+

Annual Report 2015
For the year ended March 31, 2015

Meiko Electronics Co., Ltd.

The Meiko Group consists of Meiko Electronics Co., Ltd. (the “Company”), and its 16
subsidiaries (10 consolidated subsidiaries and 6 non-consolidated subsidiaries) (the“Group”). The Group operates a single business segment, engaging in the design,
manufacture and sale of PCBs (printed circuit boards) and associated services.

Forward-looking Statements:
This annual report contains forward-looking statements that are based on the information
currently available to management, and estimates involving uncertain factors thought likely
to have an effect on future results. As such, they include various risks and uncertainties.
Actual results may differ materially from these projections for a variety of reasons, includingchanges in business environments, market trends and exchange rate fluctuations relevantto the business of Meiko Electronics Co., Ltd.

1

Contents
Five-year Financial Summary ............................................................................................ 3
Financial Review: Management’s Discussion and Analysis ........................................... 5
Business Risks ................................................................................................................... 8
Consolidated Financial Statements ................................................................................ 11
Principal Subsidiaries and Affiliates ............................................................................... 32
Principal Shareholders ..................................................................................................... 33
Corporate History ............................................................................................................. 34
Corporate Data (As of March 31, 2015) ........................................................................... 36
Meiko Share Performance in FY2015 Compared with Indices ...................................... 372

Five-year Financial Summary(For the years ended/as of March 31)
2011

2012

2013

2014

2015

(millions of yen, except per share amounts)
Consolidated financial indicators:
Net sales¥74,724¥62,973¥60,709¥79,232¥90,895

Ordinary income (loss)

2,127

222

(387)

1,932

1,075

Net income (loss)(3,095)

1,159(1,568)23(9,573)Comprehensive income(5,307)

2,048

1,822

3,522

(5,954)

Net assets

32,98035,02836,72744,70838,623

Total assets

89,816

91,105102,046

115,427

122,964

Net assets per share (yen)1,756.65

1,865.71

1,956.24

1,708.09

1,475.59

Net income (loss) per share (yen)(166.32)

61.73(83.52)

1.11(365.76)

—

—

—

—

—

Equity ratio

36.7%

38.4%

36.0%

38.7%

31.4%

Return on equity (ROE)

-8.7%

3.4%

-4.4%

0.1%

-23.0%

—

19.4

—

583.5

—

Cash flows from operating activities

7,916

9,252

3,594

2,426

2,238

Cash flows from investing activities(17,911)(10,377)(5,075)(4,021)(6,986)

Cash flows from financing activities

8,677

2,360

5,358

1,187

4,861

Cash and cash equivalents
at the end of the period

2,509

3,752

8,788

8,759

9,491

Number of employees

13,161

9,948

9,966

11,858

10,895

[597]

[397]

[528]

[700]

[609]

Net income per share (diluted) (yen)Price earnings ratio (PER) (times)[Average number of temporary staff]

3

Net sales

Net income (loss), basic per share
Net income, diluted per share¥200.00(yen)(millions of yen)

¥100,000¥80,000¥60,000¥100.00¥0.00(¥100.00)¥40,000(¥200.00)(¥300.00)¥20,000(¥400.00)
¥0

2011
2011

2012

2013

2014

2015

Net income (loss)(¥4,000)(¥6,000)(¥8,000)(¥10,000)

2011

2012

2013

2014

2011

2015

2014

2015

Cash flows from investing activities

10.0%¥50,000(percentage)(millions of yen)

2013

Return on equity (ROE)¥40,000¥30,000

5.0%
0.0%
-5.0%

¥20,000-10.0%¥10,000-15.0%

2011

2012

2013

2014

2015

-20.0%
2011

2012

2013

2014

-25.0%

2015

Total assets

Price earnings ratio (PER)
600.0 times(times)¥150,000(millions of yen)

2012

Cash flows from operating activities
Cash flows from financing activities

Net assets¥120,000¥90,000

500.0 times
400.0 times
300.0 times¥60,000

200.0 times¥30,000

100.0 times
0.0 times
2011

2012

2013

2014

2015

Net assets per share¥3,000.00
(yen)

2015

(millions of yen)(millions of yen)¥0

¥2,000.00¥1,000.00
¥0.00

2014

Net income, diluted per share (yen)¥20,000¥15,000¥10,000¥5,000¥0(¥5,000)(¥10,000)(¥15,000)(¥20,000)(¥2,000)¥0

2013

Cash flows¥2,000¥0

2012

Net income (loss), basic per share (yen)

2011

2012

2013

2014

2015

4

2011

2012

2013

2014

2015

Financial Review: Management’s Discussion and Analysis
The forward-looking statements in this section are based on the Group’s assumptions
as of the end of the current consolidated fiscal year.
(1) Significant accounting policies and estimates
The consolidated financial statements of the Group have been prepared in conformity
with accounting principles generally accepted in Japan (“Japanese GAAP”). Prior to thepresentation of these consolidated financial statements, the Company used its most
relevant accounting principles in accordance with the Ordinance on Terminology, Forms,
and Preparation Methods of Consolidated Financial Statements (Ordinance of the
Ministry of Finance No. 28 of 1976). The statements of estimates have been preparedin view of past results and reasonable assumptions, however, they involve uncertainties
and actual results may differ from the estimates presented.
(2) Analysis of the Group’s financial position
Current assets
Current assets as of March 31, 2015 were ¥51,548 million, up ¥8,808 million from theend of the previous fiscal year. This change mainly comprised an increase of ¥5,200
million in trade notes and accounts receivable, an increase of ¥2,082 million ininventories, and an increase of ¥1,658 in other receivables.
Non-current assets
Non-current assets as of March 31, 2015 were ¥71,416 million, down ¥1,271 million
from the end of the previous fiscal year. Major factors for this decrease were a ¥2,665
million decrease in property, plant and equipment and a ¥1,098 million increase ininvestment securities.
Current liabilities
Current liabilities as of March 31, 2015 were ¥47,119 million, up ¥10,209 million fromthe end of the previous fiscal year. This change mainly consisted of a ¥2,680 million
increase in trade notes and accounts payable, a ¥4,897 million increase in short-termborrowings, and a ¥2,233 million increase in the current portion of long-termborrowings.
Non-current liabilities
Non-current liabilities as of March 31, 2015 were ¥37,222 million, up ¥3,413 million fromthe end of the previous fiscal year. The major factor in this increase was ¥3,259 million
in long-term borrowings.
Net assets
Net assets as of March 31, 2015 were ¥38,623 million, down ¥6,085 million from theend of the previous fiscal year. Major factors for this decrease were a ¥9,704 million
decrease in retained earnings and a ¥3,688 million increase in foreign currencytranslation adjustments.

5(3) Analysis of business results
1) Net sales
The Group’s business performance during the fiscal year under review was boosted by
its efforts to concentrate management resources on the production of PCBs (printed
circuit boards) for automotive products and overseas smartphones, which have been
demonstrating strong sales, and to proactively solicit new customers. As a result, net
sales were ¥90,895 million, up ¥11,663 million, or 14.7%, from the previous fiscal year.
2) Cost of sales and selling, general and administrative expenses
Cost of sales increased ¥14,040 million, or 20.3%, from the previous fiscal year to¥83,063 million, reflecting a deterioration in product yield and increases in theabandonment loss and fixed costs attributable to the deterioration. As a result, grossprofit decreased ¥2,377 million, or 23.3%, from the previous fiscal year to ¥7,832 million.
The gross margin decreased 4.3 percentage points, from the previous fiscal year to
8.6%.
Selling, general and administrative expenses increased ¥1,412 million, or 15.2%,
from the previous fiscal year to ¥10,698 million, primarily due to an increase in personal
expenses and packing and freight expenses.
3) Operating loss
Operating loss was ¥2,866 million, mainly due to an increase in cost of sales, comparedwith operating income of ¥923 million for the previous fiscal year.
4) Non-operating income and non-operating expenses
Non-operating income increased ¥3,005 million from the previous fiscal year to ¥5,348
million, primarily due to higher foreign exchange gains.
Non-operating expenses increased ¥74 million from the previous fiscal year to ¥1,407
million, mainly due to an increase in interest expenses.
5) Ordinary income
Ordinary income decreased ¥857 million, or 44.3%, from the previous fiscal year to¥1,075 million, due primarily to the recording of an operating loss.
6) Extraordinary income (loss)
Extraordinary income decreased ¥439 million from the previous fiscal year to ¥261
million. This primarily reflected the recording of compensation income of ¥258 million
from Tokyo Electric Power Company, Incorporated, for the fiscal year under review.
Extraordinary loss increased ¥9,312 million from the previous fiscal year to ¥9,696
million. This mainly reflected the recording of a net loss on sales and disposal ofproperty, plant and equipment of ¥483 million, an impairment loss of ¥8,821 and aprovision of allowance for investment loss of ¥332 million for the fiscal year underreview.
7) Net loss
The total amount of income taxes–current and income taxes–deferred decreased¥1,011 million from the previous fiscal year to ¥1,213 million.
As a result of the above, the net loss was ¥9,573 million, compared with a net incomeof ¥23 million for the previous fiscal year.

6(4) Analysis of source of funds and liquidity
1) Cash flows
Cash and cash equivalents (hereafter, “net cash”) as of March 31, 2015 increased ¥732
million from the previous fiscal year, to ¥9,491 million.
Net cash provided by operating activities for the fiscal year under review was ¥2,238
million, down ¥188 million from the previous fiscal year.
Increases were mainly from depreciation and amortization of ¥7,186 million, an
impairment loss of ¥8,821 million, and an increase in trade notes and accounts payableof ¥1,281 million. The major decreases comprised a loss before income taxes andminority interests of ¥8,360, a foreign exchange gain of ¥4,167 million, and an increasein trade notes and accounts receivable of ¥3,173 million.
Net cash used in investing activities was ¥6,986 million, up ¥2,965 million from theprevious fiscal year. The major outflow was ¥6,146 million for the purchase of property,
plant and equipment.
Net cash provided by financing activities was ¥4,861 million, up ¥3,674 million fromthe previous fiscal year. The major inflows comprised an increase in short-termborrowings of ¥3,609 and proceeds from long-term borrowings of ¥14,805 million. The
major outflows comprised payments for long-term borrowings of ¥12,860 million.
Trends in cash flow indicators of the Group are as follows:Year ended
March 31, 2013

Year ended
March 31, 2014

Year ended
March 31, 2015

Equity ratio (%)

36.0

38.7

31.4

Market value equity ratio (%)

11.8

14.7

7.9

Cash flows versus Interest-bearing debt ratio

13.8

21.2

27.5

Interest coverage ratio (times)

3.9

2.5

2.1

Equity ratio = Equity capital / Total assets
Market value equity ratio = Stock market capitalization / Total assets
Cash flow versus interest-bearing debt ratio = Interest-bearing debt / Operating cash flow
Interest coverage ratio = Operating cash flow / Interest payment
Notes:
1. Each indicator is calculated based on consolidated financial values.
2. The stock market capitalization is calculated as follows: term-end closing stock price x term-end
number of shares issued (after deducting shares of treasury stock).
3. The operating cash flow represents the cash flow provided by (used in) operating activities as
indicated in the consolidated statements of cash flows. Of the liabilities posted on the consolidatedbalance sheets, the interest-bearing debt covers all the liabilities for which interest was paid. Theinterest payment represents the payment of interest indicated in the consolidated statements ofcash flows.

