Annual Report 2012
For the year ended March 31, 2012

Meiko Electronics Co., Ltd.

Profile

The Meiko Group consists of Meiko Electronics Co., Ltd. (the “Company”), and its 13
subsidiaries (10 consolidated subsidiaries and 3 non-consolidated subsidiaries) (the“Group”). The Group operates in a single business segment, engaging in the design,
manufacturing and sales of PCBs and associated services.

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

1

Contents

Five-year Financial Summary.............................................................................................. 3
Financial Review: Management’s Discussion and Analysis ........................................... 5
Business Risks ..................................................................................................................... 8
Consolidated Financial Statements ...................................................................................11
Principal Subsidiaries and Affiliates ................................................................................ 32
Principal Shareholders ...................................................................................................... 33
Corporate History ............................................................................................................... 34
Corporate Data (As of March 31, 2012) ............................................................................ 36
Meiko Share Performance in FY2012 Compared with Indices ...................................... 372

Five-year Financial Summary
2008

2009

2010

2011

2012

(millions of yen, except per share amounts)
Consolidated financial indicators:
Net sales¥78,516¥75,806¥69,823¥74,724¥62,973

Ordinary income

6,836

953

2,695

2,127

222

Net income (loss)

5,640

522

1,828

(3,095)

1,159

—

—

—

(5,307)2,048

Net assets

34,797

34,57638,16732,98035,028

Total assets

82,04385,611

84,72889,816

91,1052,026.96

2,062.17

2,067.25

1,756.65

1,865.71

Net income (loss) per share (yen)328.5730.71

107.39(166.32)

61.73

Net income per share (diluted) (yen)314.69

29.38

—

—

—

Equity ratio

42.4%

40.4%

45.0%

36.7%

38.4%

Return on equity (ROE)

16.7%

1.5%

5.0%

(8.7%)

3.4%

Price earnings ratio (PER) (times)

9.8

31.2

18.5

—

19.4

Cash flows from operating activities

3,706

7,479

8,841

7,916

9,252

Cash flows from investing activities(11,350)(12,929)(6,059)(17,911)(10,377)

Cash flows from financing activities

3,653

5,338

(3,742)

8,677

2,360

Cash and cash equivalents
at the end of the period

4,578

5,146

4,009

2,509

3,752

Number of employees

8,937

7,623

10,14913,161

9,948[Average number of temporary staff]

[723]

[815]

[565]

[597]

[397]

Comprehensive income

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

2008
2008

2009

2010

2011

2012

Net income (loss)

2011

2012

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)

2010

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

2008

2009

2010

2011

2008

2012

2009

Cash flows from operating activities
Cash flows from financing activities

2010

2011

2012

Cash flows from investing activities

Return on equity (ROE)

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

2009

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

15.0%
10.0%
5.0%
0.0%

¥10,000

2008

2009

2010

2011

2012

-5.0%
¥0

2008

2009

2010

2011

-10.0%

2012

Total assets

Price earnings ratio (PER)(times)(millions of yen)

¥100,000¥80,000¥60,000¥40,000¥20,000
¥0

2008

2009

2010

2011

2012

Net assets per share(yen)¥3,000.00¥2,000.00¥1,000.00
¥0.00

2008

2009

2010

2011

2012

4

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

2008

2009

2010

2011

2012

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, 2012 was ¥28,444 million, down ¥3,439
million from ¥31,883 million for the previous fiscal year. This change mainly comprised
an increase of ¥1,243 million in cash and deposits from ¥2,727 million to ¥3,970 million,a decline of ¥1,999 million in trade notes and accounts receivable from ¥14,634 million
to ¥12,635 million and a decrease of ¥2,241 million in inventories from ¥11,315 million
to ¥9,071 million.
(Noncurrent assets)
The balance of noncurrent assets as of March 31, 2012 was ¥62,661 million, up ¥4,728
million from ¥57,933 million for the previous fiscal year. A major factor for this increase
was a ¥4,092 million increase of property, plant and equipment from ¥52,335 million to¥56,427 million due to capital investments.
2) Liabilities(Current liabilities)
The balance of current liabilities as of March 31, 2012 was ¥26,616 million, down
¥3,003 million from ¥29,619 million for the previous fiscal year. This change mainly
consisted of a ¥2,293 million decrease in trade notes and accounts payable from
¥8,591 million to ¥6,297 million, a ¥1,051 million decline in short-term borrowings from
¥4,149 million to ¥3,098 million and an increase of ¥1,157 million in the current portionof long-term borrowings from ¥9,211 million to ¥10,368 million.
(Long-term liabilities)
The balance of long-term liabilities as of March 31, 2012 was ¥29,461 million, up¥2,244 million from ¥27,217 million for the previous fiscal year. A major factor for thisincrease was an increase of ¥2,805 million in long-term borrowings from ¥23,944
million to ¥26,749 million.
3) Net assets(Net assets)
The balance of net assets as of March 31, 2012 was ¥35,028 million, up ¥2,048 million
from ¥32,980 million for the previous fiscal year. Major factors for this increase were a¥1,159 million increase in retained earnings and an increase of ¥847 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 wasseverely affected by the Great East Japan Earthquake and subsequent accidents at
nuclear power plants, the temporary suspension of production at the Wuhan Plant in
China and sluggish performance in the electronics industry. As a result, net sales were
¥62,973 million, down ¥11,751 million, or 15.7%, from the previous fiscal year.
2) Cost of sales and Selling, general and administrative expenses
Cost of sales decreased ¥8,449 million, or 13.4%, from the previous fiscal year to¥54,770 million, reflecting the decrease in net sales and a reduction in fixed costs. As aresult, gross profit decreased ¥3,301 million, or 28.7%, from the previous fiscal year to¥8,203 million, and the gross margin declined to 13.0%.
Selling, general and administrative expenses decreased ¥816 million, or 9.9%, fromthe previous fiscal year to ¥7,391 million, primarily due to a reduction in packing andtransportation expenses.
3) Operating income
Operating income fell 75.4%, or ¥2,486 million, from the previous fiscal year to ¥812
million, mainly due to a decrease in the volume of orders. The ratio of operating income
to net sales was 1.3%.
4) Non-operating income and Non-operating expenses
Non-operating income increased ¥637 million from the previous fiscal year to ¥923
million, primarily due to a foreign exchange gain of ¥587 million for the fiscal year underreview.
Non-operating expenses increased ¥57 million from the previous fiscal year to ¥1,513
million. This was mainly because depreciation and amortization increased ¥252 million
and a foreign exchange gain was recorded instead of the foreign exchange loss of ¥251
million for the previous fiscal year.
5) Ordinary income (loss)
Ordinary income sank 89.6%, or ¥1,905 million, from the previous fiscal year to ¥222
million, primarily reflecting the decline in operating income.

