+

Annual Report 2014
For the year ended March 31, 2014

Meiko Electronics Co., Ltd.

Profile

The Meiko Group consists of Meiko Electronics Co., Ltd. (the “Company”), and its 14
subsidiaries (10 consolidated subsidiaries and 4 non-consolidated subsidiaries) (the“Group”). The Group operates a single business segment, engaging in the design,
manufacture and sale of PCBs (printed circuit boards) and associated services.

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

1

Contents(For the years ended/as of March 31) ................................................................................. 3
Five-year Financial Summary ............................................................................................ 3
Financial Review: Management’s Discussion and Analysis .............................................. 5
Business Risks..................................................................................................................... 8
Consolidated Financial Statements ................................................................................. 11
Principal Subsidiaries and Affiliates ................................................................................ 33
Principal Shareholders ..................................................................................................... 34
Corporate History.............................................................................................................. 35
Corporate Data (As of March 31, 2014) ............................................................................ 37
Meiko Share Performance in FY2014 Compared with Indices ....................................... 382

Five-year Financial Summary(For the years ended/as of March 31)
2010

2011

2012

2013

2014

(millions of yen, except per share amounts)
Consolidated financial indicators:
Net sales¥69,823¥74,724¥62,973¥60,709¥79,232

Ordinary income (loss)

2,695

2,127

222

(387)

1,932

Net income (loss)

1,828(3,095)

1,159(1,568)23—(5,307)

2,048

1,822

3,522

Net assets

38,16732,98035,02836,72744,708

Total assets

84,72889,816

91,105102,046

115,427

2,067.25

1,756.65

1,865.71

1,956.24

1,708.09

107.39(166.32)

61.73(83.52)

1.11

—

—

—

—

—

Equity ratio

45.0%

36.7%

38.4%

36.0%

38.7%

Return on equity (ROE)

5.0%

-8.7%

3.4%

-4.4%

0.1%

Price earnings ratio (PER) (times)

18.5

—

19.4

—

583.5

Cash flows from operating activities

8,841

7,916

9,252

3,594

2,426

Cash flows from investing activities(6,059)(17,911)(10,377)(5,075)(4,021)

Cash flows from financing activities(3,742)

8,677

2,360

5,358

1,187

Cash and cash equivalents
at the end of the period

4,009

2,509

3,752

8,788

8,759

Number of employees

10,14913,161

9,948

9,966

11,858

[565]

[597]

[397]

[528]

[700]

Comprehensive income

Net assets per share (yen)Net income (loss) per share (yen)Net income per share (diluted) (yen)[Average number of temporary staff]

3

Net sales

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

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

2010
2010

2011

2012

2013

2014

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

¥4,000¥2,000¥0(¥2,000)(¥4,000)

2011

2012

2013

2010

2014

2011

(percentage)(millions of yen)

¥40,000¥30,000¥20,000

2014

4.0%
2.0%
0.0%
-2.0%

2010

2011

2012

2013

2014

-6.0%
-8.0%
2010

2011

2012

2013

-10.0%

2014

Total assets

Price earnings ratio (PER)
600.0 times(times)¥120,000(millions of yen)

2013

Cash flows f rom investing activities-4.0%¥10,000¥100,000¥80,000

500.0 times
400.0 times¥60,000

300.0 times¥40,000

200.0 times¥20,000

100.0 times
0.0 times
2010

2011

2012

2013

2014

Net assets per share¥3,000.00
(yen)

2012

6.0%

¥50,000¥2,000.00¥1,000.00
¥0.00

2014

Return on equity (ROE)

Net assets

¥0

2013

Net income, diluted per share (yen)¥20,000¥15,000¥10,000¥5,000¥0(¥5,000)(¥10,000)(¥15,000)(¥20,000)
Cash f lows from operating activities
Cash f lows from f inancing activities

¥0

2012

Cash flows¥6,0002010

2011

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

2010

2011

2012

2013

2014

4

2010

2011

2012

2013

2014

Financial Review: Management’s Discussion and Analysis
The forward-looking statements in this section are based on the Group’s judgment as ofthe end of the current consolidated fiscal year.
(1) Significant accounting policies and estimates
The consolidated financial statements of the Group have been prepared in conformity
with accounting principles generally accepted in Japan (“Japanese GAAP”). Prior to thepresentation of these consolidated financial statements, the Company used its best
judgement along with past results and conditions of the Group to generate estimatesand forecasts.
(2) Analysis of the Group’s financial position
1) Assets(Current assets)
The balance of current assets as of March 31, 2014 was ¥42,740 million, up ¥7,639
million from ¥35,101 million for the previous fiscal year. This change mainly comprised
an increase of ¥5,414 million in trade notes and accounts receivable from ¥12,129
million to ¥17,543 million, and an increase of ¥1,114 million in inventories from ¥10,487
million to ¥11,601 million.
(Noncurrent assets)
The balance of noncurrent assets as of March 31, 2014 was ¥72,687 million, up ¥5,742
million from ¥66,945 million for the previous fiscal year. Major factors for this increase
were a ¥5,807 million increase in property, plant and equipment from ¥61,772 million to¥67,579 million due to capital investments, and a ¥674 million increase in investment
securities from ¥1,041 million to ¥1,715 million.
2) Liabilities(Current liabilities)
The balance of current liabilities as of March 31, 2014 was ¥36,910 million, down
¥3,268 million from ¥40,178 million for the previous fiscal year. This change mainly
consisted of a ¥2,690 million increase in trade notes and accounts payable from ¥7,243
million to ¥9,933 million, a ¥5,609 million decrease in short-term borrowings from
¥13,971 million to ¥8,362 million, and a ¥1,241 million decrease in the current portion of
long-term borrowings from ¥13,108 million to ¥11,867 million.
(Long-term liabilities)
The balance of long-term liabilities as of March 31, 2014 was ¥33,809 million, up¥8,668 million from ¥25,141 million for the previous fiscal year. Major factors for thisincrease were a ¥6,659 million in long-term borrowings from ¥22,557 million to ¥29,216
million, and a ¥1,126 million increase in long-term other payable from ¥506 million to¥1,632 million.
3) Net assets
The balance of net assets as of March 31, 2014 was ¥44,708 million, up ¥7,981 million
from ¥36,727 million for the previous fiscal year. Major factors for this increase were a¥2,343 million increase in capital stock and capital surplus, respectively, as a result of
new share issues, and a ¥3,162 million increase in foreign currency translation
adjustments.

5(3) Analysis of business results
1) Net sales
The Group’s business performance during the fiscal year under review was boosted by
its efforts to concentrate management resources on automotive products and overseas
smartphone-related products, which have been demonstrating strong sales, and its
focus on the expansion of production systems, as well as an increase in new orders. As
a result, net sales were ¥79,232 million, up ¥18,523 million, or 30.5%, from the previous
fiscal year.
2) Cost of sales and Selling, general and administrative expenses
Cost of sales increased ¥15,867 million, or 29.9%, from the previous fiscal year to¥69,023 million, reflecting an increase in variable cost following a rise in orders received.
As a result, gross profit increased ¥2,656 million, or 35.1%, from the previous fiscal
year to ¥10,209 million. The gross margin increased 12.9%, or 0.5 percentage point,
from the previous fiscal year.
Selling, general and administrative expenses increased ¥1,127 million, or 13.8%,
from the previous fiscal year to ¥9,286 million, primarily due to an increase in packing
and freight expenses.
3) Operating income
Operating income increased ¥1,529 million from the previous fiscal year to ¥923 million,
mainly due to an increase in net sales, compared with operating loss of ¥606 million forthe previous fiscal year. The operating margin was 1.2% compared with -1.0% for theprevious fiscal year.
4) Non-operating income and Non-operating expenses
Non-operating income decreased ¥285 million from the previous fiscal year to ¥2,343
million, primarily due to a decline in foreign exchange gains.
Non-operating expenses decreased ¥1,076 million from the previous fiscal year to¥1,333 million, mainly due to a decline in depreciation and amortization.
5) Ordinary income
Ordinary income increased ¥2,319 million from the previous fiscal year to ¥1,932 million,
due primarily to the recording of foreign exchange gains, compared with an ordinary
loss of ¥387 million for the previous fiscal year.
6) Extraordinary income (loss)
Extraordinary income decreased ¥513 million from the previous fiscal year to ¥700
million. This primarily reflected the recording of gain on sales of noncurrent assets of¥413 million and compensation income of ¥287 million from Tokyo Electric Power
Company, Incorporated, for the fiscal year under review.
Extraordinary loss improved by ¥889 million from the previous fiscal year to ¥384
million. This mainly reflected the recording of loss on sales and retirement of noncurrent
assets of ¥232 million and business structure improvement expenses totaling ¥64
million for the fiscal year under review.
7) Net income
The total amount of income taxes-current and Income taxes-deferred increased ¥1,103
million from the previous fiscal year to ¥2,224 million, primarily due to the reversal ofdeferred tax assets.
As a result of the above, net income increased ¥1,591 million from the previous fiscal
year to ¥23 million, compared with a net loss of ¥1,568 million for the previous fiscal
year.
6

