Annual Report 2010
For the year ended March 31, 2010

Meiko Electronics Co., Ltd.

Profile

The Meiko Electronics Group comprises Meiko Electronics Co., Ltd. (the “Company”) and 17
subsidiaries (13 consolidated and 4 non-consolidated) (the “Group”). The Group operates inbusinesses which mainly consist of design, manufacture and sales of PWBs, and the related
development and manufacture of board testers.

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 ................................................................................................................... 9
Consolidated Financial Statements ................................................................................ 13
Principal Subsidiaries and Affiliates ............................................................................... 34
Principal Shareholders ..................................................................................................... 35
Corporate History ............................................................................................................. 36
Meiko Share Performance in FY2009 Compared with Indices ...................................... 392

Five-year Financial Summary

2006

2007

2008

2009

2010

(millions of yen, except per share amounts)
Consolidated financial indicators:
Net sales¥50,327¥65,317¥78,516¥75,806¥69,823

Ordinary income

6,190

4,713

6,836

953

2,695

Net income

4,810

3,203

5,640

522

1,828

Net assets

29,34432,73034,797

34,57638,167

Total assets

66,18379,74982,04385,611

84,728

Net assets per share (yen)1,710.22

1,903.26

2,026.96

2,062.17

2,067.25

Net income per share (yen)294.09186.78328.5730.71

107.39Net income per share (diluted) (yen)293.48186.69314.6929.38-

Capital adequacy ratio

44.3%

41.0%

42.4%

40.4%

45.0%

Return on equity (ROE)

22.7%

10.3%

16.7%

1.5%

5.0%

Price earnings ratio (PER)

30.9

23.5

9.8

31.2

18.5

Cash flows from operating activities

5,336

4,512

3,706

7,479

8,841

Cash flows from investing activities(7,971)(17,169)(11,350)(12,929)(6,058)Cash flows from financing activities

10,478

6,723

3,653

5,338

(3,742)

Cash and cash equivalents
at the end of the period

13,152

8,202

4,578

5,146

4,008

Number of employees

5,853

6,786

8,937

7,623

10,149[Average number of temporary staff]

[537]

[663]

[723]

[815]

[565]

3

Net income (loss), basic per share
Net income, diluted per share¥100,000¥500.00¥80,000¥400.00¥300.00¥60,000(yen)(millions of yen)

Net sales¥40,000¥200.00¥100.00¥20,000¥0.00¥0(¥100.00)
2006

2007

2008

2009

2010

2006

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

¥6,000¥4,000((millions of yen)

¥8,000(¥2,000
¥0
2006

2007

2008

2009

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

25.0%¥40,000

20.0%(percentage)(millions of yen)

¥50,000¥30,000¥20,000¥10,000

2010

Net income, diluted per share (yen)

2007

2008

2009

2010

Cash flows from investing activities

15.0%
10.0%
5.0%

¥0

0.0%
2006

2007

2008

2009

2010

2006

2007

2008

2009

2010

Price earnings ratio (PER)

Total assets¥100,000

35.0 times
30.0 times¥80,000(times)(millions of yen)

2009

Return on equity (ROE)(¥60,000

25.0 times
20.0 times
15.0 times¥40,000

10.0 times(¥20,000

5.0 times
0.0 times

¥0
2006

2007

2008

2009

2010

2006

Net assets per share¥4,000.00¥3,000.00
(yen)

2006

Cash flows from operating activities
Cash flows from financing activities

2010

Net assets

)

2008

Cash flows

Net income (loss)

)

2007

¥2,000.00¥1,000.00
¥0.00
2006

2007

2008

2009

2010

4

2007

2008

2009

2010

Financial Review: Management’s Discussion and Analysis(1) Analysis of financial position
The forward-looking statements in this section are based on the Group’s judgment as of theend of the current consolidated fiscal year.
1) Assets(Current assets)
The balance of current assets as of March 31, 2010, was ¥33,413 million, up ¥1,424 million
from ¥31,989 million for the previous fiscal year. The major factors for this increase were an
increase of ¥4,104 million in notes and accounts receivable—trade, from ¥10,976 million to¥15,081 million, and a ¥2,039 million decrease in accounts receivable—other, from ¥5,358
million to ¥3,318 million, due to a decrease in factoring accounts receivable factoring.
(Noncurrent assets)
The balance of noncurrent assets as of March 31, 2010, was ¥51,314 million, down ¥2,306
million from ¥53,621 million for the previous fiscal year. A major factor for this decrease wasa ¥2,347 million decrease of property, plant and equipment, from ¥48,467 million to ¥46,120
million, due to depreciation.
2) Liabilities(Current liabilities)
The balance of current liabilities as of March 31, 2010, was ¥26,069 million, up ¥775 million
from ¥25,293 million for the previous fiscal year. The major factors were a ¥2,636 million
increase in notes and accounts payable—trade, from ¥5,593 million to ¥8,229 million, a¥2,105 million increase in the current portion of long-term loans payable, from ¥5,768 million
to ¥7,873 million, and a ¥3,880 million decrease in short-term loans payable, from ¥8,086
million to ¥4,206 million, due to repayment of short-term loans payable.
(Noncurrent liabilities)
The balance of noncurrent liabilities as of March 31, 2010, was ¥20,491 million, down
¥5,249 million from ¥25,741 million for the previous fiscal year. A major factor for thisdecrease was the purchase and redemption of all bonds with subscription rights to shares ata cost of ¥4.5 billion for the previous fiscal year.
3) Net assets(Net assets)
The balance of net assets as of March 31, 2010, was ¥38,167 million, up ¥3,591 million from¥34,576 million. A major factor for this increase was increases in capital stock and capitalsurplus by ¥1,684 million each, due to the issuance of new shares and a decrease in foreign
currency translation adjustment from -¥330 million to -¥1,701 million.

5(2) Analysis of business results
1) Net sales
The volume of orders the Group received during the fiscal year under review was sluggish at
the beginning of the period, due to the lingering impact of the downturn in the global
economy since the fall of 2008. This was followed by a gradual recovery and near full-scale
production for orders during the second half of the period. Despite this recovery, annual
sales were below those for the previous fiscal year. As a result, net sales decreased ¥5,983
million, or 7.9%, from the previous fiscal year, to ¥69,823 million.
2) Cost of sales and Gross profit
Cost of sales decreased ¥7,972 million, or 11.9%, from the previous fiscal year, to ¥58,916
million, due to the effects of the structural reforms implemented in February 2009 to address
the recession, such as the integration of plants, the adjustment of personnel to a more
appropriate level and fixed cost reductions, and declines in raw material prices during thefirst half of the fiscal year under review. Gross profit increased ¥1,989 million, or 22.3%, to¥10,906 million, and the gross margin improved 3.9 percentage points from the previous
fiscal year, to 15.6%.
3) Operating income
Operating income increased ¥2,032 million, or 115.5%, from the previous fiscal year, to¥3,793 million.
4) Non-operating income (expenses) and Ordinary income
Non-operating income decreased ¥451 million, to ¥369 million, because the foreignexchange gain for the previous fiscal year turned to a foreign exchange loss, down ¥386
million from the previous fiscal year.
Non-operating expenses decreased ¥159 million, to ¥1,467 million. The major factors forthis decline were repayment of interest-bearing debt and a ¥229 million decrease in interest
expenses from the previous fiscal year due to a decline in interest rates.
As a result, ordinary income rose ¥1,741 million, or 182.6%, from the previous fiscal year,to ¥2,695 million.
5) Extraordinary income (loss)
Extraordinary income was ¥96 million, mainly due to a gain on redemption of bonds of ¥95
million.
The extraordinary loss was ¥490 million, mainly due to a loss on valuation of investment
securities of ¥274 million and a loss on sales and retirement of noncurrent assets of ¥140
million.

66) Net income
As a result of the above, net income for the fiscal year under review rose ¥1,305 million, or
250.0%, from the previous fiscal year, to ¥1,828 million.
(3) Liquidity and source of funds
1) Cash flow analysis
Cash and cash equivalents as of March 31, 2010, decreased ¥1,137 million from ¥5,146
million for the previous fiscal year, to ¥4,008 million.
Net cash provided by operating activities for the fiscal year under review was ¥8,841
million, up ¥1,361 million from the previous fiscal year. Inflows were mainly from income
before income taxes of ¥2,300 million and depreciation and amortization of ¥6,793 million.
The major outflow was an increase in accounts receivable of ¥2,058 million.
Net cash used in investing activities was ¥6,058 million, down ¥6,870 million. The major
outflow was ¥6,366 million for the acquisition of property, plant and equipment.
Net cash used in financing activities was ¥3,742 million, compared with net cash provided
by financing activities of ¥5,338 million for the previous fiscal year. The major outflows were
¥4,405 million for the redemption of bonds and ¥6,323 million for the repayment of long-termloans payable. Major inflow was ¥3,369 million due to the issuance of shares.
2) Financial policy
The Group currently procures funds for its operations from internal reserves or borrowings.
The Group has a policy of procuring funds for investment and loans and funds for equipment
to acquire manufacturing equipment inside and outside Japan via long-term loans payable.
With regard to when to procure such funds and the conditions for such procurement, theGroup strives to select the most favorable timing and conditions.
3) Trends in cash flow indicators
The trends in cash flow indicators are shown below.
Year ended
March 31, 2008

Year ended
March 31, 2009

Year ended
March 31, 2010

Equity ratio (%)

42.4

40.4

45.0

Market value equity ratio (%)

67.6

18.8

43.3

Cash flows/interest-bearing debt ratio (%)

7.2

4.6

3.6

Interest coverage ratio (times)

3.1

7.7

10.9

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

7Notes:• Each indicator is calculated based on consolidated financial values.
• The stock market capitalization is calculated as follows: term-end closing stock price x term-end number ofshares issued (after deducting shares of treasury stock).
• 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 consolidated balance sheets,the interest-bearing debt covers all the liabilities for which interest was paid. The interest payment
represents the payment of interest indicated in the consolidated statements of cash flow.

