
2005 and 2004.
(a) Available-for-sale securities;

Non-listed foreign securities
Non-listed equity securities
Others

2005
¥152
659
1

Total

¥812

(b) Equity securities issued by subsidiaries and affiliated companies;

Non-listed securities for subsidiaries
Non-listed securities for affiliated companies

2005
¥833
9,024

Total

¥9,857

Book value
Millions of yen
Thousands of U.S. dollars
2004
2005
¥108
$1,420
715
6,159
1
10
¥824

$7,589Book value
Millions of yen
Thousands of U.S. dollars
2004
2005
¥635
$7,785
10,632
84,336¥11,267$92,121C. Maturities of available-for-sale securities with maturities as of March 31, 2005 and 2004.
Year ended
March 31, 2005

Within 1 year

Bonds

¥153

Year ended
March 31, 2004

Within 1 year

Bonds

¥409

Year ended
March 31, 2005

Within 1 year

Bonds

$1,430Millions of yen
Over 1 year but
Over 5 years but
within 5 years
within 10 years—

Over 10 years—

Millions of yen
Over 1 year but
Over 5 years but
within 5 years
within 10 years
¥218

¥100

Over 10 years¥22

Thousands of U.S. dollars
Over 1 year but
Over 5 years but
within 5 years
within 10 years—¥91

Over 10 years

—

$935

D. Total sales amounts of available-for-sale securities sold, gains and losses, in the years ended March 31,
2005, 2004 and 2003 are follows:

Sales amount
Gains
Losses

2005
¥534
9
0

Millions of yen
2004¥3,752
971
31

2003
¥362
4
63

Thousands of U.S. dollars
2005$4,99184
02005 ANNUAL REPORT

26

4. Inventories
Inventories as of March 31, 2005 and 2004 were as follows.

Finished products .........................................................................................
Semi-finished products .................................................................................
Work-in-process.............................................................................................
Materials and supplies ..................................................................................
Total ..................................................................................................

Millions of yen
2005
2004
¥1,442¥1,954
3,593
3,370
15,183
19,941
1,174
1,851¥21,392¥27,116

Thousands of
U.S. dollars
2005$13,477
33,579141,897
10,972$199,925

5. Short-Term Borrowings
Short-term borrowings are bank loans and represented by notes. The weighted average interest rate was 1.0%
as of March 31, 2005 and 1.2% as of March 31, 2004.

6. Long-Term Debt
Long-term debt as of March 31, 2005 and 2004 consisted of the following.

0.6% to 2.8% loans from banks and insurance companies .........................
Less: Current portion ...................................................................................

Millions of yen
2005
2004
¥21,236¥19,696(4,726)(5,264)

Total ..................................................................................................

¥16,510

Thousands of
U.S. dollars
2005$198,466(44,168)¥14,432$154,299

Millions of yen

Thousands of
U.S. dollars¥4,726
6,197
1,155
1,363
862
6,933

$44,168
57,916
10,794
12,7388,056
64,795The annual maturities of long-term debts as of March 31, 2005 were as follows.

Year ended March 31
2006 .......................................................................................................................................
2007 .......................................................................................................................................
2008 .......................................................................................................................................
2009 .......................................................................................................................................
2010 ........................................................................................................................................
2011 and thereafter ...............................................................................................................

2005 ANNUAL REPORT

27

7. Pledged Assets
The following assets were pledged as collateral at March 31, 2005 and 2004.

Buildings and structures less related accumulated depreciation ..............
Machinery and equipment less related accumulated depreciation ..........
Land ...............................................................................................................
Investment securities ....................................................................................
Construction in progress..............................................................................
Others ............................................................................................................
Total ..................................................................................................

Millions of yen
2005
2004
¥—
¥542
—
63
1,479
2,627
16
3,403
531
—
—
39
¥2,026¥6,674

Thousands of
U.S. dollars
2005
$—
—
13,822150
4,963—$18,935

Obligations with collateral pledged at March 31, 2004 and 2003 were as follows.

Short-term borrowings .................................................................................
Long-term debt .............................................................................................
Total ..................................................................................................

