Annual Report 2011
For the year ended March 31, 2011

Meiko Electronics Co., Ltd.

Profile

The Meiko Group consists of Meiko Electronics Co., Ltd. (the “Company”), and its 15
subsidiaries (11 consolidated subsidiaries and four non-consolidated subsidiaries) (the“Group”). The Group operates in a single business segment, engaging in the design,
manufacturing and sales of PWBs and associated services.

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

1

Contents

Five-year Financial Summary.............................................................................................. 3
Financial Review: Management’s Discussion and Analysis ........................................... 5
Business Risks ..................................................................................................................... 8
Consolidated Financial Statements ................................................................................... 11
Principal Subsidiaries and Affiliates ................................................................................ 36
Principal Shareholders ...................................................................................................... 37
Corporate History ............................................................................................................... 38
Corporate Data (As of March 31, 2011) ............................................................................ 40
Meiko Share Performance in FY2011 Compared with Indices....................................... 412

Five-year Financial Summary

2007

2008

2009

2010

2011

(millions of yen, except per share amounts)
Consolidated financial indicators:
Net sales¥65,317¥78,516¥75,806¥69,823¥74,724

Ordinary income

4,713

6,836

953

2,695

2,127

Net income (loss)

3,203

5,640

522

1,828

(3,094)

—

—

—

—

(5,306)

Net assets

32,73034,797

34,57638,16732,979Total assets

79,74982,04385,611

84,72889,815

1,903.26

2,026.96

2,062.17

2,067.25

1,756.65

Net income (loss) per share (yen)186.78328.5730.71

107.39(166.32)

Net income per share (diluted) (yen)186.69314.69

29.38

—

—

Equity ratio

41.0%

42.4%

40.4%

45.0%

36.7%

Return on equity (ROE)

10.3%

16.7%

1.5%

5.0%

(8.7%)

Price earnings ratio (PER) (times)

23.5

9.8

31.2

18.5

—

Cash flows from operating activities

4,512

3,706

7,479

8,841

7,916

Cash flows from investing activities(17,169)(11,350)(12,929)(6,058)(17,911)

Cash flows from financing activities

6,723

3,653

5,338

(3,742)

8,677

Cash and cash equivalents
at the end of the period

8,202

4,578

5,146

4,008

2,508

Number of employees

6,786

8,937

7,623

10,14913,161[Average number of temporary staff]

[663]

[723]

[815]

[565]

[597]

Comprehensive income (loss)

Net assets per share (yen)3Net sales

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

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

2007
2007

2008

2009

2010

2011

Net income (loss)

2010

2011

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

2009

Cash flows¥6,000¥4,000¥2,000¥0(¥2,000)(¥4,000)

2007

2008

2009

2010

2007

2011

2008

Cash flows from operating activities
Cash flows from financing activities

2009

2010

2011

Cash flows from investing activities

Return on equity (ROE)

Net assets
20.0%¥50,000(percentage)(millions of yen)

2008

Net income (loss), basic per share (yen)¥40,000¥30,000¥20,000

15.0%
10.0%

5.0%
0.0%

¥10,000
-5.0%

¥0
2007

2008

2009

2010

(times)(millions of yen)

¥80,000¥60,000¥40,000¥20,000
¥0
2009

2010

(yen)

¥3,000.00¥2,000.00¥1,000.00

¥0.00
2008

2009

2010

2011

2010

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

2007

2011

Net assets per share

2007

2009

Price earnings ratio (PER)¥100,000

2008

2008

-10.0%

2011

Total assets

2007

2007

2011

4

2008

2009

2010

2011

Financial Review: Management’s Discussion and Analysis(1) Analysis of the Group’s financial position
The forward-looking statements in this section are based on the Group’s judgment as ofthe end of the current consolidated fiscal year.
1) Assets(Current assets)
The balance of current assets as of March 31, 2011, was ¥31,882 million, down ¥1,531
million from ¥33,413 million for the previous year. This decrease was mainly due to anincrease of ¥2,452 million in inventories from ¥8,861 million to ¥11,314 million and a¥2,628 million decrease in accounts receivable—other from ¥3,318 million to ¥689
million due to a decrease in factoring accounts receivable.
(Noncurrent assets)
The balance of noncurrent assets as of March 31, 2011, was ¥57,932 million, up ¥6,618
million from ¥51,314 million for the previous fiscal year. A major factor for this increase
was a ¥6,214 million increase of property, plant and equipment from ¥46,120 million to¥52,334 million due to capital investments.
2) Liabilities(Current liabilities)
The balance of current liabilities as of March 31, 2011, was ¥29,618 million, up ¥3,549
million from ¥26,069 million for the previous fiscal year. The major factors were a¥1,337 million increase in the current portion of long-term loans payable from ¥7,873
million to ¥9,210 million and a ¥772 million increase in the provision for loss on disaster,which was associated with the Great East Japan Earthquake.
(Noncurrent liabilities)
The balance of noncurrent liabilities as of March 31, 2011, was ¥27,217 million, up¥6,726 million from ¥20,491 million for the previous fiscal year. A major factor for thisincrease was an increase of ¥6,237 million in long-term loans payable from ¥17,706
million to ¥23,943 million.
3) Net assets(Net assets)
The balance of net assets as of March 31, 2011, was ¥32,979 million, down ¥5,188
million from ¥38,167 million for the previous year. Major factors for this decrease werean increase in capital surplus of ¥331 million due to the disposal of treasury stock forthe allotment of shares to third parties, a ¥3,500 million decrease in retained earnings
and a decrease of ¥1,984 million in foreign currency translation adjustments.

5(2) Analysis of business results
1) Net sales
The volume of orders the Group received during the fiscal year under review steadily
expanded as a result of our efforts for two years to extend sales to overseas companies
and focus on products with high growth potential. As a result, net sales were ¥74,724
million, up ¥4,901 million, or 7.0%, from the previous fiscal year.
2) Cost of sales and Gross profit
Cost of sales increased ¥4,302 million, or 7.3%, from the previous fiscal year to¥63,219 million due to the significant effects of the recent surge of raw material prices,
the appreciation of the yuan and the yen and a surge in labor costs in China. Grossprofit increased ¥598 million, or 5.5%, from the previous fiscal year to ¥11,505 million,
and the gross margin declined 0.2 percentage point from the previous fiscal year to
15.4%.
3) Operating income
Operating income decreased ¥495 million, or 13.1%, from the previous fiscal year to¥3,297 million.
4) Non-operating income (expenses) and Ordinary income
Non-operating income decreased ¥83 million from the previous fiscal year to ¥285
million mainly due to a decrease of ¥167 million in the gain on valuation of derivatives
and an increase of ¥86 million in subsidy income.
Non-operating expenses decreased ¥11 million from the previous fiscal year to¥1,455 million. The major factors for this decline were a decrease of ¥141 million incompensation expenses and an increase of ¥226 million in foreign exchange loss fromthe previous fiscal year.
As a result, ordinary income decreased ¥567 million, or 21.1%, from the previous
fiscal year to ¥2,127 million.
5) Extraordinary income (loss)
Extraordinary income was ¥9 million mainly due to a gain on sales of noncurrent assets.
The extraordinary loss was ¥5,546 million mainly due to a loss on disaster of ¥4,942
million caused by the Great East Japan Earthquake which caused damage to the
Miyagi Plant and the Fukushima Plant, and business structure improvement expensesof ¥483 million.
6) Net income
As a result of the above, a net loss of ¥3,094 million was recorded for the fiscal year
under review compared with net income of ¥1,828 million for the previous fiscal year.

6(3) Liquidity and source of funds
1) Cash flow analysis
Cash and cash equivalents (hereafter “net cash”) as of March 31, 2011, decreased¥1,500 million from the previous fiscal year, to ¥2,508 million.
Net cash provided by operating activities for the fiscal year under review was ¥7,916
million, down ¥924 million from the previous fiscal year. Increases were mainly fromdepreciation and amortization of ¥6,533 million and loss on disaster of ¥4,942 million.
The major decrease was an increase in inventories of ¥3,832 million.
Net cash used in investing activities was ¥17,911 million, up ¥11,852 million. The
major outflows were ¥16,104 million for the payments for purchases of property, plantand equipment and ¥1,256 million for payments for purchases of investment securities.
Net cash provided by financing activities was ¥8,677 million, compared with net cashused in financing activities of ¥3,742 million for the previous fiscal year. Inflow was
mainly from proceeds from long-term loans payable of ¥15,895 million. The major
outflows were ¥6,816 million for the repayment of long-term loans payable.
2) Financial policy
The Group currently procures funds for its operations from internal reserves orborrowings. The Group has a policy of procuring funds for investment and loans andfunds for equipment to acquire manufacturing equipment inside and outside Japan via
long-term loans payable. With regard to when to procure such funds and the conditions
for such procurement, the Group strives to select the most favorable timing andconditions.
3) Trends in cash flow indicators
The trends in cash flow indicators are shown below.
Year ended
March 31, 2009

Year ended
March 31, 2010

Year ended
March 31, 2011

Equity ratio (%)

40.4

45.0

36.7

Market value equity ratio (%)

18.8

43.3

18.5

Cash flows/interest-bearing debt ratio

4.6

3.6

4.8

Interest coverage ratio (times)

7.7

10.9

11.0

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:* Each indicator is calculated based on consolidated financial values.
* The stock market capitalization is calculated as follows: term-end closing stock price x term-end
number of shares issued (after deducting shares of treasury stock).
* The operating cash flow represents the cash flow provided by (used in) operating activities as
indicated in the consolidated statements of cash flows. Of the liabilities posted on the consolidatedbalance sheets, the interest-bearing debt covers all the liabilities for which interest was paid. Theinterest payment represents the payment of interest indicated in the consolidated statements of cash
flow.