8

Business Risks
Major risks involved in the businesses conducted by the Company and the Group are as
follows.
(1) The Group’s major customers’ businesses performance
The Group’s major customers are brand manufacturers of digital household appliances,personal computers, communications equipment and devices, and automobile
electronic control equipment, among others. The Group’s major businesses are the
manufacture and sales of PWBs, which are positioned as parts that constitute a corefunction of finished products. Should the global economy, in turmoil since the fall of 2008,
influence the trend of the economy and consumer spending, and adversely impact themarkets of the industries in which the Group’s major customers operate, or lead tosluggish sales of their finished products, such factors could influence the order volume
received by the Group and affect the Group’s business performance.
(2) Risks related to the timing of capital investments
The Group conducts appropriate capital investments to enhance productivity andmaintain product competitiveness. Although overseas and domestic capital investments
are carefully determined considering brand manufacturers’ business performance andmarket trends, should brand manufacturers change strategies or the Group’s capital
investments become excessive due to the downturn of the global economy, or theoperation of new facilities be delayed, such factors as the burden of depreciation costs
would adversely affect the Group’s business results and financial position.
(3) Possibility of product defects
PWBs are mounted with electronic components and then embedded in finished products
by brand manufacturers. The Group manufactures PWBs in compliance with the world’s
accepted quality control standards. In addition, brand manufacturers conduct
inspections upon receipt and inspect the finished products to prevent the occurrence of
product defects. However, should a large-scale recall or a product liability lawsuit occur,
such an incident would incur significant costs and harm our corporate brand and could
adversely affect the Group’s performance.
(4) Technological development and price competition
Although the Group believes in the long-term expansion of demand for PWBs due to theworldwide dissemination of digital household appliances and the further advancement ofelectronic automobile components, to address the intensifying global competition due todownward pressure from Southeast Asia, Japanese manufacturers need to differentiate
their products by adding higher value. To this end, the Group is developing various
technologies such as element technologies to make wires thinner and minimize holediameters, as well as cost-reduction technologies. However, should such technologies
diverge from market needs and not be accepted, we might get embroiled in a pricing war,
which could affect the Group’s business performance.

9(5) Natural disaster
The Group’s major manufacturing bases are the Yamagata Plant (Yamagata Meiko
Electronics Co., Ltd.), the Fukushima Plant and the Miyagi Plant (Miyagi Meiko
Electronics Co., Ltd.), which are all located in the Tohoku area. Although our careful
preemptive measures to address the occurrence of an earthquake are in place for thesefacilities to minimize damage, should a natural disaster such as a large-scale
earthquake or wind and/or water damage occur, that could adversely affect the Group’sbusiness performance.
(6) Potential risks inherent in plant operations in China
To expand productivity and reduce production costs, the Group has established local
corporations in Hong Kong, Guangzhou and Wuhan in China, conducting manufacturing
and sales activities.
The following difficulties might occur in China.
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 in China occur, issues might arise in the management of production
facilities and equipment and in the execution of other businesses. These factors could
adversely affect the Group’s business 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 of materials prices of crudeoil, copper, gold, etc., in recent years could influence the prices of the raw materials theGroup purchases and adversely affect the Group’s business performance and financial
position.

10(9) Financial risks
The Group has aggressively conducted capital investments at an amount higher than
the funds it has acquired from operating activities to prepare for the anticipated mediumand long-term demand increase for digital household appliances and automobiles, aswell as demand for new products in line with technological innovation.
As a result, the ratio of borrowings to total assets as of March 31, 2010, was 35.2%. In
case we conduct further aggressive capital investment required by our businessstrategies, an increase in borrowings and/or interest rates could affect the Group’sbusiness performance and financial position.

11

This Page Intentionally Left Blank

12

Consolidated Financial Statements

Consolidated Balance Sheets
Meiko Electronics Co., Ltd. and Consolidated Subsidiaries
As of March 31, 2010 and 2009
Thousands ofMillions of yen

ASSETS2010

Current Assets:
Cash and cash equivalents (Note 11) ...............................................................................
Receivables －Trade notes and accounts receivable (Note 11) ........................….................................
Other receivables .......................................................................................…...…
Less: Allowance for doubtful accounts ........................................................................
Inventories －Merchandise and finished goods .............................…......................................…
Work in process ................................…............................................................…
Raw materials and supplies ...........................…................................................…
Deferred tax assets (Note 10) ....................................................................................…..
Other .............................................................................................................................
Total current assets .................................................................................................

\

Property, Plant and Equipment, at Cost (Note 4):
Land .............................................................................................................................
Buildings and structures ........................................................................….....................
Machinery, equipment and vehicles................................................…..............................
Construction in progress ................................................................................................
Other ..........................................................................................................................…
Less: Accumulated depreciation ..................................................................….…
Net property, plant and equipment ................................................................…
Intangible Assets
Investments and Other Assets:
Investment securities (Notes 3 and 11) ............................................................................
Long-term loans receivable .............................................................................................
Deferred tax assets (Note 10) .........................................................................................
Other .........................................................................................................................…
Less: Allowance for doubtful accounts ...........................................................................
Allowance for investment loss ....................................................................…
Total investments and other assets ...........................................................................
Total ...............................................................................................................

See notes to consolidated financial statements.

13

\

4,009

U.S. dollars (Note 1)

2010

2009

\

5,146

$

43,082

15,0813,318(14)

10,9775,358(21)

162,076
35,660
(152)

3,063
2,117
3,682
394
1,764
33,414

3,576
1,810
3,177
351
1,615
31,98932,91922,751
39,566
4,233
18,960359,095

1,944
23,46749,1883,495
2,400
80,494(34,374)
46,1201,946
19,67846,5907,242
2,337
77,793(29,325)
48,46820,896
252,195
528,615
37,56425,795865,065(369,416)
495,649

553

662

5,953

1,316
313
1,076
2,124
(103)
(85)
4,641
84,728

540
328
1,038
2,702
(100)
(16)
4,492
85,61114,1473,365
11,561
22,821(1,110)(913)
49,871
910,568\$

Thousands of

LIABILITIES AND
NET ASSETS

Millions of yen

2010

Current Liabilities:
Trade notes and accounts payable (Note 11) ..................................................................
Short-term borrowings (Notes 5 and 11) .........................................................................
Current portion of long-term borrowings (Notes 5 and 11) ...............................................
Income taxes payable (Note 10) ......................................................................................
Accrued bonuses ...........................................................................................................
Accrued bonuses to directors and corporate auditors ...........................................…
Other .............................................................................................................................
Total current liabilities .............................................................................................

\

Long-term Liabilities:
Bonds payable with share subscription rights (Note 5)......................................................
Long-term borrowings (Notes 5 and 11) .........................................................................
Provision for employees' retirement benefits (Note 6) ......................................................
Long-term accounts payable ...........................................................................................
Provision for directors' retirement benefits ...........................................…….......…
Other .............................................................................................................................
Total long-term liabilities .........................................................................................

8,229
4,206
7,873
179
565
24
4,993
26,069U.S. dollars (Note 1)

2010

2009

\

5,593
8,087
5,768
116
558
12
5,160
25,294$88,44045,206
84,614
1,922
6,070
258
53,654
280,164

17,706
1,090
1,164
269
262
20,491

4,500
18,473
944
1,197
269
358
25,741

190,287
11,713
12,504
2,895
2,821
220,220

10,546
12,135
17,8608,861
10,45016,367

113,333
130,417
191,938

(594)
15
(98)
(1,701)
38,163
5
38,16884,728

(594)
13
(195)
(331)
34,571
5
34,576
85,611(6,380)164(1,058)(18,284)
410,13054
410,184
910,568

Commitments and Contingent Liabilities (Note 4) :Net Assets (Note 7):
Common stock, authorized - 31,600,000 sharesissued - 19,403,320 shares in 2010 and 17,707,320 in 2009 ..................................…

Capital surplus ...............................................................................................................
Retained earnings ..........................................................................................................
Less: Treasury stock, at cost; Common stock,942,700 shares in 2010 and 2009 ..................................................................................
Net unrealized gain (loss) on available-for-sale securities ..................................................
Deferred gains (losses) on hedges ...................................…..................................…
Foreign currency translation adjustments .........................................................................
Minority Interests ................................................................................................…
Total net assets .......................................................................................................
Total ...............................................................................................................

See notes to consolidated financial statements.

