Quarterly Consolidated Financial Statements
Included in the Quarterly Report

Meiko Electronics Co., Ltd.
and its consolidated subsidiaries
For the second quarter and six months ended September 30, 2015
(ENGLISH TRANSLATION)NOTE:This document is an excerpt translation of the Quarterly Report (“Shihanki Houkokusho”) of Meiko
Electronics Co., Ltd. (the “Company”), for the second quarter and six months ended September 30,
2015, filed with the Director of the Kanto Local Finance Bureau of the Ministry of Finance of Japanpursuant to the Financial Instruments and Exchange Law of Japan on November 13, 2015.
Please note that the quarterly consolidated financial statements in this document are a translation of
the reviewed quarterly consolidated financial statements presented in Japanese. The translation of thequarterly consolidated financial statements and notes has NOT been audited by KPMG AZSA LLC,
who reviewed the original Japanese figures.
The Company provides this translation for your reference and convenience only without any warranty
as to its accuracy. In case of any discrepancy between the translation and the Japanese original, thelatter shall prevail. The final decision and responsibility for investments rests solely with the reader ofthis document.

Financial Information
1 Basis of preparation of the quarterly consolidated financial statements
The quarterly consolidated financial statements of the Company are prepared in accordance with the“Ordinance on the Terminology, Forms, and Preparation Methods of Quarterly Consolidated Financial
Statements” (Cabinet Office Ordinance No. 64 of 2007).

2 Review reports
The quarterly consolidated financial statements of the Company for the second quarter (July 1, 2015 –September 30, 2015), and those for the six months ended September 30, 2015, were reviewed by
KPMG AZSA LLC, pursuant to Article 193-2, Paragraph 1 of the Financial Instruments and Exchange
Law of Japan.

-1-1 Consolidated Financial Statements(1) Consolidated Balance Sheets
Meiko Electronics Co., Ltd. and its consolidated subsidiaries

Thousands of
U.S. dollars

Millions of yen
March 31, 2015

AssetsCurrent assets
Cash and deposits
Notes and accounts receivable-trade
Merchandise and finished goods
Work in process
Raw materials and supplies
Other
Allowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment
Buildings and structures, net
Machinery, equipment and vehicles, net
LandConstruction in progress
Other, net
Total property, plant and equipment
Intangible assets
Investments and other assets
Total non-current assets
Total assets

¥

*2, 3

¥

-2-

September 30, 2015

September 30, 2015

¥

$

9,710
22,743
5,680
3,170
4,833
5,429
(17)
51,54827,53030,966
1,702
3,241
1,475
64,914294
6,208
71,416
122,964*2¥

11,414
22,862
5,624
3,441
5,123
3,405
(17)
51,852

23,79827,294
1,488
2,473
1,148
56,201
264
3,612
60,077111,929*2$

95,177
190,642
46,901
28,69042,71628,400(143)
432,383

198,452
227,605
12,411
20,6199,571
468,658
2,203
30,117500,978
933,361

Thousands of
U.S. dollars

Millions of yen
March 31, 2015

Liabilities
Current liabilities
Notes and accounts payable-trade
Short-term loans payable
Current portion of long-term loans payable
Income taxes payable
Provision for bonuses
Other
Total current liabilities
Non-current liabilities
Long-term loans payable
Provision for directors’ retirement benefits
Net defined benefit liability
Other
Total non-current liabilities
Total liabilities
Net assets
Shareholders’ equity
Capital stock
Capital surplus
Retained earnings
Treasury shares
Total shareholders’ equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Total net assets
Total liabilities and net assets

¥
*5
*5

*5

32,475
239
2,146
2,362
37,222
84,341¥-3-

12,613
13,25914,100
720
460
5,967
47,119September 30, 2015

¥
*5
*5

*5

13,555
16,665
13,759
118
477
5,780
50,35428,328
239
2,182
4,123
34,87285,226

September 30, 2015

$
*5
*5

*5

113,033
138,972
114,733
987
3,978
48,202419,905
236,222
1,993
18,192
34,378
290,785
710,690

12,88914,8104,052(396)
31,355

12,88914,810(6,457)(396)
20,846

107,476
123,499(53,839)(3,305)
173,831

131
(162)
7,454
(155)
7,268
38,623
122,964

49
(427)
6,442
(207)
5,857
26,703111,929409(3,564)53,721(1,726)
48,840222,671933,361¥$(2) Consolidated Statements of Income and Consolidated Statements of Comprehensive Income
Consolidated Statements of Income
For the Six Months Ended September 30, 2015
Meiko Electronics Co., Ltd. and its consolidated subsidiaries
Thousands of
U.S. dollars