7

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

8(5) Natural disaster
The Group’s major manufacturing bases are the Yamagata Plant (Yamagata Meiko
Electronics Co., Ltd.), the Fukushima Plant and the Miyagi Plant, which are all located in
the Tohoku area. Although our careful preemptive measures to address the occurrence ofan earthquake and other natural disasters are in place for these facilities to minimize
damage, the recent Great East Japan Earthquake and tsunami, which were beyond ourcapability to predict, seriously affected the Group’s business performance. Should adisaster of that scale occur in the future, it might adversely affect the Company’s businessperformance again.
(6) Potential risks inherent in plant operations in China
To expand productivity and reduce production costs, the Group has established local
corporations in Hong Kong, Guangzhou and Wuhan in China, conducting manufacturing
and sales activities.
The following difficulties might occur in China.
1: Hygiene-related issues such as infectious diseases
2: Change or introduction of legal restrictions and the tax system
3: Failure of infrastructure such as electricity, water and transportation
4: Political uncertainty and public security-related issues
5: Anti-Japanese demonstrations and/or labor disputes
Should unexpected events such as changes in the political or legal environment or the
economic situation in China occur, issues might arise in the management of production
facilities and equipment and in the execution of other businesses. These factors could
adversely affect the Group’s business performance and financial position.
(7) Foreign currency exchange rate fluctuation risk
To operate plants in China, we need to hold U.S. dollars and other foreign
currency-denominated assets. Therefore, the Group is exposed to yen-to-yuan andyen-to-U.S. dollar exchange rate fluctuations. These fluctuations could result in losses.
(8) Raw materials market fluctuation risk
The Group purchases the raw materials necessary for manufacturing from externalmaterials manufacturers and trading companies. The surge of materials prices of crude oil,copper, gold, etc., in recent years could influence the prices of the raw materials theGroup purchases and adversely affect the Group’s business performance and financial
position.
(9) Financial risks
The Group has aggressively conducted capital investments at an amount higher than thefunds it has acquired from operating activities to prepare for the anticipated medium- andlong-term demand increase 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, 2011, was 41.5%. In
case we conduct further aggressive capital investment required by our businessstrategies, an increase in borrowings and/or interest rates could affect the Group’sbusiness performance and financial position.

9

This Page Intentionally Left Blank

10

Consolidated Financial Statements

Consolidated Balance Sheets
Meiko Electronics Co., Ltd. and Consolidated Subsidiaries
As of March 31, 2011 and 2010
Thousands ofMillions of yen

ASSETS2011

U.S. dollars (Note 1)

2010

Current Assets:
Cash and cash equivalents (Note 11) .............................................................................................................................
\
2,509
\
4,009
Receivables －Trade notes and accounts receivable (Note 11) ........................….....................................................................................
14,63415,081Other receivables ............................................................................................................................…...…
690
3,318
Less: Allowance for doubtful accounts ........................................................................................................................
(13)
(14)
Inventories －Merchandise and finished goods .............................…............................................................................…
4,380
3,063
Work in process ................................…..................................................................................................…
2,364
2,117
Raw materials and supplies ...........................…......................................................................................…
4,571
3,682
Deferred tax assets (Note 10) ....................................................................................…........................ 967
394
Other ...................................................................................................................................................................…
1,781
1,764
Total current assets .......................................................................................................................31,883
33,4142011$

175,996
8,297(152)
52,671
28,42654,977
11,627
21,426
383,437

Property, Plant and Equipment, at Cost (Note 4):
Land ................................................................................................................................................................
1,944
1,944
Buildings and structures ........................................................................….................................................
22,98523,467
Machinery and vehicles................................................….........................................................................
45,76049,188Construction in progress ..........................................................................................................................
10,9693,495
Other ................................................................................................................................................................….......…
2,328
2,400
83,98680,494
Less: Accumulated depreciation ........................................................................................................….…
(31,651)(34,374)
Net property, plant and equipment ......................................................................................................…
52,335
46,120Intangible Assets

608

Investments and Other Assets:
Investment securities (Notes 3 and 11) ....................................................................................................................
1,723
Long-term loans receivable .................................................................................................................... 43
Deferred tax assets (Note 10) ..............................................................................................................
987
Other ...............................................................................................................................................................…......…
2,415
Less: Allowance for doubtful accounts ..........................................................................................................
(109)
Allowance for investment loss ..........................................................................................................…
(69)
Total investments and other assets ..........................................................................................................
4,990
Total ...........................................................................................................................................
\
89,816\

See notes to consolidated financial statements.

11

30,16923,383
276,423550,329
131,922
27,994
1,010,051(380,651)
629,400

553

7,319

1,316
313
1,076
2,124
(103)
(85)
4,641
84,72820,718513
11,86529,058(1,314)(830)
60,0101,080,166$

Thousands of

LIABILITIES AND
NET ASSETS

Millions of yen

2011

U.S. dollars (Note 1)

2010

Current Liabilities:
Trade notes and accounts payable (Note 11) ..................................................................................................................
\
8,591
\
8,229
Short-term borrowings (Notes 5 and 11) ............................................................................................................…
4,149
4,206
Current portion of long-term borrowings (Notes 5 and 11) ........................................................................................................
9,211
7,873
Income taxes payable (Note 10) .....................................................................................................................
79
179
Accrued bonuses .................................................................................................................................. 435
565
Accrued bonuses to directors and corporate auditors ....................................................................…
24
Provision for loss on disaster (Note 13).................................................................................…
773
Other ................................................................................................................................................................
6,381
4,993
Total current liabilities ..................................................................................................................29,619
26,069Long-term Liabilities:
Long-term borrowings (Notes 5 and 11) .......................................................................................................................
23,944
17,706
Provision for employees' retirement benefits (Note 6) ...............................................................
1,200
1,090
Long-term other payable ..................................................................................................................
1,578
1,164
Provision for directors' retirement benefits ................................................................................................…
269
269
Other ......................................................................................................................................................................
226
262
Total long-term liabilities ..................................................................................................................................................
27,217
20,491

2011$

103,322
49,898110,772
950
5,235
9,291
76,738356,206

287,957
14,42918,982
3,240
2,725
327,333

Commitments and Contingent Liabilities (Note 4) :Net Assets (Note 7):
Shareholders' Equity:
Common stock, authorized - 63,200,000 sharesissued - 19,403,320 shares in 2011 and 2010 ..............................................................................…
10,546
10,546
126,827
Capital surplus ........................................................................................................................................................
12,467
12,135
149,935
Retained earnings ..................................................................................................................................................................…
14,35917,860172,686
Less: Treasury stock, at cost; Common stock,629,170 shares in 2011 and 942,700 in 2010 ......................................................................................................................
(396)
(594)
(4,766)
Total shareholders' equity...............................................................................................................................................…
36,97639,947444,682
Accumulated Other Comprehensive Income:Unrealized gains (losses) on available-for-sale securities .......................................................................................................................
(106)
15(1,269)Deferred gains (losses) on hedges ...........................................................................................................................…
(204)
(98)
(2,455)
Foreign currency translation adjustments ........................................................................................................................................................
(3,686)(1,701)(44,331)
Total accumulated other comprehensive income...............................................................................................................................................…
(3,996)(1,784)(48,055)
Minority interests .........................................................................................................................................................…
5
Total net assets ..................................................................................................................................................
32,98038,168396,627
Total ........................................................................................................................................................
\
89,816\
84,728$1,080,166

See notes to consolidated financial statements.

12

Consolidated Statements of Operations
Meiko Electronics Co., Ltd. and Consolidated Subsidiaries
For the Years ended March 31, 2011, 2010 and 2009
Thousands ofMillions of yen

2011

U.S. dollars (Note 1)

2010

2009

2011

Net Sales ...........................................................................................................................................................
\
74,724\
69,823\75,807$
898,670
Cost of Sales (Note 8) ..................................................................................................................................................
63,21958,917
66,890760,304
Gross profit ......................................................................................................................................................
11,505
10,906
8,917
138,366
Selling, General and Administrative Expenses (Note 8) ........................................................................................................................................................................
8,207
7,113
7,156
98,704
Operating income ....................................................................................................................................…
3,298
3,793
1,761
39,662Other Income (Expenses):
Interest expense,net ...............................................................................................................................................
(737)
(761)
Dividend income ...............................................................................................................................................
2
1
Compensation expenses......................................................................................................................................…
(33)
(175)
Foreign exchange gain (loss) .............................................................................…....................…
(252)
(25)
Gain on valuation of derivatives.....................................................................................................................…............…
168
Subsidy income ..............................................................................................................................................................…
87
Net loss on sales and disposal of property, plant and equipment (Note 9)............................................…(110)(140)
Reversal of allowance for doubtful accounts .........................................................................................…....................…
0Gain on redemption of bonds ....................................................................................................................…
95
Loss on valuation of investment securities ...........................................................................................
(274)
Provision on allowance for investment loss ...............................................................................................…
(69)
Gain on investment of securities..................................................................................................................…
33
21
Loss on disaster (Note 13).................................................................................................................…
(4,943)
Expenses for business structure improvement .......................................................................................…
(483)
Other, net ......................................................................................................................................................................................
(271)
(334)
Total ...............................................................................................................................................
(6,707)(1,493)

(953)
2
386
112
(149)
23
120
(219)
(437)
(1,115)(8,858)19(400)(3,026)
1,046(1,328)402(59,447)(5,811)(3,254)(80,657)

Income (Loss) before Income Taxes and Minority Interests .............................................................…
(3,409)

2,300

646

(40,995)

Income Taxes (Note 10):
Current ...............................................................................................................................................…
212
Deferred .................................................................................................................................................
(526)
Total income taxes ............................................................................................................................
(314)
Income (Loss) before Minority Interests....................................................................................................…
(3,095)
Minority Interests ..................................................................................................................................................…
0
Net Income (Loss) ..........................................................................................................................................
\(3,095) \

394
78
472
1,828
0
1,828

280
(158)
122
524
2
522

2,546
(6,321)(3,775)(37,220)0(37,220)

\

$

Yen

Per Share of Common Stock:
Basic net income (loss) ..........................................................................................................................................
\(166.32) \Diluted net income ..........................................................................................................................................
Cash dividends applicable to the year ......................................................................................................................
12.00

See notes to consolidated financial statements.

