+

Annual Report 2013
For the year ended March 31, 2013

Meiko Electronics Co., Ltd.

Profile

The Meiko Group consists of Meiko Electronics Co., Ltd. (the “Company”), and its 12
subsidiaries (10 consolidated subsidiaries and 2 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 ................................................................................ 33
Principal Shareholders ...................................................................................................... 34
Corporate History ............................................................................................................... 35
Corporate Data (As of March 31, 2013) ............................................................................ 37
Meiko Share Performance in FY2013 Compared with Indices ...................................... 382

Five-year Financial Summary
2009

2010

2011

2012

2013

(millions of yen, except per share amounts)
Consolidated financial indicators:
Net sales¥75,806¥69,823¥74,724¥62,973¥60,709

Ordinary income

953

2,695

2,127

222

(386)

Net income (loss)

522

1,828

(3,095)

1,159(1,568)Comprehensive income——(5,307)

2,048

1,822

Net assets

34,57638,16732,98035,02836,727

Total assets

85,611

84,72889,816

91,105102,046

2,062.17

2,067.25

1,756.65

1,865.71

1,956.24

Net income (loss) per share (yen)30.71

107.39(166.32)

61.73(83.52)

Net income per share (diluted) (yen)

29.38

—

—

—

—

Equity ratio

40.4%

45.0%

36.7%

38.4%

36.0%

Return on equity (ROE)

1.5%

5.0%

(8.7%)

3.4%(4.4%)

Price earnings ratio (PER) (times)

31.2

18.5

—

19.4

—

Cash flows from operating activities

7,479

8,841

7,916

9,252

3,594

Cash flows from investing activities(12,929)(6,059)(17,911)(10,377)(5,075)

Cash flows from financing activities

5,338(3,742)

8,677

2,360

5,358

Cash and cash equivalents
at the end of the period

5,146

4,009

2,509

3,752

8,788

Number of employees

7,623

10,14913,161

9,948

9,966

[Average number of temporary staff]

[815]

[565]

[597]

[397]

[528]

Net assets per share (yen)3Net sales

Net income (loss), basic per share
Net income, diluted per share¥400.00(yen)(millions of yen)

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

2009
2009

2010

2011

2012

2013

Net income (loss)(millions of yen)(millions of yen)

¥4,000¥2,000¥0(¥2,000)¥20,000¥15,000¥10,000¥5,000¥0(¥5,000)(¥10,000)(¥15,000)(¥20,000)(¥4,000)

2010

2011

2012

2013

(percentage)(millions of yen)

¥30,000¥20,000

2011

2012

2013

Cash flows from investing activities

4.0%
2.0%

0.0%
-2.0%

2009

2010

2011

2012

2013

-6.0%
-8.0%
2009

2010

2011

2012

2013

-10.0%

Total assets

Price earnings ratio (PER)(times)¥100,000(millions of yen)

2010

-4.0%

¥10,000¥80,000¥60,000¥40,000¥20,000

2009

2010

2011

2012

2013

Net assets per share¥3,000.00
(yen)

2013

6.0%

¥40,000¥2,000.00¥1,000.00
¥0.00

2012

Net income, diluted per share (yen)Return on equity (ROE)¥50,000¥0

2009

Cash flows from operating activities
Cash flows from financing activities

Net assets

¥0

2011

Cash flows¥6,0002009

2010

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

2009

2010

2011

2012

2013

4

35.0 times
30.0 times
25.0 times
20.0 times
15.0 times
10.0 times
5.0 times
0.0 times

2009

2010

2011

2012

2013

Financial Review: Management’s Discussion and Analysis
The forward-looking statements in this section are based on the Group’s judgment as ofthe 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 best
judgement along with past results and conditions of the Group to generate estimatesand forecasts.
(2) Analysis of the Group’s financial position
1) Assets(Current assets)
The balance of current assets as of March 31, 2013 was ¥35,101 million, up ¥6,657
million from ¥28,444 million for the previous fiscal year. This change mainly comprised
an increase of ¥5,036 million in cash and cash equivalents from ¥3,752 million to¥8,788 million, a decline of ¥506 million in trade notes and accounts receivable from
¥12,635 million to ¥12,129 million and an increase of ¥1,416 million in inventories from
¥9,071 million to ¥10,487 million.
(Noncurrent assets)
The balance of noncurrent assets as of March 31, 2013 was ¥66,945 million, up ¥4,284
million from ¥62,661 million for the previous fiscal year. A major factor for this increase
was a ¥5,345 million increase in property, plant and equipment from ¥56,427 million to¥61,772 million due to capital investments.
2) Liabilities(Current liabilities)
The balance of current liabilities as of March 31, 2013 was ¥40,178 million, up ¥13,562
million from ¥26,616 million for the previous fiscal year. This change mainly consisted ofa ¥946 million increase in trade notes and accounts payable from ¥6,297 million to¥7,243 million, a ¥10,873 million increase in short-term borrowings from ¥3,098 million
to ¥13,971 million and an increase of ¥2,740 million in the current portion of long-termborrowings from ¥10,368 million to ¥13,108 million.
(Long-term liabilities)
The balance of long-term liabilities as of March 31, 2013 was ¥25,141 million, down
¥4,320 million from ¥29,461 million for the previous fiscal year. A major factor for thisincrease was a decrease of ¥4,192 million in long-term borrowings from ¥26,749 million
to ¥22,557 million.
3) Net assets(Net assets)
The balance of net assets as of March 31, 2013 was ¥36,727 million, up ¥1,699 million
from ¥35,028 million for the previous fiscal year. Major factors for this increase were a¥1,691 million decrease in retained earnings and an increase of ¥3,443 million inforeign currency translation adjustments.

5(3) Analysis of business results
1) Net sales
The Group’s business performance during the fiscal year under review was greatly
affected by the growth in auto-related sales which, however, failed to offset stagnant
demand in the domestic electronics industry and the adverse effect of production
adjustments by manufacturers focused on smartphones. As a result, net sales were¥60,709 million, down ¥2,264 million, or 3.6%, from the previous fiscal year.
2) Cost of sales and Selling, general and administrative expenses
Cost of sales decreased ¥1,614 million, or 2.9%, from the previous fiscal year to¥53,156 million, reflecting a decline in variable cost following the decrease in net sales.
As a result, gross profit decreased ¥650 million, or 7.9%, from the previous fiscal yearto ¥7,553 million, and the gross margin declined to 12.4%.
Selling, general and administrative expenses increased ¥768 million, or 10.4%, fromthe previous fiscal year to ¥8,159 million, primarily due to increases in labor costs anddepreciation and amortization.
3) Operating loss
Operating loss was ¥606 million mainly due to a decrease in the volume of orders
compared with operating income of ¥812 million for the previous year.
4) Non-operating income and Non-operating expenses
Non-operating income increased ¥1,704 million from the previous fiscal year to ¥2,628
million, primarily due to a foreign exchange gain of ¥2,366 million for the fiscal year
under review.
Non-operating expenses increased ¥895 million from the previous fiscal year to¥2,409 million. This was mainly because depreciation and amortization increased ¥656
million.
5) Ordinary loss
Ordinary loss was ¥386 million, due primarily to the recording of operating loss
compared with ordinary income of ¥222 million for the previous fiscal year.
6) Extraordinary income (loss)
Extraordinary income was ¥1,212 million, which consisted of subsidy income of ¥500
million and compensation income of ¥620 million from Tokyo Electric Power Company,
Incorporated.
Extraordinary loss was ¥1,272 million, which mainly consisted of a ¥478 million loss
on abandonment of inventories, environmental expenses of ¥292 million, and the costof suspending operations at a factories resulting from anti-Japan protests in China of¥243 million.
7) Net loss
Loss before income taxes and minority interests was ¥447 million compared with anincome of ¥534 million for the previous fiscal year. The total amount of income taxes
after adoption of tax-effect accounting was ¥1,121 million compared with minus ¥625
million for the previous fiscal year
As a result of the above, a net loss of ¥1,568 million was recorded for the fiscal year
under review compared with a net income of ¥1,159 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, 2013 increased¥5,036 million from the previous fiscal year, to ¥8,788 million.
Of the amount above, cash increased as a result of a merger with a non-consolidated
subsidiary amounting to ¥690 million.
Net cash provided by operating activities for the fiscal year under review was ¥3,594
million, down ¥5,658 million from the previous fiscal year. Increases were mainly fromdepreciation and amortization of ¥6,283 million and a decrease in trade notes andaccounts receivable of ¥1,428 million. The major decreases comprised a decrease inforeign exchange gain of ¥2,243 million and income taxes paid of ¥1,099 million.
Net cash used in investing activities was ¥5,075 million, down ¥5,302 million. The
major outflow was ¥5,732 million for the purchase of property, plant and equipment.
Net cash provided by financing activities was ¥5,358 million, up ¥2,998 million fromthe previous fiscal year. The inflow was mainly from an increase in short-termborrowings of ¥9,963 million. The major outflow was ¥11,050 million for the repaymentof long-term borrowings.
Trends in cash flow indicators of the Group are as follows:Year ended
March 31, 2011