2) Financial policy
The Group procures funds for its operations from internal reserves or borrowings. The
Group has a policy of procuring funds for investment and loans and funds to acquire
manufacturing equipment inside and outside Japan via long-term borrowings. With
regard to procuring such funds and the conditions of procurement, the Group strives toselect the most favorable timing and conditions.

7Business Risks
Below are some of the major risks from among those described in the securities report(provided/filed in Japanese only) which may significantly affect any decisions made byinvestors.
Forward-looking statements are based on the Group’s best judgment during theconsolidated fiscal year under review.
(1) The Group’s major customers’ business performance
The Group’s major customers are manufacturers of automobile electronic control
equipment, communications equipment and devices, digital household appliances, andpersonal computers, among others. The Group’s major business is the manufacture andsale of PCBs, which are parts that constitute a core function of finished products. Should anatural disaster or global economic turmoil occur and thus influence the economic outlook
and consumer spending and adversely impact the markets of the industries in which theGroup’s major customers operate, or lead to sluggish sales of their finished products,
such factors could impact the volume of orders received by the Group and affect theGroup’s business performance.
(2) Risks related to the timing of capital investments
The Group conducts appropriate capital investment to enhance productivity and maintainproduct competitiveness. Although overseas and domestic capital investments arecarefully determined considering brand manufacturers’ business performance and market
trends, should manufacturers change strategies or the Group’s capital investments
become excessive upon a downturn in the economy, or the operation of new facilities bedelayed, factors such as the burden of depreciation costs could adversely affect theGroup’s business results and financial position.
(3) Possibility of product defects
PCBs are mounted with electronic components and then embedded in finished products
by brand manufacturers. The Group manufactures PCBs in compliance with globally
accepted quality control standards. In addition, brand manufacturers conduct inspections
upon receipt of the finished product checking for product defects. However, should alarge-scale recall or a product liability claim occur, such an incident would incur significant
costs and harm the value of our corporate brand, which could adversely affect the Group’s
performance.
(4) Technological development and price competition
Although the Group expects long-term expansion of demand for PCBs due to theworldwide spread of digital household appliances and the further advancement ofelectronic automobile components, to address intensifying global competition stemmingfrom downward pressure on prices from Southeast Asia, Japanese manufacturers need todifferentiate their products by adding more value. To this end, the Group is developing
technologies such as element technologies to make wires thinner and hole diameters
smaller, as well as cost-reduction technologies. However, should such technologies
diverge from market needs and not be accepted, the Group may get embroiled in a pricewar, which could affect its business performance.

8(5) Impact of disasters
The Group’s major manufacturing bases are the Yamagata Factory (Yamagata Meiko
Electronics Co., Ltd.), the Fukushima Factory and the Ishinomaki Factory, which are all
located in the Tohoku region. The Group endeavors to prevent damage from natural
disasters by securing the safety of its employees and protecting facilities against
earthquakes and tsunami. However, the Great East Japan Earthquake and subsequenttsunami, which were beyond our capability to predict, seriously affected the Group’sbusiness performance. Should a disaster of that scale occur in the future, it could
adversely affect the Company’s business performance again, despite the fact that we
reviewed our risk management system following the disaster.
In addition, although the Group conducts regular inspections and maintenance works
on its production equipment in manufacturing bases inside and outside Japan and strives
to minimize the occurrence of fire, equipment failures, accidents, etc. which may result inthe suspension of line operations, there is no guarantee that these will be prevented or
reduced completely.
Should production and shipping be suspended for a long period of time due to thesefactors, the Group’s business performance and financial position could be adversely
affected.
(6) Potential risks inherent in plant operations in China and Vietnam
To expand productivity and reduce production costs, the Group has established local
corporations in Hong Kong, Guangzhou and Wuhan in China, and in Vietnam, conducting
manufacturing and sales activities.
The following difficulties might occur in these countries:
1: Hygiene-related issues such as infectious diseases
2: Change or introduction of environmental regulations, legal restrictions and the tax
system3: Failure of infrastructure such as electricity, water and transportation
4: Political uncertainty and public security-related issues
5: Anti-Japanese demonstrations and/or labor disputes
Should unexpected events such as changes in the political or legal environment,
economic situation or environmental regulations occur, the Group’s business performanceand financial position could be adversely affected as a result of the issues which mightarise in the management of production facilities and equipment and in the execution ofother operations, or a large amount of liabilities or obligations associated with thecompliance of environmental conservation and other regulations.
(7) Foreign currency exchange rate fluctuation risk
To operate plants in China and Vietnam, we need to hold U.S. dollars and other foreign
currency-denominated assets. Therefore, the Group is exposed to yen-to-yuan andyen-to-U.S. dollar exchange rate fluctuations. These fluctuations could result in losses.
(8) Raw materials market fluctuation risk
The Group purchases the raw materials necessary for manufacturing from externalmaterials manufacturers and trading companies. The surge in prices of crude oil, copper,
gold, etc., in recent years could influence the prices of the raw materials the Grouppurchases and adversely affect the Group’s business performance and financial position.

9(9) Financial risks
The Group has made aggressive capital investments of amounts higher than the funds it
has acquired from operating activities to prepare for the anticipated medium- andlong-term increase in demand for digital household appliances and automobiles, as well
as demand for new products in line with technological innovation.
As a result, the ratio of borrowings to total assets as of March 31, 2015, was 48.7%.
Should we make further aggressive capital investments to fulfill our business strategies,
an increase in borrowings and/or interest rates could affect the Group’s businessperformance and financial position.
(10) Intellectual property rights
The Group recognizes intellectual properties as its significant management resources andseeks to acquire intellectual property rights by applying for patents, etc. for proprietary
technologies, etc. developed by the Group with the aim of protecting intellectual
properties. However, not all applications may be approved and it is also possible thatobtained rights may be rendered void due to objections by third parties.
Although the Company’s external relations and affairs department manages obtained
intellectual properties and pays attention to violation of rights by external parties,
anticipated profits could be lost in the event of illegal use, etc.
Meanwhile, should a lawsuit be filed against the Group with regard to a violation of
intellectual property rights of third parties, the Group’s business performance and financial
position could be adversely affected as a result of the compensation or damages paid tocustomers due to the suspension of production and payment of license fees, etc., related
to patent use in order to resume production.
(11) Risks associated with production activities
The Group may continue to build new plants or establish new production lines in order toexpand its production capacity in the future in accordance with demand of major
customers around the world. However, should such construction works be delayed or new
production lines not launched smoothly, it could result in a delay in delivery of products tocustomers or a decline in plant productivity, and the subsequent drop in sales might
adversely affect the Group’s business performance.

10Consolidated Financial Statements
Consolidated Balance Sheets
Meiko Electronics Co., Ltd. and Consolidated Subsidiaries
As of March 31, 2015 and 2014
Thousands ofMillions of yen

AS S ETS

2015

Current Assets:
Cash and cash equivalents (Note 12) ...............................................................................
Receivables －Trade notes and accounts receivable (Note 12) ........................….................................
Other receivables ........................................................................................................
Less: Allowance for doubtful accounts ........................................................................
Inventories －Merchandise and finished goods .............................….................................................
Work in process ................................….....................................................................
Raw materials and supplies ...........................…...........................................................
Deferred tax assets (Note 11) ....................................................................................…..
Other .............................................................................................................................
Total current assets .................................................................................................

\

Property, Plant and Equipment, at Cost:
Land .............................................................................................................................
Buildings and structures ........................................................................….....................
Machinery and vehicles................................................…...............................................
Construction in progress ................................................................................................
Other .............................................................................................................................
Less: Accumulated depreciation .....................................................................................
Net property, plant and equipment ...........................................................................
Intangible Assets
Investments and Other Assets:
Investment securities (Notes 3 and 12) ............................................................................
Long-term loans receivable .............................................................................................
Deferred tax assets (Note 11) .........................................................................................
Other .............................................................................................................................
Less: Allowance for doubtful accounts ...........................................................................
Less: Allowance for investment loss ...............................................................................
Total investments and other assets ...........................................................................
Total ...............................................................................................................

See notes to consolidated financial statements.

11

\

9,491

U.S. dollars (Note 1)

2015

2014

\

8,759

$

78,99022,7433,667(17)

17,5432,009(15)

189,290
30,522
(142)

5,680
3,170
4,833
463
1,518
51,548

4,573
2,604
4,424
1,181
1,662
42,74047,274
26,38640,226
3,850
12,632429,028

1,702
42,77982,9273,241
4,621
135,270(70,356)
64,914

1,702
39,977
71,962
7,335
3,351
124,327(56,748)
67,57914,165356,051
690,192
26,97838,459
1,125,845(585,570)
540,275

294

455

2,446

2,813
101
2,012
1,662
(19)
(361)
6,208
122,964

1,715
121
1,161
1,677
(21)
4,653
115,427

23,415841
16,747
13,836(162)(3,006)
51,671
1,023,420\$

Thousands of

LIABILITIES AND
NET ASSETS

Millions of yen

2015

Current Liabilities:
Trade notes and accounts payable (Note 12) ..................................................................
Short-term borrowings (Notes 4 and 12) .........................................................................
Current portion of long-term borrowings (Notes 4 and 12) ...............................................
Income taxes payable (Note 11) ......................................................................................
Accrued bonuses ...........................................................................................................
Other (Notes 4 and 12) ..................................................................................................
Total current liabilities .............................................................................................

\

Long-term Liabilities:
Long-term borrowings (Notes 4 and 12) ........................................................................
Long-term other payable (Notes 4 and 12) .....................................................................
Provision for directors' retirement benefits ......................................................................
Net defined benefit liability (Note 5) .............................................................................
Other .............................................................................................................................
Total long-term liabilities .........................................................................................

12,613
13,25914,100
720
460
5,967
47,119U.S. dollars (Note 1)

2015

2014

\

9,933
8,362
11,867
165
500
6,083
36,910$104,976
110,352
117,354
5,996
3,827
49,667392,172

32,475
1,525
239
2,146
837
37,222

29,216
1,632
261
1,942
758
33,809270,284
12,694
1,989
17,857
6,974
309,798

12,88914,810
4,052

12,88914,81013,756107,270
123,262
33,729(396)
31,355(396)
41,059(3,299)260,962

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

98
(82)
3,766
(133)
3,649
44,708
115,427

1,091(1,348)62,035(1,290)60,488321,450
1,023,420

Commitments and Contingent Liabilities (Note 8) :Net Assets (Note 6):
Shareholders' Equity:
Common stock, authorized - 63,200,000 sharesissued - 26,803,320 shares in 2015 and 2014 ..................................................................

Capital surplus ...............................................................................................................
Retained earnings ..........................................................................................................
Less: Treasury stock, at cost; Common stock,629,244 shares in 2015 and 2014 ..................................................................................
Total shareholders' equity.........................................................................................
Accumulated Other Comprehensive Income:Unrealized gains (losses) on available-for-sale securities ...................................................
Deferred gains (losses) on hedges ...................................................................................
Foreign currency translation adjustments ......................................................................
Remeasurements of defined benefit plans (Note 5) ..........................................................
Total accumulated other comprehensive income........................................................
Total net assets .......................................................................................................
Total ...............................................................................................................

See notes to consolidated financial statements.