13

107.3920.00

U.S. dollars (Note 1)

\

30.71
29.38
30.00

$

(2.00)
0.14

Consolidated Statement of Comprehensive Income
Meiko Electronics Co., Ltd. and Consolidated Subsidiaries
For the Year ended March 31, 2011
Thousands ofMillions of yen

2011

U.S. dollars (Note 1)

2011

Loss before Minority Interests ...........................................................................................................................................................
\(3,095) $(37,220)
Other Comprehensive Income (Note 14):
Unrealized losses on available-for-sale securities................................................................................................................................…
(121)(1,452)
Deferred losses on hedges ......................................................................................................................................................
(106)(1,271)
Foreign currency translation adjustments ......................................................................................................................................................
(1,985)(23,871)
Total other comprehensive income ......................................................................................................................................................
(2,212)(26,594)
Comprehensive Income (Note 14) ......................................................................................................................................................
(5,307)(63,814)Comprehensive Income Attributable to (Note 14):
Owners of the Company ................................................................................................................................…
\(5,307) $(63,814)
Minority interests ......................................................................................................................................................
00

See notes to consolidated financial statements.

14

Consolidated Statements of Changes in Net Assets
Meiko Electronics Co., Ltd. and Consolidated Subsidiaries
For the Years ended March 31, 2011, 2010 and 2009
Thousands ofMillions of yen

2011

2010

Shareholders' Equity:
Common Stock (Note 7):
Beginning balance .............................................................................................................................................................
\
10,546\
8,861
Capital increase upon issuance of 1,696,000 shares of common stock
1,685
Ending balance ................................................................................................................................................................
\
10,546\
10,546

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

$

$

\

(197)
(397)
(594)

$

(7,140)(2)
2,376(4,766)\35,084$444,682

13
2
15

\

(6)
19
13

$

183
(1,452)(1,269)

(195)
97
(98)

\

(45)
(150)
(195)

$

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

\

$

\

(396)
65
(331)

$

(20,460)(23,871)(44,331)(1,784)

\

(513)

$

(48,055)

\

$

\

3
2
5

$

60
(60)
-

\

34,576$396,627

Treasury Stock, at cost; Common Stock:
Beginning balance ..........................................................................................................................
\(594) \
(594)
Purchase of treasury stock ............................................................................................................................…
(0)
Disposal of treasury stock
198
Ending balance ................................................................................................................................................................
\(396) \
(594)
Total shareholders' equity.......................................................................................................................................…
\
36,976\39,947

Accumulated Other Comprehensive Income:Unrealized Gains (Losses) on Available-for-sale Securities:
Beginning balance ..........................................................................................................................
\
15\
Net increase (decrease) .....................................................................................................................................…
(121)
Ending balance .............................................................................................................................................................…
\(106) \

Foreign Currency Translation Adjustments:
Beginning balance ..........................................................................................................................
\(1,701)
Net increase (decrease) ..........................................................................................................................
(1,985)Ending balance ............................................................................................................................................
\(3,686)\\\

Total accumulated other comprehensive income.................................................................................................…
\(3,996) \\Minority Interests:
Beginning balance ...................................................................................................................................................…
\
5\
5
Net increase (decrease) ...............................................................................................................................................…
(5)0Ending balance ..............................................................................................................................…....................…........…
\\
5
Total Net Assets ................................................................................................................................................................
\
32,980\38,168

\

\

\

\

\

\

\

\

Number of Shares
Number of outstanding shares:
Beginning balance ..........................................................................................................................
19,403,320
17,707,320
Issuance of common stock ..........................................................................................................................
1,696,000
Repurchase of treasury stock ..........................................................................................................................
(629,170)(942,700)

17,707,320(942,700)

Ending balance ................................................................................................................................................................
18,774,150
18,460,620

16,764,620

See notes to consolidated financial statements.

15

2011

$

Retained Earnings (Note 7):
Beginning balance .............................................................................................................................................................
\
17,860\16,367
Increase due to application of ASBJ PITF No. 18 .....................................................................................…
Net income .................................................................................................................................................................…
(3,095)
1,828
Cash dividends paid ......................................................................................................................................................…
(406)
(335)
Ending balance ........................................................................…......................................................................................
\
14,359\17,860

\

2009

8,861
8,861

Capital Surplus (Note 7):
Beginning balance .............................................................................................................................................................
\
12,135\
10,450Capital increase upon issuance of 1,696,000 shares of common stock
1,685
Gain on disposal of treasury stock ..................................................................................................… 332
Ending balance ................................................................................................................................................................
\
12,467\
12,135

Deferred Gains (Losses) on Hedges:
Beginning balance .........................................................................................................................................
\(98)
Net increase (decrease) ....................................................................................................................…(106)Ending balance .............................................................................................................................................
\(204)

U.S. dollars (Note 1)

$

$

$

$

$

126,827
126,827

145,945
3,990
149,935

214,791(37,220)(4,885)
172,686(1,184)(1,271)(2,455)

Consolidated Statements of Cash Flows
Meiko Electronics Co., Ltd. and Consolidated Subsidiaries
For the Years ended March 31, 2011, 2010 and 2009
Thousands ofMillions of yen

U.S. dollars (Note 1)

2011
2010
2009
Operating Activities:
Income (loss) before income taxes and minority interests ......................................................................................................................................................
\(3,409) \
2,300
\
646
$

2011
(40,995)

Adjustments to reconcile income before income taxes
to net cash provided by operating activities:
Depreciation and amortization ........................................................................................................................................
6,533
6,794
7,098
Increase (decrease) in allowance for doubtful accounts ...................................................................................................................................
5
(3)
(13)
Increase (decrease) in allowance for investment loss ..........................................................…
(16)
69
16
Increase in provision for employees' retirement benefits .......................................................................110
146
76
Increase (decrease) in accrued bonuses .......................................................................................................................…
(130)
7
(75)
Increase (decrease) in accrued bonuses to directors and corporate auditors ..........................…
(24)
12
(26)
Interest income and dividend income ......................................................................................................…
(20)
(26)
(64)
Interest expenses ........................................................................................................................................…
755
786
1,015
Foreign exchange gain ...............................................................................................................................
(707)
(703)
(354)
Net loss on sales and disposal of property, plant and equipment.............................................................…
110
139
149
Loss on valuation of investment securities ...................................................................................................................................
274
228
Loss on sale of investment securities
7
Gain on redemption of bonds ....................................................................................................................…
(95)
(120)
Loss on disaster (Note 13) .................................................................................................................…
4,943
Business structure improvement expenses.................................................................................................................…
483
Decrease (increase) in trade notes and accounts receivable ..........................................................................................................................
2,694(2,058)3,094
Decrease (increase) in inventories ...........................................................................................................................................
(3,832)(549)
1,356
Increase (decrease) in trade notes and accounts payable ...................................................................................................................................
713
2,809
(4,082)
Increase in other assets .......................................................................................................................…
(181)
(498)
(252)
Increase in other liabilities .......................................................................................................................…
878
533
88
Subtotal
8,905
9,944
8,780
Interest and dividend received .................................................................................................................…
20
26
68
Interest paid ............................................................................................................................................…
(717)
(811)
(976)
Payments for loss on disaster.................................................................................................................…
(6)
Income taxes refund ................................................................................................................................…
115
284
Income taxes paid ..........................................................................................................................…(286)
(433)
(677)
Net cash provided by operating activities ..................................................................................................................................
7,916
8,841
7,479

78,573
65
(192)
1,321
(1,558)
(289)
(240)
9,079
(8,500)1,328
59,447
5,811
32,396(46,091)
8,581(2,192)
10,558107,102241(8,621)(75)(3,440)95,207

Investing Activities:
Payments for purchases of property, plant and equipment ..........................................................................................................................
(16,104)(6,367)
Proceeds from sales of property, plant and equipment ................................................................................................................................
23
23
Proceeds from share of profits on investment in partnership ...............................................…
Payments for purchases of intangible assets ..........................................................................................................................
(228)
(63)
Payments for purchases of investment securities ..........................................................................................................................
(1,256)(278)
Increase in time deposits ................................................................................................................................
249
Payments for loans receivable ................................................................................................................…Payments for transfer of business ..................................................................................................…
Payments for insurance policies .............................................................................….................................................
(59)
(56)
Other, net ...........................................................................................................................................................
(287)
433
Net cash used in investing activities ..................................................................................................................................................
(17,911)(6,059)(10,976)122(128)(1,302)
137
(275)
(170)
(11)
(218)
(12,929)(193,677)
271(2,745)(15,106)(712)(3,448)(215,417)

Financing Activities:
Increase (decrease) in short-term borrowings ..........................................................................................................................
112(3,821)
4,908
Proceeds from long-term borrowings ...........................................................................................................................................
15,896
8,597
9,906
Payments for long-term borrowings ...........................................................................................................................................
(6,817)(6,324)(6,777)
Payments for redemption of bonds .............................................................................................................…
(4,405)(880)
Proceeds from issuance of common stock ..........................................................................…………….. 3,370
Payments for installment liabilities ............................................................................................................................
(637)
(820)
(736)
Payments for purchase of treasury stock......................................................................................
(0)
(396)
Proceeds from disposal of treasury stock ..........................................................................……………..529
Cash dividends paid ......................................................................................................................................…
(406)
(339)
(687)
Net cash provided by (used in) financing activities ..................................................................................................................................................
8,677(3,742)
5,338

1,351
191,168(81,981)(7,664)(2)
6,366(4,879)104,359

Effect of exchange rate changes
on Cash and Cash Equivalents .....................................................................................................................................
(182)
(177)

(69)

(2,191)Net Decrease in Cash and Cash Equivalents ..........................................................................................................................
(1,500)(1,137)(181)(18,042)

Cash and Cash Equivalents at Beginning of Year .............................................................................................................................................
4,009
5,146
4,579

48,211Net Increase in Cash and Cash Equivalents
due to Change in Scope of Consolidation ..............................................................................................…
--Cash and Cash Equivalents at End of Year ...............................................................................................................................
\
2,509
\
4,009
\
See notes to consolidated financial statements.