Year ended
March 31, 2012

Year ended
March 31, 2013

Equity ratio (%)

36.7

38.4

36.0

Market value equity ratio (%)

18.5

24.7

11.8

Cash flows versus Interest-bearing debt ratio

4.8

4.4

13.8

Interest coverage ratio (times)

11.0

11.1

3.9

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 of cash
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 lawsuit 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) Natural disaster
The Group’s major manufacturing bases are the Yamagata Factory (Yamagata Meiko
Electronics Co., Ltd.), the Fukushima Factory and the Miyagi Factory (currently the
Ishinomaki Factory), which are all located in the Tohoku region. The Group endeavors toprevent damage from natural disasters by securing the safety of its employees andprotecting facilities against earthquakes and tsunami. However, the Great East Japan
Earthquake and subsequent tsunami, which were beyond our capability to predict,seriously affected the Group’s business performance. Should a disaster of that scaleoccur 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.
(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 legal restrictions and the tax system
3: 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 or the
economic situation occur, issues might arise in the management of production facilities
and equipment and in the execution of other operations, and adversely affect the Group’sbusiness performance and financial position.
(7) Foreign currency exchange rate fluctuation risk
To operate plants in China, 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) 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, 2013, was 48.6%.
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.

9

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10

Consolidated Financial Statements
Consolidated Balance Sheets
Meiko Electronics Co., Ltd. and Consolidated Subsidiaries
As of March 31, 2013 and 2012
Thousands ofMillions of yen

ASSETS2013

U.S. dollars (Note 1)

2012

Current Assets:
Cash and cash equivalents (Notes 6, 15 and 25) .............................................................................................................................
\
8,788
\
3,752
Receivables －Trade notes and accounts receivable (Notes 6 and 15) ........................….....................................................................................
12,12912,635
Other receivables ............................................................................................................................…...…
1,152
920
Less: Allowance for doubtful accounts ........................................................................................................................
(15)
(17)
Inventories －Merchandise and finished goods .............................…............................................................................…
3,418
2,954
Work in process ................................…..................................................................................................…
2,597
2,774
Raw materials and supplies ...........................…......................................................................................…
4,472
3,343
Deferred tax assets (Note 14) ....................................................................................…........................ 1,866
1,362
Other ...................................................................................................................................................................…
694
721
Total current assets .......................................................................................................................35,101
28,4442013$

129,016
12,256(159)
36,35527,62647,574
19,847
7,381
373,380

Property, Plant and Equipment, at Cost:
Land ................................................................................................................................................................
1,944
1,944
Buildings and structures ........................................................................….................................................
34,992
28,867
Machinery and vehicles................................................….........................................................................
63,092
55,611
Construction in progress ..........................................................................................................................
6,588
5,263
Other ................................................................................................................................................................….......…
2,902
2,498
109,518
94,183
Less: Accumulated depreciation ........................................................................................................….…
(47,746)(37,756)
Net property, plant and equipment ......................................................................................................…
61,77256,427
Intangible Assets

469

Investments and Other Assets:
Investment securities (Notes 5 and 15) ....................................................................................................................
1,041
Long-term loans receivable .................................................................................................................... 131
Deferred tax assets (Note 14) .............................................................................................................. 1,619
Other ...............................................................................................................................................................…......…
1,953
Less: Allowance for doubtful accounts ..........................................................................................................
(40)
Allowance for investment loss ..........................................................................................................… Total investments and other assets ..........................................................................................................
4,704
Total ...........................................................................................................................................
\
102,046\

See notes to consolidated financial statements.

11

93,484

20,682372,211
671,12270,07630,871
1,164,962(507,883)
657,079

590

4,982

1,516
129
1,716
2,398
(46)
(69)
5,644
91,105

11,071
1,389
17,226
20,771(423)
50,034
1,085,475$

Thousands of

LIABILITIES AND
NET ASSETS

Millions of yen

2013

U.S. dollars (Note 1)

2012

Current Liabilities:
Trade notes and accounts payable (Notes 6 and 15) ..................................................................................................................
\
7,243
\
6,297
Short-term borrowings (Notes 8 and 15) ............................................................................................................…
13,971
3,098
Current portion of long-term borrowings (Notes 4, 8 and 15) ........................................................................................................
13,10810,368
Income taxes payable (Note 14) .....................................................................................................................
739
510
Accrued bonuses .................................................................................................................................. 440
460
Provision for loss on disaster .................................................................................................................… 528
Other (Note 6) ................................................................................................................................................................
4,677
5,355
Total current liabilities ..................................................................................................................40,178
26,616Long-term Liabilities:
Long-term borrowings (Notes 4, 8 and 15) .......................................................................................................................
22,557
26,749Provision for employees' retirement benefits (Note 9) ...............................................................
1,517
1,324
Long-term other payable ..................................................................................................................
506
903
Provision for directors' retirement benefits ................................................................................................…
261
261
Other ......................................................................................................................................................................
300
224
Total long-term liabilities ..................................................................................................................................................
25,141
29,461

2013$

77,043
148,616
139,429
7,859
4,683
49,748427,378

239,943
16,140
5,385
2,777
3,184
267,429

Commitments and Contingent Liabilities (Note 11) :Net Assets (Note 10):
Shareholders' Equity:
Common stock, authorized - 63,200,000 sharesissued - 19,403,320 shares in 2013 and 2012 ..............................................................................…
10,546
10,546112,176
Capital surplus ........................................................................................................................................................
12,467
12,467
132,615
Retained earnings ..................................................................................................................................................................…
13,827
15,518147,085
Less: Treasury stock, at cost; Common stock,629,244 shares in 2013 and 2012 ......................................................................................................................
(396)
(396)
(4,216)
Total shareholders' equity...............................................................................................................................................…
36,444
38,135
387,660
Accumulated Other Comprehensive Income:Unrealized gains (losses) on available-for-sale securities .......................................................................................................................
(115)
(178)
(1,226)
Deferred gains (losses) on hedges ...........................................................................................................................…
(206)
(90)
(2,188)Foreign currency translation adjustments ........................................................................................................................................................
604(2,839)
6,422
Total accumulated other comprehensive income...............................................................................................................................................…
283(3,107)
3,008
Total net assets ..................................................................................................................................................
36,72735,028
390,668
Total ........................................................................................................................................................
\
102,046\
91,105$
1,085,475

See notes to consolidated financial statements.