14

\

\

$

Consolidated Statements of Income
Meiko Electronics Co., Ltd. and Consolidated Subsidiaries
For the Years ended March 31, 2010, 2009 and 2008
Thousands ofMillions of yen

2010
Net Sales ......................................................................................................................
Cost of Sales (Note 8) ..................................................................................................
Gross profit .................................................................................................................
Selling, General and Administrative Expenses (Note 8) .............................................
Operating income ...............................................................….......…………......…

\

69,82358,917
10,906
7,113
3,793

U.S. dollars (Note 1)

2009\

75,807
66,890
8,917
7,156
1,761

2010

2008
\

78,51665,00013,516
6,208
7,308

$

750,384
633,171
117,21376,441
40,772Other Income (Expenses):
Interest income (expense) ...............................................................................................
Dividend income ............................................................................................................
Compensation expenses
Foreign exchange gain (loss) .............................................................................…..........
Gain on valuation of derivatives............................................................…............…
Subsidy income .....................................................................................................…
Loss on sales and disposal of property, plant and equipment (Note 9).........................…
Reversal of allowance for doubtful accounts ................................…....................…
Gain on redemption of bonds ..............................................................................…
Provision of reserve for director's retirement benefits ......................................................
Loss on valuation of investment securities .......................................................................
Provision on allowance for investment loss .........................................................…
Other, net ......................................................................................................................
Total ......................................................................................................................

(761)
1
(175)
(25)
168
(140)
0
95
(274)
(69)
(313)
(1,493)

(953)
2
386
112
(149)
23
120
(219)
(437)
(1,115)

(946)
2
646
50
(51)
(269)
(223)
(791)

(8,183)14(1,879)(267)
1,805(1,505)
4
1,021(2,946)(742)(3,367)(16,045)

Income before Income Taxes and Minority Interests .......................................…

2,300

646

6,517

24,727

Income Taxes (Note 10):
Current ........................................................................................................................
Deferred ......................................................................................................................
Total income taxes ..................................................................................................
Minority Interests .............................................................………...……….......…
Net Income ..................................................................................................................

394
78
472
0
1,828

280
(158)
122
2
522

982
(107)
875
2
5,640

4,239
833
5,072
5
19,650

\

\

\

$

Yen

Per Share of Common Stock:
Basic net income ............................................................................................................
Diluted net income .........................................................................................................
Cash dividends applicable to the year .............................................................................

See notes to consolidated financial statements.

15\

107.39
20.00

\

30.71
29.38
30.00

U.S. dollars (Note 1)\

328.57314.69
37.50

$

1.15
0.21

Consolidated Statements of Changes in Net Assets
Meiko Electronics Co., Ltd. and Consolidated Subsidiaries
For the Years ended March 31, 2010, 2009 and 2008
Thousands of
U.S. dollars (Note 1)

Millions of yen

2010
Common Stock (Note 7):
Beginning balance ..........................................................................................................
Capital increase upon issuance of 1,696,000 shares of common stock
Ending balance ..............................................................................................................
Capital surplus (Note 7):
Beginning balance ..........................................................................................................
Capital increase upon issuance of 1,696,000 shares of common stock
Ending balance ..............................................................................................................
Retained Earnings (Note 7):
Beginning balance ..........................................................................................................
Increase due to application of ASBJ PITF No. 18 ...............................................…
Net income ....................................................................................................................
Cash dividends paid .......................................................................................................
Decrease by change in scope of consolidation .....................................................…
Appropriation for employees welfare fundby a foreign subsidiary .................................................................................................
Ending balance ........................................................................…...................................

Treasury Stock, at cost; Common Stock:
Beginning balance ..........................................................................................................
Purchase of treasury stock .....................…………..............…………...........….…
Ending balance ..............................................................................................................
Net Unrealized Gain (Loss) on Available-for-sale Securities:
Beginning balance ..........................................................................................................
Net increase (decrease) ............................................…………..............................…
Ending balance ..............................................................................................................
Deferred Gains (Losses) on Hedges:
Beginning balance .............................................................................................................
Net increase (decrease) ........................................................….......…………....…
Ending balance ..............................................................................................................
Foreign Currency Translation Adjustments:
Beginning balance ..........................................................................................................
Net increase (decrease) ..................................................................................................
Ending balance ..............................................................................................................
Minority Interests:
Beginning balance .............................................................................................................
Net increase (decrease) ......................................................................................…
Ending balance .....................................................................…....................…........…
Total Net Assets ..........................................................................................................

\
\

\
\

\

\

\
\

\
\

\
\

\

2009

8,861
1,685
10,546\

10,450
1,685
12,135\

16,367
1,828(335)
17,860

\

\

\

\

(594)
(594)

\

13
2
15

\

(195)
97
(98)

\

\

\

\

(331)
(1,370)(1,701)

\

\

\

5
0
5

\

38,168

\

\

8,861
8,861

\

10,45010,450\16,128
403
522
(686)
16,367

\

\

\

\

(197)
(397)
(594)

\

(6)
19
13

\

(45)
(150)
(195)

\

\

\

\

8,861
8,861

$

10,45010,450$

11,256
5,640
(601)
(43)
(124)
16,128$

175,892
0
19,650(3,604)
191,938

$

(45)
(45)

$

2,226
(2,622)
(396)

$

$
$

49
5
54

$

410,184

\

\

3
2
5

\

59
(56)
3

\

34,576\

34,798

Number of Shares
17,707,320
1,696,000(942,700)

17,707,320(942,700)

17,707,320(541,291)

Ending balance ...........................................................................................................

18,460,620

16,764,620

17,166,029

16

$

75
(81)
(6)

Number of outstanding shares:
Beginning balance .......................................................................................................
Issuance of common stock .........................................................................................
Repurchase of treasury stock ......................................................................................

See notes to consolidated financial statements.

$

112,309
18,108130,417$\\$

95,225
18,108113,333

(197)
0
(197)

(396)
65
(331)

\

2010

2008

$

$

$

$

(6,380)(6,380)

139
25
164

(2,091)
1,033(1,058)(3,556)(14,728)(18,284)

Consolidated Statements of Cash Flows
Meiko Electronics Co., Ltd. and Consolidated Subsidiaries
For the Years ended March 31, 2010, 2009 and 2008
Thousands ofMillions of yen

2010
Operating Activities:
Income before income taxes and minority interest ............................................................

\

2,300

U.S. dollars (Note 1)

2009
\

646

2010

2008
\

6,517

$

24,727

Adjustments to reconcile income before income taxes
to net cash provided by operating activities:
Depreciation and amortization .......................................................................................
Amortization of negative goodwill ....................................................................…
Increase (decrease) in allowance for doubtful accounts ..................................................
Increase in allowance for investment loss ..........................................................…
Increase in provision for employees' retirement benefits ................................................
Increase (decrease) in accrued bonuses .......................................................................
Increase (decrease) in accrued bonuses to directors and corporate auditors .......…
Increase in provision of directors' retirement benefits .........................................…
Interest income and dividend income ................................................................…
Interest expenses ..................................................................................................…
Foreign exchange gain ..................................................................................................
Net loss on sales and disposal of property, plant and equipment .......................…
Loss on valuation of investment securities .....................................................................
Loss on sale of investment securities
Gain on redemption of bonds ..............................................................................…
Decrease (increase) in trade notes and accounts receivable ............................................
Decrease (increase) in inventories .................................................................................
Increase (decrease) in trade notes and accounts payable ................................................
Increase in other assets ................................................................................................
Increase (decrease) in other liabilities ............................................................................
SubtotalInterest and dividend received ...........................................................................…
Interest paid ......................................................................................................…
Income taxes refund ..........................................................................................…
Income taxes paid ....................................................................………………....…
Net cash provided by operating activities ......................................................................

6,794
(3)
69
146
7
12
(26)
786
(703)
139
274
7
(95)
(2,058)
(549)
2,809
(498)
533
9,944
26
(811)
115
(433)
8,841

7,098
(13)
16
76
(75)
(26)
(64)
1,015
(354)
149
228
(120)
3,094
1,356
(4,082)
(252)
88
8,780
68
(976)
284
(677)
7,479

6,013
(17)
5
131
142
3
269
(256)
1,200
(539)
51
(4,478)(1,700)
(426)
(485)
(306)
6,124
256
(1,203)(1,471)
3,706

73,014
(34)
742
1,563
70
129
(282)
8,451
(7,552)
1,497
2,946
80
(1,021)(22,121)(5,901)30,191(5,353)
5,722
106,868
285(8,715)
1,229(4,652)
95,015Investing Activities:
Payments for purchases of property, plant and equipment ...............................................
Proceeds from sales of property, plant and equipment .....................................................
Proceeds from share of profits on investment in partnership ...............................…
Payments for purchases of intangible assets ...................................................................
Payments for purchases of investment securities .............................................................
Increase in time deposits ................................................................................................
Payments for loans receivable ..............................................................................…
Payments for transfer of business ................................................................…......…
Payments for insurance policies .............................................................................….....
Other, net ......................................................................................................................
Net cash used in investing activities .................................................................................