6) Extraordinary income (loss)
Extraordinary income was ¥878 million, which consisted of a ¥135 million gain on salesof noncurrent assets and compensation income of ¥744 million from Tokyo ElectricPower Company, Incorporated.
Extraordinary losses were ¥567 million, which mainly consisted of a ¥160 million loss
on valuation of inventories, a ¥65 million loss on abolishment of the qualified retirement
pension plan and environmental expenses of ¥219 million.
7) Income taxes
The total amount of income taxes—current, income taxes—deferred and income
taxes—refund decreased ¥311 million from the previous fiscal year to minus ¥625
million.
8) Net income
As a result of the above, net income of ¥1,159 million was recorded for the fiscal year
under review compared with a net loss of ¥3,095 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, 2012 increased¥1,243 million from the previous fiscal year, to ¥3,752 million.
Net cash provided by operating activities for the fiscal year under review was ¥9,252
million, up ¥1,336 million from the previous fiscal year. Increases were mainly fromdepreciation and amortization of ¥6,423 million and a decrease in inventories of ¥2,237
million. The major decrease was a decrease in trade notes and accounts payable of¥2,342 million.
Net cash used in investing activities was ¥10,377 million, down ¥7,534 million. The
major outflow was ¥10,439 million for the payments for purchases of property, plant andequipment.
Net cash provided by financing activities was ¥2,360 million, down ¥6,317 million
from the previous fiscal year. The inflow was mainly from proceeds from long-termborrowings of ¥13,732 million. The major outflow was ¥9,733 million for the repaymentof long-term borrowings.
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 borrowings. With regard to when to procure such funds and the conditions forsuch procurement, the Group strives to select the most favorable timing and conditions.
3) Trends in cash flow indicators
The trends in cash flow indicators of the Group’s are shown below.
Year ended
March 31, 2010

Year ended
March 31, 2011

Year ended
March 31, 2012

Equity ratio (%)

45.0

36.7

38.4

Market value equity ratio (%)

43.3

18.5

24.7

Cash flows versus Interest-bearing debt ratio

3.6

4.8

4.4

Interest coverage ratio (times)

10.9

11.0

11.1

Equity ratio = Equity capital/Total assets
Market value equity ratio = Stock market capitalization/Total assets
Cash flow versus interest-bearing debt ratio = Interest-bearing debt/Operating cash flow
Interest coverage ratio = Operating cash flow/Interest payment
Notes:* 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 PCBs, which are positioned as parts that constitute a core function of finishedproducts. Should natural disaster or the global 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 finishedproducts, 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
PCBs are mounted with electronic components and then embedded in finished products
by brand manufacturers. The Group manufactures PCBs 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 the value of our corporate brand, which
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 PCBs 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 Factory (Yamagata Meiko
Electronics Co., Ltd.), the Fukushima Factory and the Miyagi Factory, which are all
located in the Tohoku region. The Group endeavors to prevent damage from natural
disasters by such measures as securing the safety of its employees and protecting
facilities against earthquakes and tsunami. However, the Great East Japan Earthquakeand subsequent tsunami, which were beyond our capability to predict, seriously affected
the Group’s business performance. Should a disaster of that scale occur in the future, it
could adversely affect the Company’s business performance again, although carefulpreventive measures are in place based on this recent experience.
(6) Potential risks inherent in plant operations in China and Vietnam
To expand productivity and reduce production costs, the Group has established local
corporations in Hong Kong, Guangzhou and Wuhan in China, and in Vietnam, conducting
manufacturing and sales activities.
The following difficulties might occur in these countries.
1: Hygiene-related issues such as infectious diseases
2: Change or introduction of legal restrictions and the tax system
3: Failure of infrastructure such as electricity, water and transportation
4: Political uncertainty and public security-related issues
5: Anti-Japanese demonstrations and/or labor disputes
Should unexpected events such as changes in the political or legal environment or the
economic situation occur, issues might arise in the management of production facilities
and equipment and in the execution of other businesses, and adversely affect the Group’sbusiness performance and financial position.
(7) Foreign currency exchange rate fluctuation risk
To operate plants in China, we need to hold U.S. dollars and other foreign
currency-denominated assets. Therefore, the Group is exposed to yen-to-yuan andyen-to-U.S. dollar exchange rate fluctuations. These fluctuations could result in losses.
(8) Raw materials market fluctuation risk
The Group purchases the raw materials necessary for manufacturing from externalmaterials manufacturers and trading companies. The surge 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, 2012, was 44.1%. 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, 2012 and 2011
Thousands ofMillions of yen

ASSETS

2012

Current Assets:
Cash and cash equivalents (Notes 4 and 12) ....................................................................
Receivables －Trade notes and accounts receivable (Notes 4 and 12) ........................…......................
Other receivables ........................................................................................................
Less: Allowance for doubtful accounts ........................................................................
Inventories －Merchandise and finished goods .............................….................................................
Work in process ................................….....................................................................
Raw materials and supplies ...........................…...........................................................
Deferred tax assets (Note 11) ....................................................................................…..
Other .............................................................................................................................
Total current assets .................................................................................................

\

Property, Plant and Equipment, at Cost (Note 5):
Land ..............................................................................................................................
Buildings and structures ........................................................................…......................
Machinery and vehicles................................................…................................................
Construction in progress ................................................................................................
Other .............................................................................................................................
Less: Accumulated depreciation ......................................................................................
Net property, plant and equipment ...........................................................................
Intangible Assets
Investments and Other Assets:
Investment securities (Notes 3 and 12) ............................................................................
Long-term loans receivable .............................................................................................
Deferred tax assets (Note 11) ..........................................................................................
Other .............................................................................................................................
Less: Allowance for doubtful accounts ...........................................................................
Allowance for investment loss ...............................................................................
Total investments and other assets ...........................................................................
Total ...............................................................................................................

See notes to consolidated financial statements.