Millions of yen

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income (loss)
Non-operating income
Interest income
Dividend income
Subsidy income
Foreign exchange gains
Other
Total non-operating income
Non-operating expenses
Interest expenses
Foreign exchange losses
Other
Total non-operating expenses
Ordinary income (loss)
Extraordinary income
Gain on sales of non-current assets
Compensation income
Gain on liquidation of subsidiaries and associates
Total extraordinary income
Extraordinary losses
Loss on sales and retirement of non-current assets
Impairment loss
Loss on valuation of investment securities
Business structure improvement expenses
Total extraordinary losses
Loss before income taxes
Income taxes
Loss
Loss attributable to owners of parent

Six months ended
September 30, 2014

Six months ended
September 30, 2015

Six months ended
September 30, 2015

¥

¥

$

*1

¥

-4-

44,23540,343
3,892
5,154(1,262)*1

47,352
41,662
5,690
5,113
577

*1

394,861
347,416
47,44542,635
4,810

16
18
1
1,874
73
1,982

11
19
33
－
58
121

93
156
272
－
485
1,006

482
－
208
690
30

609
256
141
1,006
(308)

5,077
2,135
1,174
8,386
(2,570)

0
－
－
0

8
13
8
29

69
105
69
243

70
－
8
－
78
(48)
446
(494)
(494)

*2

¥

69
8,064
－
337
8,470
(8,749)1,298(10,047)(10,047)

*2

$

578
67,242－
2,810
70,630(72,957)
10,824(83,781)(83,781)

Consolidated Statements of Comprehensive Income
For the Six Months Ended September 30, 2015
Meiko Electronics Co., Ltd. and its consolidated subsidiaries
Thousands of
U.S. dollars

Millions of yen

Loss
Other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit plans, net of tax
Total other comprehensive income
Comprehensive income
Comprehensive income attributable toComprehensive income attributable to owners of parent
Comprehensive income attributable to non-controlling interests

Six months ended
September 30, 2014

Six months ended
September 30, 2015

Six months ended
September 30, 2015

¥

¥

$

(494)
(53)
(33)
1,692
10
1,616
1,122

¥

-5-

1,122
－

(10,047)(82)(266)(1,127)(52)(1,527)(11,574)¥(11,574)－(83,781)(683)(2,214)(9,400)(434)(12,731)(96,512)$(96,512)－(3) Consolidated Statements of Cash Flows
For the Six Months Ended September 30, 2015
Meiko Electronics Co., Ltd. and its consolidated subsidiaries

Thousands of
U.S. dollars

Millions of yen

Cash flows from operating activities
Loss before income taxes
Depreciation
Impairment loss
Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in allowance for investment loss
Increase (decrease) in provision for bonuses
Increase (decrease) in provision for directors’ retirement benefits
Increase (decrease) in net defined benefit liability
Interest and dividend income
Loss (gain) on valuation of investment securities
Interest expenses
Foreign exchange losses (gains)
Loss (gain) on sales and retirement ofproperty, plant and equipment
Compensation income
Loss (gain) on liquidation of subsidiaries and associates
Business structure improvement expenses
Decrease (increase) in notes and accounts receivable-trade
Decrease (increase) in inventories
Increase (decrease) in notes and accounts payable-trade
Decrease (increase) in other assets
Increase (decrease) in other liabilities
SubtotalInterest and dividend income received
Interest expenses paid
Proceeds from compensation
Proceeds from insurance income
Business structure improvement expenses paid
Income taxes paid
Net cash provided by (used in) operating activities
Cash flows from investing activities
Purchase of property, plant and equipment
Proceeds from sales of property, plant and equipment
Purchase of intangible assets
Proceeds from liquidation of subsidiaries and associates
Purchase of investment securities
Purchase of insurance funds
Proceeds from maturity of insurance funds
Other, net
Net cash provided by (used in) investing activities

Six months ended
September 30, 2014

Six months ended
September 30, 2015

Six months ended
September 30, 2015

¥

¥

$

¥

-6-

(48)
3,279
－
1
－
2
(22)
82
(34)
8
482
(1,748)(8,749)
3,409
8,064
0
(366)
17
－
58
(30)
－
609
742

(72,957)
28,43067,242
1(3,051)
144
－
482
(248)
－
5,077
6,189

69

61

509

－
－
－
(3,693)(1,352)
4,477
(413)
472
1,562
34
(488)
－
－
－
(185)
923

(13)
(8)
337
(493)
(709)
1,171
575
(650)
4,025
30
(623)
13
1,787
(337)
(855)
4,040