Millions of yen
2005
2004
¥—
¥2,3258,400
2,500¥8,400¥4,825

Thousands of
U.S. dollars
2005$—
78,505$78,505

8. Employees’ Severance and Pension Benefits
The Company and its consolidated subsidiaries 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 obtained by actuarial calculations.
The liabilities for severance and retirement benefits included in the liability section of the consolidated balance sheets as of March 31, 2005 and 2004 consist of the following:Thousands of
U.S. dollars

Millions of yen
2005

2004

2005

Projected benefit obligation ........................................................................
Unrecognized prior service costs................................................................
Unrecognized actuarial differences ............................................................
Less fair value of pension assets ...................................................................
Less unrecognized net transition obligation...............................................

¥48,710
4,203(4,713)(15,882)(16,971)¥52,100
2,443(4,488)(13,225)(19,453)$455,234
39,280(44,047)(148,430)(158,607)

Liability for severance and retirement benefits ..........................................

¥15,347¥17,377$143,430

1. The Company and some domestic consolidated subsidiaries applied the transitional provisions as prescribedin paragraph 47-2 of the JICPA Accounting Committee Report No.13, “Practical Guideline for Accounting ofRetirement Benefits (Interim Report)”, and the effect of transferring the substitutional portion was recognized2005 ANNUAL REPORT28

on the date permission was received from the Ministry of Health, Labor and Welfare.
The amount of pension plan assets expected to be transferred back to the government approximated to¥18,608 million ($175,547 thousand) as at March 31, 2004.
2. On October 1, 2004, the Company and some domestic consolidated subsidiaries received approval from the
Minister of Health, Labor and Welfare with respect to transfer of the substitutional portion of the benefit obligation and related pension plan assets funded in previous years, and on March 16, 2005, transferred the related
portion of the liability reserves to the Japanese government. As a result, the Company and some domestic consolidated subsidiaries recognized a gain of ¥826 million ($ 7,720 thousand) for the year ended March 31, 2005 as
the difference between the estimated amount of the transfer and the actual balance transferred.
3. The Company introduced a new performance-based retirement benefit plan, and revised its retirement allowance rules on October 1, 2005.
As a result of this revision, the projected benefit obligation decreased by 2,114 million and prior service costs
have occurred in the same amount.
4. The prior service costs have been incurred due to the change in the MEIDENSHA employee’s pension fundagreement in the year ended March 31, 2004.
Included in the consolidated statements of income for the years ended March 31, 2005, 2004 and 2003 areseverance and retirement benefit expenses comprising the following:Thousands of
U.S. dollars

Millions of yen
2005

2004

2003

2005

Service costs – benefits earned during the year .........................................
Interest cost on projected benefit obligation .............................................
Expected return on plan assets ....................................................................
Amortization of prior service costs ............................................................
Amortization of net transition obligation...................................................
Amortization of actuarial differences .........................................................
Employee’s contribution ..............................................................................

¥2,422 ¥3,202
1,187
1,665
(181)
(236)
(354)
(41)
1,698
1,930
373
857
— (244)¥3,645
2,528
(853)
(4)
2,459
489
(564)

$22,636
11,093(1,692)(3,308)15,8693,486—

Severance and retirement benefit expenses ...............................................

¥5,145¥7,700$48,084¥7,133The discount rate and the rate of expected return on plan assets used by the Company and its consolidated
subsidiaries are 2.7% and 2.0% for 2005 and 2004, and 2.7% to 3.5% and 3.5% to 4.5% for 2003, respectively.
The estimated amount of all retirement benefits to be paid at the future retirement date is allocated equally
to each service year using the estimated number of total service years. Prior service costs are recognized as an
expense in equal amounts over 10 years, and actuarial gains/losses are recognized in the statement of income
using the straight-line method over 12 to 15 years for 2005, over 13 to 15 years for 2004, and over 10 to 15 years
for 2003, respectively.