11

\

3,752

U.S. dollars (Note 1)

2011

\

2,509

2012

$

45,67912,635920(17)

14,634690(13)

153,836
11,205
(200)

2,954
2,774
3,343
1,362
721
28,444

4,380
2,364
4,571
967
1,781
31,88335,96533,77940,701
16,586
8,779
346,330

1,944
28,86755,611
5,263
2,498
94,183(37,756)
56,427

1,944
22,98545,76010,9692,328
83,986(31,651)
52,33523,674351,475
677,10864,08030,423
1,146,760(459,710)
687,050

590

608

7,178

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

1,723
43
987
2,415
(109)
(69)
4,990
89,816

18,462
1,565
20,891
29,206(564)(840)
68,7201,109,278\$

Thousands of

LIABILITIES AND
NET ASSETS

Millions of yen

2012

Current Liabilities:
Trade notes and accounts payable (Notes 4 and 12) .......................................................
Short-term borrowings (Notes 6 and 12) .........................................................................
Current portion of long-term borrowings (Notes 6 and 12) ...............................................
Income taxes payable (Note 11) ......................................................................................
Accrued bonuses ...........................................................................................................
Provision for loss on disaster (Note 14)...........................................................................
Other (Note 4) ...............................................................................................................
Total current liabilities .............................................................................................

\

Long-term Liabilities:
Long-term borrowings (Notes 6 and 12) .........................................................................
Provision for employees' retirement benefits (Note 7) ......................................................
Long-term other payable ................................................................................................
Provision for directors' retirement benefits ......................................................................
Other .............................................................................................................................
Total long-term liabilities .........................................................................................

6,297
3,098
10,368
510
460
528
5,355
26,616

U.S. dollars (Note 1)

2011

\

8,591
4,149
9,211
79
435
773
6,381
29,6192012$

76,67737,715
126,242
6,211
5,595
6,433
65,204
324,077

26,749
1,324
903
261
224
29,461

23,944
1,200
1,578
269
226
27,217

325,693
16,118
10,998
3,178
2,731
358,718

10,546
12,467
15,518

10,546
12,467
14,359128,402
151,797
188,942(396)
38,135(396)
36,976(4,826)464,315(178)(90)(2,839)(3,107)35,028
91,105(106)(204)(3,686)(3,996)32,98089,816(2,171)(1,093)(34,568)(37,832)
426,483
1,109,278

Commitments and Contingent Liabilities (Note 5) :Net Assets (Note 8):
Shareholders' Equity:
Common stock, authorized - 63,200,000 sharesissued - 19,403,320 shares in 2012 and 2011 ..................................................................

Capital surplus ...............................................................................................................
Retained earnings ..........................................................................................................
Less: Treasury stock, at cost; Common stock,629,244 shares in 2012 and 629,170 in 2011 ..................................................................
Total shareholders' equity.........................................................................................
Accumulated Other Comprehensive Income:Unrealized gains (losses) on available-for-sale securities ...................................................
Deferred gains (losses) on hedges ...................................................................................
Foreign currency translation adjustments .........................................................................
Total accumulated other comprehensive income........................................................
Total net assets .......................................................................................................
Total ...............................................................................................................

See notes to consolidated financial statements.

12

\

\

$

Consolidated Statements of Operations
Meiko Electronics Co., Ltd. and Consolidated Subsidiaries
For the Years ended March 31, 2012, 2011 and 2010
Thousands ofMillions of yen

2012
Net Sales ......................................................................................................................
Cost of Sales (Note 9) ..................................................................................................
Gross profit .................................................................................................................
Selling, General and Administrative Expenses (Note 9) .............................................
Operating income .........................................................................................................

\

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

U.S. dollars (Note 1)

2011\

74,724
63,21911,505
8,207
3,298

2010
\

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

2012
$

766,746
666,866
99,88089,991
9,889

Other Income (Expenses):
Interest expense, net .......................................................................................................
Dividend income ............................................................................................................
Compensation expenses..................................................................................................
Foreign exchange gain (loss) .............................................................................…..........
Gain on valuation of derivatives.......................................................................................
Subsidy income .............................................................................................................
Net gain (loss) on sales and disposal of property, plant and equipment (Note 10)..............
Compensation income (Note 15) ....................................................................................
Reversal of allowance for doubtful accounts ...................................................................
Gain on redemption of bonds .........................................................................................
Loss on valuation of investment securities .......................................................................
Provision on allowance for investment loss .....................................................................
Gain on investment of securities......................................................................................
Loss on disaster (Note 14)..............................................................................................
Expenses for business structure improvement .................................................................
Loss on valuation of inventories (Note 16) ......................................................................
Loss on abolishment of retirement benefit plan ................................................................
Environmental expenses (Note 17) ..................................................................................
Depreciation ..................................................................................................................
Other, net ......................................................................................................................
Total ......................................................................................................................

(812)
13
(45)
587
109
117
744
(105)
(160)
(65)
(219)
(285)
(157)
(278)

(737)
2
(33)
(252)
87
(110)
33
(4,943)
(483)
(33)
(238)
(6,707)

(761)
1
(175)
(25)
168
(140)
0
95
(274)
(69)
21
(33)
(301)
(1,493)(9,884)
160
(548)
7,148
1,324
1,430
9,054
(1,279)(1,950)(797)(2,662)(3,466)(1,917)(3,387)

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

534(3,409)

2,300

6,502

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

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

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

394
78
472
1,828
0
1,828

8,370
(5,033)(10,946)(7,609)14,111
14,111

\

\

\

$

Yen

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

\

See notes to consolidated financial statements.

13

61.73
5.00

\

(166.32)
12.00

U.S. dollars (Note 1)\

107.39
20.00

$

0.75
0.06

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

2012
Income (Loss) before Minority Interests ....................................................................

\

Other Comprehensive Income (Note 18):
Unrealized gains (losses) on available-for-sale securities....................................................
Deferred gains (losses) on hedges ...................................................................................
Foreign currency translation adjustments .........................................................................
Total other comprehensive income ..........................................................................
Comprehensive Income (Note 18) ...............................................................................

Comprehensive Income Attributable to (Note 18):
Owners of the Company ..............................................................................................
Minority interests .........................................................................................................

1,159

2011
\

(72)
114
847
889
2,048

\

See notes to consolidated financial statements.

14

2,048
-

U.S. dollars (Note 1)(3,095)

2012
$

(121)
(106)
(1,985)(2,212)(5,307)\(5,307)
0

14,111(886)
1,392
10,314
10,82024,931$

24,931-

Consolidated Statements of Changes in Net Assets
Meiko Electronics Co., Ltd. and Consolidated Subsidiaries
For the Years ended March 31, 2012, 2011 and 2010
Thousands of
U.S. dollars (Note 1)

Millions of yen

2012
Shareholders' Equity:
Common Stock (Note 8):
Beginning balance ..........................................................................................................
Capital increase upon issuance of 1,696,000 shares of common stock .............................
Ending balance ..............................................................................................................