16

748
5,146

$

30,169

Notes to Consolidated Financial Statements
Meiko Electronics Co., Ltd. and Consolidated Subsidiaries
For the Years ended March 31, 2011, 2010 and 2009
1. Basis of Presenting Consolidated Financial Statements
The accompanying consolidated financial statements of Meiko Electronics
Co., Ltd. (the “Company”) have been prepared in accordance withthe provisions set forth in the Financial Instruments and Exchange Law of Japanand its related accounting regulations, and in conformity with accounting
principles generally accepted in Japan (“Japanese GAAP”), which are different
in certain respects as to application and disclosure requirements ofInternational Financial Reporting Standards.
Effective from the year ended March 31, 2011, the Company adopted“Accounting Standard for Presentation of Comprehensive Income” (AccountingStandards Board of Japan (“ASBJ”) Statement No.25, issued on June 30, 2010)and “Revised Accounting Standard for Consolidated Financial Statements”(ASBJ Statement No. 22, revised on June 20, 2010). As a result of the adoptionof the standard, the Company prepared the consolidated statement ofcomprehensive income for the year ended March 31, 2011.
Information with respect to other comprehensive income for the year ended
March 31, 2010 is disclosed in Note 14 as required.
Prior to the year ended March 31, 2009, the accounts of consolidated overseas
subsidiaries are based on their accounting records maintained in conformity
with generally accepted accounting principles prevailing in the respective
countries of domicile. Effective from the year ended March 31, 2009, theaccounts of consolidated overseas subsidiaries are prepared in accordance witheither International Financial Reporting Standards or U.S. generally accepted
accounting principles, except for certain items which are required to be
adjusted in the consolidation process as explained in Note 2 (x).
In preparing the accompanying consolidated financial statements,
certain reclassifications and rearrangements have been made to present
them in a form which is more familiar to readers outside Japan.
In addition, the notes to the consolidated financial statements include
information which is not required under Japanese GAAP, but ispresented herein as additional information.
The consolidated financial statements are stated in Japanese yen,
the currency of the country in which the Company is incorporated
and operates. The translation of Japanese yen amounts into U.S. dollar
amounts is included solely for the convenience of readers outside Japanand have been made at the rate of \83.15 to $1, the approximate rate ofexchange at March 31, 2011. 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 11 (13 in 2010 and 15 in 2009) subsidiaries(together, the “Group”).
The difference between the cost and the underlying net equity at fairvalue of investments in consolidated subsidiaries (“goodwill” or“negative goodwill”) and in companies accounted for by the equity method
is amortized over a period of five years. All significant inter-company accounts
and transactions have been eliminated. In the elimination of investments in
subsidiaries, the assets and liabilities of the subsidiaries, including the portion
attributable to minority shareholders, are recorded based on the fair value
at the time the Company acquired control of the respective subsidiaries.
(b) Equity Method
Investments in certain unconsolidated subsidiary and affiliatedcompany are accounted for by the equity method and,accordingly, stated at cost adjusted for equity
in undistributed earnings and losses from the date of acquisition.
There are no companies accounted for by the equity method.
(c) Cash Equivalents
Cash equivalents are short-term investments that are readily convertible
into cash and that are exposed to insignificant risk of changes in value.
Cash equivalents include time deposits, certificate of deposits, andcommercial paper, all of which mature or become due within threemonths of the date of acquisition.

(d) Translation of Foreign Currency Accounts
Current and non-current receivables and payables in foreign currencies
are translated at current rates prevailing at the balance sheet date andthe resulting exchange gains or losses are recognized in earnings.
Financial statements of consolidated overseas subsidiaries are translated
into Japanese yen at the exchange rate at the balance sheet date, exceptthat shareholders' equity accounts are translated at historical rates andstatement of income items resulting from transactions with the Company
at the rates used by the Company.
Foreign currency translation adjustments resulting from translation offoreign currency financial statements are presented in net assets in the
consolidated balance sheets.
(e) Inventories
Effective from the year ended March 31, 2009, the Company andits domestic consolidated subsidiaries adopted the “Accounting Standard
for Measurement of Inventories” (ASBJ Statement No. 9, issued on July 5,2006), which requires that inventories be measured at the lower of cost or
net selling value, which is defined as the selling price less additional estimatedmanufacturing costs and estimated direct selling expense. The replacement
cost may be used in place of net selling value, if appropriate. Prior to April
2008, inventories were stated at cost, determined by the first-in, first-out method.
Consequently, compared to the amounts that would have been reported
under the previous accounting method, the gross profit, the operating profit,
and the income before income taxes decreased by \383 million
for the year ended March 31, 2009.
(f) Depreciation and Amortization
Due to the reform of Japanese Corporate Tax Law issued on March 30, 2007,(Partial Amendment of the Income Tax Law, Law No.06 and Partial Amendment ofCorporate Tax Law Enforcement Orders, Law Enforcement Order No.83),
depreciation of property, plant and equipment for the Company and its domestic
subsidiaries is computed on the following method over their estimated useful lives:
For buildings:- acquired before March 31, 1998 : declining balance method under pre-2007 tax reform- acquired between April 1, 1998 and March 31, 2007 : straight-line method underpre-2007 tax reform- acquired after April 1, 2007 : new straight-line method
For assets other than buildings:- acquired before March 31, 2007 : declining balance method under pre-2007 tax reform- acquired after March 31, 2007 : new declining balance method
For assets acquired before March 31, 2007 that have been depreciated to 5% of
their acquisition value using the previous method of calculating depreciation,
the difference between the remaining 5% of the acquisition cost and a memorandum
price will be written off in equal amounts over the five-year period beginning withthe year following the year when the book value is depreciated to 5% of the acquisition
costs. Depreciation of property, plant and equipment for foreign consolidated
subsidiaries is computed on the straight-line method over their estimated useful lives.
Software for company use is carried at cost less accumulated amortization,
which is calculated by the straight-line method over their estimated useful
lives (five years).
(g) Allowance for Doubtful Accounts
The Company and its consolidated subsidiaries provide for doubtful
accounts principally at an amount computed based on the historical bad debt
ratio during a certain reference period plus an estimated uncollectible amountbased on the analysis of certain individual accounts, including claims inbankruptcy.
(h) Allowance for Investment Loss
The Company provides for investment loss principally at an amount computed
based on the evaluation of individual financial and other conditions of subsidiaries
and affiliates.
(i) Accrued Bonuses
Accrued bonuses to employees are provided for the estimated amounts,
which the Company and its consolidated subsidiaries are obligated to
pay employees after the fiscal year-end, based on services rendered during
the current year.

17(j) Provision for loss on disaster
The provision for loss on disaster is provided for the estimated amounts principallyfor recovery of assets damaged by the Great East Japan Earthquake that occurredon March 11, 2011.
(k) 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.
(l) Investment Securities
The Company has classified all the equity securities as available-forsale securities based on management’s intention. Available-for-salesecurities other than non-marketable are reported at fair value withunrealized gains or losses, net of applicable taxes, reported in a separate
component of net assets.
Non-marketable available-for-sale securities are stated at cost determinedby the moving-average method.
For other than temporary declines in fair value, investment securities are
reduced to net realizable value by a charge to income.
(m) Income Taxes
The provision for income taxes is computed based on the pretax
income included in the consolidated statements of income. The asset
and liability approach is used to recognize deferred tax assets andliabilities for the expected future tax consequences of temporary
differences between the carrying amounts and the tax bases ofassets and liabilities. Deferred taxes are measured by applying
currently enacted tax laws to the temporary differences.
(n) Leases
In March 2007, the ASBJ issued ASBJ Statement No.13, “AccountingStandard for Lease Transactions”, which revised the previous accounting
standard for lease transactions issued in June 1993. The revised accounting
standard for lease transactions is effective for fiscal years beginning on orafter April 1, 2008.
The revised accounting standard requires that all finance lease transactions
should be capitalized to recognize lease assets and lease obligations in thebalance sheet. In addition, the accounting standard permits leases which
existed at the transition date and do not transfer ownership of the leased
property to the lessee to be accounted for as operating lease transactions.
Under the previous accounting standard, finance leases that deem to transfer
ownership of the leased property to the lessee were to be capitalized.
However, other finance leases were permitted to be accounted for as operatinglease transactions if certain “as if capitalized ” information is disclosed in thenote to the lessee’s financial statements.
The Company applied the revised accounting standard effective April 1, 2008.
There is no effect of the change on net income.

(o) Derivative Financial Instruments
The Group uses foreign currency forward contracts, interest rate swaps
and copper price swaps as a means of hedging exposure to foreign currencies,
interest risks and market fluctuation. The Group does not enter into
derivatives for trading or speculative purposes.
Derivative financial instruments are classified and accounted for as
follows: a) all derivatives are recognized as either assets or liabilities andmeasured at fair value, and gains or losses on derivative transactions
are recognized in the consolidated statements of income andb) for derivatives used for hedging purposes, if derivatives qualify
for hedge accounting because of high correlation and effectivenessbetween the hedging instruments and the hedged items, gains orlosses on derivatives are deferred until maturity of the hedgedtransactions.
However, if the foreign currency forward contracts qualify for hedge
accounting, hedged items such as foreign currency receivables andpayables are translated at the contracted rates.
Also, if interest rate swap contracts are used as hedge and meet certain
criteria, the net amount to be paid or received under the swap
contract is added to or deducted from the interest on the assets or
liabilities for which the swap contract was executed.
(p) Goodwill
Goodwill on purchases of specific businesses and consolidation goodwill
are carried at cost less accumulated amortization, which is calculatedby the straight-line method over five years.
(q) Provision for Employees' Retirement Benefits
The Company and its domestic consolidated subsidiaries have a funded
defined benefit pension plan covering substantially all employees.
The Company and its domestic consolidated subsidiaries account for theprovision for retirement benefits based on projected benefit obligations andfair value of plan assets at the balance sheet date.
Actuarial gain or loss is amortized mainly using the straight-line method
over 13 years, which is less than the average remaining years of serviceof the employees, and the amortization will be started in the following year
in which the gain or loss is recognized.
(Change in accounting policies)
Effective from the year ended March 31, 2010, the Company and its
domestic consolidated subsidiaries adopted the “Partial Amendments to
Accounting Standard for Retirement Benefits (Part 3)” (ASBJ Statement
No.19 issued on July 31, 2008). The new accounting standard requires
domestic companies to use the rate of return on long-term government
or gilt-edged bonds as of the end of the fiscal year for calculating
the projected benefit obligation of a defined-benefit plan. Previously,
domestic companies were allowed to use a discount rate determined bytaking into consideration for fluctuations in the yield of long-term
government or gilt-edged bonds over a certain period. This change had
no impact on operating income and income before income taxes andminority interests for the year ended March 31, 2010.
(r) 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.