(105)
(69)
2,811
(4,110)(5,914)
9,762
4,795(5,420)33,568248(5,194)105
14,901(2,811)(7,130)33,687(3,772)
2
(19)
－
(936)
(5)
92
43
(4,595)(1,524)
27
(38)
531
(10)
(2)
－
83
(933)

(12,709)
223
(313)
4,428
(80)
(21)
－
692
(7,780)¥$Thousands ofMillions of yen

U.S. dollars

Six months ended
September 30, 2014

Six months ended
September 30, 2015

Six months ended
September 30, 2015

¥

¥

$

Cash flows from financing activities
Net increase (decrease) in short-term loans payable

7,697

3,443

28,711

Proceeds from long-term loans payable

3,463

2,365

19,722

Repayments of long-term loans payable(6,051)(6,869)(57,280)

Repayments of installment payables
Cash dividends paid
Other, net
Net cash provided by (used in) financing activities

(213)
(130)
(40)
4,726

(509)
(0)
(45)
(1,615)(4,242)(0)(376)(13,465)

344

(152)

(1,267)

Net increase (decrease) in cash and cash equivalents

1,398

1,340

11,175

Cash and cash equivalents at beginning of period
Increase (decrease) in cash and cash equivalents resulting from changeof scope of consolidation
Cash and cash equivalents at end of period

8,759

9,491

79,142

Effect of exchange rate change on cash and cash equivalents

*1

-7-

¥

－

*2

10,157

*1

¥

364

*2

11,195

*1

3,034
$

93,351

Notes to the Consolidated Financial Statements
Matters concerning Going Concern Assumption
Not applicable
Change in Scope of Consolidation and Application of the Equity Method(Important change in the scope of consolidation)
Effective from the first quarter ended June 30, 2015, Meiko Electronics Thang Long Co., Ltd., which was a
non-consolidated subsidiary in the previous consolidated fiscal year, has been included in the scope of
consolidation, due to a rise in its importance.
Effective from the second quarter ended September 30, 2015, Meiko Techno Co., Ltd. has been included inconsolidation due to its establishment.
Basis of Presenting Consolidated Financial Statements
The accompanying consolidated financial statements of Meiko Electronics Co., Ltd. (the “Company”) havebeen prepared in accordance with the provisions set forth in the Financial Instruments and Exchange Law ofJapan and its related accounting regulations, and in conformity with accounting principles generally acceptedin Japan (“Japanese GAAP”), which are different in certain respects as to application and disclosure
requirements of International Financial Reporting Standards.
The consolidated financial statements are stated in Japanese yen, the currency of the country in which theCompany is incorporated and operates. The translation of Japanese yen amounts into U.S. dollar amounts is
included solely for the convenience of readers outside Japan and have been made at the rate of ¥119.92 to $1,
the approximate rate of exchange at September 30, 2015. Such translation should not be construed as
representation that the Japanese yen amounts could be converted into U.S. dollars at that or any other rate.
Change in Accounting Policies(Application of accounting standards for business combinations)
Effective from the first quarter ended June 30, 2015, the Company and its consolidated domestic subsidiaries
have adopted the “Accounting Standard for Business Combinations” (ASBJ Statement No. 21, September 13,2013), the “Accounting Standard for Consolidated Financial Statements” (ASBJ Statement No. 22,
September 13, 2013), the “Accounting Standard for Business Divestitures” (ASBJ Statement No. 7,
September 13, 2013) and other standards. Accordingly, the Company has changed the presentation of net
income, etc., and the presentation of minority interests to non-controlling interests. To reflect this change inpresentation, reclassification of accounts has been made to the consolidated financial statements for the six
months ended September 30, 2014 and the consolidated financial statements for the fiscal year ended March
31, 2015.
Change in Accounting Estimate(Revision of useful life)
The machinery and equipment owned by the Company and its consolidated domestic subsidiaries had
previously been written off for depreciation based on a useful life of six years. However, upon replacement ofmachinery and equipment during the first quarter ended June 30, 2015, the Company has carried out afundamental review of their useful life in order to calculate depreciation that more accurately reflects theactual circumstances. To reflect the actual utilization of machinery and equipment, the Company has revised
their useful life to 10 years, and this change will continue to be applied in the future.
Due to this change, operating income for the six months ended September 30, 2015 increased by ¥56 million,
and ordinary loss and loss before income taxes each decreased by ¥56 million, compared to the previous
accounting method.
Specific Accounting Treatments Adopted in Preparing the Quarterly Consolidated Financial Statements
Six months ended September 30, 2015
Computation of Tax Expense
Tax expenses are calculated by reasonably estimating the effective tax rate after the adoption of tax-effectaccounting that is applicable to income before income taxes for the fiscal year ending March 31, 2016, andmultiplying income before income taxes for the period under review by this estimated effective tax rate.
As a result of a review of the realizability of deferred tax assets in the first quarter ended June 30, 2015, theCompany has recorded tax expense (reversal of deferred tax assets) of ¥950 million.