10,546
10,546\

12,467
12,467\

14,3591,159
15,518

\

\

\

(396)
(0)
(396)

Total shareholders' equity.........................................................................................

\

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

\

Capital Surplus (Note 8):
Beginning balance ..........................................................................................................
Capital increase upon issuance of 1,696,000 shares of common stock .............................
Gain on disposal of treasury stock ..................................................................................
Ending balance ..............................................................................................................
Retained Earnings (Note 8):
Beginning balance ..........................................................................................................
Net income ....................................................................................................................
Cash dividends paid .......................................................................................................
Ending balance ........................................................................…...................................
Treasury Stock, at cost; Common Stock:
Beginning balance ..........................................................................................................
Purchase of treasury stock .............................................................................................
Disposal of treasury stock ..............................................................................................
Ending balance ..............................................................................................................

Deferred Gains (Losses) on Hedges:
Beginning balance ..........................................................................................................
Net increase (decrease) ..................................................................................................
Ending balance ..............................................................................................................
Foreign Currency Translation Adjustments:
Beginning balance ..........................................................................................................
Net increase (decrease) ..................................................................................................
Ending balance ..............................................................................................................
Total accumulated other comprehensive income........................................................
Minority Interests:
Beginning balance ..........................................................................................................
Net increase (decrease) ..................................................................................................
Ending balance ..............................................................................................................
Total Net Assets ..........................................................................................................

\

2011

\

\

\

\

\

\

\

\
\

\

2010

10,546
10,546\

12,135332
12,467\

17,860(3,095)(406)
14,359

\

\

\

(594)
(0)
198
(396)

38,135

\

(106)
(72)
(178)

\

(204)
114
(90)

\

\

\

\

\

\

\

\

(3,686)847(2,839)

\

\

8,861
1,685
10,546$

10,450
1,685
12,135$

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

$

$

\

(594)
(594)

$

(4,825)(1)(4,826)36,976\39,947$464,315

15
(121)
(106)

\

13
2
15

$

(1,285)(886)(2,171)

(98)
(106)
(204)

\

(195)
97
(98)

$

\

\

\

\

\

\

\

(1,701)(1,985)(3,686)(3,107)

\

\

\

-

\

35,028$$$$

151,797
151,797

174,831
14,111
188,942(2,485)
1,392(1,093)$\$(44,882)
10,314(34,568)(3,996)\(1,784)$(37,832)

\
\

5
0
5

$

\

5
(5)
-

$

-

\

32,980\38,168$426,483

Number of Shares
19,403,320(629,244)

19,403,320(629,170)

17,707,320
1,696,000(942,700)

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

18,774,076

18,774,150

18,460,620

15$

128,402
128,402(331)(1,370)(1,701)

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

See notes to consolidated financial statements.

2012

Consolidated Statements of Cash Flows
Meiko Electronics Co., Ltd. and Consolidated Subsidiaries
For the Years ended March 31, 2012, 2011 and 2010
Thousands ofMillions of yen

2012
Operating Activities:
Income (loss) before income taxes and minority interests .................................................

\

534

U.S. dollars (Note 1)

2011\(3,409)

2012

2010
\

2,300

$

6,502

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

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

6,533
5
(16)
110
(130)
(24)
(20)
755
(707)
110
4,943
483
2,694
(3,832)
713
(181)
878
8,905
20
(717)
(6)
(286)
7,916

6,794
(3)
69
146
7
12
(26)
786
(703)
140
274
7
(95)
(2,058)
(549)
2,809
(498)
532
9,944
26
(811)
115
(433)
8,841

78,208
(35)
1,507
(101)
296
(360)
10,083(9,504)(1,430)(9,054)
1,279
19,21927,232(28,512)
13,056
9,581
117,967359(10,152)
9,054(7,858)5,701(2,420)112,651

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

(10,439)
153
(144)
(0)
(51)
94
10
(10,377)(16,104)23(228)(1,256)(59)(287)(17,911)(6,367)
23
(63)
(278)
249
(56)
433
(6,059)(127,106)
1,866(1,747)
(1)
(620)
1,143
115
(126,350)

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

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

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

(3,821)
8,597(6,324)(4,405)
3,370
(820)
(339)
(3,742)(14,003)167,200(118,504)(5,943)(1)(16)
28,733

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

8

(182)

(177)

101

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

1,243(1,500)(1,137)

15,135

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

2,509

4,009

5,146

30,544

Cash and Cash Equivalents at End of Year ...............................................................

\

See notes to consolidated financial statements.

16

3,752

\

2,509

\

4,009

$

45,679

Notes to Consolidated Financial Statements
Meiko Electronics Co., Ltd. and Consolidated Subsidiaries
For the Years ended March 31, 2012, 2011 and 2010
1. Basis of Presenting Consolidated Financial Statements
The accompanying consolidated financial statements of Meiko Electronics
Co., Ltd. (the “Company”) have been prepared in accordance withthe provisions set forth in the Financial Instruments and Exchange Law of Japanand its related accounting regulations, and in conformity with accounting
principles generally accepted in Japan (“Japanese GAAP”), which are different
in certain respects as to application and disclosure requirements ofInternational Financial Reporting Standards.
Effective from the year ended March 31, 2011, the Company adopted“Accounting Standard for Presentation of Comprehensive Income” (AccountingStandards Board of Japan (“ASBJ”) Statement No.25, issued on June 30, 2010)and “Revised Accounting Standard for Consolidated Financial Statements”(ASBJ Statement No. 22, revised on June 20, 2010). As a result of the adoptionof the standard, the Company has prepared the consolidated statement ofcomprehensive income from the year ended March 31, 2011.
Information with respect to other comprehensive income for the year ended
March 31, 2010 is disclosed in Note 18 as required.
In preparing the accompanying consolidated financial statements,
certain reclassifications and rearrangements have been made to present
them in a form which is more familiar to readers outside Japan.
In addition, the notes to the consolidated financial statements include
information which is not required under Japanese GAAP, but ispresented herein as additional information.
The consolidated financial statements are denominated in Japanese yen,
the currency of the country in which the Company is incorporated
and operates. The translation of Japanese yen amounts into U.S. dollar
amounts is included solely for the convenience of readers outside Japanand have been made at the rate of \82.13 to $1, the approximate rate ofexchange at March 31, 2012. 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.

(e) Inventories
Inventories are stated at cost, determined by the first-in-first-out method.
However, they are written down due to decreased profitability where appropriate.