(4) Analysis of source of funds and liquidity
1) Cash flows
Cash and cash equivalents (hereafter, “net cash”) as of March 31, 2014 decreased ¥29
million from the previous fiscal year, to ¥8,759 million.
Net cash provided by operating activities for the fiscal year under review was ¥2,426
million, down ¥1,168 million from the previous fiscal year.
Increases were mainly from income before income taxes and minority interests of¥2,247 million, depreciation and amortization of ¥6,182 million, an increase in notes
and accounts payable-trade of ¥2,000 million, and proceeds from insurance income of¥1,206 million. The major decreases comprised foreign exchange gain of ¥2,054 million,
an increase in notes and accounts receivable-trade of ¥5,871 million, and income taxes
paid of ¥1,731 million.
Net cash used in investing activities was ¥4,021 million, down ¥1,054 million from theprevious fiscal year. The major outflow was ¥4,724 million for the purchase of property,
plant and equipment.
Net cash provided by financing activities was ¥1,187 million, down ¥4,171 million
from the previous fiscal year. The major inflows comprised proceeds from long-termloans payable of ¥18,303 million and proceeds from new share issues of ¥4,686 million.
The major outflows comprised net decrease in short-term loans payable of ¥6,265
million and repayment of long-term loans payable of ¥15,021 million.
Trends in cash flow indicators of the Group are as follows:Year ended
March 31, 2012

Year ended
March 31, 2013

Year ended
March 31, 2014

Equity ratio (%)

38.4

36.0

38.7

Market value equity ratio (%)

24.7

11.8

14.7

Cash flows versus Interest-bearing debt ratio

4.4

13.8

21.2

Interest coverage ratio (times)

11.1

3.9

2.5

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

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

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

9(9) Financial risks
The Group has made aggressive capital investments of amounts higher than the funds it
has acquired from operating activities to prepare for the anticipated medium- andlong-term increase in demand for digital household appliances and automobiles, as well
as demand for new products in line with technological innovation.
As a result, the ratio of borrowings to total assets as of March 31, 2014, was 42.8%.
Should we make further aggressive capital investments to fulfill our business strategies,
an increase in borrowings and/or interest rates could affect the Group’s businessperformance and financial position.
(10) Intellectual property rights
The Group recognizes intellectual properties as its significant management resources andseeks to acquire intellectual property rights by applying for patents, etc. for proprietary
technologies, etc. developed by the Group with the aim of protecting intellectual
properties. However, not all applications may be approved and it is also possible thatobtained rights may be rendered void due to objections by third parties.
Although the Company’s legal department manages obtained intellectual properties
and pays attention to violation of rights by external parties, anticipated profits could be lostin the event of illegal use, etc.
Meanwhile, should a lawsuit be filed against the Group with regard to a violation of
intellectual property rights of third parties, the Group’s business performance and financial
position could be adversely affected as a result of the compensation or damages paid tocustomers due to the suspension of production and payment of license fees, etc., related
to patent use in order to resume production.
(11) Risks associated with production activities
The Group may continue to build new plants or establish new production lines in order toexpand its production capacity in the future in accordance with demand of major
customers around the world. However, should such construction works be delayed or new
production lines not launched smoothly, it could result in a delay in delivery of products tocustomers or a decline in plant productivity, and the subsequent drop in sales might
adversely affect the Group’s business performance.

10Consolidated Financial Statements
Consolidated Balance Sheets
Meiko Electronics Co., Ltd. and Consolidated Subsidiaries
As of March 31, 2014 and 2013
Thousands ofMillions of yen

ASSETS

2014

Current Assets:
Cash and cash equivalents (Notes 6, 15 and 25) ...................................................
Receivables －Trade notes and accounts receivable (Notes 6 and 15) ........................…...........
Other receivables ...............................................................................................
Less: Allowance for doubtful accounts ..............................................................
Inventories －Merchandise and finished goods .............................….......................................
Work in process ................................….............................................................
Raw materials and supplies ...........................….................................................
Deferred tax assets (Note 14) ................................................................................
Other ....................................................................................................................
Total current assets ........................................................................................

\

Property, Plant and Equipment, at Cost:
Land .....................................................................................................................
Buildings and structures ........................................................................…............
Machinery and vehicles................................................….....................................
Construction in progress .......................................................................................
Other ....................................................................................................................
Less: Accumulated depreciation ...........................................................................
Net property, plant and equipment .................................................................
Intangible Assets
Investments and Other Assets:
Investment securities (Notes 5 and 15) ..................................................................
Long-term loans receivable ...................................................................................
Deferred tax assets (Note 14) ................................................................................
Other ....................................................................................................................
Less: Allowance for doubtful accounts .................................................................
Total investments and other assets .................................................................
Total .......................................................................................................

See notes to consolidated financial statements.

11

\

8,759

U.S. dollars (Note 1)

2014

2013

\

8,788

$

85,14017,5432,009(15)

12,1291,152(15)

170,523
19,525
(146)

4,573
2,604
4,424
1,181
1,662
42,740

3,418
2,597
4,472
1,866
694
35,10144,44525,30743,000
11,484
16,161
415,439

1,702
39,977
71,962
7,335
3,351
124,327(56,748)
67,5791,944
34,99263,092
6,588
2,902
109,518(47,746)
61,772

16,545388,581
699,470
71,29532,5681,208,459(551,590)
656,869

455

469

4,420

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

1,041
131
1,619
1,953
(40)
4,704
102,046

16,673
1,172
11,286
16,303(205)
45,2291,121,957\$

LIABILITIES AND
NET ASSETS

Thousands of
U.S. dollars (Note 1)

Millions of yen

2014

Current Liabilities:
Trade notes and accounts payable (Notes 6 and 15) .............................................
Short-term borrowings (Notes 8 and 15) ...............................................................
Current portion of long-term borrowings (Notes 4, 8 and 15) ................................
Income taxes payable (Note 14) ............................................................................
Accrued bonuses ...................................................................................................
Other (Notes 6, 8 and 15) .....................................................................................
Total current liabilities ..................................................................................

\

Long-term Liabilities:
Long-term borrowings (Notes 4, 8 and 15) ............................................................
Provision for employees' retirement benefits (Note 9) ...........................................
Long-term other payable (Notes 8 and 15) ............................................................
Provision for directors' retirement benefits ............................................................
Net defined benefit liability (Note 9) ...................................................................
Other ....................................................................................................................
Total long-term liabilities ..............................................................................

9,933
8,362
11,867
165
500
6,083
36,910

2014

2013

\

7,243
13,971
13,108
739
440
4,677
40,178$96,552
81,279115,349
1,605
4,864
59,123358,772

29,216
1,632
261
1,942
758
33,80922,557
1,517
506
261
300
25,141

283,979
15,8592,537
18,875
7,372
328,622

12,88914,81013,756

10,546
12,467
13,827125,277
143,954
133,717(396)
41,059(396)
36,444(3,853)399,095

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

(115)
(206)
604
283
36,727102,046951(794)
36,605(1,294)35,468434,563
1,121,957

Commitments and Contingent Liabilities (Note 11) :Net Assets (Note 10):
Shareholders' Equity:
Common stock, authorized - 63,200,000 sharesissued - 26,803,320 shares in 2014 and 19,403,320 in 2013 ...................................
Capital surplus ......................................................................................................
Retained earnings ................................................................................................
Less: Treasury stock, at cost; Common stock,629,244 shares in 2014 and 2013 .......................................................................
Total shareholders' equity...............................................................................
Accumulated Other Comprehensive Income:Unrealized gains (losses) on available-for-sale securities ......................................
Deferred gains (losses) on hedges .........................................................................
Foreign currency translation adjustments ..............................................................
Remeasurements of defined benefit plans (Note 9) ...............................................
Total accumulated other comprehensive income.............................................
Total net assets ..............................................................................................
Total .......................................................................................................