12

Consolidated Statements of Operations
Meiko Electronics Co., Ltd. and Consolidated Subsidiaries
For the Years ended March 31, 2013, 2012 and 2011
Thousands ofMillions of yen

2013

U.S. dollars (Note 1)

2012

2011

2013

Net Sales ...........................................................................................................................................................
\
60,709\62,973\74,724$
645,775
Cost of Sales (Note 12) ..................................................................................................................................................
53,15654,77063,219565,426
Gross profit ......................................................................................................................................................
7,553
8,203
11,50580,349Selling, General and Administrative Expenses (Note 12) ........................................................................................................................................................................
8,159
7,391
8,207
86,792
Operating income (loss) ....................................................................................................................................…
(606)
812
3,298
(6,443)
Other Income (Expenses):
Interest expense, net ...............................................................................................................................................
(898)
(812)
(737)
Dividend income ...............................................................................................................................................
1313
2Compensation expenses......................................................................................................................................…
(45)
(33)
Foreign exchange gain (loss) .............................................................................…....................…
2,366
587
(252)
Subsidy income ..............................................................................................................................................................…
26
109
87
Net gain (loss) on sales and disposal of property, plant and equipment (Note 13)............................................…
(36)
117
(110)
Reversal of allowance for investment loss ..............................................................................................................................................................…
69
Subsidy income for reconstruction (Note 18) ..............................................................................................................................................................…
500
Compensation income (Note 19) ..............................................................................................................................................................…
620
744
Loss on valuation of investment securities ...........................................................................................
(30)
Gain on investment of securities..................................................................................................................…33
Loss on disaster (Note 17).................................................................................................................… (170)(105)(4,943)
Expenses for business structure improvement .......................................................................................… (483)
Loss on valuation of inventories (Note 20) ..............................................................................................................................................................…
(160)
Loss on abandonment of inventories (Note 21) ..............................................................................................................................................................…
(478)
Loss on abolishment of retirement benefit plan ..............................................................................................................................................................…
(65)
Environmental expenses (Note 22) ..............................................................................................................................................................…
(292)
(219)
Loss from suspension of plant operations (Note 23)..............................................................................................................................................................…
(243)
Depreciation ..............................................................................................................................................................…
(941)
(285)
(33)
Other, net ......................................................................................................................................................................................
(347)
(157)
(238)
Total ............................................................................................................................................... 159(278)(6,707)(9,555)
137
25,171
273
(385)
734
5,319
6,597
(319)
(1,812)(5,084)(3,102)(2,588)(10,014)(3,682)
1,690

Income (Loss) before Income Taxes and Minority Interests .............................................................…
(447)
Income Taxes (Note 14):
Current ...............................................................................................................................................…
1,320
Refund ...............................................................................................................................................… Deferred .................................................................................................................................................(199)
Total income taxes ............................................................................................................................
1,121
Income (Loss) before Minority Interests....................................................................................................…
(1,568)
Minority Interests ..................................................................................................................................................…
Net Income (Loss) ..........................................................................................................................................
\(1,568) \534(3,409)(4,753)

687
(413)
(899)
(625)
1,159
1,159

212
(526)
(314)
(3,095)0(3,095)

14,041(2,115)
11,926(16,679)(16,679)

\

$

Yen

Per Share of Common Stock:
Net income (loss) ..........................................................................................................................................
\(83.52) \Cash dividends applicable to the year ......................................................................................................................
-

See notes to consolidated financial statements.

13

61.73
5.00

U.S. dollars (Note 1)\(166.32)
12.00$(0.89)-

Consolidated Statements of Comprehensive Income
Meiko Electronics Co., Ltd. and Consolidated Subsidiaries
For the Years ended March 31, 2013, 2012 and 2011
Thousands ofMillions of yen

2013

U.S. dollars (Note 1)

2012

2011

Income (Loss) before Minority Interests ...........................................................................................................................................................
\(1,568) \1,159\(3,095)
Other Comprehensive Income (Note 24):
Unrealized gains (losses) on available-for-sale securities................................................................................................................................…
63(72)
Deferred gains (losses) on hedges ......................................................................................................................................................
(116)
114
Foreign currency translation adjustments ......................................................................................................................................................
3,443
847
Total other comprehensive income ......................................................................................................................................................
3,390
889
Comprehensive Income ......................................................................................................................................................
1,822
2,048

(121)
(106)
(1,985)(2,212)(5,307)

Comprehensive Income Attributable to:
Owners of the Company ................................................................................................................................…
\
1,822
\
Minority interests ......................................................................................................................................................
-(5,307)0

See notes to consolidated financial statements.

14

2,048
-

\

2013
$

(16,679)

672(1,233)36,621
36,06019,381$

19,381-

Consolidated Statements of Changes in Net Assets
Meiko Electronics Co., Ltd. and Consolidated Subsidiaries
For the Years ended March 31, 2013, 2012 and 2011
Thousands ofMillions of yen

2013

U.S. dollars (Note 1)

2012

Shareholders' Equity:
Common Stock (Note 10):Beginning balance .............................................................................................................................................................
\
10,546\
10,546
Ending balance ................................................................................................................................................................
\
10,546\
10,546

Capital Surplus (Note 10):Beginning balance .............................................................................................................................................................
\
12,467\
12,467
Gain on disposal of treasury stock ..................................................................................................…
Ending balance ................................................................................................................................................................
\
12,467\
12,467Retained Earnings (Note 10):Beginning balance .............................................................................................................................................................
\
15,518\14,359Net income .................................................................................................................................................................…
(1,568)
1,159
Cash dividends paid ......................................................................................................................................................…
(94)
Increase by merger ......................................................................................................................................................…
(29)
Ending balance ........................................................................…......................................................................................
\
13,827\
15,518Treasury Stock, at cost; Common Stock:
Beginning balance ..........................................................................................................................
\(396) \
Purchase of treasury stock ............................................................................................................................…
Disposal of treasury stock ..........................................................................................................................…Ending balance ................................................................................................................................................................
\(396) \

2011

2013

\
\

10,546
10,546$$112,176
112,176\

12,135332
12,467$

132,615
132,615

17,860(3,095)(406)
14,359$$$(4,216)(4,216)

\

\

\

$

$

165,066(16,679)
(999)
(303)
147,085

(396)
(0)
(396)

\

\

(594)
(0)
198
(396)

Total shareholders' equity.......................................................................................................................................…
\
36,444\
38,135\36,976$387,660

15
(121)
(106)

$

(1,898)672(1,226)

(98)
(106)
(204)

$

$
$

(30,199)
36,621
6,422

Accumulated Other Comprehensive Income:Unrealized Gains (Losses) on Available-for-sale Securities:
Beginning balance ..........................................................................................................................
\(178) \Net increase (decrease) .....................................................................................................................................…
63
Ending balance .............................................................................................................................................................…
\(115) \

(106)
(72)
(178)

\

Deferred Gains (Losses) on Hedges:
Beginning balance .........................................................................................................................................
\(90)
Net increase (decrease) ....................................................................................................................… (116)Ending balance .............................................................................................................................................
\
(206)

(204)
114
(90)

\

(3,686)847(2,839)\\(1,701)(1,985)(3,686)(3,107)\(3,996)

$

3,008

-

\

$

\

5
(5)
-

$

-

Total Net Assets ................................................................................................................................................................
\
36,727\35,028\32,980$390,668

Foreign Currency Translation Adjustments:
Beginning balance ..........................................................................................................................
\(2,839)Net increase (decrease) ..........................................................................................................................3,443
Ending balance ............................................................................................................................................
\
604

\
\

\
\

Total accumulated other comprehensive income.................................................................................................…
\
283\

Minority Interests:
Beginning balance ...................................................................................................................................................…
\\Net increase (decrease) ...............................................................................................................................................…
Ending balance ..............................................................................................................................…....................…........…
\
\

\

\

Number of Shares
Number of outstanding shares:
Beginning balance ..........................................................................................................................
19,403,320
Repurchase of treasury stock ..........................................................................................................................
(629,244)

19,403,320(629,244)

19,403,320(629,170)

Ending balance ................................................................................................................................................................
18,774,076
18,774,076

18,774,150

See notes to consolidated financial statements.