12

\

\

$

Consolidated Statements of Operations
Meiko Electronics Co., Ltd. and Consolidated Subsidiaries
For the Years ended March 31, 2015, 2014 and 2013
Thousands ofMillions of yen

2015
Net Sales ......................................................................................................................
Cost of Sales (Note 9) ..................................................................................................
Gross profit .................................................................................................................
Selling, General and Administrative Expenses (Note 9) .............................................
Operating income (loss) ...............................................................................................

\

90,89583,063
7,832
10,698(2,866)

U.S. dollars (Note 1)

2014\

79,232
69,023
10,209
9,286
923

2015

2013
\

60,70953,156
7,553
8,159
(606)

$

756,516
691,331
65,18589,038(23,853)

Other Income (Expenses):
Interest expense, net .......................................................................................................
Dividend income ............................................................................................................
Foreign exchange gain .............................................................................…...................
Net gain (loss) on sales and disposal of property, plant and equipment (Note 10)..............
Reversal of allowance for investment loss .......................................................................
Subsidy income for reconstruction (Note 15) ..................................................................
Compensation income (Note 16) ....................................................................................
Loss on disaster (Note 14)..............................................................................................
Loss on abandonment of inventories (Note 17) ...............................................................
Environmental expenses (Note 18) ..................................................................................
Loss from suspension of plant operations (Note 19).........................................................
Impairment loss (Note 7) ................................................................................................
Provision of allowance for investment loss .....................................................................
Other, net ......................................................................................................................
Total ......................................................................................................................

(1,027)
21
5,051
(480)
258
(8,821)(332)(164)(5,494)

(932)
18
2,049
181
287
(62)
(217)
1,324

(898)
13
2,366
(36)
69
500
620
(170)
(478)
(292)
(243)
(1,292)
159(8,551)
171
42,041(3,991)
2,144(73,412)(2,767)(1,363)(45,728)

Income (Loss) before Income Taxes and Minority Interests ......................................

(8,360)

2,247

(447)

(69,581)

Income Taxes (Note 11):
Current ........................................................................................................................
Deferred ......................................................................................................................
Total income taxes ..................................................................................................
Income (Loss) before Minority Interests.....................................................................
Net Income (Loss) .......................................................................................................

1,166
47
1,213
(9,573)(9,573)

1,056
1,168
2,224
23
23

1,320
(199)
1,121
(1,568)(1,568)

9,706
391
10,097(79,678)(79,678)

\

\

\

$

Yen

Per Share of Common Stock:
Net income (loss) ...........................................................................................................
Cash dividends applicable to the year .............................................................................

See notes to consolidated financial statements.

13\(365.76)
-

\

1.11
10.00

U.S. dollars (Note 1)\(83.52)-$(3.04)-

Consolidated Statements of Comprehensive Income (Loss)
Meiko Electronics Co., Ltd. and Consolidated Subsidiaries
For the Years ended March 31, 2015, 2014 and 2013
Thousands ofMillions of yen

2015
Income (Loss) before Minority Interests ....................................................................

\

Other Comprehensive Income (Note 20):
Unrealized gains (losses) on available-for-sale securities....................................................
Deferred gains (losses) on hedges ...................................................................................
Foreign currency translation adjustments .........................................................................
Remeasurements of defined benefit plans ..............................................................
Total other comprehensive income ..........................................................................
Comprehensive Income (Loss) ....................................................................................

Comprehensive Income (Loss) Attributable to:
Owners of the Company ..............................................................................................

See notes to consolidated financial statements.

14(9,573)

2014
\

33
(80)
3,688
(22)
3,619
(5,954)\(5,954)

U.S. dollars (Note 1)

23

\

213
124
3,162
3,499
3,522

\

3,522

2015

2013
(1,568)

$

277
(667)
30,691(182)
30,119(49,559)

63
(116)
3,443
3,390
1,822

\

1,822

(79,678)$(49,559)

Consolidated Statements of Changes in Net Assets
Meiko Electronics Co., Ltd. and Consolidated Subsidiaries
For the Years ended March 31, 2015, 2014 and 2013

Millions of yen
Shareholders' Equity

Balance at April 1, 2012......................
Net loss..................................................
Cash dividends paid...............................
Increase by merger.................................
Net increase (decrease)...........................
Balance at March 31, 2013..................
Net income.............................................
Issuance of new shares...........................
Cash dividends paid...............................
Net increase (decrease)...........................
Balance at March 31, 2014..................
Net loss..................................................
Cash dividends paid...............................
Net increase (decrease)...........................
Balance at March 31, 2015..................

Number of
Shares ofCommonStock
19,403,320
19,403,320
7,400,000
26,803,320
26,803,320

\

\

\

\

CommonStock
10,546
10,546
2,343
12,88912,889\\\\

CapitalSurplus12,467
12,4672,343
14,81014,810\\\\Retained
Earnings
15,518(1,568)(94)(29)
13,82723(94)
13,756(9,573)
(131)
4,052

Accumulated Other Comprehensive Income
Treasury
Stock at cost;
Common
Stock
(396)
\
(396)
\
(396)
\
(396)
\

Total
Shareholders'Equity38,135\(1,568)(94)(29)
36,444
\
23
4,686
(94)
41,059\(9,573)(131)
31,355\

Unrealized Gains(Losses) on
Available-for-sale
Securities

\

\

\

\

(178)
63
(115)
213
98
33
131

Deferred
Gains(Losses) on
Hedges
(90)
\
(116)
(206)
\
124
(82)
\
(80)
(162)
\

Foreign Currency
Translation
Adjustments

\

\

\

\

(2,839)
3,443
604
3,162
3,766
3,688
7,454

Total
Accumulated
Other
Comprehensive
IncomeRemeasurementsof Defined Benefit
Plans

\

(133)
(133)
(22)
(155)

\

\

\

\

\

\

\

(3,107)
3,390
283
3,366
3,649
3,619
7,268

\

\

\

\

Total Net
Assets35,028(1,568)
(94)
(29)
3,390
36,727
23
4,686
(94)
3,366
44,708(9,573)(131)
3,619
38,623Thousands of U.S. dollars (Note 1)
Shareholders' Equity

Balance at April 1, 2014......................
Net loss..................................................
Cash dividends paid...............................
Net increase (decrease)...........................
Balance at March 31, 2015..................

$$

CommonStock107,270
107,270$$

CapitalSurplus123,262
123,262$$

Retained
Earnings
114,496(79,678)(1,089)33,729

Accumulated Other Comprehensive Income
Treasury
Stock at cost;
CommonStock$(3,299)$(3,299)See notes to consolidated financial statements.

15

Total
Shareholders'Equity$341,729(79,678)(1,089)$260,962

Unrealized Gains(Losses) on
Available-for-sale
Securities

$

$

814
277
1,091

Deferred
Gains(Losses) on
Hedges
$
(681)
(667)
$
(1,348)Foreign Currency
Translation
Adjustments$$

31,34430,691
62,035

Total
Accumulated
Other
Comprehensive
IncomeRemeasurementsof Defined Benefit
Plans

$

$

(1,108)(182)(1,290)$$30,36930,11960,488$$

Total Net
Assets372,098(79,678)(1,089)30,119321,450

Consolidated Statements of Cash Flows
Meiko Electronics Co., Ltd. and Consolidated Subsidiaries
For the Years ended March 31, 2015, 2014 and 2013
Thousands ofMillions of yen

2015
Operating Activities:
Income (loss) before income taxes and minority interests .................................................

\(8,360)U.S. dollars (Note 1)

2014
\

2,247

2015

2013
\

(447)

$

(69,581)

Adjustments to reconcile income (loss) before income taxes
to net cash provided by operating activities:
Depreciation and amortization .......................................................................................
Impairment loss...........................................................................................................
Increase (decrease) in allowance for doubtful accounts ..................................................
Increase (decrease) in allowance for investment loss ......................................................
Increase (decrease) in provision for employees' retirement benefits ...............................
Increase in net defined benefit liability .......................................................................
Increase (decrease) in accrued bonuses .......................................................................
Decrease in provision for directors' retirement benefits................................................…
Interest income and dividend income ............................................................................
Loss on valuation of investment securities .....................................................................
Interest expenses .........................................................................................................
Foreign exchange gain ..................................................................................................
Net loss (gain) on sales and disposal of property, plant and equipment............................
Subsidy income for reconstruction ...............................................................................
Compensation income ..................................................................................................
Loss on disaster ..........................................................................................................
Decrease (increase) in trade notes and accounts receivable ............................................
Increase in inventories ..................................................................................................
Increase in trade notes and accounts payable ................................................................
Decrease (increase) in other assets ................................................................................
Increase in other liabilities .............................................................................................
SubtotalInterest and dividend received ......................................................................................
Interest paid .................................................................................................................
Proceeds from compensation income ...........................................................................
Proceeds from subsidy income ....................................................................................
Proceeds from insurance income ................................................................................
Payments for loss on disaster........................................................................................
Income taxes paid ........................................................................................................
Net cash provided by operating activities ......................................................................

7,186
8,821
0
332
182
(41)
(22)
(55)
24
1,061
(4,167)480(258)(3,173)
(515)
1,281
(36)
1,276
4,016
55
(1,073)258(1,018)
2,238

6,182
62
(19)
(1,517)
1,735
60
(38)
27
952
(2,054)(181)(287)(5,871)
(616)
2,000
(281)
695
3,096
39
(971)
287
500
1,206
(1,731)
2,426

6,283
(8)
(69)
191
(19)
(33)
30
919
(2,243)
36
(500)
(620)
170
1,428
(350)
266
292
331
5,657
32
(917)
620
(699)
(1,099)3,594

59,80573,412
3
2,767
1,512
(338)
(183)
(457)
198
8,837
(34,680)
3,991(2,144)(26,406)(4,282)
10,664(296)
10,61033,432458(8,932)
2,144(8,473)
18,629Investing Activities:
Payments for purchases of property, plant and equipment ...............................................
Proceeds from sales of property, plant and equipment .....................................................
Payments for purchases of intangible assets ...................................................................
Payments for purchases of investment securities .............................................................
Payments for insurance policies .............................................................................….....
Proceeds from maturity of insurance funds .....................................................................
Other, net ......................................................................................................................
Net cash used in investing activities .................................................................................

(6,146)
48
(68)
(969)
(8)
92
65
(6,986)(4,724)
662
(101)
(325)
(13)
357
123
(4,021)(5,732)
25
(41)
(4)
(21)
170
528
(5,075)(51,155)401(569)(8,061)
(67)
765
537
(58,149)

Financing Activities:
Increase (decrease) in short-term borrowings ..................................................................
Proceeds from long-term borrowings ..............................................................................
Payments for long-term borrowings ................................................................................
Payments for installment liabilities ...................................................................................
Proceeds from issuance of common stock......................................................................
Cash dividends paid .......................................................................................................
Other..............................................................................................................................
Net cash provided by financing activities .........................................................................

3,609
14,805(12,860)
(477)
(131)
(85)
4,861

(6,265)18,303(15,021)
(406)
4,686
(94)
(16)
1,187

9,963
6,617
(11,050)
(78)
(94)
5,358

30,038123,218(107,030)(3,972)(1,087)(711)
40,456

See notes to consolidated financial statements.

16

Thousands ofMillions of yen

U.S. dollars (Note 1)

2015

2014

2013

2014

Effect of exchange rate changes
on Cash and Cash Equivalents ..................................................................................