See notes to consolidated financial statements.

12

\

\

$

Consolidated Statements of Operations
Meiko Electronics Co., Ltd. and Consolidated Subsidiaries
For the Years ended March 31, 2014, 2013 and 2012
Thousands ofMillions of yen

2014
Net Sales ..............................................................................................................
Cost of Sales (Note 12) ........................................................................................
Gross profit .........................................................................................................
Selling, General and Administrative Expenses (Note 12) ...................................
Operating income (loss) ......................................................................................

\

79,232
69,023
10,2099,286
923

U.S. dollars (Note 1)

2013\

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

2014

2012
\

62,97354,770
8,203
7,391
812

$

770,136
670,913
99,22390,256
8,967

Other Income (Expenses):
Interest expense, net .............................................................................................
Dividend income ..................................................................................................
Compensation expenses.........................................................................................
Foreign exchange gain (loss) .............................................................................…
Subsidy income ....................................................................................................
Net gain (loss) on sales and disposal of property, plant and equipment (Note 13)...
Reversal of allowance for investment loss .............................................................
Subsidy income for reconstruction (Note 18) ........................................................
Compensation income (Note 19) ...........................................................................
Loss on valuation of investment securities (Note 5) ..............................................
Loss on disaster (Note 17).....................................................................................
Loss on valuation of inventories (Note 20) ............................................................
Loss on abandonment of inventories (Note 21) .....................................................
Loss on abolishment of retirement benefit plan .....................................................
Environmental expenses (Note 22) .......................................................................
Loss from suspension of plant operations (Note 23)...............................................
Impairment loss ....................................................................................................
Expenses for business structure improvement ........................................................
Other, net .............................................................................................................
Total ..............................................................................................................

(932)
18
2,049
93
181
287
(27)
(62)
(64)
(219)
1,324

(898)
13
2,366
26
(36)
69
500
620
(30)
(170)
(478)
(292)
(243)
(1,288)
159

(812)
13
(45)
587
109
117
744
(105)
(160)
(65)
(219)
(442)
(278)

(9,057)
171
19,916
904
1,756
2,793
(263)
(604)
(615)
(2,123)
12,878

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

2,247

(447)

534

21,845

Income Taxes (Note 14):
Current ...............................................................................................................
Refund ...............................................................................................................
Deferred .............................................................................................................
Total income taxes ........................................................................................
Income (Loss) before Minority Interests..............................................................
Net Income (Loss) ...............................................................................................

1,056
1,168
2,224
23
23

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

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

10,261
11,35921,620
225
225

\

\

\

Yen

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

See notes to consolidated financial statements.

13

\

1.11
10.00

\

(83.52)-$

U.S. dollars (Note 1)

\

61.73
5.00

$

0.01
0.10

Consolidated Statements of Comprehensive Income
Meiko Electronics Co., Ltd. and Consolidated Subsidiaries
For the Years ended March 31, 2014, 2013 and 2012
Thousands ofMillions of yen

2014
Income (Loss) before Minority Interests .............................................................

\

Other Comprehensive Income (Note 24):
Unrealized gains (losses) on available-for-sale securities.......................................
Deferred gains (losses) on hedges .........................................................................
Foreign currency translation adjustments ..............................................................
Total other comprehensive income ................................................................
Comprehensive Income .......................................................................................

Comprehensive Income Attributable to:
Owners of the Company ......................................................................................

See notes to consolidated financial statements.

14

23

2013
\

213
124
3,162
3,499
3,522

\

3,522

U.S. dollars (Note 1)(1,568)

\

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

\

1,822

2014

2012
1,159

$

2,071
1,205
30,73734,013
34,238

(72)
114
847
889
2,048

\

2,048

225

$

34,238

Consolidated Statements of Changes in Net Assets
Meiko Electronics Co., Ltd. and Consolidated Subsidiaries
For the Years ended March 31, 2014, 2013 and 2012

Millions of yen
Shareholders' Equity

Balance at April 1, 2011...................
Net income........................................
Purchase of treasury stock..................
Net increase (decrease)......................
Balance at March 31, 2012..............
Net loss..............................................
Cash dividends paid...........................
Increase by merger.............................
Net increase (decrease)......................
Balance at March 31, 2013..............
Net income........................................
Issuance of new shares.......................
Cash dividends paid...........................
Net increase (decrease)......................
Balance at March 31, 2014..............

Number of
Shares ofCommonStock
19,403,320\

CommonStock
10,546

-

\

2,343

\

\

12,4672,343

26,803,320\

10,546-\

12,467-7,400,000\-\

10,546

19,403,320

CapitalSurplus12,467\

19,403,320\\

12,889\14,810Retained
Earnings
14,3591,159
15,518(1,568)(94)(29)
13,82723(94)
13,756

Accumulated Other Comprehensive Income

Treasury
Stock at cost;
Common
Stock
(396)
\
(0)
(396)
\
(396)
\
(396)
\

Total
Shareholders'Equity36,976\1,159(0)38,135\(1,568)(94)(29)
36,444
\
23
4,686
(94)
41,059\Unrealized
Gains (Losses)
on Availablefor-sale
Securities

\

\

\

\

(106)
(72)
(178)
63
(115)
213
98

\

\

\

\

Deferred
Gains(Losses) on
Hedges
(204)
114
(90)
(116)
(206)
124
(82)

Foreign
Currency
Translation
Adjustments

\

\

\

\

Total
Accumulated
Other
Comprehensive
IncomeRemeasurementsof Defined
Benefit Plans(3,686)847(2,839)
3,443
604
3,162
3,766

\

\

\

\

(133)
(133)

\

\

\

\

(3,996)889(3,107)
3,390
283
3,366
3,649

\

\

\

\

Total Net
Assets32,980
1,159
(0)
889
35,028(1,568)
(94)
(29)
3,390
36,727
23
4,686
(94)
3,366
44,708

Thousands of U.S. dollars (Note 1)
Shareholders' Equity

Balance at April 1, 2013...................
Net income........................................
Issuance of new shares.......................
Cash dividends paid...........................
Net increase (decrease)......................
Balance at March 31, 2014..............

$

CommonStock
102,504$

CapitalSurplus121,181--

22,773

22,773-$

125,277$$

143,954$

Retained
Earnings
134,404
225(912)
133,717

Accumulated Other Comprehensive Income

Treasury
Stock at cost;
CommonStock$(3,853)$(3,853)

See notes to consolidated financial statements.

15

Total
Shareholders'Equity$354,236
225
45,546(912)$
399,095

Unrealized
Gains (Losses)
on Availablefor-sale
Securities$$(1,120)2,071
951

Deferred
Gains(Losses) on
Hedges$(1,999)
1,205
$
(794)

Foreign
Currency
Translation
Adjustments

$

5,868

$
-

$

30,73736,605

Total
Accumulated
Other
Comprehensive
IncomeRemeasurementsof Defined
Benefit Plans$(1,294)(1,294)

$

2,749

$
-

$

32,71935,468$

Total Net
Assets356,985
225
45,546(912)
32,719434,563

Consolidated Statements of Cash Flows
Meiko Electronics Co., Ltd. and Consolidated Subsidiaries
For the Years ended March 31, 2014, 2013 and 2012
Thousands ofMillions of yen

2014
Operating Activities:
Income (loss) before income taxes and minority interests ......................................