18

(s) Appropriations of Retained Earnings
Appropriations of retained earnings are reflected in the accompanying
consolidated financial statements for the following year uponshareholders' approval.

(w) Income before Minority Interests
Effective from the year ended March 31, 2011, the Company and its domestic consolidated
subsidiaries adopted the “Regulation for Terminology, Forms and Preparation of Financial
Statements” (Cabinet Office Ordinance No. 5, issued on March 24, 2009), based on the“Accounting Standard for Consolidated Financial Statements” (ASBJ Statement No. 22,
issued on December 26, 2008). The account of “Income (Loss) before Minority Interests”
was separately presented due to the adoption.

(t) 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.
Basic net income per share is computed by dividing net income available
to common shareholders by the weighted-average number of commonshares outstanding for the period.
Diluted net income per share reflects the potential dilution that could occur
if diluted securities were exercised or converted into common stock. Diluted
net income per share of common stock assumes full conversion of the outstanding share subscription rights at the beginning of the year.

(x) Application of the “Practical Solution on Unification of Accounting
Policies Applied to Foreign Subsidiaries for Consolidated Financial Statements”
The Company applied the “Practical Solution on Unification of Accounting
Policies Applies to Foreign Subsidiaries for Consolidated Financial Statements” (ASBJ
PITF No.18, issued on May 17, 2006), and made necessary adjustments on the
consolidation process.
Consequently, compared to the amounts that would have been reported under theprevious accounting method, the operating profit and the income before income taxes
decreased by \128 million and the net income decreased by \22 million
for the year ended March 31, 2009.
Also, due to the increase in beginning retained earnings by \403 million,
the retained earnings increased by the same amount at March 31, 2009.
The effect of the change on the segment information is described in Note 15.

(u) Asset Retirement Obligations
Effective from the year ended March 31, 2011, the Company and its consolidated
domestic subsidiaries adopted “Accounting Standards for Asset Retirement
Obligations” (ASBJ Statement No.18 issued on March 31, 2008) and “Guidance on
Accounting Standards for Asset Retirement Obligations” (ASBJ Guidance No.21,
issued on March 31, 2008). The effect of this adoption to net income (loss) was
immaterial.

(y) Reclassifications
Certain prior year amounts have been reclassified to conform to the presentations
for the year ended March 31, 2011.

(v) Business Combination
Effective from the year ended March 31, 2011, the Company and its domestic
consolidated subsidiaries adopted “Accounting Standard for Business Combinations”(ASBJ Statement No.21, issued on December 26, 2008), “Accounting Standard forConsolidated Financial Statements” (ASBJ Statement No.22, issued on December 26,2008), “Partial amendments to Accounting Standard for Research and Development
Costs” (ASBJ Statement No.23, issued on December 26, 2008), “Accounting Standard forBusiness Divestitures” (ASBJ Statement No.7, issued on December 26, 2008),“Accounting Standard for Equity Method of Accounting for Investments” (ASBJ
Statement No.16, issued on December 26, 2008), and “Guidance on AccountingStandard for Business Combinations and Accounting Standard for Business Divestitures”(ASBJ Guidance No.10, issued on December 26, 2008).

19

3. Investment Securities
All the equity securities, classified as available-for-sale securities, are included in non-current investment securities.
The carrying amounts and aggregate fair values of the available-for-sale securities as of March 31, 2011 and 2010 were as follows:
2011
Millions of yen

Thousands of U.S. dollars

Fair

Acquisition

Unrealized

Fair

Acquisition

Unrealized

Value

Cost

Gains (Losses)

Value

Cost

Gains (Losses)

Securities whose carrying value
exceeds their acquisition cost:
Equity securities ...............................................................................................................
\
147 \
127 \
20 $
1,769 $
1,523 $
Securities whose carrying value doesn't
exceed carrying value:
Equity securities .................................................................................................................................................................................................................
431
550
(119)
5,179
6,619
Other .................................................................................................................................................................................................................
46
53
(7)
557
632
Total ...............................................................................................................
\
624 \
730 \
(106) $
7,505 $
8,774 $
2010
Millions of yen
Fair

Acquisition

Unrealized

Value

Cost

Gains (Losses)

Securities whose carrying value
exceeds their acquisition cost:
Equity securities ...............................................................................................................
\
55 \
26 \
29
Securities whose carrying value doesn't
exceed carrying value:
Equity securities .................................................................................................................................................................................................................
4
4(0)
Other .................................................................................................................................................................................................................
61
64
(3)
Total ...............................................................................................................
\
120 \
94 \
26

Information on available-for-sale securities whose fair value is not readily determinable as of March 31, 2011 and 2010
are described in Note 11.
The following table summarizes available-for-sale securities sold in the year ended March 31, 2010.

Sales value
Gain on sale
Loss on sale

Millions of
Yen
2010
\
34
7

There were no available-for-sale securities sold in the years ended March 31, 2011 and 2009.
Note: The Company recognized impairment losses, ￥274 million and ￥219 million on available-for-sale securities during
the years ended March 31, 2010 and 2009, respectively. The Company did not recognized impairment loss on available-for-sale securities
for the year ended March 31, 2011.

20

246

(1,440)(75)(1,269)

4. Leases
The Group leases certain machinery, computer equipment, software and other assets.
As discussed in Note 2 (n), 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, 2011 and 2010 were as follows:
Millions of yen
2011

2010

Acquisition

Accumulated

Net leased

Acquisition

Accumulated

Net leased

Cost

Depreciation

Property

Cost

Depreciation

Property

Machinery and vehicles ........................................................................................................................
\
330 \
284 \
46 \
392 \
Software ........................................................................................................................
21
Total ........................................................................................................................................................................
\
330 \
284 \
46 \
413 \

279 \
20
299 \

113
1
114

Thousands of U.S. dollars
2011
Acquisition

Accumulated

Net leased

Cost

Depreciation

Property

Machinery and vehicles ........................................................................................................................
$
3,969 $
3,420 $
549
Total ........................................................................................................................................................................
$
3,969 $
3,420 $
549
Obligations under finance leases:

Millionsof yen2011

Thousands of
U.S. dollars

2010

Due within one year ....................................................................................................................................................................................
\
53 \
71 $
Due after one year ..................................................................................................................................................................................................................…
53
Total ...................................................................................................................................................................................................................................
\
53 \
124 $

Depreciation expense and interest expense, which are not reflected in the accompanying statements of income, computed by straight-line method
and the interest method are as follows:
Millionsof yen2011
2010
Lease payments ....................................................................................................................................................................................
\
74 \
155 \
Depreciation expense ....................................................................................................................................................................................
\
68 \
145 \
Interest expense ............................................................................................................................................................................................................
\
3 \
6 \

21

2011
632
632

Thousands of
U.S. dollars

2009
239 $
218 $
13 $

2011
887
822
31

5. Short-term Borrowings and Long-term Debt

Short-term borrowings and long-term debt as of March 31, 2011 and 2010 consisted of the following:Thousands ofMillions of yen
2011
2010

U.S. dollars

2011

Short-term borrowings with average interest rate of 2.63% for 2011 and 1.77% for 2010.................................................................................................................................................................................
\
4,149 \
4,206 $
49,898Current portion of long-term borrowings with average interest rate of 1.92% for 2011 and 1.71% for 2010 .........................................................................................................................................................
9,211
7,873
110,772
Current portion of other liabilities with average interest rate of 1.81% for 2011 and 1.87% for 2010 ....................................................................................................................................................................
225
625
2,706
Total short-term ................................................................................................................................................................................................
13,585
12,704
163,376

Long-term borrowings with average interest rate of 1.54% for 2011 and 1.6% for 2010, less current portion .......................................................................................................................................................
23,944
17,706287,957
Long-term other payable, less current portion ...................................................................................................................................................................................................................................…
367
593
4,426
Total long-term ...................................................................................................................................................................................................................................…
24,311
18,299292,383
Total ..................................................................................................................................................................................................................................................…
\
37,896 \31,003 $455,759* Average interest rate of borrowings represents the weighted average rate for the outstanding balances at March 31, 2011 and 2010. Average interest rate of otherliabilities represents the weighted average rate for the average of the outstanding balances at April 1, 2010 and March 31, 2011.
The aggregate annual maturities of long-term debt as of March 31, 2011 were as follows:

Millions
Thousands ofYear ending March 31
of yenU.S. dollars
2012................................................................................................................................................................................................................................................................................................................
\
9,436 $
113,478
2013................................................................................................................................................................................................................................................................................................................
8,571
103,076
2014 ...............................................................................................................................................................................................................................................................................................................
8,267
99,4292015................................................................................................................................................................................................................................................................................................................
4,621
55,5772016 and thereafter ..........................................................................................................................................................................................................................................................................................
2,852
34,301
Total .......................................................................................................................................................................................................................................................................................
\
33,747 $405,86122

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

The provision for employees' retirement benefits at March 31, 2011 and 2010 consisted of the following:Thousands ofMillions of yen
2011
2010
Projected benefit obligation ........................................................................................................................................................................
\(1,763) \Fair value of plan assets .....................................................................................................................................................................................................
512
Unrecognized actuarial gain (loss) ........................................................................................................................................................................ 51
Net liability ...................................................................................................................................................................................................................
\(1,200) \U.S. dollars