15

$

$

(955)
(1,233)(2,188)

This Page Intentionally Left Blank

16

Consolidated Statements of Cash Flows
Meiko Electronics Co., Ltd. and Consolidated Subsidiaries
For the Years ended March 31, 2013, 2012 and 2011
Thousands ofMillions of yen

U.S. dollars (Note 1)

2013
2012
2011
Operating Activities:
Income (loss) before income taxes and minority interests ......................................................................................................................................................
\(447) \
534\
(3,409)2013$(4,753)Adjustments to reconcile income before income taxes
to net cash provided by operating activities:
Depreciation and amortization ........................................................................................................................................
6,283
6,423
6,533
Increase (decrease) in allowance for doubtful accounts ...................................................................................................................................
(8)
(3)
5
Decrease in allowance for investment loss ........................................................................................… (69)(16)
Increase in provision for employees' retirement benefits ....................................................................... 191
124
110
Decrease in provision for directors' retirement benefits.............................................................................................................................................…
(8)
Increase (decrease) in accrued bonuses .......................................................................................................................…
(19)
24
(130)
Decrease in accrued bonuses to directors and corporate auditors ..........................................................… (24)Interest income and dividend income ......................................................................................................…
(33)
(30)
(20)
Loss on valuation of investment securities ........................................................................................................................................…
30
Interest expenses ........................................................................................................................................…
919
828
755
Foreign exchange gain ...............................................................................................................................
(2,243)(781)(707)
Net loss (gain) on sales and disposal of property, plant and equipment.............................................................…
36
(117)
110
Subsidy income for reconstruction ...................................................................................................................................................…
(500)
Compensation income ....................................................................................................................… (620)(744)
Loss on disaster ................................................................................................................................................…
170
105
4,943
Business structure improvement expenses.................................................................................................................…
483
Decrease in trade notes and accounts receivable ..........................................................................................................................
1,428
1,578
2,694
Decrease (increase) in inventories ...........................................................................................................................................
(350)
2,237
(3,832)
Increase (decrease) in trade notes and accounts payable ...................................................................................................................................
266(2,342)
713
Decrease (increase) in other assets .......................................................................................................................…
292
1,072
(181)
Increase in other liabilities .......................................................................................................................…
331
788
878
Subtotal
5,657
9,688
8,905
Interest and dividend received .................................................................................................................…
32
30
20
Interest paid ............................................................................................................................................…
(917)
(834)
(717)
Proceeds from compensation income ............................................................................................................................................…
620
744
Payments for loss on disaster.................................................................................................................…
(699)
(645)
(6)
Income taxes refund ................................................................................................................................… 468
Income taxes paid ..........................................................................................................................…(1,099)
(199)
(286)
Net cash provided by operating activities ..................................................................................................................................
3,594
9,252
7,916

66,832
(85)
(734)
2,036
(205)
(353)
319
9,771
(23,863)385(5,319)(6,597)
1,812
15,189(3,719)
2,835
3,107
3,512
60,170341(9,754)
6,597(7,432)(11,687)
38,235Investing Activities:
Payments for purchases of property, plant and equipment ..........................................................................................................................
(5,732)(10,439)
Proceeds from sales of property, plant and equipment ................................................................................................................................
25
153
Payments for purchases of intangible assets ..........................................................................................................................
(41)
(144)
Payments for purchases of investment securities ..........................................................................................................................
(4)(0)
Payments for insurance policies .............................................................................….................................................
(21)
(51)
Proceeds from maturity of insurance funds .............................................................................….................................................
170
94
Other, net ...........................................................................................................................................................
528
10
Net cash used in investing activities ..................................................................................................................................................
(5,075)(10,377)(16,104)23(228)(1,256)(59)(287)(17,911)(60,973)
263
(441)
(43)
(225)
1,806
5,625
(53,988)

Financing Activities:
Increase (decrease) in short-term borrowings ..........................................................................................................................
9,963(1,150)
Proceeds from long-term borrowings ...........................................................................................................................................
6,617
13,732
Payments for long-term borrowings ...........................................................................................................................................
(11,050)(9,733)
Payments for installment liabilities ............................................................................................................................
(78)
(488)
Payments for purchase of treasury stock......................................................................................
(0)
Proceeds from disposal of treasury stock ..........................................................................……………..
Cash dividends paid ......................................................................................................................................…
(94)(1)
Net cash provided by financing activities ..................................................................................................................................................
5,358
2,360

112
15,896(6,817)
(637)
(0)
529
(406)
8,677

105,983
70,385(117,542)(832)(1,001)
56,993

See notes to consolidated financial statements.

17

Thousands ofMillions of yen

2013
Effect of exchange rate changes
on Cash and Cash Equivalents .....................................................................................................................................
469

U.S. dollars (Note 1)

2012

2011

2013

8

(182)

4,992

(1,500)46,232Net Increase (Decrease) in Cash and Cash Equivalents ..........................................................................................................................
4,346
1,243

Cash and Cash Equivalents at Beginning of Year .............................................................................................................................................
3,752
2,509
4,009
Increase in Cash and Cash Equivalents
resulting from Merger with Unconsolidated Subsidiaries (Note 25) .............................................................................................................................................
690
Cash and Cash Equivalents at End of Year .............................................................................…
\
8,788
\
3,752
\
2,509
$
See notes to consolidated financial statements.

18

39,907
7,345
93,484

Notes to Consolidated Financial Statements
Meiko Electronics Co., Ltd. and Consolidated Subsidiaries
For the Years ended March 31, 2013, 2012 and 2011
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.
Effective from the year ended March 31, 2011, the Company adopted“Accounting Standard for Presentation of Comprehensive Income” (AccountingStandards Board of Japan (“ASBJ”) Statement No.25, issued on June 30, 2010)and “Revised Accounting Standard for Consolidated Financial Statements”(ASBJ Statement No. 22, revised on June 20, 2010). As a result of the adoptionof the standard, the Company has prepared the consolidated statement ofcomprehensive income from the year ended March 31, 2011.
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 \94.01 to $1, the approximate rate ofexchange at March 31, 2013. 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 (10 in 2012 and 11 in 2011) subsidiaries(together, the “Group”).
The difference between the cost and the underlying net equity at fairvalue of investments in consolidated subsidiaries (“goodwill”) is amortizedover a period of five years. All significant inter-company accounts
and transactions have been eliminated. In the elimination of investments in
subsidiaries, the assets and liabilities of the 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 forby 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 after April 1, 2007 : declining balance method
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 are 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($4,308 thousand) and operating loss and loss before income taxes andminority interests decreased by 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 have 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, is 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
The Company provides for investment loss principally at an amount computed
based on the evaluation of individual financial and other conditions of subsidiaries.
There was no balance in allowance for investment loss as of March 31, 2013.
(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.