\

2,247

U.S. dollars (Note 1)

2013
\

(447)

2014

2012
\

534

$

21,845Adjustments to reconcile income (loss) before income taxes
to net cash provided by operating activities:
Depreciation and amortization ............................................................................
Impairment loss...................................................................................................
Decrease in allowance for doubtful accounts ......................................................
Decrease in allowance for investment loss ..........................................................
Increase (decrease) in provision for employees' retirement benefits ....................
Increase in net defined benefit liability ..............................................................
Decrease in provision for directors' retirement benefits........................................
Increase (decrease) in accrued bonuses ..............................................................
Interest income and dividend income ..................................................................
Loss on valuation of investment securities ..........................................................
Interest expenses .................................................................................................
Foreign exchange gain ........................................................................................
Net loss (gain) on sales and disposal of property, plant and equipment.................
Subsidy income for reconstruction ......................................................................
Compensation income .........................................................................................
Loss on disaster ..................................................................................................
Business structure improvement expenses............................................................
Decrease (increase) in trade notes and accounts receivable .................................
Decrease (increase) in inventories .......................................................................
Increase (decrease) in trade notes and accounts payable .....................................
Decrease (increase) in other assets ......................................................................
Increase in other liabilities ..................................................................................
SubtotalInterest and dividend received ............................................................................
Interest paid ........................................................................................................
Proceeds from compensation income ..................................................................
Proceeds from subsidy income ............................................................................
Proceeds from insurance income .........................................................................
Payments for loss on disaster...............................................................................
Income taxes refund ............................................................................................
Income taxes paid ...............................................................................................
Net cash provided by operating activities ...........................................................

6,182
62
(19)
(1,517)
1,735
60
(38)
27
952
(2,054)
(181)
(287)
64
(5,871)
(616)
2,000
(281)
631
3,096
39
(971)
287
500
1,206
(1,731)
2,426

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

6,423
(3)
124
(8)
24
(30)
828
(781)
(117)
(744)
105
1,578
2,237
(2,342)
1,072
788
9,688
30
(834)
744
(645)
468
(199)
9,252

60,089604(181)(14,749)
16,866
584
(372)
263
9,258
(19,968)(1,756)(2,793)615(57,071)(5,992)
19,439(2,731)
6,138
30,088383(9,439)2,793
4,860
11,719(16,822)
23,582

Investing Activities:
Payments for purchases of property, plant and equipment .....................................
Proceeds from sales of property, plant and equipment ...........................................
Payments for purchases of intangible assets .........................................................
Payments for purchases of investment securities ...................................................
Payments for insurance policies ............................................................................
Proceeds from maturity of insurance funds ...........................................................
Other, net .............................................................................................................
Net cash used in investing activities .....................................................................

(4,724)
662
(101)
(325)
(13)
357
123
(4,021)(5,732)
25
(41)
(4)
(21)
170
528
(5,075)(10,439)
153
(144)
(0)
(51)
94
10
(10,377)(45,914)
6,432
(985)
(3,162)
(127)
3,467
1,205
(39,084)

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

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

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

(1,150)13,732(9,733)
(488)
(0)
(1)
2,360

(60,895)
177,905(146,006)(3,946)45,546(915)(154)
11,535

See notes to consolidated financial statements.

16

Thousands ofMillions of yen

U.S. dollars (Note 1)

2014

2013

2012

2014

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

379

469

8

3,683

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

(29)

4,346

1,243

(284)

Cash and Cash Equivalents at Beginning of Year ..............................................
Increase in Cash and Cash Equivalents
resulting from Merger with Unconsolidated Subsidiaries (Note 25) ..................
Cash and Cash Equivalents at End of Year ........................................................

8,788

3,752

2,509

85,424

See notes to consolidated financial statements.

17

\

8,759

\

690
8,788

\

3,752

$

85,140Notes to Consolidated Financial Statements
Meiko Electronics Co., Ltd. and Consolidated Subsidiaries
For the Years ended March 31, 2014, 2013 and 2012
1. Basis of Presenting Consolidated Financial Statements
The accompanying consolidated financial statements of Meiko Electronics
Co., Ltd. (the “Company”) have been prepared in accordance withthe provisions set forth in the Financial Instruments and Exchange Law of Japanand its related accounting regulations, and in conformity with accounting
principles generally accepted in Japan (“Japanese GAAP”), which are different
in certain respects as to application and disclosure requirements ofInternational Financial Reporting Standards.
In preparing the accompanying consolidated financial statements,
certain reclassifications and rearrangements have been made to present
them in a form which is more familiar to readers outside Japan.
In addition, the notes to the consolidated financial statements include
information which is not required under Japanese GAAP, but ispresented herein as additional information.
The consolidated financial statements are denominated in Japanese yen,
the currency of the country in which the Company is incorporated
and operates. The translation of Japanese yen amounts into U.S. dollar
amounts is included solely for the convenience of readers outside Japanand have been made at the rate of \102.88 to $1, the approximate rate ofexchange at March 31, 2014. Such translation should not be construed
as representation that the Japanese yen amounts could be converted
into U.S. dollars at that or any other rate.

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

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

(e) Inventories(j) Investment Securities
Inventories are stated at cost, determined by the first-in-first-out method.
The Company has classified all the equity securities as available-forHowever, they are written down due to decreased profitability where appropriate. sale securities based on management’s intention. Available-for-salesecurities other than non-marketable are reported at fair value withunrealized gains or losses, net of applicable taxes, reported in a separate
component of net assets.
Non-marketable available-for-sale securities are stated at cost determinedby the moving-average method.

18

(k) Income Taxes
The provision for income taxes is computed based on the pretax
income included in the consolidated statements of operations. The asset
and liability approach is used to recognize deferred tax assets andliabilities for the expected future tax consequences of temporary
differences between the carrying amounts and the tax bases ofassets and liabilities. Deferred tax assets are measured by applying
currently enacted tax laws to the temporary differences.
(l) Leases
All finance lease transactions are capitalized to recognize lease assets
and lease obligations in the consolidated balance sheet, except for leases
which existed at April 1, 2008 and do not transfer ownership of the leased
property to the lessee and are accounted for as operating lease transactions.
(m) Derivative Financial Instruments
The Group uses foreign currency forward contracts, interest rate swaps
and copper price swaps as a means of hedging exposure to foreign currencies,
interest risks and market fluctuation. The Group does not enter into
derivatives for trading or speculative purposes.
Derivative financial instruments are classified and accounted for as
follows: a) all derivatives are recognized as either assets or liabilities andmeasured at fair value, and gains or losses on transactions arising fromderivative except for hedge purposes are recognized in the consolidated
statements of operations and b) for derivatives used for hedging purposes,
if derivatives qualify for hedge accounting because of high correlation andeffectiveness between the hedging instruments and the hedged items,
gains or losses on derivatives are deferred until maturity of the hedgedtransactions.
However, if the foreign currency forward contracts qualify for hedge
accounting, hedged items such as foreign currency receivables andpayables are translated at the contracted rates.
Also, if interest rate swap contracts are used as hedge and meet certain
criteria, the net amount to be paid or received under the swap
contract is added to or deducted from the interest on the assets or
liabilities for which the swap contract was executed.
(n) Retirement benefits for employees
The straight-line method is used as a method of attributing
expected benefits to the periods through the end of the fiscal year
in calculating projected benefit obligation.
Actuarial gain or loss is amortized using the declining balance method
over 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.
Past service cost is amortized using the straight-line method over 10
years, which is less than the average remaining years of service of theemployees.
Certain consolidated subsidiaries apply the simplified method in which
the retirement benefit amount required for voluntary termination at year-end
is deemed a projected benefit obligation for the calculation of liability
associated with retirement and retirement benefit expenses.

(p) Appropriations of Retained Earnings
Appropriations of retained earnings are reflected in the accompanying
consolidated financial statements for the following year uponshareholders' approval.
(q) Per Share Information
Dividends per share shown in the consolidated statements of operations havebeen presented on an accrual basis and include, in each fiscal period,
dividends approved after each balance sheet date, but applicable to the fiscal
period then ended.
Net income per share is computed by dividing net income available
to common shareholders by the weighted-average number of commonshares outstanding for the period.
The diluted net income per share is omitted as the Company had no potential
dilutive shares.
(r) Application of “Accounting Standard for Retirement Benefits”
Effective from the year ended March 31, 2014, the Company and its consolidated domestic
subsidiaries have applied the “Accounting Standard for Retirement Benefits” (ASBJ Statement
No. 26, issued on May 17, 2012 (hereinafter, the “Statement No.26”)) and “Guidance on
Accounting Standard for Retirement Benefits” (ASBJ Guidance No. 25, issued on May 17, 201(hereinafter, the “Guidance No.25”)) except the article 35 of the Statement No.26 and the articlof the Guidance No.25 and actuarial gains and losses and past service cost that are yet tobe recognized have been recognized and the difference between projected benefit obligationand plan assets has been recognized as net defined benefit liability.
In accordance with the article 37 of the Statement No.26, the effect of the change in accounting
policies arising from initial application has been recognized in remesurements of defined benefit
plans in accumulated other comprehensive income.
As a result of the application, net defined benefit liability in the amount of \1,942 million ($18,
thousand) has been recognized, and accumulated other comprehensive income has decreased by\133 million ($1,294 thousand), at the end of the current fiscal year.
(s) Application of “Accounting Standard for Accounting Changes and Error
Corrections”
Effective from the year ended March 31, 2012, the Company and its domestic consolidated
subsidiaries adopted “Accounting Standard for Accounting Changes and Error
Corrections” (ASBJ Statement No. 24, issued on December 4, 2009) and “Guidance on
Accounting Standard for Accounting Changes and Error Corrections” (ASBJ Guidance
No. 24, issued on December 4, 2009) for changes in accounting policies and corrections of
figures on and after the beginning of the fiscal year ended March 31, 2012.
(t) Reclassifications
Certain prior year amounts have been reclassified to conform to the presentations
for the year ended March 31, 2014.