(6,367)
23
(63)
(278)
249
(56)
433
(6,059)(10,976)122(128)(1,302)
137
(275)
(170)
(11)
(218)
(12,929)(10,266)
12
21
(55)
(286)
605
(20)
(1,299)(62)(11,350)(68,425)243(682)(2,986)
2,676
(605)
4,663
(65,116)

Financing Activities:(Decrease) increase in short-term borrowings ..................................................................
Proceeds from long-term borrowings ..............................................................................
Payments for long-term borrowings ................................................................................
Payments for redemption of bonds .......................................................................…
Proceeds from issuance of common stock ......................................................................
Payments for installment liabilities ...................................................................................
Payments for acquisition of treasury stock .....................................................................
Cash dividends paid ................................................................................................…
Net cash provided by (used in) financing activities ...........................................................

(3,821)
8,597(6,324)(4,405)
3,370
(820)
(339)
(3,742)

4,908
9,906
(6,777)
(880)
(736)
(396)
(687)
5,338

2,271
8,228
(4,924)
(500)
(820)
(0)
(601)
3,654

(41,062)
92,387(67,959)(47,340)
36,217(8,815)(3,646)(40,218)

Foreign Currency Translation Adjustments
on Cash and Cash Equivalents ..................................................................................

(177)

(69)

283

(1,904)

Net Decrease in Cash and Cash Equivalents .............................................................

(1,137)(181)(3,707)(12,223)

Cash and Cash Equivalents at Beginning of Year ......................................................

5,146

4,579

8,202

55,305

-

748

84

-

Net Increase in Cash and Cash Equivalents
due to Change in Scope of Consolidation ........................................................…
Cash and Cash Equivalents at End of Year ...............................................................

See notes to consolidated financial statements.

17

\

4,009

\

5,146

\

4,579

$

43,082

Notes to Consolidated Financial Statements
Meiko Electronics Co., Ltd. and Consolidated Subsidiaries
For the Years ended March 31, 2010, 2009 and 2008
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 Act 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.
Prior to the year ended March 31, 2009, the accounts of consolidated overseas
subsidiaries are based on their accounting records maintained in conformity
with generally accepted accounting principles prevailing in the respective
countries of domicile. Effective from the year ended March 31, 2009, theaccounts of consolidated overseas subsidiaries are prepared in accordance witheither International Financial Reporting Standards or U.S. generally accepted
accounting principles, except for certain items which are required to be
adjusted in the consolidation process as explained in Note 2 (t).
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 stated 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 \93.05 to $1, the approximate rate ofexchange at March 31, 2010. 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 13 (15 in 2009 and 14 in 2008) subsidiaries(together, the "Group").
The difference between the cost and the underlying net equity at fairvalue of investments in consolidated subsidiaries ("goodwill" or"negative goodwill") and in companies accounted for by the equity method
is amortized over 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.
(b) Equity Method
Investments in certain unconsolidated subsidiary and affiliatedcompany are accounted for by the equity method and,accordingly, stated at cost adjusted for equity
in undistributed earnings and losses from the date of acquisition.
There are no companies acounted for by the equity method.
(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 earnings.
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 are presented in net assets in the
consolidated balance sheets.
(e) Inventories
Effective from the year ended March 31, 2009, the Company andthe domestic consolidated subsidiaries adopted the "Accounting Standard
for Measurement of Inventories" (Accounting Standards Board of Japan(“ASBJ”) Statement No. 9, issued by ASBJ on July 5, 2006), which requiresthat inventories be measured at the lower of cost or net selling value, which isdefined as the selling price less additional estimated manufacturing costs
and estimated direct selling expense. The replacement cost may be usedin place of net selling value, if appropriate. Prior to April 2008, inventories
were stated at cost, determined by the first-in, first-out method.
Consequently, compared to the amounts that would have been reported
under the previous accounting method, the gross profit, the operating profit,
and the income before income taxes and minority interests decreasedby \383 million for the year ended March 31, 2009.
(f) Depreciation and Amortization
Due to the reform of Japanese Corporate Tax Law issued on March 30, 2007,(Partial Amendment of the Income Tax Law, Law No.06 and Partial Amendment ofCorporate Tax Law Enforcement Orders, Law Enforcement Order No.83),
depreciation of 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 to March 31, 2007 : straight-line method underpre-2007 tax reform- acquired after April 1, 2007 : new straight-line method
For assets other than buildings:- acquired before March 31, 2007 : declining balance method under pre-2007 tax reform- acquired after March 31, 2007 : new 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 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).
(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
and affiliates.

18

(i) Allowance for Bonuses
Allowance for bonuses to employees are provided for the estimated amounts,
which the Company and its consolidated domestic subsidiaries are obligated to
pay to employees after the fiscal year-end, based on services rendered during
the current 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 the discounted cash flows from the continued use andeventual disposition of the asset or net selling price at disposition.
(k) Investment Securities
The Company has classified all debt and 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.
For other than temporary declines in fair value, investment securities are
reduced to net realizable value by a charge to income.
(l) Income Taxes
The provision for income taxes is computed based on the pretax
income included in the consolidated statements of income. 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 taxes are measured by applying
currently enacted tax laws to the temporary differences.
(m) Leases
In March 2007, the ASBJ issued ASBJ Statement No.13, “AccountingStandard for Lease Transactions”, which revised the previous accounting
standard for lease transactions issued in June 1993. The revised accounting
standard for lease transactions is effective for fiscal years beginning on orafter April 1, 2008.
The revised accounting standard requires that all finance lease transactions
should be capitalized to recognize lease assets and lease obligations in thebalance sheet. In addition, the accounting standard permits leases which
existed at the transition date and do not transfer ownership of the leased
property to the lessee to be accounted for as operating lease transactions.
Under the previous accounting standard, finance leases that deem to transfer
ownership of the leased property to the lessee were to be capitalized.
However, other finance leases were permitted to be accounted for as operatinglease transactions if certain “ as if capitalized ” information is disclosed in thenote to the lessee’s financial statements.
The Company applied the revised accounting standard effective April 1, 2008.
There are no effect of the change on net income.
(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 derivative transactions
are recognized in the consolidated statements of income andb) for derivatives used for hedging purposes, if derivatives qualify
for hedge accounting because of high correlation and effectivenessbetween the hedging instruments and the hedged items, gains orlosses 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) Liability for Employees' Retirement Benefits
The Company and domestic consolidated subsidiaries have a funded
defined benefit pension plan covering substantially all employees.
The Company and domestic consolidated subsidiaries account for theliability for retirement benefits based on projected benefit obligations andfair value of plan assets at the balance sheet date.
Actuarial gain or loss is amortized mainly 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.
(Change in accounting policies)
Effective from the year ended March 31, 2010, the Company andconsolidated domestic subsidiaries has adopted the “Partial Amendments to
Accounting Standard for Retirement Benefits (Part 3)” (ASBJ Statement
No.19 issued on July 31, 2008). The new accounting standard requires
domestic companies to use the rate of return on long-term government
or gilt-edged bonds as of the end of the fiscal year for calculating
the projected benefit obligation of a defined-benefit plan. Previously,
domestic companies were allowed to use a discount rate determined bytaking into consideration for fluctuations in the yield of long-term
government or gilt-edged bonds over a certain period. This change had
no impact on operating income and income before income taxes andminority interests for the year ended March 31, 2010.
(q) Liability for Directors' Retirement Benefits
The Company and its domestic consolidated subsidiaries account for the liability fordirectors' retirement benefits at balance sheet date in accordance with internal
regulations.
(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
Basic 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.
Diluted net income per share reflects the potential dilution that could occur
if diluted securities were exercised or converted into common stock. Diluted
net income per share of common stock assumes full conversion of the outstanding share subscription rights at the beginning of the year.
(t) Application of the "Practical Solution on Unification of Accounting
Policies Applied to Foreign Subsidiaries for Consolidated Financial Statements"
The Company applied the "Practical Solution on Unification of Accounting
Policies Applies to Foreign Subsidiaries for Consolidated Financial Statements" (ASBJ
PITF No.18) issued on May 17, 2006, and made necessary adjustments on the
consolidation process.
Consequently, compared to the amounts that would have been reported under theprevious accounting method, the operating profit and the income before income taxes
and minority interests decreased by \128 million and the net income
decreased by \22 million for the year ended March 31, 2009.
Also, due to the increase in beginning retained earnings by \403 million,
the retained earnings increased by the same amount at March 31, 2009.
The effect of the change on the segment information is described in Note 14.
(u) Reclassifications
Certain prior year amounts have been reclassified to conform to the presentations
for the year ended March 31, 2010.

19

3. Investment Securities
All the debt and 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, 2010 and 2009 were as follows:
2010
Millions of yen

Thousands of U.S. dollars

Fair

Acquisition

Unrealized

Fair

Acquisition

Unrealized

Value

Cost

Gains (Losses)

Value

Cost

Gains (Losses)

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

55 \

26 \

29 $

593 $

279 $

314

4
61
120 \

4
64
94 \

(0)
(3)
26 $

45
652
1,290 $

46
690
1,015 $

(1)
(38)
275

2009
Millions of yen

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

Acquisition

Unrealized

Value

Cost

Gains

48 \

25 \

23

5
95
148 \

5
96
126 \

(1)
22

Available-for-sale securities whose fair value is not readily determinable as of March 31, 2009 are as follows:
Carrying amountMillions ofyen
2009
Subsidiaries and affiliated company ...................................................................................................... \362
30
Unlisted shares ........................................................................................................................................
Total ................................................................................................................................................... \392
Information on available-for-sale securities whose fair value is not readily determinable as of March 31, 2010 is described in
Note 11.Financial instruments.
The following table summarizes available-for-sale securities sold in the year ended March 31, 2010.