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.

(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.

(a) Consolidation
The consolidated financial statements include the accounts of
the Company and its significant 10 (11 in 2011 and 13 in 2010) subsidiaries(together, the “Group”).
The difference between the cost and the underlying net equity at fairvalue of investments in consolidated subsidiaries (“goodwill”) is amortizedover a period of five years. All significant inter-company accounts
and transactions have been eliminated. In the elimination of investments in
subsidiaries, the assets and liabilities of the subsidiaries, including the portion
attributable to minority shareholders, are recorded based on the fair value
at the time the Company acquired control of the respective subsidiaries.
Investments in certain unconsolidated subsidiaries are accounted forby cost method due to immateriality in view of consolidation.
(b) Equity Method
Investments in unconsolidated subsidiaries and affiliates are accounted forby the equity method. However, certain investments in unconsolidated
subsidiaries and affiliates are not accounted for by the equity method and arestated at cost because the effect of their net income or losses and retained
earnings on the accompanying consolidated financial statements is immaterial.
(c) Cash Equivalents
Cash equivalents are short-term investments that are readily convertible
into cash and that are exposed to insignificant risk of changes in value.
Cash equivalents include time deposits, certificate of deposits, andcommercial paper, all of which mature or become due within threemonths of the date of acquisition.
(d) Translation of Foreign Currency Accounts
Current and non-current receivables and payables in foreign currencies
are translated at current rates prevailing at the balance sheet date andthe resulting exchange gains or losses are recognized in the consolidated
statements of operations.
Financial statements of consolidated overseas subsidiaries are translated
into Japanese yen at the exchange rate at the balance sheet date, exceptthat shareholders' equity accounts are translated at historical rates andstatement of income items resulting from transactions with the Company
at the rates used by the Company.
Foreign currency translation adjustments resulting from translation offoreign currency financial statements prepared by consolidated overseas
subsidiaries are presented in net assets in the consolidated balance sheets.

(f) Depreciation and Amortization
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 : straight-line method
For assets other than buildings:- acquired before March 31, 2007 : declining balance method under pre-2007 tax reform- acquired after April 1, 2007 : declining balance method
For assets acquired before March 31, 2007 that have been depreciated to 5% of
their acquisition value using the previous method of calculating depreciation,
the difference between the remaining 5% of the acquisition cost and a memorandum
price will be written off in equal amounts over the five-year period beginning withthe year following the year when the book value is depreciated to 5% of the acquisition
costs. Depreciation of 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.

(i) Accrued Bonuses
Accrued bonuses to employees are provided for the estimated amounts,
which the Company and its consolidated subsidiaries are obligated to
pay to employees after the fiscal year-end based on services rendered during
the current year.
(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.

17

(m) Income Taxes
The provision for income taxes is computed based on the pretax
income included in the consolidated statements of operations. The asset
and liability approach is used to recognize deferred tax assets andliabilities for the expected future tax consequences of temporary
differences between the carrying amounts and the tax bases ofassets and liabilities. Deferred tax assets are measured by applying
currently enacted tax laws to the temporary differences.
(n) Leases
All finance lease transactions are capitalized to recognize lease assets
and lease obligations in the consolidated balance sheet, except for leases
which existed at April 1, 2008 and do not transfer ownership of the leased
property to the lessee and are accounted for as operating lease transactions.
(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 transactions arising fromderivative except for hedge purposes are recognized in the consolidated
statements of operations and b) for derivatives used for hedging purposes,
if derivatives qualify for hedge accounting because of high correlation andeffectiveness between the hedging instruments and the hedged items,
gains or losses on derivatives are deferred until maturity of the hedgedtransactions.
However, if the foreign currency forward contracts qualify for hedge
accounting, hedged items such as foreign currency receivables andpayables are translated at the contracted rates.
Also, if interest rate swap contracts are used as hedge and meet certain
criteria, the net amount to be paid or received under the swap
contract is added to or deducted from the interest on the assets or
liabilities for which the swap contract was executed.
(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 using the straight-line method
over 13 years, which is less than the average remaining years of serviceof the employees, and the amortization will be started in the following year
in which the gain or loss is recognized.
Prior service cost is amortized using the straight-line method over 10
years, which is less than the average remaining years of service of theemployees.
(Change in pension plan)
The Company and Yamagata Meiko electronics Co., Ltd., a consolidated
subsidiary, abolished qualified pension plan as of October 1, 2011 andtransferred to lump-sum retirement plan. “Accounting for Transfers
between Retirement Benefit Plans” (ASBJ Guidance No.1) was applied tothis change. As a result, loss on abolishment of retirement benefit plan of\65 million ($797 thousand) is recognized for the year ended March 31, 2012.
(Change in accounting policies)
Effective from the year ended March 31, 2010, the Company and its
domestic consolidated subsidiaries adopted “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.
(s) Appropriations of Retained Earnings
Appropriations of retained earnings are reflected in the accompanying
consolidated financial statements for the following year uponshareholders' approval.
(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.
Net income per share is computed by dividing net income available
to common shareholders by the weighted-average number of commonshares outstanding for the period.
The diluted net income per share is omitted as the Company had no potential
dilutive shares.
(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 AccountingStandards for Asset Retirement Obligations” (ASBJ Guidance No.21, issued on March 31,2008). The effect of this adoption to net income (loss) was immaterial.
(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 for Consolidated Financial
Statements” (ASBJ Statement No.22, issued on December 26, 2008), “Partial amendments
to Accounting Standard for Research and Development Costs” (ASBJ Statement No.23,
issued on December 26, 2008), “Accounting Standard for Business Divestitures” (ASBJ
Statement No.7, issued on December 26, 2008), “Accounting Standard for Equity Methodof Accounting for Investments” (ASBJ Statement No.16, issued on December 26, 2008),
and “Guidance on Accounting Standard for Business Combinations and Accounting Standard
for Business Divestitures” (ASBJ Guidance No.10, issued on December 26, 2008).
(w) Income before Minority Interests
Effective from the year ended March 31, 2011, the Company and its domestic consolidated
subsidiaries adopted “Regulation for Terminology, Forms and Preparation of Financial
Statements” (Cabinet Office Ordinance No. 5, issued on March 24, 2009), based on“Accounting Standard for Consolidated Financial Statements” (ASBJ Statement No. 22,
issued on December 26, 2008). The account of “Income (Loss) before Minority Interests”
was separately presented due to the adoption.
(x) Application of “Accounting Standard for Accounting Changes and Error
Corrections”
Effective from the year ended March 31, 2012, the Company and its domestic consolidated
subsidiaries adopted “Accounting Standard for Accounting Changes and Error
Corrections” (ASBJ Statement No. 24, issued on December 4, 2009) and “Guidance on
Accounting Standard for Accounting Changes and Error Corrections” (ASBJ Guidance
No. 24, issued on December 4, 2009) for changes in accounting policies and corrections of
figures on and after the beginning of the fiscal year ended March 31, 2012.
(y) Practical Solution on Unification of Accounting Policies Applied to Foreign
Subsidiaries for Consolidated Financial Statements
The Company adopted “Practical Solution on Unification of Accounting Policies Applied
to Foreign Subsidiaries for Consolidated Financial Statements” (ASBJ Practical Issues Task
Force No. 18, issued on February 19, 2010), and necessary modifications have been made forconsolidation.
(z) Reclassifications
Certain prior year amounts have been reclassified to conform to the presentations
for the year ended March 31, 2012.