2005 ANNUAL REPORT

29

9. Shareholders’ Equity
Under the Commercial Code of Japan, the entire amount of the issue price of shares is required to be accounted for as capital, although a company may, by resolution of its Board of Directors, account for an amountnot exceeding one-half of the issue price of the new shares as additional paid-in capital, which is included incapital surplus.
Under the Commercial Code, certain amounts of retained earnings equal to at least 10% of cash dividends
and other cash appropriations shall be appropriated and set aside as a legal earnings reserve until the total
amount of legal earnings reserve and additional paid-in capital equals 25% of common stock. The total amountof legal earnings reserve and additional paid-in capital of the Company has been reached to 25% of common
stock, and therefore the Company is not required to provide legal earnings reserve any more. The legal earnings
reserve and additional paid-in capital may be used to eliminate or reduce a deficit by resolution of the shareholders’ meeting or may be capitalized by resolution of the Board of Directors. On condition that the total amount oflegal earnings reserve and additional paid-in capital remains being equal to or exceeding 25% of common stock,
they are available for distribution by the resolution of shareholders’ meeting. Legal earnings reserve is included
in retained earnings in the accompanying financial statements.
The maximum amount that the Company can distribute as dividends is calculated based on the nonconsolidated financial statements of the Company in accordance with the Commercial Code.

10. Contingent Liabilities
Contingent liabilities at March 31, 2005, were as follows.

Repurchase of note discounted and endorsed ...................................................................
Guarantees of loans from banks to employees and unconsolidated subsidiaries
and affiliates ........................................................................................................................

Millions of yen¥365

Thousands of
U.S. dollars$3,411564

5,271

11. Lease Information:(1)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 bookvalue as of March 31, 2005 and 2004, are summarized as follows.
Millions of yen
2005
2004
Assumed acquisition cost
Machinery and equipment .........................................................
Others ..........................................................................................
Accumulated depreciation ..............................................................

Thousands of
U.S. dollars
2005

¥171
1,237
(709)

¥300
1,702
(894)

$1,598
11,561(6,626)¥699¥1,108$6,5332005 ANNUAL REPORT

30

(ii) Future minimum lease payments, inclusive of interest, at March 31, 2005 totaled ¥699 million ($6,533
thousand), including ¥284 million ($2,654 thousand) due within one year.
(iii) Lease payments, which are equal to assumed depreciation charges for the years ended March 31,
2005, 2004 and 2003, were ¥523 million ($4,888 thousand), ¥511 million and ¥365 million, respectively.
(iv) Assumed depreciation charges are computed using the straight-line method over lease terms assuming no residual value.
(2)Lease contracts receivable under non-cancelable operating leases as lessor as of March 31, 2005 totaled ¥656
million ($6,131 thousand), including ¥268 million ($2,505 thousand) due within one year.

12. Research and Development Expenses
Research and development expenses are charged to income as incurred. The amounts charged to income forthe years ended March 31, 2005, 2004 and 2003 were ¥6,186 million ($57,813 thousand), ¥6,794 million, and¥7,012 million, respectively.

13. Segment Information
Industry segments:

The Company and its consolidated subsidiaries operate principally in four industrial sectors: Social Infrastructure Systems, Industrial Systems, Engineering and Other sectors.
The business organization was changed in the current fiscal year to bring it in line with changes in the business environment, and the method of identifying business segments was changed as follows in order to reflect
actual business practices in more appropriate segments:• The former Energy and Environment segments were combined into Social Infrastructure Systems.
• The former Info and Communications and Industrial Systems were combined into Industrial Systems.
• Engineering, formerly included under Others, has been separated for segment disclosure.
Information by industry segments for the years ended March 31, 2005 and 2004 are as follows:
Millions of yen
Year ended March 31, 2005
Net sales:
Outside customers
Inter-segment
Total

Social Infrastructure Industrial
Systems
Systems Engineering

Operating expenses
Operating income
Identifiable assets
Depreciation and amortization
Capital expenditures

OthersTotal

Eliminations
or Corporate Consolidated¥91,300
5,662
96,962¥63,724
7,388
71,112¥15,898294
16,192¥14,520
8,523
23,043¥185,442
21,867
207,309¥–(21,867)(21,867)¥185,442–
185,442