Sales value
Gain on sale
Loss on sale

Millions ofThousand of
Yen
Dollars(Note 1)
2010
2010
\
34 $
367
7
80

Note: The Company recognized impairment losses of ￥274 million ($2,946 thousand) and ￥219 million on available-for-sale securities
during the year ended March 31,2010 and 2009.

20

4. Leases
The Group leases certain machinery, computer equipment, software and other assets.
As discussed 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 year ended March 31, 2010 and 2009 were as follows:
Millions of yen
2010

Machinery and equipment .......................\
Tools, furniture and fixtures ....................
Software ................................................
Total ..................................................... \2009

Acquisition

Accumulated

Net leased

Acquisition

Accumulated

Net leased

Cost

Depreciation

Property

Cost

Depreciation

Property

392 \
21
413 \

279 \
20
299 \

114 \
0
114 \

844 \
104
64
1,012 \

611 \
88
54
753 \

233
16
10
259

Thousands of U.S. dollars
2010

Machinery and equipment ....................... $Tools, furniture and fixtures ....................
Software ................................................
Total ..................................................... $Acquisition

Accumulated

Net leased

Cost

Depreciation

Property

4,216 $
223
4,439 $

2,996 $
218
3,214 $

1,220
5
1,225

Obligations under finance leases:

Millionsof yen2010

Due within one year ...................................................................................................................................................... \Due after one year ........................................................................................................................................................
Total ............................................................................................................................................................................ \

71 \
53
124 \

Thousands of
U.S. dollars

2009
150 $
124
274 $

2010
765
564
1,329

Depreciation expense and interest expense, which are not reflected in the accompanying statements of income, computed by straight-line method
and the interest method are as follows:
Thousands ofMillions
U.S. dollarsof yen
2010
2010
2009
2008
155 \
1,671
Lease payments ................................................................................................................................... \
239 \
285 $
145 \
1,554
Depreciation expense ........................................................................................................................... \
218 \
265 $
6 \
62
Interest expense ................................................................................................................................... \
13 \
22 $

21

5. Short-term Borrowings and Long-Term Debt

Short-term borrowings and long-term debt as of March 31, 2010 and 2009 consisted of the following:Thousands ofMillions of yen
2010
2009

U.S. dollars

2010

Short-term borrowings with average interest rate of 1.77% for 2010 and 1.46% for 2009.................................................. \Current portion of long-term borrowings with average interest rate of 1.71% for 2010 and 2.14% for 2009 .......................
Current portion of other liabilities with average interest rate of 1.87% for 2010 and 1.61% for 2009 ..................................
Total Short-term .................................................................................................................................................

4,206 \
7,873
625
12,704

8,087 $
5,768
800
14,65545,206
84,614
6,718
136,538

Bond payable with share subscription rights, due March 2012.........................................................................................
Long-term borrowings with average interest rate of 1.6% for 2010 and 2.43% for 2009, less current portion .....................
Long-term accounts payable, less current portion ..........................................................................................................
Total Long-term .................................................................................................................................................
Total ................................................................................................................................................................. \17,706593
18,29931,003 \4,500
18,473
1,211
24,184
38,839 $190,287
6,370
196,657
333,195* Average interest rate of borrowings denotes the weighted average rate for the outstanding balances at March 31, 2010 and 2009. Average interest rate of otherliabilities denotes the weighted average rate for the average of the outstanding balances at April 1, 2009 and March 31, 2010. Bonds payable with sharesubscription rights, due march 2012, were all redeemed in the year ended March 31, 2010.
The aggregate annual maturities of long-term debt as of March 31, 2010 were as follows:Year ending March 31
2012...................................................................................................................................................................................................... \2013 .....................................................................................................................................................................................................
2014......................................................................................................................................................................................................
2015 .....................................................................................................................................................................................................
Total .................................................................................................................................................................................................... \22

Thousands ofMillions
U.S. dollarsof yen6,934 $
74,5185,443
58,4904,793
51,5081,129
12,141
18,299 $196,657

6. Liability for Employees' Retirement Benefits
The Company and certain domestic consolidated subsidiaries have a funded
defined benefit pension plan, such as qualified pension plan and lump-sum
retirement plan. Although the Company and certain domestic consolidated
subsidiaries also contributes to a jointly sponsored employee pension fund,related benefit obligation, plan assets and benefit costs are excluded fromthe following calculation because it is difficult to assess the plan assets
reasonably.

The liability for employees' retirement benefits at March 31, 2010 and 2009 consisted of the following:Thousands ofMillions of yen
2010
2009
Projected benefit obligation ........................................................................................................................................... \Fair value of plan assets ................................................................................................................................................
Unrecognized actuarial gain ...........................................................................................................................................
Net liability .............................................................................................................................................................. \1,551 \
(396)
(65)
1,090 \

U.S. dollars

2010

1,441 $
(384)
(113)
944 $

16,673(4,259)(701)
11,713The components of net periodic benefit costs for the years ended March 31, 2010 and 2009 are as follows:
Thousands ofMillions of yen
2010
2009
Service cost ................................................................................................................................................................. \Interest cost .................................................................................................................................................................
Expected return on plan assets ......................................................................................................................................
Recognized actuarial loss ..............................................................................................................................................
Net periodic retirement benefit costs ......................................................................................................................... \

180 \
22
(3)
19
218 \

U.S. dollars

2010
130 $
19
(2)
15
162 $

1,936
234
(27)
196
2,339

Assumptions used for the years ended March 31, 2010 and 2009 are set forth as follows:
Discount rate ........................................................................................................................................................................................
Expected rate of return on plan assets ....................................................................................................................................................
Recognition period of actuarial gain/loss ................................................................................................................................................

2010
2.0%
1.0%
13 years

2009
2.0%
1.0%
13 years

Descriptions of the jointly sponsored employee pension plan whose payments are treated as retirement benefit costs are as follows:
Thousands of(1) Overall situation of fund (as of March 31, 2010)
Millions of yen
41,476 $Fair value of plan assets ................................................................................................................................................................ \56,260Benefit obligation on the basis of pension financing ........................................................................................................................
(14,784) $Difference ..................................................................................................................................................................................... \U.S. dollars

445,737
604,624(158,887)

Thousands of(2) Contribution share ratio of the Company and certain domestic consolidated subsidiaries to total pension plan
U.S. dollars(from April 1, 2008 to March 31, 2009)
Millions of yen
69,043 $742,003
Gross pay (of total pension plan) .............................................................................................................................….................. \4,002
43,004Gross pay (of the Company) .............................................................................................................................…........................
5.80%
5.80%
Ratio .................................................................................................................................................................................................
Thousands of(3) Supplement remarks
U.S. dollars
The difference amount described in above (1) was calculated as:Millions of yen
0 $0General reserve ............................................................................................................................................................................. \2,659
28,580
Balance of unamortized prior service costs .....................................................................................................................…............
12,125130,307
Carried over shortage.....................................................................................................................…............................................
(14,784) $(158,887)
Difference ..................................................................................................................................................................................... \Balance of unamortized prior service costs are amortized by equal payment method in 18 years, and the remaining amortization period is 8 years as ofMarch 31, 2010.

23

7. Net assets
Since May 1, 2006, Japanese companies have beeb subject to the Companies
Act of Japan (the "Act").
The significant provisions in the Act that affect financial andaccounting matters are summarized below:(b) Increases/decreases and transfer of common stock, reserve and surplus
The Act requires that an amount equal to 10% of dividends must
be appropriated as a legal reserve (a component of retained earnings) or
as additional paid-in capital (a component of capital surplus) dependingon the equity account charged upon the payment of such dividends until
the total of aggregate amount of legal reserve and additional paid-in capitalequals 25% of the common stock.
Under the Act, the total amount of additional paid-in capitaland legal reserve may be reversed without limitation.
The Act provides that common stock, legal reserve,
additional paid-in capital, other capital surplus and retained earnings can betransferred among the accounts under certain conditions upon resolutionof' the shareholders.

(a) Dividends
Under the Act, companies can pay dividends at any time during
the fiscal year in addition to the year-end dividend upon resolution at
the shareholders meeting. For companies that meet certain criteria such as;(1) having the Board of Directors, (2) having independent auditors,(3) having the Board of Corporate Auditors, and (4) the term of serviceof the directors is prescribed as one year rather than two years of normal
term by its articles of incorporation, the Board of Directors may declare
dividends (except for dividends in kind) if the company has prescribed soin its articles of incorporation.
The Act permits companies to distribute dividends-in-kind(non-cash assets) to shareholders subject to a certain limitation andadditional requirements.
Semiannual interim dividends may also be paid once a year upon resolution
by the Board of Directors if the articles of incorporation of the company
so stipulate.