18

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, 2012 and 2011 are as follows:
2012
Millions of yen

Thousands of U.S. dollars

Fair

Acquisition

Unrealized

Fair

Acquisition

Unrealized

Value

Cost

Gains (Losses)

Value

Cost

Gains (Losses)

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

43 \

26 \

17 $

525 $

313 $

212

363
18
424 \

651
24
701 \

(288)
(6)
(277) $

4,424
214
5,163 $

7,931
290
8,534 $

(3,507)(76)(3,371)

2011
Millions of yen

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

Acquisition

Unrealized

Value

Cost

Gains (Losses)

147 \

127 \

20

431
46
624 \

550
53
730 \

(119)
(7)
(106)

Information on available-for-sale securities whose fair value is not readily determinable as of March 31, 2012 and 2011 are described in Note 12.
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, 2012 and 2011.
Note: The Company recognized impairment losses, ￥274 million on available-for-sale securities during the year ended March 31, 2010.
The Company did not recognize impairment loss on available-for-sale securities for the years ended March 31, 2012 and 2011.

4. Notes Matured at End of Fiscal Year
March 31, 2012, the end of current fiscal year coincided with a bank holiday and the following notes that matured at the end of the fiscal year
were accounted for as if they were settled on their date of maturity.

Notes receivable ............................................................................................................................................................................ \Notes payable ............................................................................................................................................................................... \Notes payable for equipments ........................................................................................................................................................ \19

Millions
Thousands ofof yenU.S. dollars
2012
2012
73 $
885
532
44 $
10
1 $

5. Leases
The Group leases certain machinery, computer equipment, software and other assets.
As described 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 year ended March 31, 2011 was as follows:
Information for the year ended March 31, 2012 is not disclosed since there are no finance leases which commenced prior to April 1, 2008 and do not transfer
ownership of the leased property to the lessee as of March 31, 2012.
Millions of yen
2011
Acquisition

Accumulated

Net leased

Cost

Depreciation

Property

284 \
284 \

46
46

Due within one year ............................................................................................................................................................................... \Due after one year .................................................................................................................................................................................
Total .................................................................................................................................................................................................... \Millionsof yen2011
53
53

Machinery and vehicles ........................................................................................................................ \Total ................................................................................................................................................... \

330 \
330 \

Obligations under finance leases:

Depreciation expense and interest expense, which are not reflected in the accompanying statements of operations, computed by straight-line method
and the interest method are as follows:
Millions
Thousands ofof yenU.S. dollars
2010
2012
2012
2011
647
155 $
74 \
Lease payments ................................................................................................................................... \
53 \
554
145 $
46 \
68 \
Depreciation expense ........................................................................................................................... \96$Interest expense ................................................................................................................................... \1 \3 \6. Short-term Borrowings and Long-term Debt
Short-term borrowings and long-term debt as of March 31, 2012 and 2011 consist of the following:Thousands ofMillions of yen
2012
2011

U.S. dollars

2012

Short-term borrowings with average interest rate of 3.18% for 2012 and 2.63% for 2011.................................................. \Current portion of long-term borrowings with average interest rate of 1.73% for 2012 and 1.92% for 2011 .......................
Current portion of other liabilities with average interest rate of 2.17% for 2012 and 1.81% for 2011 ..................................
Total short-term .................................................................................................................................................

3,098 \
10,36873
13,5394,149 $
9,211
225
13,58537,715
126,242899
164,856

Long-term borrowings with average interest rate of 1.57% for 2012 and 1.54% for 2011, less current portion ...................
Long-term other payable, less current portion ................................................................................................................
Total long-term ...................................................................................................................................................
Total ................................................................................................................................................................. \26,74959
26,80840,347 \23,944367
24,31137,896 $325,693713
326,406
491,262* Average interest rate of borrowings represents the weighted average rate for the outstanding balances at March 31, 2012 and 2011. Average interest rate of otherliabilities represents the weighted average rate for the average of the outstanding balances at April 1, 2011 and March 31, 2012.
The aggregate annual maturities of long-term debt as of March 31, 2012 were as follows:Year ending March 31
2013............................................................................................................................................................................................................................... \2014...............................................................................................................................................................................................................................
2015 ..............................................................................................................................................................................................................................
2016...............................................................................................................................................................................................................................
2017 and thereafter .........................................................................................................................................................................................................
Total .............................................................................................................................................................................................................................. \20

Millionsof yen10,441 $
10,670
7,527
5,387
3,224
37,249 $Thousands of
U.S. dollars

127,141
129,918
91,646
65,58739,255453,547

7. Provision for Employees' Retirement Benefits
The Company and Yamagata Meiko Electronics Co., Ltd. had a funded defined benefit pension plan, such as qualified pension plan and lump-sum
retirement plan for the year ended March 31, 2011. The Company and Yamagata Meiko electronics Co., Ltd. abolished qualified pension plan
as of October 1, 2011, and transferred to lump-sum retirement plan. Other domestic consolidated subsidiaries have had a lump-sum retirement plan.
Although the Company and certain domestic consolidated subsidiaries also contribute to a jointly sponsored employee pension fund, related benefit
obligation, plan assets and benefit costs are excluded from the following calculation because it is difficult to assess the plan assets reasonably.
The provision for employees' retirement benefits at March 31, 2012 and 2011 consists of the following:Thousands ofMillions of yen
2012
2011
Projected benefit obligation ........................................................................................................................................... \Fair value of plan assets ................................................................................................................................................
Unrecognized actuarial gain (loss) ..................................................................................................................................
Unrecognized prior service cost ........................................................................................................................................
Net liability .............................................................................................................................................................. \(1,366) \45(3)(1,324) \U.S. dollars