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

19

3. Accounting Standard Issued But Not Yet Effective“Accounting Standard for Retirement Benefits” (ASBJ Statement No.26, issued on May 17, 2012) and “Guidance on Accounting Standard for Retirement Benefits”(ASBJ Guidance No.25, issued on May 17, 2012)(1) Summary
These accounting standards are revised from the viewpoint of improvements to financial reporting and international convergence, mainly focusing on (a) accounting method of
unrecognized actuarial gains and losses and past service costs, (b) the calculation formula for retirement benefit obligations and current service costs, and (c) enhancement of disclo(2) Effective dates
Amendments relating to determination of projected benefit obligation and service cost are effective from the beginning of fiscal year ending on or after March 31, 2015.
(3) Effect of the application of the standards
The Company and its consolidated domestic subsidiaries are currently in the process of determining the effects of these new standards on the consolidated financial statements.

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

5. Investment Securities
All the equity securities, classified as available-for-sale securities, are included in non-current investment securities.
The carrying amounts and aggregate fair values of the available-for-sale securities as of March 31, 2014 and 2013 are as follows:
2014
Millions of yen
Fair
Value

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

Thousands of U.S. dollars
Unrealized
Gains (Losses)

Fair
Value

Acquisition
Cost

Unrealized
Gains (Losses)

846 \

684 \

162 $

8,223 $

6,645 $

1,578

846 \

684 \

162 $

8,223 $

6,645 $

1,578

2013
Millions of yen
Fair
Value

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

Unrealized
Gains (Losses)

176 \

131 \

45

331
18
525 \

547
26
704 \

(216)
(8)
(179)

Information on available-for-sale securities whose fair value is not readily determinable as of March 31, 2014 and 2013 are described in Note 15.
The Company recognized impairment losses of \27 million ($263 thousand) and \30 million on available-for-sale securities during the years ended March 31, 2014 and 2013.
The Company did not recognize impairment loss on available-for-sale securities for the year ended March 31, 2012.

6. Notes Matured at End of Fiscal Year
March 31, 2013, the end of fiscal year coincided with a bank holiday and the following notes that matured at the end of the fiscal year
were accounted for as if they were settled on their dates of maturity.
Millionsof yen2013
Notes receivable ........................................................................................................................................ \Notes payable ............................................................................................................................................ \Notes payable for equipments .................................................................................................................... \

20

31
49
2

7. Leases
The Group leases certain machinery, computer equipment, software and other assets.
As described in Note 2 (l), lease assets under finance leases that do not transfer ownership to lessees are capitalized and amortized to residual value of zero using
the straight line method with useful life defined by the terms of the contract effective from the fiscal year beginning April 1, 2008.
Pro forma information on leased property, such as acquisition costs, accumulated depreciation and net book value for property held under finance leases which commenced
prior to April 1, 2008 and do not transfer ownership of the leased property to the lessee on an “as if capitalized” basis for the years ended March 31, 2014 and 2013 is notdisclosed since there are no such leases as of March 31, 2014 and 2013.
Depreciation expense and interest expense, which are not reflected in the accompanying statements of operations, computed by straight-line method
and the interest method are as follows:
Millionsof yen2012
Lease payments ..................................................................................................................................................\
Depreciation expense ......................................................................................................................................... \Interest expense ................................................................................................................................................. \

53
46
1

Information for the years ended March 31, 2014 and 2013 is not disclosed since there are no finance leases which commenced prior to April 1, 2008 and do not transfer ownershipof the leased property to the lessee as of March 31, 2014 and 2013.

8. Short-term Borrowings and Long-term Debt
Short-term borrowings and long-term debt as of March 31, 2014 and 2013 consist of the following:Thousands ofMillions of yen
2014
2013

U.S. dollars

2014

Short-term borrowings with average interest rate of 2.08% for 2014 and 1.65% for 2013...................................\
Current portion of long-term borrowings with average interest rate of 1.48% for 2014 and 1.65% for 2013.......
Current portion of other liabilities with average interest rate of 1.74% for 2014 and 2.13% for 2013.................
Total short-term .......................................................................................................................................

8,362 \
11,867410
20,63913,971 $13,10858
27,137

81,279115,349
3,989
200,617Long-term borrowings with average interest rate of 1.43% for 2014 and 1.51% for 2013, less current portion ..
Long-term other payable, less current portion ....................................................................................................
Total long-term ........................................................................................................................................
Total .......................................................................................................................................................\

29,216
1,510
30,72651,365 \22,5571
22,558 $49,695283,979
14,681
298,660
499,277* Average interest rate of borrowings represents the weighted average rate for the outstanding balances at March 31, 2014 and 2013. Average interest rate of otherliabilities represents the weighted average rate for the average of the outstanding balances at April 1, 2013 and March 31, 2014.
The aggregate annual maturities of long-term debt as of March 31, 2014 are as follows:Year ending March 31
2015...................................................................................................................................................................................................................... \2016......................................................................................................................................................................................................................
2017 .....................................................................................................................................................................................................................
2018......................................................................................................................................................................................................................
2019 and thereafter ...............................................................................................................................................................................................
Total ..................................................................................................................................................................................................................... \21

Millionsof yen12,277 $
11,410
8,069
6,462
4,785
43,003 $Thousands of
U.S. dollars

119,338
110,90378,43362,80746,517417,998

9. Retirement Benefits
For the year ended March, 31 2014
The Company and its certain consolidated subsidiaries provide a lump-sum retirement plan as defined benefit pension plan for employees' retirement benefits.
Certain consolidated subsidiaries apply the simplified method in computing net defined benefit liability and benefit costs for their lump-sum retirement plans.
Although the Company and certain domestic consolidated subsidiaries also contribute to a multi-employer pension plan, related benefit
obligation, plan assets and benefit costs are excluded from the following calculation because it is difficult to assess the plan assets reasonably.
Defined benefit pension plans, except plan applying the simplified method(1) Movement in projected benefit obligations
Thousands ofMillions of yen
U.S. dollars
1,405 $
13,653
Balance at April 1, 2013 ................................................................................................................................... \
144
1,400
Service cost .......................................................................................................................................................
14
137
Interest cost ........................................................................................................................................................
(15)
(142)
Actuarial gain ....................................................................................................................................................
(28)
(274)
Benefits paid .....................................................................................................................................................
1,520 $
14,774
Balance at March 31, 2014................................................................................................................................ \(2) Reconciliation from projected benefit obligations to net defined benefit liability
Thousands ofMillions of yen
U.S. dollars
Unfunded projected benefit obligations ............................................................................................................. \1,520 $
14,774
Total liability at March 31, 2014 .......................................................................................................................\
1,520 $
14,774
Net defined benefit liability ............................................................................................................................... \Total liability at March 31, 2014 .......................................................................................................................\

1,520 $
1,520 $

14,774
14,774(3) Retirement benefit costs
Thousands ofMillions of yen
U.S. dollars
144 $
1,400
Service cost ....................................................................................................................................................... \14137Interest cost ........................................................................................................................................................
30
294
Amortization of actuarial loss ............................................................................................................................
Amortization of past service cost .......................................................................................................................
8
78
196 $
1,909
Total benefit costs ..............................................................................................................................................\(4) Remeasurements of defined benefit plans
Thousands ofMillions of yen
U.S. dollars
65 $632
Unrecognized past service cost .......................................................................................................................... \
142
1,377
Unrecognized actuarial loss ...............................................................................................................................
207 $
2,009
Total .................................................................................................................................................................. \(5) Actuarial assumptions
Discount rate .....................................................................................................................................................