619

379

469

5,152

Net Increase (Decrease) in Cash and Cash Equivalents ............................................

732

(29)

4,346

6,088

Cash and Cash Equivalents at Beginning of Year ......................................................
Increase in Cash and Cash Equivalents
resulting from Merger with Unconsolidated Subsidiaries (Note 21)..........................
Cash and Cash Equivalents at End of Year ...............................................................

8,759

8,788

3,752

72,902

See notes to consolidated financial statements.

17

\

9,491

\

8,759

\

690
8,788

$

78,990Notes to Consolidated Financial Statements
Meiko Electronics Co., Ltd. and Consolidated Subsidiaries
For the Years ended March 31, 2015, 2014 and 2013
1. Basis of Presenting Consolidated Financial Statements
The accompanying consolidated financial statements of Meiko Electronics
Co., Ltd. (the “Company”) have been prepared in accordance withthe provisions set forth in the Financial Instruments and Exchange Law of Japanand its related accounting regulations, and in conformity with accounting
principles generally accepted in Japan (“Japanese GAAP”), which are different
in certain respects as to application and disclosure requirements ofInternational Financial Reporting Standards.
In preparing the accompanying consolidated financial statements,
certain reclassifications and rearrangements have been made to present
them in a form which is more familiar to readers outside Japan.
In addition, the notes to the consolidated financial statements include
information which is not required under Japanese GAAP, but ispresented herein as additional information.
The consolidated financial statements are denominated in Japanese yen,
the currency of the country in which the Company is incorporated
and operates. The translation of Japanese yen amounts into U.S. dollar
amounts is included solely for the convenience of readers outside Japanand have been made at the rate of \120.15 to $1, the approximate rate ofexchange at March 31, 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.

2. Significant Accounting Policies
The following is a summary of the significant accounting policies
adopted by the Company and its consolidated subsidiaries
in the preparation of the consolidated financial statements.
(a) Consolidation
The consolidated financial statements include the accounts of
the Company and its significant 10 subsidiaries (together, the “Group”).
All significant inter-company accounts and transactions have been eliminated.
In the elimination of investments in subsidiaries, the assets and liabilities ofthe subsidiaries, including the portion attributable to minority shareholders,
are recorded based on the fair value at the time the Company acquired
control of the respective subsidiaries. Investments in certain unconsolidated
subsidiaries are accounted for by cost method due to immateriality
in view of consolidation.
(b) Equity Method
Investments in unconsolidated subsidiaries and affiliates are accounted forby the equity method. However, certain investments in unconsolidated
subsidiaries and affiliates are not accounted for by the equity method and arestated at cost because the effect of their net income or losses and retained
earnings on the accompanying consolidated financial statements is immaterial.
(c) Cash Equivalents
Cash equivalents are short-term investments that are readily convertible
into cash and that are exposed to insignificant risk of changes in value.
Cash equivalents include time deposits, certificate of deposits, andcommercial paper, all of which mature or become due within threemonths of the date of acquisition.
(d) Translation of Foreign Currency Accounts
Current and non-current receivables and payables in foreign currencies
are translated at current rates prevailing at the balance sheet date andthe resulting exchange gains or losses are recognized in the consolidated
statements of operations.
Financial statements of consolidated overseas subsidiaries are translated
into Japanese yen at the exchange rate at the balance sheet date, exceptthat shareholders' equity accounts are translated at historical rates andstatement of income items resulting from transactions with the Company
at the rates used by the Company.
Foreign currency translation adjustments resulting from translation offoreign currency financial statements prepared by consolidated overseas
subsidiaries are presented in net assets in the consolidated balance sheets.
(e) Inventories
Inventories are stated at cost, determined by the first-in-first-out method.
However, they are written down due to decreased profitability where appropriate.

(f) Depreciation and Amortization
Depreciation of buildings, property, plant and equipment for the Company and its domestic
subsidiaries is computed on the following method over their estimated useful lives:
For buildings:- acquired before March 31, 1998 : declining balance method under pre-2007 tax reform- acquired between April 1, 1998 and March 31, 2007 : straight-line method underpre-2007 tax reform- acquired after April 1, 2007 : straight-line method
For assets other than buildings:- acquired before March 31, 2007 : declining balance method under pre-2007 tax reform- acquired between April 1, 2007 and March 31, 2012 : declining balance method (250%)- acquired after April 1, 2012 : declining balance method (200%)
For assets acquired before March 31, 2007 that have been depreciated to 5% of
their acquisition value using the previous method of calculating depreciation,
the difference between the remaining 5% of the acquisition cost and a memorandum
price will be written off in equal amounts over the five-year period beginning withthe year following the year when the book value is depreciated to 5% of the acquisition
costs. Depreciation of buildings, property, plant and equipment for foreign consolidated
subsidiaries is computed on the straight-line method over their estimated useful lives.
Software for company use is carried at cost less accumulated amortization,
which is calculated by the straight-line method over their estimated useful
lives (five years).
(Change in accounting estimates)
The Company revised useful lives of production equipment of consolidated overseas
subsidiaries based on the fact that durability of equipment has improved by recent
innovation in technology and repairs and maintenance enable long-term stable
operations of those equipment.
Accordingly, useful lives were changed from 8 to 9 years to 10 to 20 years fromthe fourth quarter ended March 31, 2013.
As a result of this change, depreciation expense decreased by \405 million
and operating loss and loss before income taxes and minority interests decreasedby the same amounts for the year ended March 31, 2013.
(Change in accounting policies with amendment of respective law or regulation thatare not distinguishable from change in accounting estimates)
Effective from the year ended March 31, 2013, in accordance with the amendment in
Corporate Tax Law, the Company and its domestic subsidiaries changed its
depreciation method for property, plant and equipment. Assets acquired on or after
April 1, 2012 are depreciated using the method prescribed in amended Corporate Tax Law.
The impact of this change on operating loss and loss before income
taxes and minority interests for the year ended March 31, 2013, was immaterial.
(g) Allowance for Doubtful Accounts
The Company and its consolidated subsidiaries provide for doubtful
accounts principally at an amount computed based on the historical bad debt
ratio during a certain reference period plus an estimated uncollectible amountbased on the analysis of certain individual accounts including claims inbankruptcy.
(h) Allowance for investment loss
Allowance for investment loss is provided for the necessary amount,considering the financial conditions and others of the invested unconsolidated
subsidiaries.
(i) Accrued Bonuses
Accrued bonuses to employees are provided for the estimated amounts,
which the Company and its consolidated subsidiaries are obligated to
pay to employees after the fiscal year-end based on services rendered during
the current fiscal year.
(j) Impairment Losses on Fixed Assets
The Group reviews its long-lived assets for impairment whenever eventsor changes in circumstance indicate the carrying amount of an asset or
asset group may not be recoverable. An impairment loss would berecognized if the carrying amount of an asset or asset group exceeds
the sum of the undiscounted future cash flows expected to result fromthe continued use and eventual disposition of the asset or asset group.
The impairment loss would be measured as the amount by which
the carrying amount of the asset exceeds its recoverable amount,which is higher of asset's or cash-generating unit's fair valueless costs to sell and its value in use.
(k) Investment Securities
The Company has classified all the equity securities as available-forsale securities based on management’s intention. Available-for-salesecurities other than non-marketable are reported at fair value withunrealized gains or losses, net of applicable taxes, reported in a separate
component of net assets.
Non-marketable available-for-sale securities are stated at cost determinedby the moving-average method.

18

(l) Income Taxes
The provision for income taxes is computed based on the pretax
income included in the consolidated statements of operations. The asset
and liability approach is used to recognize deferred tax assets andliabilities for the expected future tax consequences of temporary
differences between the carrying amounts and the tax bases ofassets and liabilities. Deferred tax assets are measured by applying
currently enacted tax laws to the temporary differences.
(m) Derivative Financial Instruments
The Group uses foreign currency forward contracts, interest rate swaps
and copper price swaps as a means of hedging exposure to foreign currencies,
interest risks and market fluctuation. The Group does not enter into
derivatives for trading or speculative purposes.
Derivative financial instruments are classified and accounted for as
follows: a) all derivatives are recognized as either assets or liabilities andmeasured at fair value, and gains or losses on transactions arising fromderivative except for hedge purposes are recognized in the consolidated
statements of operations and b) for derivatives used for hedging purposes,
if derivatives qualify for hedge accounting because of high correlation andeffectiveness between the hedging instruments and the hedged items,
gains or losses on derivatives are deferred until maturity of the hedgedtransactions.
However, if the foreign currency forward contracts qualify for hedge
accounting, hedged items such as foreign currency receivables andpayables are translated at the contracted rates.
Also, if interest rate swap contracts are used as hedge and meet certain
criteria, the net amount to be paid or received under the swap
contract is added to or deducted from the interest on the assets or
liabilities for which the swap contract was executed.
(n) Retirement benefits for employees
The benefit formula method is used as a method of attributing
expected benefits to the periods through the end of the fiscal year
in calculating projected benefit obligation.
Actuarial gain or loss is amortized using the declining balance method
over 10 years, which is less than the average remaining years of serviceof the employees, and the amortization will be started in the following year
in which the gain or loss is recognized.
Past service cost is amortized using the straight-line method over 10
years, which is less than the average remaining years of service of theemployees.
Certain consolidated subsidiaries apply the simplified method in which
the retirement benefit amount required for voluntary termination at year-end
is deemed a projected benefit obligation for the calculation of liability
associated with retirement and retirement benefit expenses.

(p) Appropriations of Retained Earnings
Appropriations of retained earnings are reflected in the accompanying
consolidated financial statements for the following year uponshareholders' approval.
(q) Per Share Information
Dividends per share shown in the consolidated statements of operations havebeen presented on an accrual basis and include, in each fiscal period,
dividends approved after each balance sheet date, but applicable to the fiscal
period then ended.
Net income (loss) per share is computed by dividing net income (loss) available
to common shareholders by the weighted-average number of commonshares outstanding for the period.
The diluted net income per share is omitted as the Company had no potential
dilutive shares.
(r) Application of “Accounting Standard for Retirement Benefits”
Effective from the year ended March 31, 2015, the Company and its consolidated
domestic subsidiaries have applied the article 35 of the “Accounting Standard for
Retirement Benefits” (ASBJ Statement No. 26, issued on May 17, 2012 (hereinafter,
the “Statement No.26”)) and the article 67 of the “Guidance on Accounting Standard
for Retirement Benefits” (ASBJ Guidance No. 25, issued on March 26, 2015
(hereinafter, the “Guidance No.25”)). Accordingly, the method for calculating projected
benefit obligations and current service costs has been revised and the method of attributing
expected benefits has been changed from a straight-line method to a benefit formula method.
Also, the method of determining discount rate has been changed from using the period whichapproximates the expected average remaining years of service of the employees to using a single
weighted average discount rate reflecting the estimated period and amount of benefit payment.
There was no impact of this change on retained earnings as of April 1, 2014 and profit or loss
for the year ended March 31, 2015.
In accordance with the revision of the Guidance No.25, the note to Retirement Benefits
relating to multi-employer pension plan has been changed and the prior year amounts have been
reclassified to conform to the presentations for the year ended March 31, 2015.
Details are disclosed in Note 5. Retirement Benefits.
(s) Reclassifications
Certain prior year amounts have been reclassified to conform to the presentations
for the year ended March 31, 2015.