92,647¥4,315¥62,254
1,528
1,101

68,597¥2,515¥49,161
980
1,351

15,219¥973¥12,282342
315

22,141¥902¥1,383
172
107

198,604¥8,705¥125,079
3,022
2,874

(20,973)¥(894)¥55,516
884
3,488

177,631¥7,811¥180,595
3,906
6,362

2005 ANNUAL REPORT

31

Millions of yen
Year ended March 31, 2004

Social Infrastructure Industrial
Systems
Systems Engineering

Net sales:
Outside customers
Inter-segment

OthersTotal

Eliminations
or Corporate Consolidated¥96,734
6,618¥54,058
11,560¥15,439254¥15,330
7,841¥181,560
26,275¥–(26,275)¥181,560–

Total

103,352

65,61815,69323,171

207,835(26,275)

181,560

Operating expenses

97,206

65,642

15,27622,425200,550(24,295)

176,255

Operating income (loss)¥6,146

¥(24)

¥417

¥746

¥7,285¥(1,980)¥5,305

Identifiable assets
Depreciation and amortization
Capital expenditures¥62,398
1,673
1,714

¥52,779
1,100
892¥14,011363
274¥5,164163
132¥134,351
3,299
3,012

¥59,812963
1,705¥194,163
4262
4,717

Thousands of US dollars
Year ended March 31, 2005

Social Infrastructure Industrial
Systems
Systems Engineering

Net sales:
Outside customers
Inter-segment

OthersTotal

Eliminations
or Corporate Consolidated$853,271
52,916$595,551
69,047$148,579
2,748$135,701
79,654$1,733,103
204,364$–(204,364)$1,733,103
–

Total

906,187

664,598

151,327

215,355

1,937,467(204,364)

1,733,103

Operating expenses

865,860

641,093

142,234

206,925

1,856,112(196,009)

1,660,103

Operating income (loss)$40,327$23,505$9,093$8,430$81,355$(8,355)$73,000

Identifiable assets
Depreciation and amortization
Capital expenditures$581,813
14,280
10,290$459,449
9,159
12,626$114,785
3,196
2,944

$12,925
1,607
1000$1,168,963
28,243
26,860$518,841
8,262
32,598$1,687,804
36,50559,458Geographic information and overseas sales are not disclosed due to their insignificance.

2005 ANNUAL REPORT

32

14. Income Taxes
The Company and its consolidated subsidiaries are subject to a number of taxes based on income, which inaggregate, resulted in normal statutory tax rates of approximately 39.69%, 42.69% and 42.69% for the years
ended March 31, 2005, 2004 and 2003, respectively.
The following table summarizes the significant differences between the statutory tax rate and the Company’s
effective tax rate for financial statement purposes for the years ended March 31, 2005, 2004 and 2003.
Statutory tax rate
Permanent difference (Social expenses, etc.)
Per capita inhabitant tax
Net changes in valuation allowance
Decrease (increase) in deferred tax assets due to thechange of statutory tax rate
Increase in division of corporation
Decrease in net operating loss carry forwards of subsidiaries due toadoption of consolidated tax return system
Equity in loss of affilliated companies
Other-net
Effective tax rate2005
39.69%(7.68)
1.01
7.86

2004
42.69%
6.06
2.61(31.20)2003
42.69%
11.35
14.08(233.83)

–
–

6.65
–

(8.83)
116.15–6.31
1.93
49.12%

9.32–
0.16
36.29%

56.90–(2.79)–4.28%

Significant components of deferred tax assets and liabilities of the Company and its consolidated subsidiaries
as of March 31, 2005 and 2004 are as follows.
Millions of yen
2005
2004
Deferred tax assets:
Net operating loss carry forwards ..........................................................
Allowance for retirement benefits .........................................................
Unrecognized intercompany profit .......................................................
Bonuses .....................................................................................................
Other ........................................................................................................
Gross deferred tax assets .....................................................................
Less: Valuation allowance ........................................................................
Deferred tax liabilities:
Deferred gain on sales of property for tax purpose..............................
Unrealized holding gains on securities ..................................................
Deferred gain from division of corporation ..........................................
Other ........................................................................................................
Gross deferred tax liabilities ................................................................
Net deferred tax assets .........................................................................