1.0%

Defined benefit pension plan applying the simplified method(1) Movement in net defined benefit liability
Thousands ofMillions of yen
U.S. dollars
372 $
3,620
Balance at April 1, 2013 ................................................................................................................................... \58
561
Benefit costs ......................................................................................................................................................
(8)(80)
Benefits paid .....................................................................................................................................................
422 $
4,101
Balance at March 31, 2014 ............................................................................................................................... \(2) Reconciliation from projected benefit obligations to net defined benefit liability
Thousands ofMillions of yen
U.S. dollars
422 $
4,101
Unfunded projected benefit obligations ............................................................................................................. \
422 $
4,101
Total liability at March 31, 2014 .......................................................................................................................\Net defined benefit liability ............................................................................................................................... \Total liability at March 31, 2014 .......................................................................................................................\

422 $
422 $

Retirement benefit costs calculated using the simplified method are \58 million ($561 thousand) for the year ended March 31, 2014.

22

4,101
4,101

Multi-employer pension plan
The amount to be required to contribute to the multi-employer pension plan is \127 million ($1,231 thousand).
Thousands of(1) Funded status (as of March 31, 2013)
Millions of yen U.S. dollars
54,319 $ 527,985
Fair value of plan assets ....................................................................................................................................................... \57,853562,338
Benefit obligation on the basis of pension financing ............................................................................................................
(3,534) $(34,353)
Funded status ....................................................................................................................................................................... \(2) Contribution share ratio of the Company for the year ended March 31, 2013 is 6.51%.
Note: The above ratio does not match the Group's actual share ratio.
(3) Supplementary information
Thousands of
The funded status described in above (1) was calculated as follows:
Millions of yen U.S. dollars(6,298) $(61,221)
Accumulated deficit of the fund .......................................................................................................................................... \3,965
38,541
Current year reserve ............................................................................................................................................................
Less:
1,201
11,673
Balance of unrecognized past service cost ......................................................................................................................….
(3,534) $(34,353)
Funded status ....................................................................................................................................................................... \Balance of unrecognized past service cost is recognized by equal payment method over 6 years and 4 months and the remaining period is 3 years and 4 months as ofMarch 31, 2013.

For the year ended March 31, 2013
The Company and its domestic consolidated subsidiaries had a lump-sum retirement plan.
Although the Company and certain domestic consolidated subsidiaries also contributed to a multi-employer pension plan, related benefit
obligation, plan assets and benefit costs were excluded from the following calculation because it was difficult to assess the plan assets reasonably.
The provision for employees' retirement benefits at March 31, 2013 consisted of the following:

Projected benefit obligation ............................................................................................................................... \Unrecognized actuarial loss ...............................................................................................................................
Unrecognized past service cost ..........................................................................................................................
Net liability .................................................................................................................................................. \Millions of yen(1,777)
187
73(1,517)The components of net periodic benefit costs for the year ended March 31, 2013 were as follows:

Service cost ....................................................................................................................................................... \Interest cost ........................................................................................................................................................
Expected return on plan assets ...........................................................................................................................
Amortization of past service cost .......................................................................................................................
Amortization of actuarial loss ............................................................................................................................
Net periodic retirement benefit costs ............................................................................................................. \Millions of yen
188
22
8
7
225

Note: Net periodic retirement benefit costs of the Company's domestic consolidated subsidiaries which adopt simplified method were included in service cost.
Assumptions used for the year ended March 31, 2013 were set forth as follows:
Discount rate ...............................................................................................................................................................................
Amortization of past service cost .................................................................................................................................................
Amortization of period of actuarial gain/loss ...............................................................................................................................

1.0%
10 years
13 years

Descriptions of the multi-employer pension plan to which contributions were recognized as expense were as follows:(1) Funded status (as of March 31, 2012)
Millions of yen
45,789Fair value of plan assets ....................................................................................................................................................... \Benefit obligation on the basis of pension financing ............................................................................................................
53,683Funded status ....................................................................................................................................................................... \(7,894)(2) Contribution share ratio of the Company as of March 31, 2012 is 6.57%.

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

23

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

11. Contingent Liabilities
Contingent liabilities of the Company as of March 31, 2014 and 2013 are as follows:
Thousands of
U.S. dollars

Millions of yen
2014
2013
Trade notes discounted.................................................................. \

38 \

2014
38 $

372

12. Research and Development Costs
Research and development costs included in selling, general and administrative expenses and manufacturing costs are \1,013 million ($9,846 thousand),\1,032 million and \961 million for the years ended March 31, 2014, 2013 and 2012, respectively.

13. Net Gain (Loss) on Sales and Disposal of Property, Plant and Equipment
Significant components of net gain (loss) on sales and disposal of property, plant and equipment for the years ended March 31, 2014, 2013 and 2012 are as follows:

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

Millions of yen
2014
2013
30 \
- \
4
3
379
2
17
0
1
413
23
15
114
1
91
6
5
232
181 \

0
38
5
15
1
59
(36) \

24

Thousands of
U.S. dollars

2012

2014

0 $
59
76
0
135

288
41
3,680
2
4,011

0
15
0
3
18
117 $

147
1,104
11
881
54
58
2,255
1,756

14. Income Taxes
Income taxes applicable to the Company consist of corporate tax, inhabitant tax and enterprise tax, which in the aggregate resulted in the normal statutory
tax rates of approximately 38.0% for the years ended March 31, 2014 and 2013, and approximately 40.6% for the year ended March 31, 2012.
The tax effects of significant temporary differences which resulted in deferred tax assets and liabilities as of March 31, 2014 and 2013 are as follows:

Millions of yen
2014
2013
Deferred Tax Assets:
Elimination of unrealized profits ...............................................................................................\
Accrued bonuses .......................................................................................................................
Liability for employees' retirement benefits ..............................................................................
Net defined benefit liability ......................................................................................................
Provision for directors' retirement benefits ................................................................................
Accrued enterprise tax ..............................................................................................................
Allowance for doubtful accounts................................................................................................
Tax loss carryforwards ..............................................................................................................
Valuation loss of inventories......................................................................................................
Difference on depreciation period..............................................................................................
Loss on valuation of investment securities..................................................................................
Loss on revaluation of golf club memberships ..........................................................................
Deferred losses on hedges..........................................................................................................
Valuation difference on available-for-sale securities..................................................................
Other ........................................................................................................................................
Less: valuation allowance .........................................................................................................
Total ...........................................................................................................................................\

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

37 $
169
541
93
53
18
1,535
39
1,110
11
36
94
64
248
(384)
3,664 $

Thousands of
U.S. dollars

2014
624
1,751
6,683
903
453
114
15,142
581
7,522
148
225
453
1,638
(10,225)
26,012Thousands of
U.S. dollars

Millions of yen
2014
2013

2014

Deferred Tax Liabilities:
Reserve for advanced depreciation of property, plant and equipment.........................................\
Retained earnings of foreign subsidiaries...................................................................................
Deferred gains on hedges...........................................................................................................
Other.........................................................................................................................................
Total ...........................................................................................................................................\(135) \
(250)
(6)
(54)
(445) \

(179) $
(179) $

(1,313)(2,434)(58)(524)(4,329)Deferred Tax Assets, Net: ...........................................................................................................\

2,231 \

3,485 $

21,683

A reconciliation between the normal effective statutory tax rates and the actual effective tax rates reflected in the accompanying consolidated statements
of income for years ended March 31, 2014 and 2012 are as follows:

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

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

2012
40.6%
2.8%
(2.7)%
3.4%
154.1%(77.4)%
24.0%(257.5)%(4.3)%(117.0)%

The reconciliation for the year ended March 31, 2013 is omitted due to pre-tax loss.
Amendments to the amount of deferred tax assets and liabilities for enacted changes in tax laws and rates
The Partial Revision of Income Tax Act (Act No.10, 2014) was enacted on March 31, 2014. Accordingly, the Special CorporationTax for Reconstruction
will be abolished for fiscal years beginning on or after April 1, 2014. As a result, the statutory tax rate used to calculate deferred tax assets and liabilities
decreased from 38.0% to 35.6% at March 31, 2014.
The impact of this change is immaterial.