(Change in accounting estimates)(Change in amortization period of actuarial gain or loss)
Previously, the actuarial gain or loss on net defined benefit liability
was amortized over 13 years. However, the average remaining
years of service of the employees fell below 13 years, and, therefore,
it is amortized over 10 years from the year ended March 31, 2015.
The effect of this change on profit or loss before income taxes andminority interests for the year ended March 31, 2015, was immaterial.
(o) Provision for Directors' Retirement Benefits
The Company and its domestic consolidated subsidiaries account for the provision19

3. Investment Securities
All the equity securities, classified as available-for-sale securities, are included in non-current investment securities.
The carrying amounts and aggregate fair values of the available-for-sale securities as of March 31, 2015 and 2014 are as follows:
2015
Millions of yen

Thousands of U.S. dollars

Fair

Acquisition

Unrealized

Fair

Acquisition

Unrealized

Value

Cost

Gains (Losses)

Value

Cost

Gains (Losses)

Securities whose carrying value
exceeds their acquisition cost:
Equity securities .............................................................\
Securities whose carrying value doesn't
exceed their acquisition cost:
Equity securities .............................................................
Total ............................................................................. \

877 \

684 \

193 $

7,300 $

5,690 $

1,610

877 \

684 \

193 $

7,300 $

5,690 $

1,610

2014
Millions of yen

Securities whose carrying value
exceeds their acquisition cost:
Equity securities ............................................................. \Securities whose carrying value doesn't
exceed their acquisition cost:
Equity securities .............................................................
Total ............................................................................. \Fair

Acquisition

Unrealized

Value

Cost

Gains (Losses)

846 \

684 \

162

846 \

684 \

162

Information on available-for-sale securities whose fair value is not readily determinable as of March 31, 2015 and 2014 are described in Note 12.
The Company recognized impairment losses of \24 million ($198 thousand), \27 million and \30 million on available-for-sale securities during the years ended March 31, 2015, 2014 and 2013.

4. Short-term Borrowings and Long-term Debt
Short-term borrowings and long-term debt as of March 31, 2015 and 2014 consist of the following:Thousands ofMillions of yen
2015
2014

U.S. dollars

2015

Short-term borrowings with average interest rate of 2.39% for 2015 and 2.08% for 2014........................................................\
Current portion of long-term borrowings with average interest rate of 1.54% for 2015 and 1.48% for 2014.............................
Current portion of other liabilities with average interest rate of 1.69% for 2015 and 1.74% for 2014........................................
Total short-term .......................................................................................................................................................

13,259 \14,100481
27,8408,362 $
11,867410
20,639110,352
117,354
4,006
231,712Long-term borrowings with average interest rate of 1.50% for 2015 and 1.43% for 2014, less current portion ........................
Long-term other payable, less current portion ......................................................................................................................
Total long-term ........................................................................................................................................................
Total ...................................................................................................................................................................... \32,475
1,313
33,78861,628 \29,216
1,510
30,72651,365 $270,284
10,931
281,215
512,927* Average interest rate of borrowings represents the weighted average rate for the outstanding balances at March 31, 2015 and 2014. Average interest rate of otherliabilities represents the weighted average rate for the average of the outstanding balances at April 1, 2014 and March 31, 2015.
The aggregate annual maturities of long-term debt as of March 31, 2015 are as follows:Year ending March 31
2016......................................................................................................................................................................................................................................... \2017.........................................................................................................................................................................................................................................
2018 ........................................................................................................................................................................................................................................
2019.........................................................................................................................................................................................................................................
2020 and thereafter ...................................................................................................................................................................................................................
Total ........................................................................................................................................................................................................................................ \20

Millionsof yen14,581 $11,996
10,253
6,562
4,977
48,369 $Thousands of
U.S. dollars

121,360
99,84585,336
54,614
41,420402,575

5. Retirement Benefits
The Company and its certain consolidated subsidiaries provide a lump-sum retirement plan as defined benefit pension plan for employees' retirement benefits.
Certain consolidated subsidiaries apply the simplified method in computing net defined benefit liability and benefit costs for their lump-sum retirement plans.
Although the Company and certain domestic consolidated subsidiaries also contribute to a multi-employer pension plan, related benefit
obligation, plan assets and benefit costs are excluded from the following calculation because it is difficult to assess the plan assets reasonably.
Defined benefit pension plans, except plan applying the simplified method(1) Movement in projected benefit obligations
Thousands ofBalance at beginning of year ............................................................................................................................................... \Service cost .......................................................................................................................................................................
Interest cost .......................................................................................................................................................................
Actuarial gain (loss)............................................................................................................................................................
Benefits paid ......................................................................................................................................................................
Balance at end of year......................................................................................................................................................... \Millions of yen
2015
2014
1,520 \
1,405 $
142
144
15
14
59
(15)
(62)
(28)
1,674 \
1,520 $

U.S. dollars

2015
12,650
1,177
127
494
(516)
13,932(2) Reconciliation from projected benefit obligations to net defined benefit liability
Thousands ofUnfunded projected benefit obligations ............................................................................................................................... \Total liability at end of year ................................................................................................................................................ \Net defined benefit liability ................................................................................................................................................. \Total liability at end of year ................................................................................................................................................ \Millions of yen
2015
2014
1,674 \
1,520 $
1,674 \
1,520 $
1,674 \
1,674 \

1,520 $
1,520 $

U.S. dollars

2015
13,932
13,932
13,932
13,932(3) Retirement benefit costs
Thousands ofService cost ....................................................................................................................................................................... \Interest cost .......................................................................................................................................................................
Amortization of actuarial loss .............................................................................................................................................
Amortization of past service cost ........................................................................................................................................
Total benefit costs ............................................................................................................................................................. \Millions of yen
2015
2014
142 \
144 $
15
14
29
30
8
8
194 \
196 $

U.S. dollars

2015
1,177
127
243
67
1,614

(4) Remeasurements of defined benefit plans
Thousands of

Past service cost ................................................................................................................................................................ \Actuarial loss ................................................................................................................................................................…
Total ................................................................................................................................................................................. \Millions of yen
2015
2014
(8) \
30
22 \

U.S. dollars

- $
- $

2015
(67)
251
184

(5) Accumulated remeasurements of defined benefit plans
Thousands ofUnrecognized past service cost .......................................................................................................................................... \Unrecognized actuarial loss ................................................................................................................................................
Total ................................................................................................................................................................................. \Millions of yen
2015
2014
57 \
65 $
172
142
229 \
207 $

(6) Actuarial assumptions

Discount rate .....................................................................................................................................................................

21

2015
0.7%

2014
1.0%

U.S. dollars

2015
474
1,431
1,904

Defined benefit pension plan applying the simplified method(1) Movement in net defined benefit liability
Thousands ofBalance at beginning of year ............................................................................................................................................... \Benefit costs ......................................................................................................................................................................
Benefits paid ......................................................................................................................................................................
Others ...............................................................................................................................................................................
Balance at end of year ........................................................................................................................................................ \Millions of yen
2015
2014
422 \
372 $
60
58
(14)
(8)
4
472 \
422 $

U.S. dollars

2015
3,512
501
(116)
28
3,925

(2) Reconciliation from projected benefit obligations to net defined benefit liability
Thousands ofUnfunded projected benefit obligations ............................................................................................................................... \Total liability at end of year ................................................................................................................................................ \Net defined benefit liability ................................................................................................................................................. \Total liability at end of year ................................................................................................................................................ \Millions of yen
2015
2014
472 \
422 $
472 \
422 $
472 \
472 \

422 $
422 $

U.S. dollars

2015
3,925
3,925
3,925
3,925

(3) Retirement benefit costThousands ofRetirement benefit costs calculated using the simplified method ........................................................................................... \Total costs at end of year ................................................................................................................................................... \Millions of yen
2015
2014
60 \
58 $
60 \
58 $

Multi-employer pension plan
The amount required to contribute to the multi-employer pension plan which is accounted for in the same way as defined contribution plans is\122 million ($1,018 thousand) and \127 Million for the years ended March 31, 2015 and 2014, respectively.

(1) Funded status
Fair value of plan assets ............................................................................................................................................. \Total amount of pension benefit obligation recorded by pension fund and minimum actuarial reserve..............................
Funded status ............................................................................................................................................................ \Millions of yen
2014
2013
59,789 \54,31961,91957,853(2,130) \(3,534)(2) Contribution share ratio of the Company
Contribution share ratio ..............................................................................................................................................

2014
6.63%

2013
6.51%

Note: The above ratio does not match the Group's actual share ratio.

(3) Supplementary information
The funded status described in above (1) was calculated as follows:
Accumulated deficit of the fund .................................................................................................................................. \Current year reserve ...................................................................................................................................................
Less:
Balance of past service cost ......................................................................................................................….............
Funded status ............................................................................................................................................................ \Millions of yen
2014
2013
(2,333) \(6,298)
1,041
3,965
838
(2,130) \

1,201(3,534)As of March 31, 2014 and 2013, balance of past service cost is recognized by equal payment method over 6 years and 4 months and the remaining period is
2 years and 4 months and 3 years and 4 months, respectively.
The Social Welfare Pension Fund of Nippon Electronic Circuits (the “Fund”) that the Company and certain consolidated domestic subsidiaries have joined resolved
an ordinary dissolution of the fund at a meeting of board members of the Fund on February 25, 2015.

22

U.S. dollars

2015
501
501

6. Net assets
Under the Japanese Corporation Law (“the Law”) and regulations, the entire amount paid for new shares is required to be designated as capital stock.
However, a company may, by a resolution of the Board of Directors, designate an amount not exceeding one-half of the price of the new sharesas additional paid-in capital, which is included in capital surplus.
In cases where dividend distribution of surplus is made, the smaller of an amount equal to 10% of the dividend or the excess, if any, of 25% ofcapital stock over the total of additional paid-in capital and legal earnings reserve must be set aside as additional paid-in capital or legal earnings reserve.
Legal earnings reserve is included in retained earnings in the accompanying consolidated balance sheets.
Additional paid-in capital and legal earnings reserve may not be distributed as dividends. However, all additional paid-in capital and all legal earnings
reserve may be transferred to other capital surplus and retained earnings, respectively, which are potentially available for dividends.
The maximum amount that the Company can distribute as dividends is calculated based on the non-consolidated financial statements of
the Company in accordance with the Law.

7. Impairment loss
Impairment losses recognized for the year ended March 31, 2015 are as follows:
Thousands of

Use
Business assets

Type of assets
Buildings and structures and Machinery andvehicles, etc.

Millions of yen
2015

Location\

Wuhan, Hubei, China

Buildings and structures and Machinery andHanoi, Vietnam
vehicles, etc.
Idle assets
Machinery and vehicles
Yamato, Kanagawa, Japan
Total ...................................................................................................................................................................... \Business assets

U.S. dollars

2015

4,244 $

35,3204,508

37,51769
8,821 $

575
73,412The Group carries out grouping mainly based on each plant for business assets and based on each asset for idle assets.
For the year ended March 31, 2015, the Group recognized impairment losses of \8,821 million ($73,412 thousand) due to decline in profitability,
which resulted in decreasing the book values of such assets to recoverable amounts for business assets and to the net selling price for idle assets.
Impairment losses comprise of \3,448 million ($28,698 thousand) for buildings and structures, \4,551 million ($37,879 thousand) for Machineryand vehicles, \460 million ($3,826 thousand) for Construction in progress and \362 million ($3,009 thousand) for others.
Impairment losses recognized for the year ended March 31, 2014 are omitted due to their immateriality.
No impairment loss was recognized for the year ended March 31, 2013.