19

(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.
(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) Leases
All finance lease transactions are capitalized to recognize lease assets
and lease obligations in the consolidated balance sheet, except for leases
which existed at April 1, 2008 and do not transfer ownership of the leased
property to the lessee and are accounted for as operating lease transactions.
(n) 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.
(o) Goodwill
Goodwill on purchases of specific businesses and consolidation goodwill
are carried at cost less accumulated amortization, which is calculatedby the straight-line method over five years.
(p) Provision for Employees' Retirement Benefits
The Company and its domestic consolidated subsidiaries have a funded
defined benefit pension plan covering substantially all employees.
The Company and its domestic consolidated subsidiaries account for theprovision for retirement benefits based on projected benefit obligations andfair value of plan assets at the balance sheet date.
Actuarial gain or loss is amortized using the straight-line method
over 13 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.
Prior service cost is amortized using the straight-line method over 10
years, which is less than the average remaining years of service of theemployees.

(r) Appropriations of Retained Earnings
Appropriations of retained earnings are reflected in the accompanying
consolidated financial statements for the following year uponshareholders' approval.
(s) 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 per share is computed by dividing net income 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.
(t) Asset Retirement Obligations
Effective from the year ended March 31, 2011, the Company and its consolidated
domestic subsidiaries adopted “Accounting Standard for Asset Retirement Obligations”(ASBJ Statement No.18, issued on March 31, 2008) and “Guidance on AccountingStandards for Asset Retirement Obligations” (ASBJ Guidance No.21, issued on March 31,2008). The effect of this adoption to net income (loss) was immaterial.
(u) Business Combination
Effective from the year ended March 31, 2011, the Company and its domestic consolidated
subsidiaries adopted “Accounting Standard for Business Combinations” (ASBJ Statement
No.21, issued on December 26, 2008), “Accounting Standard for Consolidated Financial
Statements” (ASBJ Statement No.22, issued on December 26, 2008), “Partial amendments
to Accounting Standard for Research and Development Costs” (ASBJ Statement No.23,
issued on December 26, 2008), “Accounting Standard for Business Divestitures” (ASBJ
Statement No.7, issued on December 26, 2008), “Accounting Standard for Equity Methodof Accounting for Investments” (ASBJ Statement No.16, issued on December 26, 2008),
and “Guidance on Accounting Standard for Business Combinations and Accounting Standard
for Business Divestitures” (ASBJ Guidance No.10, issued on December 26, 2008).
(v) Income before Minority Interests
Effective from the year ended March 31, 2011, the Company and its domestic consolidated
subsidiaries adopted “Regulation for Terminology, Forms and Preparation of Financial
Statements” (Cabinet Office Ordinance No. 5, issued on March 24, 2009), based on“Accounting Standard for Consolidated Financial Statements” (ASBJ Statement No. 22,
issued on December 26, 2008). The account of “Income (Loss) before Minority Interests”
was separately presented due to the adoption.
(w) Application of “Accounting Standard for Accounting Changes and Error
Corrections”
Effective from the year ended March 31, 2012, the Company and its domestic consolidated
subsidiaries adopted “Accounting Standard for Accounting Changes and Error
Corrections” (ASBJ Statement No. 24, issued on December 4, 2009) and “Guidance on
Accounting Standard for Accounting Changes and Error Corrections” (ASBJ Guidance
No. 24, issued on December 4, 2009) for changes in accounting policies and corrections of
figures on and after the beginning of the fiscal year ended March 31, 2012.
(x) Reclassifications
Certain prior year amounts have been reclassified to conform to the presentations
for the year ended March 31, 2013.

(Change in pension plan)
The Company and Yamagata Meiko electronics Co., Ltd., a consolidated
subsidiary, abolished qualified pension plan as of October 1, 2011 andtransferred to lump-sum retirement plan. “Accounting for Transfers
between Retirement Benefit Plans” (ASBJ Guidance No.1) was applied tothis change. As a result, loss on abolishment of retirement benefit plan of\65 million was recognized for the year ended March 31, 2012.
(q) Provision for Directors' Retirement Benefits
The Company and its domestic consolidated subsidiaries account for the provision for
directors' retirement benefits at balance sheet date in accordance with internal
regulations.

20

3. Accounting Standard Issued But Not Yet Effective“Accounting Standard for Retirement Benefits” (ASBJ Statement No.26, issued on May 17, 2012) and “Guidance on Accounting Standard for Retirement Benefits”(ASBJ Guidance No.25, issued on May 17, 2012)(1) Summary
This accounting standard is revised from the viewpoint of improvements to financial reporting and international convergence, mainly focusing on (a) how actuarial gains
and losses and past service costs should be accounted for, (b) how retirement benefit obligations and current service costs should be determined and (c) enhancementof disclosures.
(2) Effective dates
Effective for the end of fiscal years ending on or after March 31, 2014. However amendments relating to determination of projected benefit obligation and service cost are effectivefrom the beginning of fiscal years ending on or after March 31, 2015.
(3) Effect of the application of the standard
The Company and its consolidated domestic subsidiaries are currently in the process of determining the effects of these new standards on the consolidated financial statements.

4. Restrictive Financial Covenants
The Company's borrowings with restrictive financial covenants which includes an acceleration clause (primary terms are listed below, as terms vary for each agreement) on
obligations under the financing contract if the borrowings come in conflict with any of the below are \25,213 million ($268,194 thousand) (including current portion)
as of March 31, 2013.
(1) Ordinary income (loss) in the consolidated statements of operations cannot be a loss for each fiscal year (Excluding the year ended March 31, 2013).
(2) Ordinary income (loss) in the consolidated statements of operations cannot be a loss for two consecutive fiscal years.
(3) Total net assets in the consolidated balance sheets as of each fiscal year-end need to exceed the higher of (i) the amount equal to 75% of total net assets in the consolidatedbalance sheet as of the previous fiscal year end or (ii) the amount equal to 75% of total net assets in the consolidated balance sheet as of March 31, 2011.
(4) The total of interest-bearing debts at each fiscal year-end in the consolidated balance sheet cannot exceed the amount, the calculation of which is the net sales(in the consolidated statements of operations) divided by 12 and multiplied by 8, of the corresponding fiscal year (Excluding the year ended March 31, 2013).

5. 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, 2013 and 2012 are as follows:
2013
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 ...............................................................................................................
\
176 \
131 \
45 $
1,874 $
1,389 $
485
Securities whose carrying value doesn't
exceed their acquisition cost:
Equity securities .................................................................................................................................................................................................................
331
547
(216)
3,515
5,813
(2,298)Other .................................................................................................................................................................................................................
18
26
(8)
189
282
(93)
Total ...............................................................................................................
\
525 \
704 \
(179) $
5,578 $
7,484 $
(1,906)2012
Millions of yen
Fair

Acquisition

Unrealized

Value

Cost

Gains (Losses)

Securities whose carrying value
exceeds their acquisition cost:
Equity securities ...............................................................................................................
\
43 \
26 \
17
Securities whose carrying value doesn't
exceed their acquisition cost:
Equity securities .................................................................................................................................................................................................................
363
651
(288)
Other .................................................................................................................................................................................................................
18
24
(6)
Total ...............................................................................................................
\
424 \
701 \
(277)
Information on available-for-sale securities whose fair value is not readily determinable as of March 31, 2013 and 2012 are described in Note 15.
The Company recognized impairment losses of \30 million ($319 thousand) on available-for-sale securities during the year ended March 31, 2013.
The Company did not recognize impairment loss on available-for-sale securities for the years ended March 31, 2012 and 2011.