(c) Treasury stock and treasury stock acquisition rights
The Act provides for companies to purchase treasury stockand dispose of such treasury stock by resolution of the Board of Directors.
The amount of treasury stock purchased cannot exceed the amount available
for distribution to the shareholders which is determined by specific formula.
Under the Act, stock acquisition rights are presented as a separate componentof net assets.
The Act provides that companies can parchase both treasury stock acquisitionrights and treasury stock. Such treasury stock acquisition rights are presented
as a separate component of net assets or deducted directly from stockacquisition rights.

The Act provides certain limitations on the amounts available fordividends or the purchase of treasury stock. The limitation isdefined as the amount available for distribution to the shareholders,
but the amount of net assets after dividends must be maintained at no lessthan \3 million.

8. Research and Development Costs
million ($15,445 thousand), \1,193 million and \925 million forthe years ended March 31, 2010 and 2009 and 2008, respectively.

Research and development costs included in selling, generaland administrative expenses and manufacturing costs were \1,437

9. Loss on Sales and Disposal of Property, Plant and Equipment
Significant components of loss on sales and disposal of property,
plant and equipment for the years ended March 31, 2010, 2009, and 2008
were as follows:
Thousands of

Buildings and structures .................................................................... \Machinery and equipment ..................................................................
Construction in progress ......................................................................
Removal cost .......................................................................................
Others ..............................................................................................
\

Millions of yen
2010
2009
19 \
45 \
112
92
0
7
3
6
5
140 \
149 \

24

U.S. dollars

2010

2008
7 $
28
16
51 $

204
1,206
1
33
61
1,505

10. 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 40.6% for the years ended March 31, 2010, 2009
and 2008.

The tax effects of significant temporary differences which resulted indeferred tax assets and liabilities as of March 31, 2010 and 2009 are
as follows:

Thousands ofMillions of yen
2010
2009
Deferred Tax Assets:
Elimination of unrealized profits ..........................................................................................................
Liability for employees' retirement benefits ..........................................................................................
Accrued enterprise tax .......................................................................................................................
Accrued bonuses ...............................................................................................................................
Loss on revaluation of golf club memberships ....................................................................................
Tax loss carryforwards ......................................................................................................................
Accrued bonuses to directors and corporate auditors ..........................................................................
Valuation loss of inventories................................................................................................................
Allowance for doubtful accounts.........................................................................................................
Allowance for investment loss.............................................................................................................
Provision for directors' retirement benefits ..........................................................................................
Deferred gains (losses) on hedges........................................................................................................
Difference on depreciation period........................................................................................................
Loss on valuation of investment securities............................................................................................
Other .................................................................................................................................................
Less: valuation allowance ...................................................................................................................
Total ................................................................................................................................................... \

35
443
58
276
41
1,281
10
106
42
35
109
88
632
50
92
(1,765)
1,533 \

5
385
10
255
56
1,153
5
191
48
6
109
114
510
4
14
(1,443)
1,422 $

U.S. dollars

2010
380
4,758
623
2,971
443
13,765
105
1,139
451
371
1,176
945
6,788
533
993
(18,971)
16,470Thousands ofMillions of yen
2010
2009

U.S. dollars

2010

Deferred Tax Liabilities:
Unrealized gain on available-for-sale securities ..................................................................................... \Allowance for doubtful debts .............................................................................................................
Other .................................................................................................................................................
Total ................................................................................................................................................... \(10) \
0(53)(63) \

(9) $
0
(24)
(33) $

(112)
(4)
(560)
(676)

Deferred Tax Assets, Net: .................................................................................................................... \1,470 \

1,316 $

15,794

A reconciliation between the normal effective statutory tax rate sand theactual effective tax rates reflected in the accompanying consolidated

statements of income for years ended March 31,2010, 2009 and2008 are as follows:

Statutory tax rate .....................................................................................................................................
Permanent differences; entertainment and other .........................................................................................
Per capita inhabitant tax ...........................................................................................................................
Tax credits for research and development costs .......................................................................................
Foreign tax credits ...................................................................................................................................
Tax rate difference in foreign subsidiaries .................................................................................................
Valuation allowance .................................................................................................................................
Other, net ................................................................................................................................................
Actual effective tax rate ...........................................................................................................................

25

2010

2009

2008

40.6%
0.4%
0.9%
(4.5%)(5.5%)(17.5%)
4.6%
1.5%
20.5%

40.6%
2.0%
3.7%
(18.2%)(44.4%)(22.7%)
56.5%
1.4%
18.9%

40.6%
0.2%
0.3%
(1.0%)(10.0%)(29.5%)
16.5%(3.7%)
13.4%

11. Financial Instruments(Additional information)
Effective from the year ended March 31,2010, the Company has adopted
the revised Accounting Standard, "Accounting Standard for
Financial Instruments" (ASBJ Statement No.10 revised on March 10, 2008)
and the “Guidance on Disclosures about Fair Value of Financial Instruments”(ASBJ Guidance No.19 revised on March 10, 2008).
Information on financial instruments for the year ended March 31, 2010
required parsuant to the revised accounting standards is as follows:(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 date and balance per customer. The Company keeps track of the adverse
financial conditions of our customers in the early stage to mitigate the bad debt.
The Company enters into derivative transactions only with the credit worthy
financial institutions to mitigate the credit risk.

(a) Qualitative information on financial instruments(1) Policies for using financial instruments
The Group finances necessary funds mainly through bank loans andbond issues according to the capital investment plan of the production
and sales of printed circuit boards.
Temporary excess 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 following risks andit is our policy not to enter into derivative transactions for speculative purpose.

(ii) Market risk management (risk of foreign currency fluctuations and interests)
Regarding the operating receivables and operating payables dominated inforeign currencies, the Company utilizes foreign exchange forward contracts
if necessary to hedge the foreign currency fluctuation risk, which is controlled
by each currency and monthly. For investment securities, the Company regularly
reviews the fair value and issuers’ financial condition and readjust Company’
portfolio on an ongoing basis considering the business relationship withcounterparties. Derivative transactions are based on the internal rules andexecuted after getting the approval from the approver and managed inaccounting department. Contents of the derivative transactions are reported
to board of directors meeting periodically.

(2) Details of financial instruments used and exposures to risk andhow they arise
Operating receivables such as trade notes and accounts receivable areexposed to credit risk. Some operating receivables, which are dominated inforeign currencies due to global operations, 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 payables
dominated in the same foreign currency. Investments securities mainly
consist of securities of companies in which a business relationshiphas 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 dominatedin the same foreign currency. Loans are mainly used for the purpose offinancing capital investments. A part of these are variable interest loans andare 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 ofoperating receivables and payables dominated in foreign currencies andinterest rate swaps to hedge interest fluctuation risk.

(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.
(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 casemarket 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 12. Derivatives”, the contract amount itself does not indicate
market risk related to derivative transactions.

26

(b) Fair values of financial instruments
Book values of the financial instruments included in the consolidated balance sheet and their fair values at March 31, 2010 are as follows:
2010
Millions of yen

Cash and deposits....................................................... \Trade notes and accounts receivable ...........................
Investment securities:
Available-for-sale securities........................................
Trade notes and accounts payable ...............................\
Short-term borrowings.................................................
Long-term borrowings.................................................
Derivative transactions................................................. \

Book

Fair

Value

Value

4,229 \
15,081

4,229 \
15,081120
8,229 \
4,206
25,579- \120
8,229 \
4,206
25,689- \Thousands of U.S. dollars
Difference

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

Book

Fair

Value

Value

-$
-

45,452 $162,076

45,452 $162,076

-

-$
-

1,290
88,440 $45,206274,901- $1,290
88,440 $45,206
276,084
- $

-

110
- $

(i). Cash and cash equivalents, (ii) 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.
(iii). Investment securities
Please refer to "Note 3. Investment Securities".
(iv). Trade notes and accounts payable, (v) 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.

(2) Unlisted securities of 1,196 million yen ($12,857 thousand), for which
fair value is determined to be extremely difficult to determine because
the securities have no market value as of March 31, 2010,
are not included in the above table.

(c) The redemption schedule for financial instruments and securities withmaturity as of March 31, 2010 is as follows:
2010
Millions of yen
Due in one

Due after one

Due after fiveDue after ten

year

year throughyear throughyears

or less

five years

ten years

4,229 \
15,081

-\
-

-\
-

-

19,310 \

-\

-\

-

2010
Thousands of U.S. dollars

Cash and cash equivalents........................................... $Trade notes and accounts receivable ...........................
Investment securities:
Other securities with maturities......................................
Total .......................................................................... $

1,183
-

(vi). Long-term borrowings
The fair values are measured as the net present value of estimated future
cash flows by discounting the principle and interest value using the loaninterest rate applied to the new loans. Variable interest rate loans meetshort cut method of interest rate swaps, and the fair value is determined by
the sum of principle and the interest processed as interest rate swaps
using the reasonably estimated loan interest rate applied to the same kind ofloans.
(vii). Derivative transactions
Please refer to “Note 12. Derivatives”.