2011

1,551 $
(396)
(65)
1,090 $

(21,201)
6,158
614(14,429)

The components of net periodic benefit costs for the years ended March 31, 2011 and 2010 are as follows:
Thousands ofMillions of yen
2011
2010
Service cost ........................................................................................................................................................................................................
\
163 \Interest cost ....................................................................................................................................................................................................
23
Expected return on plan assets ........................................................................................................................................................................
(3)
Recognized actuarial loss ........................................................................................................................................................................
11
Net periodic retirement benefit costs ........................................................................................................................................................................
\
194 \U.S. dollars

2011
180 $
22
(3)
19
218 $

1,955
280
(33)
127
2,329

Assumptions used for the years ended March 31, 2011 and 2010 are set forth as follows:
2011
2010
Discount rate ............................................................................................................................................................................................................................................................
2.0%
2.0%
Expected rate of return on plan assets .........................................................................................................................................................................................................
1.0%
1.0%
Recognition period of actuarial gain/loss ........................................................................................................................................................................
13 years
13 years
Descriptions of the multi-employer pension plan to which contributions are recognized as expense are as follows:
Thousands of(1) Funded status (as of March 31, 2010)
Millions of yen
U.S. dollars
Fair value of plan assets ..........................................................................................................................................................................................................................................
\
49,353 $593,537
Benefit obligation on the basis of pension financing ..............................................................................................................................................................…
44,430534,327
Funded status ............................................................................................................................................................................................................…
\
4,923 $
59,210(2) Contribution share ratio of the Company and certain domestic consolidated subsidiaries to total pension plan
Thousands of(from April 1, 2009 to March 31, 2010)
Millions of yen
U.S. dollars
Gross pay (of total pension plan) .............................................................................................................................…................................................…
\
60,493 $727,521
Gross pay (of the Company) .............................................................................................................................…................................................…
4,043
48,623
Ratio ..........................................................................................................................................................................................................…
6.68%
6.68%
(3) Supplement remarks
Thousands of
The funded status described in above (1) was calculated as follows:
Millions of yen
U.S. dollars
General reserve .........................................................................................................................................................................................................................…
\
12,422 $149,395
Less:
Balance of unrecognized prior service costs .....................................................................................................................…................................................…
2,215
26,634
Carried over shortage.....................................................................................................................…................................................…
5,284
63,551
Funded status ............................................................................................................................................................................................................…
\
4,923 $
59,210
Balance of unrecognized prior service costs are recognized by equal payment method over 13 years, and the remaining period is 6 years as ofMarch 31, 2011.

23

7. 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 ofan 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.

8. Research and Development Costs
million ($14,612 thousand), \1,437 million and \1,193 million forthe years ended March 31, 2011 and 2010 and 2009, respectively.

Research and development costs included in selling, generaland administrative expenses and manufacturing costs were \1,215

9. Net Loss on Sales and Disposal of Property, Plant and Equipment
Significant components of net loss on sales and disposal of property, plant and equipment for the years ended March 31, 2011, 2010 and 2009 were as follows:
Thousands ofMillions of yen
U.S. dollars
Gain:
2011
2010
2009
2011
Buildings and structures ........................................................................................................................................................................
\
8 \
- \
- $
91
Machinery and vehicles ........................................................................................................................................................................
20
1
28
Others ........................................................................................................................................................................
0
Total gain ................................................................................................................................................................................................
10
0
1
119
Loss:
Buildings and structures ........................................................................................................................................................................
9
19
45
110
Machinery and vehicles ........................................................................................................................................................................
104
112
93
1,254
Construction in progress ........................................................................................................................................................................
20
7
18
Removal cost ........................................................................................................................................................................
3
Others ........................................................................................................................................................................
5
6
5
65
Total loss ................................................................................................................................................................................................
120
140
150
1,447
Net loss ..................................................................................................................................................................................................................................................…
\(110) \
(140) \
(149) $
(1,328)24

10. Income Taxes
Income taxes applicable to the Company consist of corporate tax, inhabitant
tax and enterprise tax, which in the aggregate resulted in the normal statutory
tax rates of approximately 40.6% for the years ended March 31, 2011,2010 and 2009.

The tax effects of significant temporary differences which resulted in deferred
tax assets and liabilities as of March 31, 2011 and 2010 are as follows:

Thousands ofMillions of yen
2011
2010

U.S. dollars

2011
Deferred Tax Assets:
Elimination of unrealized profits .........................................................................................................................…
23
35
281
Accrued bonuses .....................................................................................................................................................
204
276
2,452
Accrued bonuses to directors and corporate auditors ........................................................................................................................................................................
10
Liability for employees' retirement benefits .........................................................................................................................… 487
443
5,859
Provision for directors' retirement benefits ........................................................................................................................................................................
110
109
1,316
Accrued enterprise tax ........................................................................................................................................................................
4
58
50
Allowance for doubtful accounts.....................................................................................................................................................................…
274
42
3,297
Tax loss carryforwards ........................................................................................................................................................................
2,191
1,281
26,349Valuation loss of inventories.....................................................................................................................................................................…
40
106
486
Difference on depreciation period.....................................................................................................................................................................…
821
632
9,870
Loss on valuation of investment securities.....................................................................................................................................................................…
4
50
49
Allowance for investment loss.....................................................................................................................................................................…
98
35
1,180
Loss on revaluation of golf club memberships ........................................................................................................................................................................
41
41
495
Loss on disaster.....................................................................................................................................................................… 92
1,111
Business structure improvement loss.....................................................................................................................................................................…
156
1,870
Deferred gains (losses) on hedges.....................................................................................................................................................................…
85
88
1,024
Valuation difference on available-for-sale securities.....................................................................................................................................................................…
43
516
Other ...................................................................................................................................................................................................
47
92
553
Less: valuation allowance ........................................................................................................................................................................
(2,751)(1,765)(33,081)
Total ......................................................................................................................................................................................
\
1,969 \
1,533 $
23,677

Thousands ofMillions of yen
2011
2010

U.S. dollars

2011
Deferred Tax Liabilities:
Unrealized gains on available-for-sale securities ........................................................................................................................................................................
\- \(10) $
Deferred gains (losses) on hedges.....................................................................................................................................................................…
(15)
(53)
(185)
Total .........................................................................................................................................................................................
\(15) \(63) $(185)
Deferred Tax Assets, Net: ........................................................................................................................................................................
\
1,954 \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,

1,470 $

23,492

2010 and 2009 are as follows:
A reconciliation for the year ended March 31, 2011 is omitted
due to net loss.
2010

2009

Statutory tax rate ............................................................................................................................................................................................................................
40.6%
40.6%
Expenses not deductible for tax purpose ........................................................................................................................................................................
0.4%
2.0%
Per capita inhabitant tax ............................................................................................................................................................................................
0.9%
3.7%
Tax credits for research and development costs ............................................................................................................................................................................................
(4.5%)(18.2%)
Foreign tax credits .............................................................................................................................................................................................................................................
(5.5%)(44.4%)Tax rate difference in foreign subsidiaries .............................................................................................................................................................................................................................................
(17.5%)(22.7%)
Valuation allowance ............................................................................................................................................................................................................
4.6%
56.5%
Other, net ................................................................................................................................................................................................................................
1.5%
1.4%
Actual effective tax rate ....................................................................................................................................................................................................
20.5%
18.9%

25

11. Financial Instruments(Additional information)
Effective from the year ended March 31,2010, the Company adopted
the revised Accounting Standard, “Accounting Standard for
Financial Instruments” (ASBJ Statement No.10 revised on March 10, 2008)
and the “Guidance on Disclosures about Fair Value of Financial Instruments”(ASBJ Guidance No.19 revised on March 10, 2008).
Information on financial instruments for the years ended March 31, 2011
and 2010 required pursuant to the revised accounting standards is as follows:(a) Qualitative information on financial instruments(1) Policies for using financial instruments
The Group finances necessary funds mainly through bank loans andbond issues according to the capital investment plan of the production
and sales of printed circuit boards.
Temporary excess funds are operated by highly stable financial instruments,
and the Group finances short-term operating capital by bank loans.
Derivative transactions are only utilized to hedge the risks mentionedin (2) below.
(2) Details of financial instruments used and exposures to risk andhow they arise
Operating receivables such as trade notes and accounts receivable areexposed to credit risk. Some operating receivables, which are dominated inforeign currencies due to global operations, are exposed to foreign currency
fluctuation risk. The Group might utilize foreign exchange forward contracts
if necessary except for those within the range of the operating payables
dominated in the same foreign currency. Investments securities mainly
consist of securities of companies in which a business relationshiphas been established and they are exposed to market fluctuation risk.
Operating payables such as trade notes and accounts payable
are due within one year.
Some of the operating payables relating to imports of raw materials are
dominated in foreign currencies and are exposed to foreign currency
fluctuation risk.
The Group might utilize foreign exchange forward contracts if necessary
except for those within the range of the operating receivables dominatedin the same foreign currency. Loans are mainly used for the purpose offinancing capital investments. A part of these are variable interest loans andare exposed to interest fluctuation risk. The Group utilizes interest rate swaps
to hedge the risk. Regarding derivative transactions, the Group utilizes
foreign exchange forward contracts to hedge foreign currency fluctuation risk ofoperating receivables and payables dominated in foreign currencies andinterest rate swaps to hedge interest fluctuation risk.

(3) Policies and processes for managing the risk(i) Credit risk management (risk of default by the counterparties)
The sales management department in the Company follows sales management
rules, monitors the customers’ credit conditions periodically and manages
the due date and balance per customer. The Company keeps track of the adverse
financial conditions of 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 inforeign currencies, the Company utilizes foreign exchange forward contracts
if necessary to hedge the foreign currency fluctuation risk, which is controlled
by each currency and on a monthly basis. For investment securities, the Company
regularly reviews the fair value and issuers’ financial condition and readjust Company’
portfolio on an ongoing basis considering the business relationship withcounterparties. Derivative transactions are based on the internal rules andexecuted after getting the approval from the approver and managed byaccounting department. 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 casemarket prices do not exist. As the calculation of those values adopts certain
assumptions, those values may vary in case different assumptions are applied.
Also, for the contract amount regarding derivative transactions described in
Note 12, the contract amount itself does not indicate market risk
related to derivative transactions.