2012(1,763) $512
51(1,200) $(16,633)555(40)(16,118)

The components of net periodic benefit costs for the years ended March 31, 2012 and 2011 are as follows:
Thousands ofMillions of yen
2012
2011
Service cost ................................................................................................................................................................. \Interest cost .................................................................................................................................................................
Expected return on plan assets ......................................................................................................................................
Recognized prior service cost .......................................................................................................................................
Recognized actuarial loss ..............................................................................................................................................
Net periodic retirement benefit costs ......................................................................................................................... \

159 \
23
(1)
(0)
6
187 \

U.S. dollars

2012
163 $
23
(3)
11
194 $

1,942
278
(18)
(2)
83
2,283

Note 1: In addition, loss on abolishment of retirement benefit plan of \65 million ($797 thousand) is recognized for the year ended March 31, 2012.
2: Prior service cost is recognized following to abolishment of qualified pension plan and transition to lump-sum retirement plan.
Assumptions used for the years ended March 31, 2012 and 2011 are set forth as follows:
Discount rate ........................................................................................................................................................................................
Expected rate of return on plan assets ....................................................................................................................................................
Recognition prior service cost ...............................................................................................................................................................
Recognition period of actuarial gain/loss ................................................................................................................................................

2012
2.0%
1.0%
10 years
13 years

2011
2.0%
1.0%
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, 2011)
Millions of yen
Fair value of plan assets ................................................................................................................................................................ \47,907 $Benefit obligation on the basis of pension financing ........................................................................................................................
49,265Funded status ............................................................................................................................................................................... \(1,358) $U.S. dollars

583,313599,842(16,529)

Thousands of(2) Contribution share ratio of the Company and certain domestic consolidated subsidiaries to total pension plan(from April 1, 2010 to March 31, 2011)
Millions of yen
U.S. dollars
Gross pay (of total pension plan) .............................................................................................................................….................. \59,985 $730,372
Gross pay (of the Group) .............................................................................................................................….............................
4,109
50,034
Ratio ............................................................................................................................................................................................
6.85%
6.85%
Thousands of(3) Supplement remarks
The funded status described in above (1) was calculated as follows:
Millions of yen
U.S. dollars
General reserve ............................................................................................................................................................................. \
585 $
7,124
Less:
Balance of unrecognized prior service cost ......................................................................................................................…...........
1,943
23,653Carried over shortage ....................................................................................................................................................................
Funded status ............................................................................................................................................................................... \(1,358) $(16,529)

Balance of unrecognized prior service cost is recognized by equal payment method over 6 years and 4 months and the remaining period is 5 years and 4 months as ofMarch 31, 2012.

21

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

9. Research and Development Costs
Research and development costs included in selling, general and administrative expenses and manufacturing costs are \961million ($11,707 thousand),\1,215 million and \1,437 million for the years ended March 31, 2012, 2011 and 2010 respectively.

10. Net Gain (Loss) on Sales and Disposal of Property, Plant and Equipment
Significant components of net gain (loss) on sales and disposal of property, plant and equipment for the years ended March 31, 2012, 2011 and 2010 are as follows:
Thousands of

Gain:
Buildings and structures .................................................................... \Machinery and vehicles .....................................................................
Construction in progress ...................................................................
Others ..............................................................................................
Total gain .................................................................................
Loss:
Buildings and structures ....................................................................
Machinery and vehicles .....................................................................
Construction in progress ...................................................................
Removal cost ....................................................................................
Others ..............................................................................................
Total loss .................................................................................
Net gain (loss) ..........................................................................\

Millions of yen
2012
2011
0 \
8 \
59
2
76
0
135
10
0
15
0
3
18
117 \

9
104
2
5
120
(110) \

22

U.S. dollars

2010

2012
- $
0
0
0

0
720
926
1
1,647

19
112
0
3
6
140
(140) $

4
177
1
35
217
1,430

11. Income Taxes
Income taxes applicable to the Company consist of corporate tax, inhabitant tax and enterprise tax, which in the aggregate resulted in the normal statutory
tax rates of approximately 40.6% for the years ended March 31, 2012, 2011 and 2010.
The tax effects of significant temporary differences which resulted in deferred tax assets and liabilities as of March 31, 2012 and 2011 are as follows:
Thousands ofMillions of yen
2012
2011
Deferred Tax Assets:
Elimination of unrealized profits ..........................................................................................................
Accrued bonuses ...............................................................................................................................
Liability for employees' retirement benefits ..........................................................................................
Provision for directors' retirement benefits ..........................................................................................
Accrued enterprise tax ........................................................................................................................
Allowance for doubtful accounts.........................................................................................................
Tax loss carryforwards ......................................................................................................................
Valuation loss of inventories................................................................................................................
Difference on depreciation period........................................................................................................
Loss on valuation of investment securities............................................................................................
Allowance for investment loss.............................................................................................................
Loss on revaluation of golf club memberships ....................................................................................
Loss on disaster..................................................................................................................................
Business structure improvement loss....................................................................................................
Deferred gains (losses) on hedges........................................................................................................
Valuation difference on available-for-sale securities...............................................................................
Other .................................................................................................................................................
Less: valuation allowance ....................................................................................................................
Total ................................................................................................................................................... \

10
176
473
93
48
18
971
17
872
25
36
172
80
98
298
(276)
3,111 \

U.S. dollars

2012

23
204
487
110
4
274
2,191
40
821
4
98
41
92
156
85
43
47
(2,751)
1,969 $

124
2,144
5,764
1,131
591
221
11,820204
10,614
299
439
2,089
977
1,199
3,630
(3,365)37,881Thousands ofMillions of yen
2012
2011

U.S. dollars

2012

Deferred Tax Liabilities:
Deferred gains (losses) on hedges........................................................................................................ \Total ................................................................................................................................................... \(33) \(33) \(15) $(15) $

(404)
(404)

Deferred Tax Assets, Net: .................................................................................................................... \3,078 \

1,954 $

37,477

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, 2012 and 2010 are as follows:
A reconciliation for the year ended March 31, 2011 is omitted due to pre-tax loss.