Thousands of
U.S. dollars

2005¥1,826
5,472
132
1,681
3,733
12,844(1,905)
10,939¥3,343
6,313
172
1,779
2,164
13,771(1,604)
12,167$17,065
51,1401,234
15,71034,888120,037(17,803)102,234

3,215
3,568
1,132
0
7,915
¥3,024

–
2,830
1,131
5
3,966
¥8,201

30,04733,346
10,579073,972$28,262

The statutory tax rate in Japan effective April 1, 2004 was finally determined to be 39.69% which has beenused for the calculation of deferred tax assets and liabilities for the year ended March 31, 2005. The effect on the
consolidated financial statements of this change was not material.
2005 ANNUAL REPORT33

15. 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, 2005 and 2004 are as follows:
Thousands of
U.S. dollars
2005$101,794
1,421$103,215

Millions of yen
2005¥10,892
152¥11,044

Cash and time deposits
Short-term securities
Cash and cash equivalents

2004¥9,255–¥9,255

16. Gain from Division of Corporation
Gain from division of corporation for the year ended March 31, 2003 was due to transferring the substation
business of the Company to Japan AE Power Systems Corporation.

17. Loss from Division of Corporation
Loss from division of corporation for the year ended March 31, 2003 consisted of the following:
Millions of yen
Recognized actuarial differences
Recognized net transition obligation
Loss on disposal of inventories
Other¥2,277496
255
169¥3,197

18. Related Party Transactions
Significant transactions with related parties for the years ended March 31, 2005 and 2004 are as follows:Year ended March 31, 2005
Purchase offinished products
Japan AE Power Systems Corporation
Japan Motor & Generator Co., Ltd.

¥6,836
6,833

Year ended March 31, 2004
Purchase offinished products
Japan AE Power Systems Corporation
Japan Motor & Generator Co., Ltd.

¥6,936
5,541

Year ended March 31, 2005
Purchase offinished products
Japan AE Power Systems Corporation
Japan Motor & Generator Co., Ltd.

$63,888
63,860Millions of yen
Material
Accounts
supply, etc.
payable¥458
6,134¥3,2992,211

Millions of yen
Material
Accounts
supply, etc.
payable
¥258
5,040

¥62
2,079

Secured income
receivable¥3,336
2,026

Thousands of U.S. dollars
Material
Accounts
supply, etc.
payable$4,28057,327

Secured income
receivable$20,664
30,832¥85
1,693

Secured income
receivable$579
19,4302005 ANNUAL REPORT34

19. Subsequent Event
It was resolved at the annual shareholders’ meeting of the Company held on June 24, 2005, that the Company
would reduce its additional paid-in capital (included in capital surplus) and transfer it to other capital surplus.
A summary of this resolution is provided below.
(1) Purpose of reduction of additional paid-in capital
Pursuant to Article 289, Paragraph 2 of the Commercial Code of Japan, the Company will reduce its
additional paid-in capital and transfer it to other capital surplus for the purpose of assuring greater mobility andflexibility in undertaking future capital policy.
(2) Amount of reduction of additional paid-in capital
The additional paid-in capital of 13,933 million yen as of March 31, 2005, will be reduced by 8,933 million yen
to 5,000 million yen.
(3) Schedule for reduction of additional paid-in capital
Official filing of objections by creditors
End of period for official filing of objections by creditors
Reduction of additional paid-in capital becomes effective