21

6. Notes Matured at End of Fiscal Year
March 31, 2013 and 2012, the end of fiscal years coincided with a bank holiday and the following notes that matured at the end of the fiscal years
were accounted for as if they are settled on their dates of maturity.
Thousands ofMillions of yen
U.S. dollars
2013
2012
2013
Notes receivable ......................................................................................................................................................................................................................................
\
31 \
73 $
330
Notes payable .........................................................................................................................................................................................................................................
\
49 \
44 $
518
Notes payable for equipments ..........................................................................................................................................................................................................................
\
2 \
1 $
16

7. Leases
The Group leases certain machinery, computer equipment, software and other assets.
As described in Note 2 (m), lease assets under finance leases that do not transfer ownership to lessees are capitalized and amortized to residual value of zero using
the straight line method with useful life defined by the terms of the contract effective from the fiscal year beginning April 1, 2008.
Pro forma information on leased property, such as acquisition costs, accumulated depreciation and net book value for property held under finance leases which commenced
prior to April 1, 2008 and do not transfer ownership of the leased property to the lessee on an “as if capitalized” basis for the years ended March 31, 2013 and 2012 is notdisclosed since there are no such leases as of March 31, 2013 and 2012.
Depreciation expense and interest expense, which are not reflected in the accompanying statements of operations, computed by straight-line method
and the interest method are as follows:
Millions of yen

2012
2011
Lease payments ....................................................................................................................................................................................
\
53 \
74
Depreciation expense ....................................................................................................................................................................................
\
46 \
68
Interest expense ............................................................................................................................................................................................................
\
1 \3
Information for the year ended March 31, 2013 is not disclosed since there are no finance leases which commenced prior to April 1, 2008 and do not transfer ownershipof the leased property to the lessee as of March 31, 2013.

8. Short-term Borrowings and Long-term Debt
Short-term borrowings and long-term debt as of March 31, 2013 and 2012 consist of the following:Thousands ofMillions of yen
2013
2012

U.S. dollars

2013

Short-term borrowings with average interest rate of 1.65% for 2013 and 3.18% for 2012..........................................................................................................................................................................
\
13,971 \3,098 $
148,616
Current portion of long-term borrowings with average interest rate of 1.65% for 2013 and 1.73% for 2012........................................................................................................................................................
13,10810,368
139,429
Current portion of other liabilities with average interest rate of 2.13% for 2013 and 2.17% for 2012...........................................................................................................................................................
58
73
612
Total short-term ................................................................................................................................................................................................
27,137
13,539288,657
Long-term borrowings with average interest rate of 1.51% for 2013 and 1.57% for 2012, less current portion ....................................................................................................................................................
22,557
26,749239,943
Long-term other payable, less current portion .................................................................................................................................................................................................................
1
59
11
Total long-term ...................................................................................................................................................................................................................................…
22,55826,808239,954
Total ..............................................................................................................................................................................................................................................
\
49,695 \40,347 $528,611* Average interest rate of borrowings represents the weighted average rate for the outstanding balances at March 31, 2013 and 2012. Average interest rate of otherliabilities represents the weighted average rate for the average of the outstanding balances at April 1, 2012 and March 31, 2013.
The aggregate annual maturities of long-term debt as of March 31, 2013 are as follows:
Millions
Year ending March 31
of yen2014...........................................................................................................................................................................................................................................................
\
13,166 $2015...........................................................................................................................................................................................................................................................
9,226
2016 ..........................................................................................................................................................................................................................................................
7,014
2017...........................................................................................................................................................................................................................................................
3,888
2018 and thereafter ...........................................................................................................................................................................................................................................
2,430
Total .........................................................................................................................................................................................................................................................
\
35,724 $22

Thousands of
U.S. dollars

140,041
98,141
74,60941,35625,848379,995

9. Provision for Employees' Retirement Benefits
The Company and its domestic consolidated subsidiaries have a lump-sum retirement plan.
Although the Company and certain domestic consolidated subsidiaries also contribute to a jointly sponsored employee pension fund, related benefit
obligation, plan assets and benefit costs are excluded from the following calculation because it is difficult to assess the plan assets reasonably.
The provision for employees' retirement benefits at March 31, 2013 and 2012 consists of the following:Thousands ofMillions of yen
2013
2012
Projected benefit obligation ........................................................................................................................................................................
\(1,777) \Unrecognized actuarial loss .......................................................................................................................................................… 187
Unrecognized prior service cost .......................................................................................................................................................…73
Net liability .............................................................................................................................................................................................…
\(1,517) \(1,366) $45(3)(1,324) $U.S. dollars

2013(18,902)
1,984
778(16,140)

The components of net periodic benefit costs for the years ended March 31, 2013 and 2012 are as follows:
Thousands ofMillions of yen
2013
2012
Service cost ........................................................................................................................................................................................................
\
188 \
159 $
Interest cost ....................................................................................................................................................................................................
22
23
Expected return on plan assets ........................................................................................................................................................................
(1)
Amortization of prior service cost ........................................................................................................................................................................
8(0)
Amortization of actuarial loss ........................................................................................................................................................................
7
6
Net periodic retirement benefit costs ........................................................................................................................................................................
\
225 \
187 $

U.S. dollars

2013
1,994
238
86
79
2,397

Note 1: In addition, loss on abolishment of retirement benefit plan of \65 million was recognized for the year ended March 31, 2012.
2: Prior service cost was recognized following to abolishment of qualified pension plan and transition to a lump-sum retirement plan for the year ended March 31, 2012.
3: Net periodic retirement benefit costs of the Company's domestic consolidated subsidiaries which adopt simplified method are included in service costs.
Assumptions used for the years ended March 31, 2013 and 2012 are set forth as follows:
2013
2012
Discount rate .................................................................................................................................................................................................................................................
1.0%
2.0%
Expected rate of return on plan assets .........................................................................................................................................................................................................
1.0%
Amortization of prior service cost ...........................................................................................................................................................................................................…
10 years
10 years
Amortization of period of actuarial gain/loss ........................................................................................................................................................................
13 years
13 years

Descriptions of the multi-employer pension plan to which contributions are recognized as expense are as follows:
Thousands of(1) Funded status (as of March 31, 2012)
Millions of yen
U.S. dollars
Fair value of plan assets .............................................................................................................................................................................................................................
\
45,789 $487,065
Benefit obligation on the basis of pension financing ..............................................................................................................................................................…
53,683571,034
Funded status ............................................................................................................................................................................................................…
\(7,894) $(83,969)(2) Contribution share ratio of the Company as of March 31, 2012 is 6.57%.

(3) Supplement remarks
Thousands of
The funded status described in above (1) was calculated as follows:
Millions of yen
U.S. dollars
General reserve .........................................................................................................................................................................................................................…
\
585 $
6,224
Less:
Current year shortage .........................................................................................................................................................................................................................…
\
6,884 $
73,222
Balance of unrecognized prior service cost ......................................................................................................................…................................................…
1,595
16,971
Funded status ............................................................................................................................................................................................................…
\(7,894) $(83,969)
Balance of unrecognized prior service cost is recognized by equal payment method over 6 years and 4 months and the remaining period is 4 years and 4 months as ofMarch 31, 2012.

10. 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.

23

11. Contingent Liabilities
Contingent liabilities of the Company as of March 31, 2013 are as follows:
2013
Thousands ofMillions of yen

U.S. dollars

Trade notes discounted........................................................................................................................................................................
\
38 $
405

12. Research and Development Costs
Research and development costs included in selling, general and administrative expenses and manufacturing costs are \1,032 million ($10,982 thousand),\961 million and \1,215 million for the years ended March 31, 2013, 2012 and 2011, respectively.