-8-

Consolidated Balance Sheets
1 Guarantee obligation
We provide debt guarantee for installment payables of the following affiliate.
Thousands of
U.S. dollars

Millions of yen
March 31, 2015

Meiko Electronics Thang Long Co., Ltd.
For contracts in US dollars･････････････････････¥

September 30, 2015

2,328

¥

－

September 30, 2015－$

(US$19,375 thousand)Note: Meiko Electronics Thang Long Co., Ltd. has been excluded from the above table since it has beenin the scope of consolidation effective from the first quarter ended June 30, 2015.
*2 Amount of allowance for doubtful accounts directly deducted from the amount of assets
Thousands of
U.S. dollars

Millions of yen
March 31, 2015

Investments and other assets･･･････････････････¥

19

September 30, 2015¥19

September 30, 2015$162

*3 Amount of allowance for investment loss directly deducted from the amount of assets
Thousands of
U.S. dollars

Millions of yen
March 31, 2015

Investment and other assets････・・・・・・・・・･･････¥

361

September 30, 2015¥－

September 30, 2015－$

4 Discounted notes receivable-trade are summarized below:
Thousands of
U.S. dollars

Millions of yen
March 31, 2015

Discounted notes receivable-trade･･････････････¥

72

September 30, 2015¥34

September 30, 2015$

285

*5 Financial covenants
Consolidated fiscal year ended March 31, 2015
Of short-term loans payable and long-term loans payable (including loans payable scheduled for repayment
within one year), ¥34,635 million have financial covenants attached under which the breaching of any of thefollowing will require the accelerated repayment of the obligation in the corresponding funding agreement(when there is more than one covenant, the one with stricter conditions is stated).
(1) Two consecutive ordinary losses shall not be recorded in the consolidated statements of income for eachfiscal year.
(2) The total amount of net assets recorded in the consolidated balance sheet as of the close of each fiscal
year shall be at least the higher of: (i) 75% of the total amount of net assets recorded in the consolidatedbalance sheet as of March 31, 2014; and (ii) 75% of the total amount of net assets recorded in the
consolidated balance sheet as of the close of the immediately preceding fiscal year.
(3) The total amount of interest-bearing debt recorded in the consolidated balance sheet as of the close ofeach fiscal year shall be no more than the amount of net sales recorded in the consolidated statement ofincome for the same fiscal year, divided by 12 and multiplied by 8.

-9-Six months ended September 30, 2015
Of short-term loans payable and long-term loans payable (including loans payable scheduled for repayment
within one year), ¥31,143 million have financial covenants attached under which the breaching of any of thefollowing will require the accelerated repayment of the obligation in the corresponding funding agreement(when there is more than one covenant, the one with stricter conditions is stated).
(1) Two consecutive ordinary losses shall not be recorded in the consolidated statements of income for eachfiscal year.
(2) The total amount of net assets recorded in the consolidated balance sheet as of the close of each fiscal
year shall be at least the higher of: (i) 75% of the total amount of net assets recorded in the consolidatedbalance sheet as of March 31, 2014; or (ii) 75% of the total amount of net assets recorded in the
consolidated balance sheet as of the close of the immediately preceding fiscal year.
(3) The total amount of interest-bearing debt recorded in the consolidated balance sheet as of the close ofeach fiscal year shall be no more than the amount of net sales recorded in the consolidated statement ofincome for the same fiscal year, divided by 12 and multiplied by 8.
Consolidated Statements of Income*1 Main items and corresponding amounts recorded as selling, general and administrative expenses are shown
below:
Thousands ofMillions of yen
Six months ended
September 30, 2014

Salaries and allowances･･･････････････････････
Research and development expenses････････････
Provision for bonuses･････････････････････････
Provision of allowance for doubtful accounts････
Retirement benefit expenses･･･････････････････

¥

997
439
118
0
66

U.S. dollars

Six months ended
September 30, 2015

¥

1,040
344
129
0
69

Six months ended
September 30, 2015

$

8,675
2,868
1,078
1
572

*2 Impairment loss
Six months ended September 30, 2014
Not applicable
Six months ended September 30, 2015
The Group recorded impairment loss for the following asset group.
Use