26

(b) Fair values of financial instruments
Book values of the financial instruments included in the consolidated balance sheets and their fair values at March 31, 2011 and 2010 are as follows:
2011
Millions of yen
Book

Fair

Value

Value

Thousands of U.S. dollars
Difference

Cash and deposits .............................................................................................................
\
2,728 \
2,728 \
- $Trade notes and accounts receivable ...................................................................................................
14,634
14,634
Investment securities:
Available-for-sale securities....................................................................................................................
624
624
Trade notes and accounts payable .................................................
\
8,591 \
8,591 \
- $Short-term borrowings......................................................................................................
4,149
4,149
Long-term borrowings............................................................................
33,15533,222
67
Derivative financial instruments ........................................................................…
\
- \
- \
- $

Book

Fair

Value

Value

Difference

32,803 $175,996

32,803 $175,996-

7,505
103,322 $
49,898398,729- $7,505
103,322 $
49,898399,541
- $

812
-

2010
Millions of yen
Book

Fair

Value

Value

Difference

Cash and deposits .............................................................................................................
\
4,229 \
4,229 \
Trade notes and accounts receivable ...................................................................................................
15,081
15,081
Investment securities:
Available-for-sale securities....................................................................................................................
120
120
Trade notes and accounts payable .................................................
\
8,229 \
8,229 \
Short-term borrowings......................................................................................................
4,206
4,206
Long-term borrowings............................................................................
25,57925,689110
Derivative financial instruments ........................................................................…
\
- \
- \
-

The financial instruments whose fair value is extremely difficult to determine
are not included above.
(1) Valuation method of the fair value of financial instruments andinformation of investment securities and derivative transactions(i). Cash and cash equivalents, (ii) Notes and accounts receivable
The carrying value is deemed as the fair value since it is scheduled to be settled
in a short period of time.
(iii). Investment securities
Fair value of equity securities is based on the quoted price on stock exchange.
Please refer to Note 3. regarding the information of the fair value forthe investment in securities by classification.
(iv). Trade notes and accounts payable, (v) Short-term borrowings
The carrying value is deemed as the fair value since it is scheduled to be settled
in a short period of time.

(vi). Long-term borrowings
The fair values are measured as the net present value of estimated future
cash flows by discounting the principal and interest value using the loaninterest rate applied to the new loans. If the variable interest rate loans meetcertain criteria for the short cut method (If interest rate swap contracts areused 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 theinterest rate swap contract is added to or deducted from the interest on theliabilities for which the swap contract was executed), the sum of principal
and the interest processed as interest rate swaps are discounted by using thereasonably estimated loan interest rate applied to the same kind of loans.
(vii). Derivative transactions
Please refer to Note 12.
(2) Unlisted securities of \1,099 million yen ($13,213 thousand) and \1,196 million yen,
for which fair value is determined to be extremely difficult to determine because
the securities have no market value as of March 31, 2011 and 2010
are not included in the above table.

27

(c) The redemption schedule for financial instruments and securities withmaturity as of March 31, 2011 and 2010 is as follows:
2011
Millions of yen
Due in one
year

Due after one
year throughDue after five
year throughor less

five years

ten years

Due after ten
years

Cash and deposits .............................................................................................................
\
2,728 \
- \- \Trade notes and accounts receivable ...................................................................................................
14,634
Investment securities:
Available-for-sale securities with maturities....................................................................................................................
Total ...............................................................................................................
\
17,362 \
- \
- \
2011
Thousands of U.S. dollars
Due in one

Due after one

Due after fiveDue after ten

year

year throughyear throughyears

or less

five years

ten years

Cash and deposits .............................................................................................................
$
32,803 $- $- $Trade notes and accounts receivable ...................................................................................................
175,996
Investment securities:
Available-for-sale securities with maturities....................................................................................................................
Total ...............................................................................................................
$
208,799 $
- $
- $
2010
Millions of yen
Due in one
year

Due after one
year throughDue after five
year throughor less

five years

ten years

Due after ten
years

Cash and deposits .............................................................................................................
\
4,229 \-\-\
Trade notes and accounts receivable ...................................................................................................
15,081
Investment securities:
Available-for-sale securities with maturities....................................................................................................................
Total ...............................................................................................................
\
19,310 \
-\
-\
-

28

12. Derivatives
Derivative transactions for which hedge accounting has been applied for the years ended March 31, 2011 and 2010 are as follows:
2011

Contract
amountHedged item

Millions of yen
Contract
amountdue after
one year

Fair value

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

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

Long-term
borrowings\

17,239 \12,354 \(227) $

207,326 $

148,571 $(2,726)

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

Long-term
borrowings

\

667 \

- \

(5) $

8,018 $

- $(60)

Raw materials

\

140 \

- \

178 $

1,684 $

- $

2,139

Commodity related :Benchmark Method
Copper price swaps

2010
Millions of yen
Contract
amountdue after
one yearContract
amountHedged item

Fair value

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

Long-term
borrowings\

7,220 \

4,946 \

(262)

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

Long-term
borrowings\

1,468 \

667 \

(15)

Raw materials

\

923 \

-\

1,051

Commodity related :Benchmark Method
Copper price swaps

Fair value is principally based on quoted price obtained from financial institutions signing the contract.
Above information is required under new regulation ASBJ statement No.10 “Accounting Standard for Financial Instruments”
issued on March 10, 2008 and ASBJ Guidance No.19 “Guidance on Disclosures about Fair Value of Financial Instruments”
issued on March 10, 2008 and therefore, disclosure of fair value of derivative transactions at March 31, 2009 is not required.
There are no derivative transactions for which hedge accounting has not been applied for the years ended March 31, 2011 and 2010.
Derivative transactions for which hedge accounting has not been applied for the year ended March 31, 2009 are summarized as follows:
Millions of yen
2009
Copper price swaps:
Contract amount ............................................................................................…
\
421
Fair value ............................................................................................…
446
Unrealized profit ............................................................................................…
\
25

29

13. Loss on Disaster
Loss on disaster caused by the Great East Japan Earthquake that occurred on March 11, 2011 is summarized as follows:
2011
Thousands ofMillions of yen
U.S. dollars
Devaluation of inventories ........................................................................................................................................................................
\
801 $
9,638
Repairment of property, plant and equipment ........................................................................................................................................................................
3,063
36,834
Intangible assets ........................................................................................................................................................................
1
9
Provision for loss on disaster .....................................................................................................................................................................…
773
9,291
Other .....................................................................................................................................................................…
305
3,675
Total ......................................................................................................................................................................................
\
4,943 $
59,447

14. Comprehensive Income
Other comprehensive income for the year ended March 31, 2010 consists of the following:
Millions of yen
2010
Other comprehensive income:Unrealized gains on available-for-sale securities ........................................................................................................................................................................
2
Deferred gains on hedges ........................................................................................................................................................................
97
Foreign currency translation adjustments ........................................................................................................................................................................
(1,370)Total other comprehensive income ........................................................................................................................................................................
(1,271)

Total comprehensive income for the year ended March 31, 2010 consists of the following:
Millions of yen
2010
Comprehensive income attributable to:
Owners of the parent ........................................................................................................................................................................
557
Minority interests ........................................................................................................................................................................
0
Total comprehensive income....................................................................................................…
55730

15. Segment Information
Effective from the year ended March 31, 2011, the Company adopted “Accounting Standard for Disclosures about Segments of an Enterprise and RelatedInformation” (ASBJ Statement No. 17 issued on March 27, 2009) and “Guidance on Accounting Standard for Disclosures about Segments of an Enterpriseand Related Information” (ASBJ Guidance No. 20, issued on March 21, 2008).
Information about reported segment sales, segment profit, segment assets and other items under the new accounting standards is not disclosed as the Group's
reporable 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

2011
Millions of yen
Japan

Asia

Net sales .............................................................................................................................
\
35,253\ 30,735\

North America

Europe

\

6,000

Other

2,722

\

Total

14

\

74,724

174$

898,6702011
Thousands of U.S. dollars
Japan

Asia

Net sales .............................................................................................................................
$
423,968$ 369,627$

North America

Europe72,163$

Other

32,738$Total

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

2011
Millions of yen
Japan

Asia

North America

EuropeProperty, plant and equipment .............................................................................................................................
\
7,202\ 45,131
\
\

Other

-

\

-

$

Total

2

\

52,335

14$

629,400

2011
Thousands of U.S. dollars
Japan

Asia

North America

Property, plant and equipment .............................................................................................................................
$
86,615$ 542,771$$

Europe

Other

Total

(3) Information about major customers
Information about major customers is not disclosed since there are no external sales for customers accounted for more than 10% of consolidated net sales.
A summary of business segment information for the years ended March 31, 2010 and 2009 based on the previous accounting standard is as follows:Business segment information is not disclosed as the Group's reporable segment is solely PCB and the related business.
Segment information by geographical area for the years ended March 31, 2010 and 2009 under accounting standards previously applied were summarized as follows:31Segment infomation by geographical Area:
Millions of yen
Corporate Assets
Japan

Asia

North America

Total

2010
Net Sales:
Sales to customers .............................................................................................................................
\
41,638\26,857\
1,328\Intersegment sales and transfers .............................................................................................................................
2,600
20,46885
Total ..........................................................................................................................................
\
44,238\47,325\and Eliminations

Consolidated

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

69,823-

1,413\

92,976\(23,153)\

69,823Operating expenses .................................................................................................................................
\
43,212\
44,631\
1,389
Operating income .................................................................................................................................
\
1,026
\
2,694
\
24

\
\

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

66,030
3,793

Identifiable assets .......................................................................................................................................
\
54,100\52,752\
427\

107,279\(22,551)\

84,728\75,807
18,726\(18,726)\

75,807-

1,834\

94,533\(18,726)\

75,807

Operating expenses .................................................................................................................................
\
45,088\46,138\
1,843
Operating income .................................................................................................................................
\
93
\
1,380
\
(9)