(1) Valuation method of the fair value of financial instruments andinformation of investment securities and derivative transactions

Cash and cash equivalents........................................... \Trade notes and accounts receivable ...........................
Investment securities:
Other securities with maturities...................................
Total ..........................................................................\

Difference

Due in one

Due after one

Due after fiveDue after ten

year

year throughyear throughyears

or less

five years

ten years

45,452 $162,076

-$
-

-$
-

-

207,528 $

-$

-$

-

27

12. Derivatives
The Group uses foreign currency forward contracts, interest rate swap
contracts and copper price swap contracts as derivative financial
instruments only for the purpose of mitigating future risks of fluctuationof foreign currency exchange rates, interest rate and commodity price.
The Group does not enter into derivatives for trading or speculative purposes.

The following summarizes hedging derivative financial instruments
used by the Group and items hedged:
Hedging Instruments:
Foreign currency forward contracts
Interest rate swap contracts
Copper price swap contracts
Hedged Items:
Monetary items subject to risk of market fluctuation andthe fluctuation is not reflected in the amount of the items

Foreign currency forward contracts are subject to risk of foreignexchange rate changes, interest rate swap contracts are subject to riskof interest rate changes, and copper price swap contracts are subject
to risk of copper price changes.
Because the counterparties to those derivatives are limited tomajor financial institutions, the Group does not anticipate any
losses arising from credit risk.

Execution and control of derivatives are handled by the Company's
Accounting Department in accordance with internal handling policy.
A current status of the derivatives is reported to theBoard of Directors of the Company.

Derivative transactins for which hedge accounting has been applied for the year ended march 31, 2010 are as follows:

2010

Contract
amountHedged item

Millions of yen
Contract
amountdue after
one year
Fair value

Thousands of U.S. dollars
Contract
amountdue after
Contract
one year
Fair value
amountInterest rate related:
Benchmark Method
Interest rate swap
contracts
Payable fixed/
Receive floating

Long-term
borrowings \7,220 \

4,946 \

(262) $

77,594 $53,155 $(2,821)

Short-cut Method
Interest rate swap
contracts
Payable fixed/
Receive floating

Long-term
borrowings \1,468 \

667 \(15) $

15,780 $7,165 $

(162)

923 \

-\

1,051 $

9,921 $

- $11,298

Commodity related :Benchmark Method
Copper price swaps
Rawmaterials\

Fair value is principally based on quoted price obtained from financial institutions signing the contract.
Above information is required under new regulation ASBJ statement No.10, March 10, 2008 and ASBJ Guidance No.19, March 10, 2008 and therefore,
fair value of derivative transactions at March 31, 2009 and 2008 are omitted.
There are no derivative transactions for which hedge accounting has not been applied for the year ended March 31, 2010.
Derivative transactions for which hedge accounting has not been applied for the years ended March 31, 2009 and 2008 are summarized as follows:
Copper price swaps

Contract amount .................................... \Fair value ..................................................
Unrealized profit .................................... \Millions of yen
2009
2008
421 \
228
446
254
25 \
26

28

13. Related Party Transactions
There were no material transactions of the Group with associated company for the years ended March 31, 2010, 2009 and 2008.
Transactions of the Group with directors as of and for the years ended March 31, 2010, 2009 and 2008 were as follows:
Thousands of2010
Selling, general and administrative expenses ....................................... \Purchases of land and building ..............................................................
Total ................................................................................................ \Millions of yen
2009
-\
-\
-\
-\

29

U.S. dollars

2010

2008
2 $
20
22 $

-

14. Segment Information
Business segment information is not disclosed as the Company and consolidated subsidiaries operate in one segment, which is electronics related business.
Operations by geographic area for the years ended March 31, 2010, 2009 and 2008 were summarized as follows:
Operations by Geographic Area:
Millions of yen
Corporate Assets
Japan

2010
Net Sales:
Sales to customers .................................................
Intersegment sales .................................................

Asia

North America

Total

and Eliminations

Consolidated\

41,6382,600\

26,857
20,468

\

1,328
85

\

69,82323,153\(23,153)\

69,823-

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

\

44,238\47,325

\

1,413

\

92,976\(23,153)\

69,823Operating expenses .................................................
Operating income ....................................................

\\

43,212
1,026\\

44,631
2,694

\
\

1,389
24

\
\

89,232
3,744\\(23,202)
49\\

66,030
3,793

Identifiable assets ....................................................

\

54,100\52,752\

427\

107,279\(22,551)\

84,728\42,1803,001\

31,904
15,614

\

1,723
111

\

75,807
18,726\(18,726)\

75,807-

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

\

45,181\47,518

\

1,834

\

94,533\(18,726)\

75,807

Operating expenses ....................................................
Operating income .......................................................

\\

45,08893\\

46,138
1,380

\
\

1,843
(9)

\
\

93,0691,464\\(19,023)297\\

74,046
1,761

Identifiable assets .......................................................

\

59,323\50,872\

333\

110,528\(24,917)\85,611\

40,3453,501\

35,906
17,471

\

2,265
38

\

78,51621,010\(21,010)\

78,516-

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

\

43,846\53,377

\

2,303

\

99,526\(21,010)\

78,516

Operating expenses ....................................................
Operating income .......................................................

\\

41,9001,946\\

47,879
5,498

\
\

2,395
(92)

\
\

92,174
7,352\\(20,966)(44)\\

71,208
7,308

Identifiable assets .......................................................

\

56,711\

48,181\

499\

105,391\(23,348)\

82,0432009
Net Sales:
Sales to customers ...................................................
Intersegment sales and transfers ................................

2008
Net Sales:
Sales to customers ...................................................
Intersegment sales ....................................................

Thousands of U.S. dollars
Corporate Assets
Japan

2010
Net Sales:
Sales to customers .................................................
Intersegment sales .................................................

Asia

North America

Total

and Eliminations

Consolidated$

447,484
27,942$ 288,631
219,971$

14,269910$

750,384
248,823$(248,823)$

750,384-

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

$

475,426$ 508,602$

15,179$999,207$(248,823)$

750,384

Operating expenses .................................................
Operating income ....................................................

$$

464,405
11,021$ 479,648$ 28,954$$

14,921
258$$

958,974
40,233$$(249,362)
539$$

709,612
40,772

Identifiable assets ....................................................

$

581,413$ 566,924

$

4,586

$ 1,152,923$(242,355)$

910,56830

The geographic areas consist primarily of the following countries and regions:Asia....................................... China, Hong Kong, Philippines and Vietnam
North America....................... United States
Change of the accounting methoda) As discussed in Note 2 (e), effective from the year ended March 31, 2009, the Company and the consolidated subsidiaries
adopted the "Accounting Standard for Measurement of Inventories" (Statement No. 9, issued by ASBJ on July 5, 2006).
Consequently, compared to the amounts that would have been reported under the previous accounting method, operating expenses
of Japan and Asia for the year ended March 31, 2009 increased by \201 million and \183 million, respectively.
b) As discussed in Note 2 (t), effective from the year ended March 31, 2009, the Company applied the "Practical Solution on
Unification of Accounting Policies Applied to Foreign Subsidiaries for Consolidated Financial Statements" (ASBJ PITF No.18)
issued on May 17, 2006, and made necessary adjustments on the consolidation process. Consequently, compared to the amounts
that would have been reported under the previous accounting method, the operating expenses of Asia for the year ended March 31, 2009
increased by \128 million and no effect on the other areas.
Overseas Sales:
Millions of yen
Asia

North America

Europe

Other

Total

2010
Overseas sales .........................................................

\

30,571

\

3,035

\

857

\

7

Consolidated net sales .............................................
Ratios of overseas sales ..........................................

43.8%

4.3%

1.2%

\

34,470\69,823

0.0%

49.4%

2009
Asia

Overseas sales ...........................................................

\

33,677

North America

\

3,025

Europe

\

Total

123

Consolidated net sales ................................................
Ratios of overseas sales .............................................

44.4%

4.0%

\

36,825\75,807

0.2%

48.6%

2008
Overseas sales ...........................................................

\

38,785

\

2,825

\

7

Consolidated net sales ................................................
Ratios of overseas sales .............................................

49.4%

3.6%

\

41,617\78,516

0.0%

53.0%

Thousands of U.S. dollars
Asia

North America

Europe

Other

Total

2010
Overseas sales .........................................................

$

328,539$

32,622

$

9,206

$

77

Consolidated net sales .............................................
Ratios of overseas sales ..........................................

43.8%

4.3%

1.2%

0.0%

$

370,444$

750,384
49.4%

The geographic areas consist primarily of the following countries and regions:Asia....................................... China, Hong Kong, Philippines and Singapore
North America....................... United States
Europe...................................Germany and France
Other ..................................…United States (2006 only)
Geographical areas were previously classified to three segments as "Asia", "North America" and "Europe". From the year ended March31, 2010, geographical segments
have been changed to four segments as "Asia", "North America", "Europe" and "Other", because sales were recognized in a new geographic area.