Late June 2005
Early August 2005
Early August 2005

2005 ANNUAL REPORT

35

INDEPENDENT AUDITORS’ REPORTTo the Board of Directors of MEIDENSHA CORPORATION:
We have audited the accompanying consolidated balance sheets of MEIDENSHA CORPORATION andconsolidated subsidiaries as of March 31, 2005 and 2004, and the related consolidated statements of income,shareholders’ equity and cash flows for each of the three years in the period ended March 31, 2005, expressed inJapanese yen. These consolidated financial statements are the responsibility of the Company’s management.
Our responsibility is to independently express an opinion on these consolidated financial statements based on
our audits.
We conducted our audits in accordance with auditing standards generally accepted in Japan. Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting theamounts and disclosures in the financial statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects,
the consolidated financial position of MEIDENSHA CORPORATION and subsidiaries as of March 31, 2005
and 2004, and the consolidated results of their operations and their cash flows for each of the three years in the
period ended March 31, 2005, in conformity with accounting principles generally accepted in Japan.
Without qualifying our opinion, we draw attention to the following.
(1) As discussed in Note 13 to the consolidated financial statements, effective April 1, 2004, MEIDENSHACORPORATION and its consolidated subsidiaries changed the business segments.
(2) As discussed in Note 19 to the consolidated financial statements, it was resolved at the annual shareholders’ meeting of the Company held on June 24, 2005, to reduce its additional paid-in capital and transfer it
to other capital surplus.
The U.S. dollar amounts in the accompanying consolidated financial statements with respect to the year
ended March 31, 2005 are presented solely for convenience. Our audit also included the translation of yen
amounts into U.S. dollar amounts and, in our opinion, such translation has been made on the basis described in
Note 1 to the consolidated financial statements.
Tokyo, Japan
June 24, 2005

2005 ANNUAL REPORT36

OVERSEAS OFFICES AND AFFILIATES(As of July, 2005)● Overseas office● Affiliate

CHINA

INDONESIA● DONGGUAN MEIDEN● P.T. MEIDEN ENGINEERINGELECTRICAL ENGINEERING
CO., LTD.
Yan Wu Industrial District,
Wan Jiang Country, Dongguan,
Guangdong 523049
P.R.China
Phone: 769-2171273
Facsimile: 769-2285250● SHANGHAI MEIDENSEMICONDUCTOR CO., LTD.
53-1A, No.311, Fu Te Nan Lu,
Wai Gao Qiao Free Trade Zone,
Shanghai 200137, P.R.China
Phone: 21-50483681
Facsimile: 21-50483035● MEIDEN ZHENGZHOUELECTRIC CO., LTD.
Zhengzhou Hi-Tech Industries
Development Zone,
Zhengzhou, Henan Province,
P.C. 450001, P.R.China
Phone: 371-67896-081
Facsimile: 371-67896-197

H ONG K ONG● MEIDEN PACIFIC (CHINA) LTD.

Unit 01-02A, 16/F, Tower 1, Ever Gain
Plaza, 88 Container Port Road,
Kwai Chung, N.T., Hong Kong
Phone: 2503-2468
Facsimile: 2887-8046● MEIDEN POWER SOLUTIONS(SINGAPORE) PTE. LTD.
No.14 Penjuru Close
Singapore 608610
Phone: 6377-5387
Facsimile: 6377-5386

INDONESIA
20th Floor, Summitmas I,
Jl. Jenderal Sudirman Kaveling 61-62,
P.O.BOX 6920/KBYSummitmas I
Jakarta Selatan 12190, Indonesia
Phone: 21-520-0612
Facsimile: 21-520-0240

THAILAND● THAI MEIDENSHA CO., LTD.

K OREA● MEIDENSHA CORPORATIONRoyal Building No.410,
5 Dangju-Dong, Chongro-ku,
Seoul, Korea
Phone: 2-736-0232~3
Facsimile: 2-736-0234

11th Floor, TST Tower Building,
21 Viphavadi-Rangsit Road,
Soi Chuei Phung, Jomphol, Jatujak,
Bangkok 10900, Thailand
Phone: 2-273-8954~61
Facsimile: 2-273-8966● MEIDEN ELECTRIC(THAILAND) LTD.
898 Moo 2, Bangpa-in Industrial Estate,
Udomsorayuth Rd., Klongjig,
Bangpa-in, Ayudhaya 13160, Thailand
Phone: 35-258258~262
Facsimile: 35-221388

MALAYSIA● MEIDEN ELECTRIC

ENGINEERING SDN. BHD.
G. 03, Ground Floor, Wisma Academy,
4A, Jalan 19/1, 46300 Petaling Jaya,
Selangor Darul Ehsan, Malaysia
Phone: 3-79554646
Facsimile: 3-79546466

THE U NITED K INGDOM● MEIDEN EUROPE LTD.