2515. Financial Instruments(a) Qualitative information on financial instruments(1) Policies for using financial instruments
The Group finances necessary funds mainly through bank loans and bond issues according to the capital investment plan for the production and sales of PCB.
Temporary and excessive funds are operated by highly stable financial instruments and the Group finances short-term operating capital by bank loans.
Derivative transactions are only utilized to hedge the risks mentioned in (2) below.
(2) Details of financial instruments used and exposures to risk and how they arise
Operating receivables such as trade notes and accounts receivable are exposed to credit risk. Some operating receivables, which are denominated in foreign currencies
due to global operations, are exposed to foreign currency fluctuation risk. The Group might utilize foreign exchange forward contracts if necessary except for thosewithin the range of the operating payables dominated in the same foreign currency. Investments securities mainly consist of securities of companies in whicha business relationship has been established and they are exposed to market fluctuation risk.
Operating payables such as trade notes and accounts payable are due within one year.
Some of the operating payables relating to imports of raw materials are dominated in foreign currencies and are exposed to foreign currency fluctuation risk.
The Group might utilize foreign exchange forward contracts if necessary except for those within the range of the operating receivables dominated in the same foreign
currency. Loans are mainly used for the purpose of financing capital investments. Some of them are variable interest loans and are exposed to interest fluctuation risk.
The Group utilizes interest rate swaps to hedge the risk. Regarding derivative transactions, the Group utilizes foreign exchange forward contracts to hedge foreign
currency fluctuation risk of operating receivables and payables dominated in foreign currencies and interest rate swaps to hedge interest fluctuation risk.
The Group utilizes commodity forward contracts to hedge copper price fluctuation risk.
(3) Policies and processes for managing the risk(i) Credit risk management (risk of default by the counterparties)
The sales management department in the Company follows sales management rules, monitors the customers’ credit conditions periodically and manages the due dateand balance per customer. The Company keeps track of the adverse financial conditions of its customers in the early stage to mitigate the uncollectible risk.
The Company enters into derivative transactions only with the credit worthy financial institutions to mitigate the credit risk.
(ii) Market risk management (risk of foreign currency fluctuations and interests)
Regarding the trade receivables and trade payables dominated in foreign currencies, the Company utilizes foreign exchange forward contracts if necessary to hedge
the foreign currency fluctuation risk, which is controlled by each currency and on a monthly basis. For investment securities, the Company regularly reviews the fair value
and issuers' financial condition and readjust Company's portfolio on an ongoing basis considering the business relationship with counterparties. Derivative transactions
are based on the internal rules and executed after getting the approval from the approver and managed by Finance Dept. Contents of the derivative transactions
are reported to Board of Directors' meeting periodically.
(iii) Liquidity risk management (risk of default at the due dates)
The Company prepares and updates the cash management plan based on the reports from each department to manage liquidity risk on a timely basis.
(4) Supplemental information on fair values
As well as the values based on market prices, fair values of financial instruments include values which are reasonably calculated in case market prices do not exist.
As the calculation of those values adopts certain assumptions, those values may vary in case different assumptions are applied.
Also, for the contract amount regarding derivative transactions described in Note 16, the contract amount itself does not indicate market risk related to derivativetransactions.
(b) Fair values of financial instruments
Book values of the financial instruments included in the consolidated balance sheets and their fair values at March 31, 2014 and 2013 are as follows:
2014
Millions of yen

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

Book

Fair

Value

Value

8,759 \
219
17,5438,759 \
219
17,543846
9,933 \
8,362
41,083
1,920- \Thousands of U.S. dollars
Difference

Book

Fair

Value

Value

- $
-

85,140 $2,129
170,523

85,140 $2,129
170,523

-

846

-

8,223

8,223

-

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

- $
80
27
- $

96,552 $81,279399,328
18,670- $96,552 $81,279400,10918,926
- $

781
256
-

2013
Millions of yen

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

Book

Fair

Value

Value

Difference

8,788 \
219
12,1298,788 \
219
12,129

-

525

525

-

7,243 \
13,97135,665- \7,243 \
13,97135,967- \302-

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

26

Difference(1) Valuation method of the fair value of financial instruments and information of investment securities and derivative transactions(i). Cash and cash equivalents, (ii). Time deposits, (iii). Trade notes and accounts receivable
The carrying value is deemed as the fair value since it is scheduled to be settled in a short period of time.
(iv). Investment securities
Fair value of equity securities is based on the quoted price on stock exchange. Please refer to Note 5 regarding the information of the fair value for the investment
in securities by classification.
(v). Trade notes and accounts payable, (vi) Short-term borrowings
The carrying value is deemed as the fair value since it is scheduled to be settled in a short period of time.
(vii). Long-term borrowings, (viii). Long-term other payable
The fair values are measured as the net present value of estimated future cash flows by discounting the principal and interest value using the loan interest rate applied
to the new loans or the installment contracts. If the variable interest rate loans meet certain criteria for the short cut method (If interest rate swap contracts are used as a hedge
and meet certain hedging criteria, the interest rate swaps are not remeasured at market price and the amount to be received under the interest rate swap contract is added to or
deducted from the interest on the liabilities for which the swap contract was executed), the sum of principal and the interest processed as interest rate swaps are discounted byusing the reasonably estimated loan interest rate applied to the same kind of loans.
(ix). Derivative transactions
Please refer to Note 16.
(2) Unlisted securities of \869 million yen ($8,450 thousand) and \516 million yen, for which fair value is extremely difficult to be determined because
the securities without fair market value as of March 31, 2014 and 2013 are not included in the above table.
(c) The redemption schedule for financial instruments and securities with maturity as of March 31, 2014 and 2013 is as follows:
2014
Millions of yen
Due in one
year
or less

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

Due after five
year throughten years

Due after ten
years

8,759 \
219
17,543

- \
-

- \
-

-

26,521 \

- \

- \

-

2014
Thousands of U.S. dollars

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

Due after one

Due after fiveDue after ten

year
or less

year throughfive years

year throughten years

years

85,140 $2,129
170,523

- $
-

- $
-

-

257,792 $

- $

- $

-

2013
Millions of yen
Due in one
year
or less

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

Due after five
year throughten years

Due after ten
years

8,788 \
219
12,129

-\
-

-\
-

-

21,136 \

-\

-\

-

27

16. Derivatives
Derivative transactions for which hedge accounting has been applied for the years ended March 31, 2014 and 2013 are as follows:
2014

Contract
Hedged item amountMillions 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 \15,671 \10,035 \(139) $

152,322 $

97,539 $(1,353)Special Method
Interest rate swap
contracts
Payable fixed/
Receive floating

Long-term
borrowings \2,550 \

2,460 \

(29) $

24,786 $23,911 $

(285)

642 \

- \

17 $

6,242 $

- $162

Commodity related :Benchmark Method
Copper price swap
contractsRawmaterials\

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

Long-term
borrowings \2013
Millions of yen
Contract
amountdue after
one year
Fair value

21,100 \13,553 \(299)

Fair value is principally based on quoted price obtained from financial institutions signing the contract.
There are no derivative transactions for which hedge accounting has not been applied for the years ended March 31, 2014 and 2013.

17. Loss on Disaster
Loss on disaster is due to the Great East Japan Earthquake that occurred on March 11, 2011.
Loss on disaster for the year ended March 31, 2013 mainly consists of restoration of Miyagi plant (current Ishinomaki-plant).
Loss on disaster for the year ended March 31, 2012 mainly consists of disposal of inventories and the relief money.