31

15. Subsequent Event
The Company resolved at a meeting of its board of directors held on May 31, 2010, as to the merger of Miyagi Meiko Electronics co., Ltd ("Miyagi Meiko")
and Togoshi Co., Ltd.("Togoshi"), wholly owned subsidiaries of the Company and signed the merger agreement on the same day.
The merger is planned to be effective on October 1, 2010.
1.Purpose of merger
Miyagi Meiko and Togoshi's business purpose within the Group is manufacturing of printed circuit boards ("PCB").
The merger is conducted as the Company determined that by integrating their businesses into the Company, the Group makes effective use of
the managerial resources, and conducts businesses efficiently and swiftly.
2.Outline of merger(1) Timeline of merger
Board of directors' meetingfor approval of the merger agreement:
Conclusion of the merger agreement:
Shareholders' meetingfor approval of the merger agreement:
Effective date of the merger:
Registration date of the merger:

May 31, 2010
May 31, 2010
June 29, 2010
October 1, 2010 (planned)
Beginning of October 2010 (planned)(2) Legal form of the business combination
Marger to make the Company a surviving company and Miyagi Meiko and Togoshi dissolved companies.
(3) Merger ratio and cash-out for the merger
Since the Company owns all shares of Miyagi Meiko and Togoshi, there will be no issuance of new shares, increase of common stock and cash-out
following the merger.
3.Profile of the two companies to merge (As of March 31, 2010)
Company nameHead office
Representative director
Capital
Net assets
Total assets
Scope of businessMiyagi Meiko Electronics Co., Ltd
8-5, Shigeyoshi-cho, Ishinomaki City,
Miyagi Prefecture, Japan
Yuichiro Naya
\50 million ($537 thousand)\(2,508) million ($(26,954) thousand)\1,270 million ($13,648 thousand)
Manufacturing and sales of PCB

Togoshi Co.,Ltd1012, Ebinashi, Kamizato,
Kanagawa Prefecture, Japan
Yuichiro Naya
\10 million ($107 thousand)\(183) million ($(1,965) thousand)\368 million ($3,958 thousand)
Manufacturing and sales of PCB

4. After the Merger (planned)
Company nameScope of business
Head office
Representative director
CapitalFiscal year

Meiko Electronics Co., Ltd
Design, manufacturing and sales of PCB
5-14-15, Ogami, Ayase City,
Kanagawa Prefecture, Japan
Yuichiro Naya
\10,546 million ($113,333 thousand)March 3132

33

Principal Subsidiaries and Affiliates

Name or Trade Name
Multitech Co., Ltd.

Paid-in Capital

Address(Millions of yen)

Ayase City,

20

Kanagawa Prefecture
Yamagata Meiko Electronics

Kahoku-cho,Co., Ltd.

Nishimurayama-gun,Principal business
PWBs in the Electronics

Investment
Ratio (%)
97.5

business
75

PWBs in the Electronics

100.0

business

Yamagata Prefecture
MEIKO FINE Co., Ltd.

Yamato City, Kanagawa

91

Prefecture
M.D. SYSTEMS Co., Ltd.

Atsugi City, Kanagawa

15

10

Prefecture
Ishinomaki City, Miyagi

Co., Ltd.

Prefecture

MEIKO ELEC. HONG

Hong Kong

50(GUANGZHOU NANSHA)

Province, P.R.China

PWBs in the Electronics

100.0

PWBs in the Electronics

100.0

business
US$72,669
thousand

Guangzhou, Guangdong

100.0

business

KONG. CO., LTD.
MEIKO ELECTRONICSPWBs in the Electronics
business

Ebina City, Kanagawa

Miyagi Meiko Electronics

99.4

the Electronics business

Prefecture
Togoshi Co., Ltd.

Electronic equipment in

US$106,216

PWBs in the Electronics

100.0

business
PWBs in the Electronics

100.0

business(66.3)

PWBs in the Electronics

100.0

business(53.8)

PWBs in the Electronics

100.0

millionbusiness(100.0)

US$500PWBs in the Electronics

100.0

thousandbusinessthousandCO., LTD.
MEIKO ELECTRONICS

Hubei Province,(WUHAN) CO., LTD.)

P.R.China

MDS CIRCUIT

Manila, Philippine

US$85,800
thousand
12 PH peso

TECHNOLOGY, INC.
MEIKO ELECTRONICS

CA, U.S.A.

AMERICA, INC.
GUANGZHOU MEIKO PCB

Hubei Province,

CO., LTD

P.R.China

MEIKO ELECTRONICS

Hanoi, Vietnam

US$10,000

PWBs in the Electronics

100.0

business(100.0)

US$50,000

Electronic equipment in

100.0

thousandthe Electronics business(100.0)thousandVIETNAM CO., LTD

34

Principal Shareholders

As of March 31, 2010
Number of
Shares Held(Thousands ofshares)Percentage ofTotal Number of
Shares Issued
(%)

4,695

24.20

1,528

7.88

864

4.46

Meiko Kosan Co., Ltd.

608

3.14

Yuho, Ltd.

521

2.69

Haruyuki Naya

487

2.51

Seiichi Naya

437

2.26

Sumitomo Mitsui Banking Corporation

377

1.94

The Bank of Tokyo-Mitsubishi UFJ, Ltd.

375

1.94

Nippon Life Insurance Company

338

1.74

10,234

52.74

Name of Shareholder

Yuichiro NayaJapan Trustee Services Bank, Ltd.
(trust account)
The Master Trust Bank of Japan, Ltd.
(trust account)

Total

Note: In addition to the shareholders mentioned above, the Company holds 942 thousand shares oftreasury stock (4.86%).

35

Corporate History

November 1975

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

April 1978

Established the System Development Department (currently Industrial
Machinery Department/Image Equipment Department) to develop
electronics application products.

October 1978

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

September 1980

Constructed a new headquarters building and plant, establishing an
integrated production system for the entire process from design tofinished products.

December 1980

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

December 1981

Developed the world’s first multi-video processor.

March 1982

Established Multitech Co., Ltd. to manufacture single-sided PWBs
(currently a consolidated subsidiary of the Company).

September 1982

Established Yamagata Meiko Electronics Co., Ltd. (currently aconsolidated subsidiary of the Company) to manufacture PWBs.

August 1984

Completed construction to expand the headquarters plant in Ayase,
Kanagawa, and started operation.

June 1986

Established MEIKO FINE Co., Ltd. (currently a consolidated subsidiaryof the Company) to mount components on PWBs.

July 1988

Established M.D.SYSTEMS Co., Ltd. to design PWBs (currently aconsolidated subsidiary of the Company).

June 1990

Constructed the Fukushima Plant.

April 1991

Changed company name to Meiko Electronics Co., Ltd.

November 1997

Constructed a new manufacturing building inside the premises of the
Yamagata Plant (Yamagata Meiko Electronics Co., Ltd.) to manufacture
PWBs using the new PWB 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 purchasematerials 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 theCompany], to manufacture PWBs.

June 1999

Changed the name of the PWB manufacturing department of theheadquarters to the Kanagawa Plant.

December 2000

Stock listed on the Japan Securities Dealers Association.

36

January 2001

Started operation at the Guangzhou Plant [MEIKO ELECTRONICS(GUANGZHOU NANSHA) CO., LTD.].

June 2001

Established MDS CIRCUIT TECHNOLOGY, INC. (currently aconsolidated subsidiary of the Company) in Manila, the Philippines, todesign PWBs.

February 2004

Established Togoshi Co., Ltd. (currently a consolidated subsidiary of theCompany) to design, manufacture and sell PWBs.

December 2004

Stock listed on the Jasdaq Securities Exchange, Inc.*

January 2005

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

July 2005

Established MEIKO ELECTRONICS (WUHAN) CO., LTD. in Wuhan,
Hubei, China (currently a consolidated subsidiary of the Company) to
manufacture PWBs.

November 2005

Constructed a new plant building at the Miyagi Plant (Miyagi Meiko
Electronics Co., Ltd.).

April 2006

Established MEIKO ELECTRONICS AMERICA, INC. in the UnitedStates (currently a consolidated subsidiary of the Company) to sell
PWBs.

July 2006

Started operation at the WUHAN Plant [MEIKO ELECTRONICS(WUHAN) CO., LTD.].

January 2007

Established MEIKO ELECTRONICS VIETNAM CO., LTD. (currently aconsolidated subsidiary of the Company), in a suburb of Hanoi, Vietnam,
to manufacture PWBs.

April 2007

Established the Nagano R&D Center for PWB development at Shinshu
University, Faculty of Engineering.

November 2007

Constructed a new headquarters building inside the premises of the
Kanagawa Plant.

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.

* Associated with the merger of Jasdaq Securities Exchange, Inc. and Osaka Securities Exchange Co., Ltd.
in April 2010, the Company’s stock is listed on the Osaka Securities Exchange, JASDAQ market.

37

Corporate Data (As of March 31, 2010)
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:
5,497
Securities Code:
6787
Stock Exchange Listing:Osaka Securities Exchange, JASDAQ market
Number of Employees:
10,149 (Consolidated)
Number of Subsidiaries:
17
Transfer Agent:
The Sumitomo Trust and Banking Company, Limited
Accounting Auditor:
KPMG AZSA & Co.
Headquarters:
5-14-15, Ogami, Ayase City, 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/

38

Meiko Share Performance in FY2009 Compared with Indices300.0

Meiko Electronics （JASDAQ: 6787）
250.0

JASDAQ INDEX

200.0

150.0

100.0

50.0
1-Apr-09 1-May-09 1-Jun-09 1-Jul-09 1-Aug-09 1-Sep-09 1-Oct-09 1-Nov-09 1-Dec-09 1-Jan-10 1-Feb-10 1-Mar-10

Financial year 2009 ended March 31, 2010
Index
In %

39

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