\
\

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

74,046
1,761

Identifiable assets .......................................................................................................................................
\
59,323\50,872\
333\

110,528\(24,917)\85,6112009
Net Sales:
Sales to customers .............................................................................................................................
\
42,180\31,904\
1,723
Intersegment sales .............................................................................................................................
3,001
15,614111
Total ..........................................................................................................................................
\
45,181\47,518\The geographical areas consist primarily of the following countries and regions:Asia................................................
China, Hong Kong, Philippines and Vietnam
North America...........................................…
United States
Change of the accounting methoda) As discussed in Note 2 (e), effective from the year ended March 31, 2009, the Company and its domestic consolidated subsidiaries
adopted the “Accounting Standard for Measurement of Inventories” (ASBJ Statement No. 9, issued on July 5, 2006).
Consequently, compared to the amounts that would have been reported under the previous accounting method, operating expenses
of Japan and Asia for the year ended March 31, 2009 increased by \201 million and \183 million, respectively.
b) As discussed in Note 2 (x), effective from the year ended March 31, 2009, the Company applied the “Practical Solution on
Unification of Accounting Policies Applied to Foreign Subsidiaries for Consolidated Financial Statements” (ASBJ PITF No.18,
issued on May 17, 2006), and made necessary adjustments on the consolidation process. Consequently, compared to the amounts
that would have been reported under the previous accounting method, the operating expenses of Asia for the year ended March 31, 2009
increased by \128 million and no effect on the other areas.

32Overseas Sales:
Millions of yen
Asia

North America

Europe

Other

Total

2010
Overseas sales ........................................................................................................................................................................
\
30,571
\
3,035
\
857
\
7

\

34,470Consolidated net sales ........................................................................................................................................................................
\

69,823

Ratios of overseas sales ........................................................................................................................................................................
43.8%
4.3%
1.2%
0.0%

49.4%

2009
Asia

North America

EuropeTotal

Overseas sales ........................................................................................................................................................................
\
33,677
\
3,025
\
123
\
36,825
Consolidated net sales ........................................................................................................................................................................
\
75,807
Ratios of overseas sales ........................................................................................................................................................................
44.4%
4.0%
0.2%
48.6%

The geographical areas consist primarily of the following countries and regions:Asia..........................................…
China, Hong Kong, Philippines and Singapore
North America................................…
United States
Europe.....................................…
Germany and France
Geographical areas were previously classified to three segments as “Asia”, “North America” and “Europe”. From the year ended March 31, 2010,
geographical segments have been changed to four segments as “Asia”, “North America”, “Europe” and “Other”, because sales were recognized ina new geographical area.

33

16. Business Combination
On October 1, 2010, the Company merged with its wholly-owned consolidated subsidiaries, Miyagi Meiko Electronics co., Ltd. (“Miyagi Meiko”)
and Togoshi Co., Ltd. (“Togoshi”) based on the resolution of the Board of Directors' meeting held on May 31, 2010.
1.Outline of merger(a) Names and description of the business of the companies involved:
Acquiring company:
Company name
Meiko Electronics Co., Ltd
Description of the business
Designing, manufacturing and sales of PCB
Acquired companies:
Company name
Description of the businessMiyagi Meiko Electronics Co., Ltd
Manufacturing and sales of PCB

Togoshi Co.,Ltd
Manufacturing and sales of PCB(b) Legal form of the business combination
Merger to make the Company a surviving company and Miyagi Meiko and Togoshi dissolved companies.
(c) Name of company after business combination
Meiko Electronics Co., Ltd(d) Purpose of merger
Miyagi Meiko and Togoshi's business purpose within the Group is manufacturing of PCB.
The merger is conducted as the Company determined that by integrating their businesses into the Company, the Group makes effective use of
the managerial resources, and conducts businesses efficiently and swiftly.
2. Overview of accounting procedures implemented
This merger was accounted for as a transaction under common control in accordance with the “Accounting Standard for Business Combinations” (ASBJ
Statement No. 21, issued on December 26, 2008), and the “Guidance on Accounting Standard for Business Combinations and Accounting Standard forBusiness Divestitures” (ASBJ Guidance No.10, issued on December 26, 2008).

34

35

Principal Subsidiaries and Affiliates

Name or Trade Name

Paid-in Capital

Address(Millions of yen)

Principal business

Investment
Ratio (%)

Multitech Co., Ltd.

Ayase City,
Kanagawa Prefecture

20

PWBs in theElectronics business

100.0

Yamagata Meiko
Electronics Co., Ltd.

Kahoku-cho,Nishimurayama-gun,
Yamagata Prefecture75

PWBs in theElectronics business

100.0

MEIKO FINE Co., Ltd.

Yamato City,
Kanagawa Prefecture

91

Electronicequipment in theElectronics business

100.0

M.D. SYSTEMS Co., Ltd.

Atsugi City,
Kanagawa Prefecture

15

PWBs in theElectronics business

100.0

MEIKO ELEC. HONG
KONG CO., LTD.

Hong Kong

US$72,669
thousand

PWBs in theElectronics business

100.0

MEIKO ELECTRONICS(GUANGZHOUNANSHA) CO., LTD.

Guangzhou,
Guangdong Province,
P.R.China

US$120,800
thousand

PWBs in theElectronics business

100.0

MEIKO ELECTRONICS(WUHAN) CO., LTD.

Wuhan,
Hubei Province,
P.R.China

US$85,800
thousand

PWBs in theElectronics business

100.0

MDS CIRCUITTECHNOLOGY, INC.

Manila, Philippine

12 PH peso

100.0

million

PWBs in theElectronics business

MEIKO ELECTRONICSAMERICA, INC.

CA, U.S.A.

US$1,500
thousand

PWBs in theElectronics business

GUANGZHOU MEIKOPCB CO., LTD

Guangzhou,
Guangdong Province,
P.R. China

US$10,000
thousand

PWBs in theElectronics business

MEIKO ELECTRONICS
VIETNAM CO., LTD

Hanoi, Vietnam

US$77,000
thousandElectronicequipment in theElectronics business36(66.3)(53.8)(100.0)
100.0

100.0
(100.0)100.0(100.0)Principal Shareholders

As of March 31, 2011
Number of
Shares Held

Name of Shareholder(Thousands of shares)

Percentage ofTotal Number of
Shares Issued (%)

Yuichiro Naya

4,695

24.20

Japan Trustee Services Bank, Ltd.

1,042

5.37

Meiko Kosan Co., Ltd.

608

3.14

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

530

2.73

Yuho, Ltd.

521

2.69

Haruyuki Naya

487

2.51

The Master Trust Bank of Japan, Ltd.

444

2.29

Seiichi Naya

438

2.26

Sumitomo Mitsui Banking Corporation

377

1.94

The Bank of Tokyo-Mitsubishi UFJ, Ltd.

375

1.94

9,520

49.07

(trust account)(Standing Agent: Mizuho Corporate Bank, Ltd.,
Kabutocho Settlement and Clearing Services
Division)(trust account)

Total

Note: In addition to the shareholders mentioned above, the Company holds 629 thousand shares oftreasury stock (3.24%).

37

Corporate History

November 1975

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

April 1978

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

October 1978

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

September 1980

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

December 1980

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

December 1981

Developed the world’s first multi-video processor.

March 1982

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

September 1982

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

August 1984

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

June 1986

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

July 1988

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

June 1990

Constructed the Fukushima Plant.

April 1991

Changed company name to Meiko Electronics Co., Ltd.

November 1997

Constructed a new manufacturing building inside the premises of the
Yamagata Plant (Yamagata Meiko Electronics Co., Ltd.) to manufacture
PWBs using the new PWB Build-Up technology.

August 1998

Established MEIKO ELEC. HONG KONG CO., LTD. in Hong Kong, China(currently a consolidated subsidiary of the Company), mainly to expand
transactions with overseas manufacturers and 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 theCompany], to manufacture PWBs.

June 1999

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

December 2000

Stock listed on the Japan Securities Dealers Association.

January 2001

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

June 2001

Established MDS CIRCUIT TECHNOLOGY, INC. (currently a consolidated
subsidiary of the Company) in Manila, the Philippines, to design PWBs.

38

February 2004

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

December 2004

Stock listed on the Jasdaq Securities Exchange, Inc.*

January 2005

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

July 2005

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

November 2005

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

April 2006

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

July 2006

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

January 2007

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

April 2007

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

November 2007

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

March 2008

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

April 2009

Started operation of the EMS Plant in Vietnam.

May 2009

Established the Meiko R&D Center.

September 2009

Started operation of Second pant in WUHAN.

April 2010

Associated with 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

Merged Miyagi Meiko Electronics Co., Ltd., and Togoshi Co., Ltd.

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.

39Corporate Data (As of March 31, 2011)
Corporate Name:
Meiko Electronics Co., Ltd.
Date of Establishment:
November 25, 1975
Paid-in Capital:¥10,545 million
Fiscal Year:
April 1 to March 31
Number of Shares Authorized:
63,200,000
Number of Shares Issued:
19,403,320
Number of Shareholders:
6,501
Securities Code:
6787
Stock Exchange Listing:Osaka Securities Exchange, JASDAQ standard market
Number of Employees:
13,161 (Consolidated)
Number of Subsidiaries:
15
Transfer Agent:
The Sumitomo Trust and Banking Company, Limited
Accounting Auditor:
KPMG AZSA LLC
Headquarters:
5-14-15, Ogami, Ayase City, Kanagawa Prefecture, Japan 252-1104
Investor Relations Contact:- Tel:+81-(0)467-76-6001- E-mail: Meiko_Eng@meiko-elec.com- URL: http://www.meiko-elec.com/

40

Meiko Share Performance in FY2011 Compared with Indices

120.0
110.0
100.0
90.0
80.0
70.0

60.0
50.0

Meiko Electronics （JASDAQ: 6787）

40.0

JASDAQ INDEX

30.0

Financial year 2011 ended March 31, 2011
Index
In %

41

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43