8. Contingent Liabilities
Contingent liabilities of the Company as of March 31, 2015 and 2014 are as follows:
Thousands ofMillions of yen
2015
2014
Guarantee of installment liabilities denominated in U.S. dollar
Meiko Electronics Thang Long Co., Ltd................................................... \2,328 \

Trade notes discounted.................................................................................

72

U.S. dollars

2015
- $

19,375597

38

9. Research and Development Costs
Research and development costs included in selling, general and administrative expenses and manufacturing costs are \908 million ($7,556 thousand),\1,013 million and \1,032 million for the years ended March 31, 2015, 2014 and 2013, respectively.

10. Net Gain (Loss) on Sales and Disposal of Property, Plant and Equipment
Significant components of net gain (loss) on sales and disposal of property, plant and equipment for the years ended March 31, 2015, 2014 and 2013 are as follows:
Thousands of

Gain:
Buildings and structures ..........................................................................\
Machinery and vehicles ...........................................................................
Land ......................................................................................................
Construction in progress ........................................................................
Long-term prepaid expenses ...................................................................
Others ...................................................................................................
Total gain .......................................................................................
Loss:
Buildings and structures ..........................................................................
Machinery and vehicles ...........................................................................
Land ......................................................................................................
Construction in progress ........................................................................
Intangible assets .....................................................................................
Others ...................................................................................................
Total loss .......................................................................................
Net gain (loss) ............................................................................... \2015

Millions of yen
2014
- \
30 \
0
4
379
3
0
0
3
413

(12)
(266)
(0)
(84)
(114)
(7)
(483)
(480) \

(15)
(114)
(1)
(91)
(6)
(5)
(232)
181 \

23

U.S. dollars

2015

2013
- $
3
2
17
1
23

4
22
1
27

(0)
(38)
(5)
(15)
(1)
(59)
(36) $(96)(2,211)
(2)
(696)
(950)
(63)
(4,018)(3,991)

11. Income Taxes
Income taxes applicable to the Company consist of corporate tax, inhabitant tax and enterprise tax, which in the aggregate resulted in the normal statutory
tax rates of approximately 35.6% for the year ended March 31, 2015, and approximately 38.0% for the years ended March 31, 2014 and 2013.
The tax effects of significant temporary differences which resulted in deferred tax assets and liabilities as of March 31, 2015 and 2014 are as follows:
Thousands ofMillions of yen
2015
2014
Deferred Tax Assets:
Elimination of unrealized profits ............................................................................................................... \Accrued bonuses ....................................................................................................................................
Net defined benefit liability .......................................................................................................................
Provision for directors' retirement benefits ................................................................................................
Accrued enterprise tax .............................................................................................................................
Allowance for doubtful accounts..............................................................................................................
Tax loss carryforwards ............................................................................................................................
Valuation loss of inventories.....................................................................................................................
Difference on depreciation period.............................................................................................................
Impairment loss...........................................................................................................................................
Loss on valuation of investment securities.................................................................................................
Allowance for investment loss .....................................................................................................................
Loss on revaluation of golf club memberships .........................................................................................
Deferred losses on hedges........................................................................................................................
Other ......................................................................................................................................................
Less: valuation allowance .........................................................................................................................
Total .........................................................................................................................................................\

37 \
156
695
77
74
353
2,404
75
500
1,666
16
60
21
69
232
(3,710)2,725 \

U.S. dollars

2015

64 $
180
688
93
46
12
1,558
60
774
15
23
47
168
(1,052)
2,676 $

311
1,296
5,782
641
621
2,941
20,008621
4,160
13,863
134
496
175
574
1,941
(30,880)
22,684

Thousands ofMillions of yen
2015
2014

U.S. dollars

2015

Deferred Tax Liabilities:
Reserve for advanced depreciation of property, plant and equipment..........................................................\
Retained earnings of foreign subsidiaries...................................................................................................
Deferred gains on hedges..........................................................................................................................
Other.......................................................................................................................................................
Total .........................................................................................................................................................\(100) \
(158)(62)(320) \

(135) $
(250)
(6)
(54)
(445) $

(833)
(1,311)(519)(2,663)

Deferred Tax Assets, Net: ..........................................................................................................................\

2,405 \

2,231 $

20,021

A reconciliation between the normal effective statutory tax rates and the actual effective tax rates reflected in the accompanying consolidated statements
of income for year ended March 31, 2014 is as follows:

2014
Statutory tax rate ................................................................................................................................................................
Expenses not deductible for tax purpose .............................................................................................................................
Per capita inhabitant tax ......................................................................................................................................................
Foreign tax credit ...............................................................................................................................................................
Special tax credit for income tax .........................................................................................................................................
Tax rate difference in foreign subsidiaries ............................................................................................................................
Retained earnings of foreign subsidiaries .............................................................................................................................
Decrease of tax loss carryforwards .....................................................................................................................................
Reduction of deferred tax assets due to income tax rates change ..........................................................................................
Valuation allowance ...........................................................................................................................................................
Other, net ..........................................................................................................................................................................
Actual effective tax rate ......................................................................................................................................................

38.0%
0.4%
0.8%
(7.1)%(6.7)%
14.1%
17.2%
30.0%
0.8%
9.9%
1.6%
99.0%

The reconciliation for the years ended March 31, 2015 and 2013 are omitted due to pre-tax loss.
Amendments to the amount of deferred tax assets and liabilities for enacted changes in tax laws and rates
The Partial Revision of the Income Tax Act (Act. No. 9, 2015) and the Partial Revision of the Local Income Tax Act (Act. No. 2, 2015) were enacted on March 31, 2015.
Accordingly, income tax rates will be reduced from the fiscal years beginning on or after March 31, 2015. As a result, the statutory tax rate used to calculate deferred tax
assets and deferred tax liabilities will decrease from 35.6% to 33.0% for temporary differences that are expected to be realized in the fiscal year beginningon April 1, 2015, and to 32.2% for those that are expected to be realized in the fiscal year beginning on April 1, 2016 and thereafter.
As a result, deferred tax assets (net of deferred tax liabilities), deferred income taxes, unrealized gains on available-for-sale securities, deferred gains (losses) on hedges,
remeasurements of defined benefit plans decreased by ¥100 million ($829 thousand), \91 million ($761 thousand), \6 million ($54 thousand), \7 million ($58 thousand)and \8 million ($64 thousand), respectively.
The Partial Revision of Income Tax Act (Act No.10, 2014) was enacted on March 31, 2014.
Accordingly, the Special Corporation Tax for Reconstruction was abolished for fiscal years beginning on or after April 1, 2014.
As a result, the statutory tax rate used to calculate deferred tax assets and liabilities decreased from 38.0% to 35.6% at March 31, 2014.
The impact of this change was immaterial.

2412. Financial Instruments(a) Qualitative information on financial instruments(1) Policies for using financial instruments
The Group finances necessary funds mainly through bank loans and bond issues according to the capital investment plan for the production and sales of PCB.
Temporary and excessive funds are operated by highly stable financial instruments and the Group finances short-term operating capital by bank loans.
Derivative transactions are only utilized to hedge the risks mentioned in (2) below.
(2) Details of financial instruments used and exposures to risk and how they arise
Operating receivables such as trade notes and accounts receivable are exposed to credit risk. Some operating receivables, which are denominated in foreign currencies
due to global operations, are exposed to foreign currency fluctuation risk. The Group might utilize foreign exchange forward contracts if necessary except for thosewithin the range of the operating payables dominated in the same foreign currency. Investments securities mainly consist of securities of companies in whicha business relationship has been established and they are exposed to market fluctuation risk.
Operating payables such as trade notes and accounts payable are due within one year.
Some of the operating payables relating to imports of raw materials are dominated in foreign currencies and are exposed to foreign currency fluctuation risk.
The Group might utilize foreign exchange forward contracts if necessary except for those within the range of the operating receivables dominated in the same foreign
currency. Loans are mainly used for the purpose of financing capital investments. Some of them are variable interest loans and are exposed to interest fluctuation risk.
The Group utilizes interest rate swaps to hedge the risk. Regarding derivative transactions, the Group utilizes foreign exchange forward contracts to hedge foreign
currency fluctuation risk of operating receivables and payables dominated in foreign currencies and interest rate swaps to hedge interest fluctuation risk.
The Group utilizes commodity forward contracts to hedge copper price fluctuation risk.
(3) Policies and processes for managing the risk(i) Credit risk management (risk of default by the counterparties)
The sales management department in the Company follows sales management rules, monitors the customers’ credit conditions periodically and manages the due dateand balance per customer. The Company keeps track of the adverse financial conditions of its customers in the early stage to mitigate the uncollectible risk.
The Company enters into derivative transactions only with the credit worthy financial institutions to mitigate the credit risk.
(ii) Market risk management (risk of foreign currency fluctuations and interests)
Regarding the trade receivables and trade payables dominated in foreign currencies, the Company utilizes foreign exchange forward contracts if necessary to hedge
the foreign currency fluctuation risk, which is controlled by each currency and on a monthly basis. For investment securities, the Company regularly reviews the fair value
and issuers' financial condition and readjust Company's portfolio on an ongoing basis considering the business relationship with counterparties. Derivative transactions
are based on the internal rules and executed after getting the approval from the approver and managed by Finance Dept. Contents of the derivative transactions
are reported to Board of Directors' meeting periodically.
(iii) Liquidity risk management (risk of default at the due dates)
The Company prepares and updates the cash management plan based on the reports from each department to manage liquidity risk on a timely basis.
(4) Supplemental information on fair values
As well as the values based on market prices, fair values of financial instruments include values which are reasonably calculated in case market prices do not exist.
As the calculation of those values adopts certain assumptions, those values may vary in case different assumptions are applied.
Also, for the contract amount regarding derivative transactions described in Note 13, the contract amount itself does not indicate market risk related to derivativetransactions.
(b) Fair values of financial instruments
Book values of the financial instruments included in the consolidated balance sheets and their fair values at March 31, 2015 and 2014 are as follows:
2015
Millions of yen

AssetsCash and cash equivalents ............................................ \Time deposits ..............................................................
Trade notes and accounts receivable .............................
Investment securities:
Available-for-sale securities.........................................
Liabilities
Trade notes and accounts payable ................................ \Short-term borrowings..................................................
Long-term borrowings...................................................
Long-term other payable ..................................................
Derivative financial instruments ....................................... \

Book

Fair

Value

Value

Thousands of U.S. dollars
Difference

Book

Fair

Value

Value

9,491 \
219
22,7439,491 \
219
22,743- $-78,990 $1,823
189,290

78,990 $1,823
189,290

-

877

877

-

7,300

7,300

-

12,613 \13,25946,5751,794(231) \

12,613 \13,25946,6901,801(231) \

- $
115
7
- $

104,976 $
110,352
387,638
14,937(1,922) $104,976 $
110,352
388,599
14,992(1,922) $

961
55
-

2014
Millions of yen

AssetsCash and cash equivalents ............................................ \Time deposits ..............................................................
Trade notes and accounts receivable .............................
Investment securities:
Available-for-sale securities.........................................
Liabilities
Trade notes and accounts payable ................................ \Short-term borrowings..................................................
Long-term borrowings...................................................
Long-term other payable ..................................................
Derivative financial instruments ....................................... \Difference

Book

Fair

Value

Value

Difference

8,759 \
219
17,5438,759 \
219
17,543

-

846

846

-

9,933 \
8,362
41,0831,920- \9,933 \
8,362
41,163
1,947
- \

80
27
-

The financial instruments whose fair value is extremely difficult to determine are not included above.
Derivative financial instruments are stated in net of assets and liabilities. The figures in parenthesis indicate net liabilities.