13. 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, 2013, 2012 and 2011 are as follows:
Thousands ofMillions of yen
U.S. dollars
Gain:
2013
2012
2011
2013
Buildings and structures ........................................................................................................................................................................
\
- \
0 \
8 $
Machinery and vehicles ........................................................................................................................................................................
3
59
2
34
Construction in progress ........................................................................................................................................................................
2
76
26
Long-term prepaid expenses ........................................................................................................................................................................
17
182
Others ........................................................................................................................................................................
1
0
6
Total gain ................................................................................................................................................................................................
23
135
10
248
Loss:
Buildings and structures ........................................................................................................................................................................
00
91Machinery and vehicles ........................................................................................................................................................................
38
15
104
406
Construction in progress ........................................................................................................................................................................
50
252Intangible assets ........................................................................................................................................................................
15
161
Others ........................................................................................................................................................................
1
3
5
13
Total loss ................................................................................................................................................................................................
59
18
120
633
Net gain (loss) ....................................................................................................................................................................................................................................
\(36) \
117 \(110) $
(385)

24

14. 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 38.0% for the year ended March 31, 2013 and approximately 40.6% for the years ended March 31, 2012 and 2011.
The tax effects of significant temporary differences which resulted in deferred tax assets and liabilities as of March 31, 2013 and 2012 are as follows:
Thousands ofMillions of yen
2013
2012

U.S. dollars

2013
Deferred Tax Assets:
Elimination of unrealized profits .........................................................................................................................…
\
37 \
10 $
390
Accrued bonuses .....................................................................................................................................................
169
176
1,797
Liability for employees' retirement benefits .........................................................................................................................…
541
473
5,756
Provision for directors' retirement benefits ........................................................................................................................................................................
93
93
988
Accrued enterprise tax ........................................................................................................................................................................
53
48
565
Allowance for doubtful accounts.....................................................................................................................................................................…
18
18
190
Tax loss carryforwards ........................................................................................................................................................................
1,535
971
16,330
Valuation loss of inventories.....................................................................................................................................................................…
39
17
413
Difference on depreciation period.....................................................................................................................................................................…
1,110
872
11,805
Loss on valuation of investment securities.....................................................................................................................................................................…
11
114
Allowance for investment loss.....................................................................................................................................................................…
25
Loss on revaluation of golf club memberships ........................................................................................................................................................................
36
36
384
Loss on disaster.....................................................................................................................................................................…
172
Deferred losses on hedges.....................................................................................................................................................................…
94
80
996
Valuation difference on available-for-sale securities.....................................................................................................................................................................…
64
98
680
Other ...................................................................................................................................................................................................
248
298
2,647
Less: valuation allowance ........................................................................................................................................................................
(384)
(276)
(4,076)
Total ......................................................................................................................................................................................
\
3,664 \
3,111 $
38,979Thousands ofMillions of yen
2013
2012

U.S. dollars

2013
Deferred Tax Liabilities:
Reserve for advanced depreciation of property, plant and equipment.....................................................................................................................................................................…
\(179) \
- $(1,906)
Deferred gains on hedges.....................................................................................................................................................................…
(33)
Total .........................................................................................................................................................................................
\(179) \
(33) $(1,906)
Deferred Tax Assets, Net: ........................................................................................................................................................................
\
3,485 \
3,078 $

37,073

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, 2012 are as follows:
A reconciliation for the years ended March 31, 2013 and 2011 are omitted due to pre-tax loss.
2012
Statutory tax rate ............................................................................................................................................................................................................................
40.6%
Expenses not deductible for tax purpose ........................................................................................................................................................................
2.8%
Non-taxable dividend income ........................................................................................................................................................................
(2.7)%Per capita inhabitant tax ............................................................................................................................................................................................
3.4%
Tax rate difference in foreign subsidiaries ...................................................................................................................................................................................................................
154.1%
Refund of income taxes ........................................................................................................................................................................................................................................
(77.4)%
Reduction of deferred tax assets due to income tax rates change ...............................................................................................................................................................................................
24.0%
Valuation allowance ............................................................................................................................................................................................................
(257.5)%
Other, net ................................................................................................................................................................................................................................
(4.3)%
Actual effective tax rate ....................................................................................................................................................................................................
(117.0)%
Following the promulgation of the “Act for Partial Amendment of the Income Tax Act, etc. for the Purpose of Creating Taxation System Responding to Changes
in Economic and Social Structures” (Act No. 114, 2011) and the “Act on Special Measures for Securing Financial Resources Necessary to Implement Measuresfor Reconstruction following the Great East Japan Earthquake” (Act No. 117, 2011) on December 2, 2011, the statutory tax rates used to calculate deferred tax
assets and liabilities will be changed from 40.63% to 37.96% for temporary differences expected to reverse in the consolidated fiscal years beginning from April 1, 2012
to April 1, 2014, and 35.58% for those expected to reverse in the consolidated fiscal years beginning from April 1, 2015 and thereafter.
As a result of this change, deferred tax assets, net of deferred tax liabilities, decreased by \151 million. Income taxes - deferred, unrealized securities
gains (losses) on available-for-sale and deferred gains (losses) on hedges increased by \128 million, \14 million, and \9 million, respectively for the year ended
March 31, 2012.

25

15. 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 16, 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, 2013 and 2012 are as follows:
2013
Millions of yen
Book

Fair

Value

Value

Thousands of U.S. dollars
Difference

Cash and cash equivalents ...........................................................................................................
\
8,788 \
8,788 \- $Time deposits ..................................................................…
219
219
Trade notes and accounts receivable ...................................................................................................
12,12912,129Investment securities:
Available-for-sale securities....................................................................................................................
525
525
Trade notes and accounts payable .................................................
\
7,243 \
7,243 \
- $Short-term borrowings......................................................................................................
13,971
13,971Long-term borrowings............................................................................
35,66535,967302
Derivative financial instruments ........................................................................…
\
- \
- \
- $
2012
Millions of yen
Book

Fair

Value

Value

Difference

Cash and cash equivalents ...........................................................................................................
\
3,752 \
3,752 \
Time deposits ..................................................................…
219
219
Trade notes and accounts receivable ...................................................................................................
12,635
12,635Investment securities:
Available-for-sale securities....................................................................................................................
424
424
Trade notes and accounts payable .................................................
\
6,297 \
6,297 \
Short-term borrowings......................................................................................................
3,098
3,098
Long-term borrowings............................................................................
37,11737,262
145
Derivative financial instruments ........................................................................…
\
- \
- \
-

The financial instruments whose fair value is extremely difficult to determine are not included above.

26

Book

Fair

Value

Value

Difference

93,484 $2,330
129,016

93,484 $2,330
129,016-

5,578
77,043 $148,616
379,372- $5,578
77,043 $148,616
382,583
- $

3,211
-

(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). 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
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. 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 deductedfrom 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.
(viii). Derivative transactions
Please refer to Note 16.
(2) Unlisted securities of \516 million yen ($5,493 thousand) and \1,092 million yen, for which fair value is determined to be extremely difficult to determine because
the securities without fair market value as of March 31, 2013 and 2012 are not included in the above table.
(c) The redemption schedule for financial instruments and securities with maturity as of March 31, 2013 and 2012 is as follows:
2013
Millions of yen
Due in one
year

Due after one
year throughDue after five
year throughor less

five years

ten years

Due after ten
years

Cash and cash equivalents ...........................................................................................................
\
8,788 \
- \- \Time deposits ..................................................................…
219
Trade notes and accounts receivable ...................................................................................................
12,129Investment securities:
Available-for-sale securities with maturities....................................................................................................................
Total ...............................................................................................................
\
21,136 \
- \
- \
2013
Thousands of U.S. dollars
Due in one

Due after one

Due after fiveDue after ten

year

year throughyear throughyears

or less

five years

ten years

Cash and cash equivalents ...........................................................................................................
$
93,484 $- $- $Time deposits ..................................................................…
2,330
Trade notes and accounts receivable ...................................................................................................
129,016
Investment securities:
Available-for-sale securities with maturities....................................................................................................................
Total ...............................................................................................................
$
224,830 $
- $
- $
2012
Millions of yen
Due in one
year