NYK Complex,
Bradbourne Drive, Tilbrook,
Milton Keynes MK7 8BN, England, U.K.
Phone: 1908-276000
Facsimile: 1908-276010

S INGAPORE● MEIDEN ASIA PTE. LTD.

5, Jalan Pesawat, Jurong Industrial Estate,
Singapore 619363
Phone: 6268-8222
Facsimile: 6264-4292● MEIDEN SINGAPORE PTE. LTD.

5, Jalan Pesawat, Jurong Industrial Estate,
Singapore 619363
Phone: 6268-8222
Facsimile: 6264-4292

THE UNITED STATES● MEIDEN AMERICA, INC.

27000 Meadowbrook Road,
Meadowbrook Corporate Park,
Suite #209, Novi, Michigan 48377,
U.S.A.
Phone: 248-305-9903
Facsimile: 248-305-9904

2005 ANNUAL REPORT

37

Consolidated Subsidiary Companies
MEIDEN SHOJI Co., Ltd.

MEIDEN SYSTEM ENGINEERING Co., Ltd.

MEIDEN HOIST SYSTEM COMPANY, LTD.

Capital ¥300 million
Sales of electric products and components
Mitomi New Building, 20-18,
Ebisu 1-chome, Shibuya-ku,
Tokyo 150-0013 Japan
Phone: 3-5449-3700 Fax: 3-5449-3701

Capital ¥50 million
System engineering of plants
Meiko Building, 5-5, Osaki 5-chome,
Shingawa-ku, Tokyo 141-8616 Japan
Phone: 3-5487-6500 Fax: 3-5487-6516

Capital ¥400 million
Manufacture and sales of hoists
496-1, Ittangosewari, Nishibiwajima-cho,Nishikasugai-gun, Aichi 452-8602 Japan
Phone: 52-501-3211 Fax: 52-501-3277

Meiden Kankyo Service Co., Ltd.

MSA Co., Ltd.

Capital ¥30 million
Maintenance and control service of water
treatment equipment
Meiko Building, 5-5, Osaki 5-chome,
Shinagawa-ku, Tokyo 141-8616 Japan
Phone: 3-3490-0630 Fax: 3-3490-0623

Capital ¥400 million
Manufacture and sales of surge arresters
515, Kaminakamizo, Higashimakado-aza,
Numazu-shi, Shizuoka 410-0865 Japan
Phone: 559-29-4300 Fax: 559-29-4399

HOKUTO DENKO CORPORATION❖ MEIDEN SINGAPORE PTE. LTD.

KOFU MEIDENSHA CORPORATION
Capital ¥200 million
Manufacture and sales of electric motors
825 Nakadate, Tamaho-cho, Nakakoma-gun,
Yamanashi 490-3801 Japan
Phone: 55-273-1515 Fax: 55-273-1519

Meiden Plant Engineering &Construction Co., Ltd.
Capital ¥130 million
Constructing service
Meiko Building, 5-5, Osaki 5-chome,
Shinagawa-ku, Tokyo 141-8616 Japan
Phone: 3-5487-6426 Fax: 3-5487-6487

MEIDEN CHEMICAL CO., LTD.
Capital ¥95 million
Insulating varnish and molded instrumenttransformer
1-17, Osaki 2-chome, Shinagawa-ku,
Tokyo 141-0032 Japan
Phone: 3-3492-5251 Fax: 3-3492-5280

Meiden Kohsan Co., Ltd.
Capital ¥100 million
Sales of products and materials, and agent
service of insurance
Meiko Building, 5-5, Osaki 5-chome,
Shingawa-ku, Tokyo 141-8616 Japan
Phone: 3-3490-3737 Fax: 3-3490-3906