25

(1) Valuation method of the fair value of financial instruments and information of investment securities and derivative transactions(i). Cash and cash equivalents, (ii). Time deposits, (iii). Trade notes and accounts receivable
The carrying value is deemed as the fair value since it is scheduled to be settled in a short period of time.
(iv). Investment securities
Fair value of equity securities is based on the quoted price on stock exchange. Please refer to Note 5 regarding the information of the fair value for the investment
in securities by classification.
(v). Trade notes and accounts payable, (vi) Short-term borrowings
The carrying value is deemed as the fair value since it is scheduled to be settled in a short period of time.
(vii). Long-term borrowings, (viii). Long-term other payable
The fair values are measured as the net present value of estimated future cash flows by discounting the principal and interest value using the loan interest rate applied
to the new loans or the installment contracts. If the variable interest rate loans meet certain criteria for the short cut method (If interest rate swap contracts are used as a hedge
and meet certain hedging criteria, the interest rate swaps are not remeasured at market price and the amount to be received under the interest rate swap contract is added to or
deducted from the interest on the liabilities for which the swap contract was executed), the sum of principal and the interest processed as interest rate swaps are discounted byusing the reasonably estimated loan interest rate applied to the same kind of loans.
(ix). Derivative transactions
Please refer to Note 13.
(2) Unlisted securities of \1,936 million yen ($16,115 thousand) as of March 31, 2015 and \869 million yen as of March 31, 2014 are not included in the above tablebecause the securities do not have fair market values and it is extremely difficult to estimate fair values.
(c) The redemption schedule for financial instruments and securities with maturity as of March 31, 2015 and 2014 is as follows:
2015
Millions of yen

Cash and cash equivalents .............................................. \Time deposits ................................................................
Trade notes and accounts receivable ...............................
Investment securities:
Available-for-sale securities with maturities.....................
Total ............................................................................. \Due in one
year

Due after one
year throughDue after five
year throughor less

five years

ten years

Due after ten
years

9,491 \
219
22,743

- \
-

- \
-

-

32,453 \

- \

- \

-

2015
Thousands of U.S. dollars

Cash and cash equivalents .............................................. $Time deposits ................................................................
Trade notes and accounts receivable ...............................
Investment securities:
Available-for-sale securities with maturities.....................
Total ............................................................................. $Due in one

Due after one

Due after fiveDue after ten

year

year throughyear throughyears

or less

five years

ten years

78,990 $1,823
189,290

- $
-

- $
-

-

270,103 $

- $

- $

-

2014
Millions of yen

Cash and cash equivalents .............................................. \Time deposits ................................................................
Trade notes and accounts receivable ...............................
Investment securities:
Available-for-sale securities with maturities.....................
Total ............................................................................. \Due in one
year

Due after one
year throughDue after five
year throughor less

five years

ten years

Due after ten
years

8,759 \
219
17,543

-\
-

-\
-

-

26,521 \

-\

-\

-

26

13. Derivatives
Derivative transactions for which hedge accounting has been applied for the years ended March 31, 2015 and 2014 are as follows:
2015

Contract
amountHedged item

Millions of yen
Contract
amountdue after
one year

Fair value

Thousands of U.S. dollars
Contract
amountContract
due after
amountone year
Fair value

Interest rate related:
Benchmark Method
Interest rate swap
contracts
Payable fixed/
Receive floating

Long-term
borrowings \20,945 \13,955 \(225) $

174,327 $

116,145 $(1,876)

Special Method
Interest rate swap
contracts
Payable fixed/
Receive floating

Long-term
borrowings \2,460 \

1,950 \

(27) $

20,474 $16,230 $(225)

Commodity related :Benchmark Method
Copper price swap
contractsRawmaterials

63 \

- \

(6) $

520 $

- $

(46)

\

Contract
amountHedged item

2014
Millions of yen
Contract
amountdue after
one year

Fair value

Interest rate related:
Benchmark Method
Interest rate swap
contracts
Payable fixed/
Receive floating

Long-term
borrowings\

15,671 \10,035 \(139)

Special Method
Interest rate swap
contracts
Payable fixed/
Receive floating

Long-term
borrowings\

2,550 \

2,460 \

(29)

Commodity related :Benchmark Method
Copper price swap
contractsRawmaterials

\

642 \

- \

17

Fair value is principally based on quoted price obtained from financial institutions signing the contract.
There are no derivative transactions for which hedge accounting has not been applied for the years ended March 31, 2015 and 2014.

14. Loss on Disaster
Loss on disaster is due to the Great East Japan Earthquake that occurred on March 11, 2011.
Loss on disaster for the year ended March 31, 2013 mainly consists of restoration of Miyagi plant (current Ishinomaki-plant).

15. Subsidy income for reconstruction
Subsidy income for reconstruction consists of subsidy payments from Miyagi prefecture based on “Assistance program for small and medium-sized enterprises in restoration andmaintenance of group facilities” for the reconstruction of the Miyagi plant in Ishinomaki, which shut down due to the influence of the Great East Japan Earthquake.

16. Compensation Income
Compensation income consists of compensation payments from Tokyo Electric Power Company for lost earnings due to accidents at Fukushima Daiichi Nuclear Power
Station ("NPS") and Fukushima Daini NPS of Tokyo Electric Power Company.

27

17. Loss on abandonment of inventories
Loss on abandonment of inventories mainly consists of disposal costs of inventories for prolonged temporary shutdown of the 2nd Plant of Meiko Electronics(Wuhan) Co., Ltd. due to problem on permitting process regarding environmental assessment.

18. Environmental Expenses
Environmental expenses consist of environmental costs incurred in the 2nd Plant of Meiko Electronics (Wuhan) Co., Ltd. which was temporarily shut down due to problem on
permitting process regarding environmental assessment.

19. Loss from suspension of plant operations
Loss from suspension of plant operations consists of plants shutdown costs due to anti-Japanese demonstrations which took place in China.

20. Comprehensive Income
Reclassifications and income tax effects attributable to other comprehensive income for the years ended March 31, 2015, 2014 and 2013 are as follows:
Thousands ofMillions of yen
2014

2015
Unrealized gains (losses) on available-for-sale securities:
Gains arising during the year .................................................................................................................. \Reclassifications and adjustments ..........................................................................................................
Before income tax effects ........................................................................................................................
Income tax effects .................................................................................................................................
Total .......................................................................................................................................................\
Deferred gains (losses) on hedges:
Gains (losses) arising during the year ......................................................................................................\
Reclassifications and adjustments ..........................................................................................................
Before income tax effects ........................................................................................................................
Income tax effects .................................................................................................................................
Total .......................................................................................................................................................\
Foreign currency translation adjustments:
Adjustments arising during the year ........................................................................................................ \Total .......................................................................................................................................................\
Remeasurements of defined benefit plans:
Adjustments arising during the year ......................................................................................................... \Reclassifications and adjustments ..........................................................................................................
Before income tax effects ........................................................................................................................
Income tax effects .................................................................................................................................
Total .......................................................................................................................................................\
Total other comprehensive income ........................................................................................................... \U.S. dollars

2015

2013

26 \
16
42
(9)
33 \

331 \
331
(118)
213 \

98 $
98
(35)
63 $

216
131
347
(70)
277

(304) \
196
(108)
28
(80) \

(2) \
179
177
(53)
124 \

(337) $
175
(162)
46
(116) $

(2,535)
1,632
(903)
236
(667)

3,688 \
3,688 \

3,162 \
3,162 \

3,443 $
3,443 $

30,691
30,691(59) \
37(22)0(22) \
3,619 \

- \- \3,499 \

- $- $3,390 $

(494)
310
(184)
2
(182)
30,11921. Supplementary Cash Flow Information
Due to the merger of Meiko High-End Electronic Circuit Board (Wuhan), Co., Ltd., an unconsolidated subsidiary, and Meiko Electronics (Wuhan), Co., Ltd.,a consolidated subsidiary of the Company and surviving company, the Company assumed the following assets and liabilities for the year ended March 31, 2013:
2013
Millions of yen
Current assets....................................................................................... \Non-current assets ...............................................................................
Total assets ............................................................................................\

2,866
10
2,876

Current liabilities ................................................................................... \Non-current liabilities ............................................................................
Total liabilities......................................................................................... \-28

22. Segment Information
Information about reported segment sales, segment profit, segment assets and other items under the new accounting standards is not disclosed as the Group's
reportable segment is solely printed circuit boards (“PCB”) and the related business.
(Supplementary information)(1) Information about products and services
Information about products and services is not disclosed since sales amount of single unit of product or service to external customers accounted for more than
90% of consolidated net sales.
(2) Information about geographical areas(a) Net sales

2015
Millions of yen
Japan

Net sales ............................................................................................

\

25,274

Asia\

50,024

North America\

Europe\10,916

4,681

Other

\

Total

-

\

90,895-$756,516

-

\

-

\

2015
Thousands of U.S. dollars
Japan

Net sales ............................................................................................

$

210,358

Asia$ 416,347

North America$

Europe90,853$

38,958

Other

$

Total

2014
Millions of yen
Japan

Net sales ............................................................................................

\

24,919Asia\

42,452

North America\

Europe

\

7,848

4,013

Other

\

Total

79,232

2013
Millions of yen
Japan

Net sales ............................................................................................

\

24,086

Asia\

27,780

North America

\

5,099

Europe\3,744

Net sales by destination were recognized based on the location of customers and classified by country or regions.
(b) Property, plant and equipment

2015
Millions of yen
Japan

Property, plant and equipment .............................................................

\

5,867

Asia

\

59,046

Other

\

Total

1

\

64,914

7$

540,275

1\

2015
Thousands of U.S. dollars
Japan

Property, plant and equipment .............................................................

$

48,833Asia$ 491,435

Other

$

Total

2014
Millions of yen
Japan

Property, plant and equipment .............................................................

\

6,161

Asia

\

61,417

Other

\

Total

(3) Information about major customers
Information about major customers is not presented since no single customer accounts for 10% or more of consolidated net sales.
(4) Information about impairment loss
Information about impairment loss by reportable segment for the year ended March 31, 2015 is not disclosed as the Group's reportable segment issolely printed circuit boards (“PCB”) and the related business.
There were no applicable matters for the year ended March 31, 2014.

29

67,579

Other

\

Total

60,70923. Related party transactions
For the year ended March 31, 2015
Transactions with related parties
Unconsolidated subsidiary

Name
Meiko Electronics ThangLong Co., Ltd.