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

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

28

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

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

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

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

24. Comprehensive Income
Reclassifications and income tax effects attributable to other comprehensive income for the years ended March 31, 2014, 2013 and 2012 are as follows:

2014
Unrealized gains (losses) on available-for-sale securities:
Gains (losses) arising during the year ...................................................................................... \Reclassifications and adjustments ...........................................................................................
Before income tax effects .........................................................................................................
Income tax effects ...................................................................................................................
Total .........................................................................................................................................\
Deferred gains (losses) on hedges:
Gains (losses) arising during the year ...................................................................................... \Reclassifications and adjustments ...........................................................................................
Before income tax effects .........................................................................................................
Income tax effects ...................................................................................................................
Total .........................................................................................................................................\
Foreign currency translation adjustments:
Adjustments arising during the year ........................................................................................ \Total .........................................................................................................................................\
Total other comprehensive income ............................................................................................\

Millions of yen
2013

Thousands of
U.S. dollars

2012

2014

331 \
331
(118)
213 \

98 \
98
(35)
63 \

(171) $
(171)
99(72) $

3,216
3,216(1,145)
2,071

(2) \
179
177
(53)
124 \

(337) \
175
(162)
46
(116) \

247 $
(195)
52
62
114 $

(16)
1,735
1,719
(514)
1,205

3,162 \
3,162 \
3,499 \

3,443 \
3,443 \
3,390 \

847 $
847 $
889 $

30,73730,73734,01325. Supplementary Cash Flow Information
Due to the merger of Meiko High-End Electronic Circuit Board (Wuhan), Co., Ltd., an unconsolidated subsidiary, and Meiko Electronics (Wuhan), Co., Ltd.,a consolidated subsidiary of the Company and surviving company, the Company assumed the following assets and liabilities for the year ended March 31, 2013:
2013
Millions of yen
Current assets............................................................................. \Non-current assets .....................................................................
Total assets ................................................................................. \Current liabilities ...................................................................... \Non-current liabilities ...............................................................
Total liabilities............................................................................ \

2,866
10
2,876
-

29

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

2014
Millions of yen
Japan

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

\

24,919Asia\

North America\

42,452

7,848

Europe

\

4,013

Other

\

Total

-

\

79,232-$

770,136

-

\

4

\

2014
Thousands of U.S. dollars

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

$

Japan

Asia

242,210$ 412,639

North America$

76,284

Europe$39,003

Other

$

Total

2013
Millions of yen
Japan

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

\

24,086

Asia\

North America\

27,7805,099

Europe

\

3,744

Other

\

Total

60,7092012
Millions of yen
Japan

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

\

27,694

Asia\

North America\

27,2254,870

Europe

\

3,180

Other

\

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

2014
Millions of yen
Japan

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

\

6,161

Asia

\

Other

\

61,417

Total

1

\

67,5798$

656,869

1\

2014
Thousands of U.S. dollars

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

$

Japan

Asia

59,881$ 596,980

Other

$

Total

2013
Millions of yen
Japan

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

\

6,529

Asia

\

55,242

Other

\

Total

61,772(3) Information about major customers
Information about major customers is not presented since no single customer accounts for 10% or more of consolidated net sales.

30

Total

62,973

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

28. Significant Subsequent Events(Establishment of subsidiary)
The Company established the following subsidiary based on a resolution of the Board of Directors at a meeting held on May 12, 2014.
1. Objective of the subsidiary’s establishment
As the demand for automobile related circuit boards and smart phone related devices, mainly from China, has steadily grown in the electronic circuit board market,
the Company founded the production base and has deployed its business in China and Vietnam. The new subsidiary has been established to further boost
the Company’s production capacity and also complement the production of the current plant inVietnam.
2. Outline of the subsidiary
Name: Meiko Electronics Thang Long Co., Ltd.
Location: Plot J1, J2 Thang Long Industrial Park, Dong Anh District, Hanoi, Vietnam
Representative: Yuichiro Naya (the president and C.E.O of the Company)
Business activities: manufacturing and selling of electronics circuit board
Capital: $15,000 thousand
Major shareholders and ownership ratio: Meiko Electronics Co., Ltd. 100%
Established: August, 2014

31

32

Principal Subsidiaries and Affiliates

Name or Trade Name

Paid-in Capital

Address(Millions of yen)

Principal Business

Investment
Ratio (%)

Meiko Tech Co., Ltd.

Ayase City,
Kanagawa Prefecture

20

PCBs for electronics

100.0

Yamagata Meiko
Electronics Co., Ltd.

Kahoku-cho,Nishimurayama-gun,
Yamagata Prefecture

75

PCBs for electronics

100.0

M.D. Systems Co., Ltd.

Atsugi City,
Kanagawa Prefecture

15

PCBs for electronics

100.0

Meiko Elec. Hong Kong.
Co., Ltd.

Hong Kong

US$72,669
thousand

PCBs for electronics

100.0

Meiko Electronics(Guangzhou Nansha)
Co., Ltd.

Guangzhou,
Guangdong Province,
P.R.C.

US$120,800
thousand

PCBs for electronics

100.0

Meiko Electronics(Wuhan) Co., Ltd.

Wuhan,
Hubei Province,
P.R.C.

US$148,800
thousand

PCBs for electronics

MDS Circuit
Technology, Inc.

Manila, Philippines

12,000 PH peso

PCBs for electronics

Meiko Electronics
America, Inc.

CA, U.S.A.

US$1,500
thousand

PCBs for electronics

100.0

Guangzhou Meiko PCBCo., Ltd.

Guangzhou,
Guangdong Province,
P.R.C.

US$10,000
thousand

PCBs for electronics

100.0

Meiko Electronics
Vietnam Co., Ltd.

Hanoi, Vietnam

US$90,000
thousand

PCBs for electronics(66.3)(47.6)

thousand

33

100.0

100.0
(100.0)(100.0)100.0(100.0)Principal Shareholders
As of March 31, 2014

(Thousands of shares)

Percentage ofTotal Number of
Shares Issued (%)

Yuichiro Naya

4,697

17.53

The Master Trust Bank of Japan, Ltd.

1,440

5.38

1,354

5.05

675

2.52

631

2.36

Meiko Kosan Co., Ltd.

608

2.27

BNYML-NON TREATY ACCOUNT

561

2.10

Yuho, Ltd.

521

1.94

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

507

1.89

488

1.82

11,48842.86

Number of
Shares Held

Name of Shareholder(trust account)
Japan Trustee Services Bank, Ltd.
(trust account)
Trust & Custody Services Bank, Ltd.
(securities investment trust account)
PLEASANT VALLEY(Standing Agent: The Bank of Tokyo-Mitsubishi
UFJ, Ltd.)(Standing Agent: The Bank of Tokyo-Mitsubishi
UFJ, Ltd.)(Standing Agent: The Bank of Tokyo-Mitsubishi
UFJ, Ltd.)
Haruyuki Naya
Total

34

Corporate History
November 1975

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

April 1978

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

October 1978

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

September 1980

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

December 1980

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

December 1981

Developed the world’s first multi-video processor.

March 1982

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

September 1982

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

August 1984

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

July 1988

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

June 1990

Constructed the Fukushima Factory.

April 1991

Changed company name to Meiko Electronics Co., Ltd.

November 1997

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

August 1998

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

December 1998

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

June 1999

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

December 2000

Stock listed on the Japan Securities Dealers Association.

January 2001

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

June 2001

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

35

December 2004

Stock listed on JASDAQ Securities Exchange, Inc.

July 2005

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

November 2005

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

April 2006

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

July 2006

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

January 2007

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

November 2007

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

March 2008

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

April 2009

Started operation of the EMS Plant in Vietnam.

May 2009

Established the Meiko R&D Center.

July 2009

Started operation of second plant in WUHAN.

April 2010

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

October 2010

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

July 2011

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

November 2011

Started operation of the PCB Plant in Vietnam.

May 2013

Started operation of the Ishinomaki Factory.

July 2013

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

36

Corporate Data (As of March 31, 2014)
Corporate Name:
Meiko Electronics Co., Ltd.
Date of Establishment:
November 25, 1975
Paid-in Capital:¥12,889 million
Fiscal Year:
April 1 to March 31
Number of Shares Authorized:
63,200,000
Number of Shares Issued:
26,803,320
Number of Shareholders:
6,558
Securities Code:
6787
Stock Exchange Listing:Tokyo Stock Exchange, JASDAQ standard market
Number of Employees:
11,858 (Consolidated)
Number of Subsidiaries:
14
Transfer Agent:
Sumitomo Mitsui Trust Bank, Limited
Accounting Auditor:
KPMG AZSA LLC
Headquarters:
5-14-15, Ogami, Ayase, Kanagawa Prefecture, Japan 252-1104
Investor Relations Contact:- Tel:+81-(0)467-76-6001- E-mail: Meiko_Eng@meiko-elec.com- URL:
http://www.meiko-elec.com/

37

Meiko Share Performance in FY2014 Compared with Indices180.0

Meiko Electronics (JASDAQ: 6787)

170.0

JASDAQ INDEX

160.0
150.0
140.0
130.0
120.0
110.0
100.0
90.0
80.0

Fiscal year 2014 ended March 31, 2014
Index
In %

38

39