Due after one
year throughDue after five
year throughor less

five years

ten years

Due after ten
years

Cash and cash equivalents ...........................................................................................................
\
3,752 \-\-\
Time deposits ..................................................................…
219
Trade notes and accounts receivable ...................................................................................................
12,635Investment securities:
Available-for-sale securities with maturities....................................................................................................................
Total ...............................................................................................................
\
16,606 \
-\
-\
-

27

16. Derivatives
Derivative transactions for which hedge accounting has been applied for the years ended March 31, 2013 and 2012 are as follows:
2013

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

Long-term
borrowings \Contract
amountHedged item
Interest rate related:
Benchmark Method
Interest rate swap
contracts
Payable fixed/
Receive floating

21,100 \Millions of yen
Contract
amountdue after
one year
Fair value

13,553 \(299) $

2012
Millions of yen
Contract
amountdue after
one year

Fair value

Long-term
borrowings\

17,242 \11,688 \

(232)

Raw
materials

\

944 \

- \

1,031

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

224,446 $

144,168 $(3,184)

Commodity related :Benchmark Method
Copper price swaps

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, 2013 and 2012.

17. 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 plants.
Loss on disaster for the year ended March 31, 2012 mainly consists of disposal of inventories and the relief money.
Loss on disaster for the year ended March 31, 2011 consists of the following:
2011
Millions of yen
Inventories ........................................................................................................................................................................
\
801
Property, plant and equipment ........................................................................................................................................................................
3,063
Intangible assets ........................................................................................................................................................................
1
Provision for loss on disaster .....................................................................................................................................................................…
773
Other .....................................................................................................................................................................…
305
Total ......................................................................................................................................................................................
\
4,943

18. 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 plants in Ishinomaki, which shut down due to the influence of the Great East Japan Earthquake.

19. 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.

28

20. Loss on Valuation of Inventories
Loss on valuation of inventories mainly consists of disposal costs of inventories expected in the future for prolonged temporary shutdown of the 2nd Factory of Meiko
Electronics (Wuhan) Co., Ltd. due to problem on permitting process regarding environmental assessment.

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

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

23. 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.

24. Comprehensive Income
Reclassifications and income tax effects attributable to other comprehensive income for the years ended March 31, 2013 and 2012 are as follows:
Thousands ofMillions of yen
2013
2012

U.S. dollars

2013
Unrealized gains (losses) on available-for-sale securities:
Gains (losses) arising during the year ........................................................................................................................................................................
\
98 \(171) $
1,039
Reclassifications and adjustments ........................................................................................................................................................................
Before income tax effects .....................................................................................................................................................................…
98
(171)
1,039
Income tax effects .....................................................................................................................................................................…
(35)
99
(367)
Total ......................................................................................................................................................................................
\
63 \(72) $
672
Deferred gains (losses) on hedges:
Gains (losses) arising during the year ........................................................................................................................................................................
\(337) \
247 $
(3,585)
Reclassifications and adjustments ........................................................................................................................................................................
175
(195)
1,857
Before income tax effects .....................................................................................................................................................................…
(162)
52(1,728)
Income tax effects .....................................................................................................................................................................…
46
62
495
Total ......................................................................................................................................................................................
\(116) \
114 $
(1,233)Foreign currency translation adjustments:
Adjustments arising during the year ........................................................................................................................................................................
\
3,443 \
847 $
36,621
Total ......................................................................................................................................................................................
\
3,443 \
847 $
36,621
Total other comprehensive income ......................................................................................................................................................................................
\
3,390 \
889 $
36,06025. 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
Thousands ofMillions of yen

U.S. dollars

Current assets........................................................................................................................................................................
\
2,866 $
30,492
Non-current assets ........................................................................................................................................................................
10
105
Total assets .....................................................................................................................................................................…
\
2,876 $
30,597
Current liabilities ........................................................................................................................................................................
\-$
Non-current liabilities ........................................................................................................................................................................
Total liabilities.....................................................................................................................................................................…
\
-$
-

29

26. Segment Information
Effective from the year ended March 31, 2011, the Company adopted “Accounting Standard for Disclosures about Segments of an Enterprise and RelatedInformation” (ASBJ Statement No. 17, issued on March 27, 2009) and “Guidance on Accounting Standard for Disclosures about Segments of an Enterpriseand Related Information” (ASBJ Guidance No. 20, issued on March 21, 2008).
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

2013
Millions of yen
Japan

Asia

North America

Net sales .............................................................................................................................
\
24,086\27,780\Europe

\

5,099

3,744

Other

\

Total

-

\

60,709-$645,775

4\2013
Thousands of U.S. dollars
Japan

Asia

North America

Net sales .............................................................................................................................
$
256,207$ 295,502$

Europe54,238$39,828

Other

$

Total

2012
Millions of yen
Japan

Asia

North America

Net sales .............................................................................................................................
\
27,694\27,225\4,870

Europe\3,180

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

2013
Millions of yen
Japan

Asia

Other

Property, plant and equipment .............................................................................................................................
\
6,529
\
55,242
\
1
\

Total

61,772

2013
Thousands of U.S. dollars
Japan

Asia

Other

Property, plant and equipment .............................................................................................................................
$
69,451$ 587,623
$
5
$

Total

657,079

2012
Millions of yen
Japan

Asia

Other

Property, plant and equipment .............................................................................................................................
\
6,578
\
49,849
\
0
\

30

Total

56,427

Other

\

Total

62,973

27. 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 is 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).

31

32

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, Philippines

120 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)(54.0)

million

33

100.0

100.0
(100.0)(100.0)100.0(100.0)Principal Shareholders
As of March 31, 2013
Number of
Shares Held

Name of Shareholder(Thousands of shares)

Yuichiro Naya

Percentage ofTotal Number of
Shares Issued (%)

4,697

24.21

631

3.26

Meiko Kosan Co., Ltd.

608

3.14

Japan Trustee Services Bank, Ltd.

552

2.85

Yuho, Ltd.

521

2.69

The Chase Manhattan Bank, N.A. London Secs
Lending Omnibus Account

519

2.68

Haruyuki Naya

488

2.52

Seiichi Naya

439

2.27

HILLCREST, L.P.

379

1.96

377

1.94

9,215

47.49

PLEASANT VALLEY(Standing Agent: The Bank of Tokyo-Mitsubishi
UFJ, Ltd.)(trust account)(Standing Agent: Mizuho Corporate Bank, Ltd.,
Kabutocho Settlement and Clearing Services
Division)(Standing Agent: The Bank of Tokyo-Mitsubishi
UFJ, Ltd.)
Sumitomo Mitsui Banking Corporation
Total

34

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 consolidated subsidiaryof the Company) in Manila, the Philippines, to design PCBs.

35

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 a suburb of 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.

36

Corporate Data (As of March 31, 2013)

Corporate Name:
Meiko Electronics Co., Ltd.
Date of Establishment:
November 25, 1975
Paid-in Capital:¥10,545 million
Fiscal Year:
April 1 to March 31
Number of Shares Authorized:
63,200,000
Number of Shares Issued:
19,403,320
Number of Shareholders:
5,899
Securities Code:
6787
Stock Exchange Listing:Osaka Securities Exchange, JASDAQ standard market
Number of Employees:
9,966 (Consolidated)
Number of Subsidiaries:
12
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/

37

Meiko Share Performance in FY2013 Compared with Indices

120.0
110.0

Meiko Electronics (JASDAQ: 6787)
JASDAQ INDEX

100.0
90.0
80.0
70.0
60.0
50.0
40.0
30.0

Fiscal year 2013 ended March 31, 2013
Index
In %

38

39