Business assets

Type of assets
Buildings and structures
Machinery, equipment and vehicles
OthersBuildings and structures
Machinery, equipment and vehicles
Others
Total

Location

AmountIshinomaki,
Miyagi, Japan¥992 million

Hanoi, Vietnam¥7,072 million¥8,064 million

The Group carries out grouping mainly based on each plant for business assets. During the six months ended
September 30, 2015, the Group reduced the book value of business assets to the recoverable amount due to a
decline in profitability, and recorded the reduced amount as an impairment loss of ¥8,064 million under
extraordinary losses. The breakdown is: ¥3,194 million for buildings and structures; ¥3,364 million formachinery, equipment and vehicles; ¥213 million for land; ¥848 million for construction in progress; and¥445 million for others.
The recoverable amount of this asset group uses the higher of net realizable value and use value. Net
realizable value is evaluated based on the amount obtained by making reasonable adjustments to the assessedvalue of non-current assets. Use value is obtained by discounting future cash flow by 14.0%.

- 10 -

Consolidated Statements of Cash Flows*1 The relationship between cash and cash equivalents as of September 30, 2015, and the amounts shown on theConsolidated Balance Sheets are shown below:
Thousands of
U.S. dollars

Millions of yen
Six months ended
September 30, 2014

Cash and deposits･････････････････････････････
Time deposits with tenors exceeding 3 months･･･
Cash and cash equivalents･････････････････････¥¥

Six months ended
September 30, 2015

10,376(219)
10,157¥¥

11,414(219)
11,195Six months ended
September 30, 2015$$

*2 Main breakdown of assets and liabilities of the newly consolidated company
Six months ended September 30, 2014
Not applicable
Six months ended September 30, 2015
The following is a breakdown of assets and liabilities at the time of the start of consolidation of Meiko
Electronics Thang Long Co., Ltd., which was newly consolidated due to the rise in its importance.
Millions of yen

Thousands of
U.S. dollars

Current assets････････････････････････････････
Non-current assets････････････････････････････
Total assets･････････････････････････････････

¥

589
2,342
2,931

$

Current liabilities･････････････････････････････
Non-current liabilities･････････････････････････
Total liabilities･･････････････････････････････

¥

634
1,718
2,352

$

¥

¥

- 11 -$$

4,914
19,53024,444
5,288
14,322
19,61095,177(1,826)
93,351

Total Shareholders’ Equity
Six months ended September 30, 2014
1 Cash dividends paid
Resolution
Board meeting on May 28, 2014
Type of shares ･････････････････････････・・・･･・
Total dividends (Millions of yen) ･････････････・
Dividend per share (Yen)･････････････････････・
Record date･････････････････････････････････・
Effective date････････････････････････････････
Dividend resource･･････････････････････・・･･･・

Common stock131
5.00
March 31, 2014
June 12, 2014
Retained earnings

2 Of the dividends whose record date falls during the six months ended September 30, 2014, those dividends whose
effective date fell after the last day of the second quarter
Not applicable
Six months ended September 30, 2015
1 Cash dividends paid
Not applicable
2 Of the dividends whose record date falls during the six months ended September 30, 2015, those dividends whose
effective date will fall after the last day of the second quarter
Not applicable3 Significant changes in shareholders’ equity
Effective from the first quarter ended June 30, 2015, Meiko Electronics Thang Long Co., Ltd., which was a
non-consolidated subsidiary in the previous consolidated fiscal year, has been included in the scope of
consolidation, due to a rise in its importance. As a result, retained earnings as of the beginning of the term
have decreased by ¥462 million.

- 12 -

Segment Information
As the Group’s businesses are primarily in PCB design, manufacturing, sales, and ancillary operations, thedescription of other businesses is omitted as they are of little significance.
Per Share Information
The basis for calculating loss per share is shown below:
Six months ended
September 30, 2014(18.86)Item

Loss per share (Yen)Basis for calculation
Loss attributable to owners of parent (Millions of yen)
(494)
Amounts not attributable to common shareholders－(Millions of yen)
Loss attributable to owners of parent pertaining to(494)
common shares (Millions of yen)
Average number of common shares outstanding for the period
26,174,076(Shares)
Note: Diluted profit per share is not disclosed as there were no diluted shares.

Six months ended
September 30, 2015
(383.85)(10,047)－(10,047)
26,174,076

Significant Subsequent Events
Not applicable
2 Other
As per a resolution passed by the Board of Directors at its meeting held on November 12, 2015, no interim
dividend will be paid for the fiscal year ending March 31, 2016.

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