MEIDEN SOFTWARE CORPORATION
Capital ¥90 million
Engineering and programming of software
809, Oka-Isshikitorimachi, Numazu-shi, Shizuoka
410-0012 Japan
Phone: 559-23-4966 Fax: 559-23-1191

MEIDEN FOUNDRY INDUSTRIAL Co., Ltd.
Capital ¥50 million
Casting
4, Nyogetsu, Heisaka-cho, Nishio-shi,
Aichi 444-0305 Japan
Phone: 563-59-6181 Fax: 563-59-4132

Capital ¥25 million
Manufacture and sales of electric sensors
22-13, Himonya 4-chome, Meguro-ku,
Tokyo 152-0003 Japan
Phone: 3-3716-3235 Fax: 3-3793-8787

Capital S$10 million
Manufacture and sales of transformers,
switchgears and circuit-breakers andrelated engineering and constructing
service❖ THAI MEIDENSHA CO., LTD.

MEIDEN SYSCON Co., Ltd.
Capital ¥20 million
Manufacture and sales of switchgear and relays
726-1, Osuwa, Numazu-shi,
Shizuoka 410-0873 Japan
Phone: 559-24-4630 Fax: 559-22-4013

Meiden Kiden Kogyo Co., Ltd.
Capital ¥20 million
Machining and repairing service
127, Nishishinmachi,
Oota-shi, Gunma 373-0847 Japan
Phone: 276-20-6371 Fax: 276-32-7999

Capital TB10 million
Engineering and constructing service❖ MEIDEN ELECTRIC (THAILAND) LTD.
Capital TB70 million
Manufacture and sales of switchgears❖ P.T.MEIDEN ENGINEERING INDONESIA
Capital US$320 thousand
Engineering and constructing service❖ MEIDEN EUROPE LTD.
Capital £750 thousand
Sales of electric products and components

MEIDEN MEDIAFRONTCORPORATION
Capital ¥40 million
Printing and copy service
Maruki Building, 13-7, Nishigotanda 1-chome,
Shinagawa-ku, Tokyo 141-0031 Japan
Phone: 3-3490-4767 Fax: 3-3779-3083

Meiden Sheet Metal Products Corporation
Capital ¥90 million
Manufacture and sales of sheet metal
515, Kaminakamizo, Higashimakado-aza,
Numazu-shi, Shizuoka 410-0865 Japan
Phone: 559-29-5555 Fax: 559-29-5566❖ MEIDEN PACIFIC (CHINA) LTD.
Capital HK$10 million
Sales of electric products and components, and constructing service

Plus five domestic subsidiaries.
❖ Please see page 37 to find contact
information for overseas offices andaffiliates.

2005 ANNUAL REPORT38

CORPORATEDATABOARD OF DIRECTORS(As of June 24, 2005)

CORPORATE NAMEMEIDENSHACORPORATION(Kabushiki Kaisha Meidensha)

CHAIRMAN
Shigeo Seko

HEAD OFFICE
Riverside Building, 36-2,
Nihonbashi Hakozakicho,
Chuo-ku, Tokyo 103-8515 Japan

FOUNDEDPRESIDENT

1897

Keiji Kataoka

COMMON STOCK
Authorized 576,000,000 shares
Issued246,252,704 shares¥17,070 million($161,038 thousand)
EXECUTIVEVICE
PRESIDENTSHAREHOLDERS
22,440Masaoki Hino

TRANSFER AGENTThe Sumitomo Trust & Banking
Co., Ltd.

DIRECTOR AND
SENIOR MANAGINGEXECUTIVE OFFICER

Masaaki Kato
Kosuke Sato

Kennosuke Goto
Kenji Sasaki

DIRECTORS

Tetsuro Kawakami

Shigeo Matsumoto

SENIOR CORPORATE AUDITORS

Tadashi Sanada

Shigeo Takeuchi

CORPORATE AUDITORS

Masayuki Tsubonoya

Nobuyuki Watanabe

2005 ANNUAL REPORT

39

2005 ANNUAL REPORT

40