Location
Hanoi, Vietnam

Capital$9,000thousands

Percentage forpossession of Voting
Rights
Details of businessElectronics-related business Direct ownership (%)
100.0

Relationship
Manufacturing of
the Company's
product, guarantee of
liabilities andconcurrent director

Details oftransaction ※2
Guarantee of
liabilities

Note: ※1 Consumption taxes were not included in the transaction amount.
※2 The Company has guaranteed the installment payables of Meiko Electronics Thang Long Co., Ltd.
The Company dose not receive the guarantee fee.
There were no applicable matters for the years ended March 31, 2014 and 2013.

24. Business Combination
On January 28, 2013, the Company's consolidated subsidiary in China, Meiko Electronics (Wuhan) Co., Ltd. merged with the Company's unconsolidated
subsidiary, Meiko High-End Electronic Circuit Board (Wuhan), Co., Ltd. based on the resolution of the Board of Directors' meeting held on January 7, 2013.
1. Outline of merger(a) Names and description of the business of the company acquired:
Acquired company:
Company name
Meiko Electronics Co., Ltd
Description of the business
Designing, manufacturing and sales of PCB(b) Date of the business combination
January 28, 2013(c) Legal form of the business combination
Merger to make Meiko Electronics (Wuhan) Co., Ltd. a surviving company and Meiko High-End Electronic Circuit Board (Wuhan), Co., Ltd. a dissolved
company.
(d) Name of company after business combination
Meiko Electronics (Wuhan) Co., Ltd(e) Purpose of merger
The merger was conducted to increase the efficiency of the business and decrease administrative costs by merging Meiko Electronics (Wuhan), Co., Ltd.
and Meiko High-End Electronic Circuit Board (Wuhan), Co., Ltd.
2. Overview of accounting procedures implemented
This merger was accounted for as a transaction under common control in accordance with “Accounting Standard for Business Combinations” (ASBJ
Statement No. 21, issued on December 26, 2008) and “Guidance on Accounting Standard for Business Combinations and Accounting Standard forBusiness Divestitures” (ASBJ Guidance No.10, issued on December 26, 2008).

25. Significant Subsequent Events(Impairment loss)
The Group recognized impairment losses for its groups of fixed assets in the first quarter of the year ended March 31, 2016 as follows:
Thousands ofType of assets
Location
Buildings and structures andBusiness assets
Ishinomaki, Miyagi
Machinery and vehicles, etc.
Buildings and structures andBusiness assets
Hanoi, Vietnam
Machinery and vehicles, etc.
Total .....................................................................................................................

Millions of yen
2016

Use

\

964 $

\

U.S. dollars

2016
8,021

7,073

58,8688,037 $

66,889For the first quarter of the year ended March 31, 2016, the Group recognized impairment losses of \8,037 million ($66,889 thousand) due to decline in profitability,
which resulted in decreasing the book values of such assets to recoverable amounts for business assets.

30

Transaction
amount ※1\2,328 million($19,375
thousands)

Balance at
March31 2015-

31

Principal Subsidiaries and Affiliates

Name or Trade Name

Paid-in Capital

Address(Millions of yen)

Principal Business

Investment
Ratio (%)

Meiko Tech Co., Ltd.

Ayase City,
Kanagawa Prefecture

20

PCBs for electronics

100.0

Yamagata Meiko
Electronics Co., Ltd.

Kahoku-cho,Nishimurayama-gun,
Yamagata Prefecture

75

PCBs for electronics

100.0

M.D. Systems Co., Ltd.

Atsugi City,
Kanagawa Prefecture

15

PCBs for electronics

100.0

Meiko Elec. Hong Kong.
Co., Ltd.

Hong Kong

US$72,669
thousand

PCBs for electronics

100.0

Meiko Electronics(Guangzhou Nansha)
Co., Ltd.

Guangzhou,
Guangdong Province,
P.R.C.

US$120,800
thousand

PCBs for electronics

100.0

Meiko Electronics(Wuhan) Co., Ltd.

Wuhan,
Hubei Province,
P.R.C.

US$148,800
thousand

PCBs for electronics

MDS Circuit
Technology, Inc.

Manila, the Philippines

12,000 PH peso

PCBs for electronics

Meiko Electronics
America, Inc.

CA, U.S.A.

US$1,500
thousand

PCBs for electronics

100.0

Guangzhou Meiko PCBCo., Ltd.

Guangzhou,
Guangdong Province,
P.R.C.

US$10,000
thousand

PCBs for electronics

100.0

Meiko Electronics
Vietnam Co., Ltd.

Hanoi, Vietnam

US$90,000
thousand

PCBs for electronics(66.3)(47.6)

thousand

32

100.0

100.0
(100.0)(100.0)100.0(100.0)Principal Shareholders(Thousands of shares)

Percentage ofTotal Number of
Shares Issued (%)

4,699

17.53

631

2.36

Meiko Kosan Co., Ltd.

608

2.27

Yuho, Ltd.

521

1.94

Haruyuki Naya

488

1.82

SBI SECURITIES Co., Ltd.

482

1.80

Seiichi Naya

442

1.65

BNY GCM CLIENT ACCOUNT JPRD AC ISG(FE–AC)

437

1.63

379

1.42

377

1.41

9,067

33.83

Number of
Shares Held

Name of Shareholder

Yuichiro Naya
PLEASANT VALLEY(Standing Agent: The Bank of Tokyo-Mitsubishi
UFJ, Ltd.)(Standing Agent: The Bank of Tokyo-Mitsubishi
UFJ, Ltd.)HILLCREST, L.P.
(Standing Agent: The Bank of Tokyo-Mitsubishi
UFJ, Ltd.)
Sumitomo Mitsui Banking Corporation
Total

33

Corporate History

November 1975

Established Meiko Denshi Kogyo Co., Ltd. to manufacture and sell PCBs.
Started selling double-sided PCBs.

April 1978

Established the System Development Department (currently Yamato
Technology Center/ Meiko Tech Co., Ltd.) to develop electronics application
products.

October 1978

Developed in-house use PCB Testers for the PCB final inspection process.

September 1980

Constructed a new headquarters and factory, establishing an integrated
production system for the entire process from design to finished product.

December 1980

Introduced a multi-layer press machine and started manufacturingmulti-layer PCBs.

December 1981

Developed the world’s first multi-video processor.

March 1982

Established Multitech Co., Ltd. (currently Meiko Tech Co., Ltd.) to
manufacture single-sided PCBs (currently a consolidated subsidiary of theCompany).

September 1982

Established Yamagata Meiko Electronics Co., Ltd. (currently a consolidated
subsidiary of the Company) to manufacture PCBs.

August 1984

Completed construction to expand the headquarters/factory in Ayase,
Kanagawa Prefecture, and started operations.

July 1988

Established M.D. Systems Co., Ltd. to design PCBs (currently a consolidated
subsidiary of the Company).

June 1990

Constructed the Fukushima Factory.

April 1991

Changed company name to Meiko Electronics Co., Ltd.

November 1997

Constructed a new manufacturing building on the premises of the Yamagata
Factory (Yamagata Meiko Electronics Co., Ltd.) to manufacture PCBs using
the new PCB Build-Up technology.

August 1998

Established Meiko Elec. Hong Kong. Co., Ltd. in Hong Kong, China(currently a consolidated subsidiary of the Company), mainly to expand
transactions with overseas manufacturers and purchase materials locally.

December 1998

Established Meiko Electronics (Panyu Nansha) Co., Ltd. in Guangzhou,
Guangdong, China [currently Meiko Electronics (Guangzhou Nansha) Co.,
Ltd., a consolidated subsidiary of the Company], to manufacture PCBs.

June 1999

Changed the name of the PCB manufacturing department of headquarters to
Kanagawa Factory.

December 2000

Stock listed on the Japan Securities Dealers Association.

January 2001

Started operations at the Guangzhou Plant [Meiko Electronics (Guangzhou
Nansha) Co., Ltd.].

June 2001

Established MDS Circuit Technology, Inc. (currently a non-consolidated
subsidiary of the Company) in Manila, the Philippines, to design PCBs.

34

December 2004

Stock listed on JASDAQ Securities Exchange, Inc.

July 2005

Established Meiko Electronics (Wuhan) Co., Ltd. in Wuhan, Hubei, China(currently a consolidated subsidiary of the Company) to manufacture PCBs.

November 2005

Constructed a new factory building at Miyagi Factory (currently the Ishinomaki
Factory).

April 2006

Established Meiko Electronics America, Inc. in the United States (currently aconsolidated subsidiary of the Company) to sell PCBs.

July 2006

Started operations at the WUHAN Plant [Meiko Electronics (Wuhan) Co.,Ltd.].

January 2007

Established Meiko Electronics Vietnam Co., Ltd. (currently a consolidated
subsidiary of the Company) in Hanoi, Vietnam, to manufacture PCBs.

November 2007

Constructed a new headquarters building on the premises of the Kanagawa
Factory.

March 2008

Purchased the Circuit Business from Victor Company of Japan, Limited.

April 2009

Started operation of the EMS Plant in Vietnam.

May 2009

Established the Meiko R&D Center.

July 2009

Started operation of second plant in WUHAN.

April 2010

Upon the merger of JASDAQ Securities Exchange, Inc. and Osaka Securities
Exchange Co., Ltd., the Company’s stock is listed on the Osaka Securities
Exchange, JASDAQ market.

October 2010

Subsequent to the integration of the Hercules, JASDAQ and NEO markets of
the Osaka Securities Exchange, Meiko Electronics Co., Ltd. had its stock
listed on the JASDAQ Standard market of the exchange.

July 2011

Transferred the imaging equipment and industrial equipment businesses
to Multitech Co., Ltd., and changed the trade name to Meiko Tech Co., Ltd.

November 2011

Started operation of the PCB Plant in Vietnam.

May 2013

Started operation of the Ishinomaki Factory.

July 2013

Subsequent to the integration of cash equity markets of the Osaka Securities
Exchange Co., Ltd. and Tokyo Stock Exchange Group, Inc., Meiko Electronics
Co., Ltd. had its stock listed on the JASDAQ standard market of the Tokyo
Stock Exchange.

August 2014

Established Meiko Electronics Thang Long Co., Ltd. (currently a consolidated
subsidiary of the Company) in Hanoi, Vietnam, to manufacture and sell PCBs.

35

Corporate Data (As of March 31, 2015)

Corporate Name:
Meiko Electronics Co., Ltd.
Date of Establishment:
November 25, 1975
Paid-in Capital:¥12,889 million
Fiscal Year:
April 1 to March 31
Number of Shares Authorized:
63,200,000
Number of Shares Issued:
26,803,320
Number of Shareholders:
6,845
Securities Code:
6787
Stock Exchange Listing:Tokyo Stock Exchange, JASDAQ standard market
Number of Employees:
10,895 (Consolidated)
Number of Subsidiaries:
16
Transfer Agent:
Sumitomo Mitsui Trust Bank, Limited
Accounting Auditor:
KPMG AZSA LLC
Headquarters:
5-14-15, Ogami, Ayase, Kanagawa Prefecture, Japan 252-1104
Investor Relations Contact:- Tel:+81-(0)467-76-6001- E-mail: Meiko_Eng@meiko-elec.com- URL:
http://www.meiko-elec.com/

36

Meiko Share Performance in FY2015 Compared with Indices140.0

Meiko Electronics (JASDAQ: 6787)

130.0

JASDAQ INDEX

120.0
110.0
100.0
90.0
80.0
70.0
60.0
50.0
40.0

Fiscal year ended March 31, 2015
Index
In %

37

38