Statutory tax rate ..........................................................................................................................................................
Expenses not deductible for tax purpose .......................................................................................................................
Non-taxable dividend income ........................................................................................................................................
Per capita inhabitant tax ................................................................................................................................................
Tax credits for research and development costs .............................................................................................................
Foreign tax credits ........................................................................................................................................................
Tax rate difference in foreign subsidiaries ......................................................................................................................
Refund of income taxes ................................................................................................................................................
Reduction of deferred tax assets due to income tax rates change ....................................................................................
Valuation allowance ......................................................................................................................................................
Other, net .....................................................................................................................................................................
Actual effective tax rate .................................................................................................................................................

2012

2010

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

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

Following the promulgation of the “Act for Partial Amendment of the Income Tax Act, etc. for the Purpose of Creating Taxation System Responding to Changes
in Economic and Social Structures” (Act No. 114, 2011) and the “Act on Special Measures for Securing Financial Resources Necessary to Implement Measuresfor Reconstruction following the Great East Japan Earthquake” (Act No. 117, 2011) on December 2, 2011, the statutory tax rates used to calculate deferred tax
assets and liabilities will be changed from 40.63% to 37.96% for temporary differences expected to reverse in the consolidated fiscal years beginning from April 1, 2012
to April 1, 2014, and 35.58% for those expected to reverse in the consolidated fiscal years beginning from April 1, 2015 and thereafter.
As a result of this change, deferred tax assets, net of deferred tax liabilities, decreased by \151 million ($1,838 thousand). Income taxes - deferred, unrealized
gains (losses) on available-for-sale securities and deferred gains (losses) on hedges increased by \128 million ($1,562 thousand), \14 million ($170 thousand),and \9 million ($105 thousand), respectively for the year ended March 31, 2012.

23

12. Financial Instruments(a) Qualitative information on financial instruments(1)   Policies for using financial instruments
The Group finances necessary funds mainly through bank loans and bond issues according to the capital investment plan for the production and sales of PCB.
Temporary and excessive funds are operated by highly stable financial instruments and the Group finances short-term operating capital by bank loans.
Derivative transactions are only utilized to hedge the risks mentioned in (2) below.
(2)   Details of financial instruments used and exposures to risk and how they arise
Operating receivables such as trade notes and accounts receivable are exposed to credit risk. Some operating receivables, which are dominated in foreign currencies
due to global operations, are exposed to foreign currency fluctuation risk. The Group might utilize foreign exchange forward contracts if necessary except for thosewithin the range of the operating payables dominated in the same foreign currency. Investments securities mainly consist of securities of companies in whicha business relationship has been established and they are exposed to market fluctuation risk.
Operating payables such as trade notes and accounts payable are due within one year.
Some of the operating payables relating to imports of raw materials are dominated in foreign currencies and are exposed to foreign currency fluctuation risk.
The Group might utilize foreign exchange forward contracts if necessary except for those within the range of the operating receivables dominated in the same foreign
currency. Loans are mainly used for the purpose of financing capital investments. Some of them are variable interest loans and are exposed to interest fluctuation risk.
The Group utilizes interest rate swaps to hedge the risk. Regarding derivative transactions, the Group utilizes foreign exchange forward contracts to hedge foreign
currency fluctuation risk of operating receivables and payables dominated in foreign currencies and interest rate swaps to hedge interest fluctuation risk.
The Group utilizes commodity forward contracts to hedge copper price fluctuation risk.
(3)  Policies and processes for managing the risk(i) Credit risk management (risk of default by the counterparties)
The sales management department in the Company follows sales management rules, monitors the customers’ credit conditions periodically and manages the due dateand balance per customer. The Company keeps track of the adverse financial conditions of its customers in the early stage to mitigate the uncollectible risk.
The Company enters into derivative transactions only with the credit worthy financial institutions to mitigate the credit risk.
(ii) Market risk management (risk of foreign currency fluctuations and interests)
Regarding the trade receivables and trade payables dominated in foreign currencies, the Company utilizes foreign exchange forward contracts if necessary to hedge
the foreign currency fluctuation risk, which is controlled by each currency and on a monthly basis. For investment securities, the Company regularly reviews the fair value
and issuers' financial condition and readjust Company's portfolio on an ongoing basis considering the business relationship with counterparties. Derivative transactions
are based on the internal rules and executed after getting the approval from the approver and managed by Finance Dept. Contents of the derivative transactions
are reported to Board of Directors' meeting periodically.
(iii) Liquidity risk management (risk of default at the due dates)
The Company prepares and updates the cash management plan based on the reports from each department to manage liquidity risk on a timely basis.
(4) Supplemental information on fair values
As well as the values based on market prices, fair values of financial instruments include values which are reasonably calculated in case market prices do not exist.
As the calculation of those values adopts certain assumptions, those values may vary in case different assumptions are applied.
Also, for the contract amount regarding derivative transactions described in Note 13, the contract amount itself does not indicate market risk related to derivativetransactions.
(b) Fair values of financial instruments
Book values of the financial instruments included in the consolidated balance sheets and their fair values at March 31, 2012 and 2011 are as follows:
2012
Millions of yen

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

Book

Fair

Value

Value

3,752 \
219
12,6353,752 \
219
12,635424
6,297 \
3,098
37,117- \424
6,297 \
3,098
37,262- \Thousands of U.S. dollars
Difference

Book

Fair

Value

Value

- $
-

45,679 $2,667
153,836

45,679 $2,667
153,836

-

- $
145
- $

5,163
76,677 $
37,715451,935- $5,163
76,677 $
37,715453,704
- $

1,769
-

2011
Millions of yen

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

Book

Fair

Value

Value

Difference

2,509 \
219
14,6342,509 \
219
14,634-624
8,591 \
4,149
33,155- \624
8,591 \
4,149
33,222
- \

67
-

24

Difference

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 and information of investment securities and derivative transactions(i). Cash and cash equivalents, (ii). Time deposits, (iii). Notes and accounts receivable
The carrying value is deemed as the fair value since it is scheduled to be settled in a short period of time.
(iv). Investment securities
Fair value of equity securities is based on the quoted price on stock exchange. Please refer to Note 3 regarding the information of the fair value for the investment
in securities by classification.
(v). Trade notes and accounts payable, (vi) Short-term borrowings
The carrying value is deemed as the fair value since it is scheduled to be settled in a short period of time.
(vii). Long-term borrowings
The fair values are measured as the net present value of estimated future cash flows by discounting the principal and interest value using the loan interest rate applied
to the new loans. If the variable interest rate loans meet certain criteria for the short cut method (If interest rate swap contracts are used as a hedge and meet certain
hedging criteria, the interest rate swaps are not remeasured at market price and the amount to be received under the interest rate swap contract is added to or deductedfrom the interest on the liabilities for which the swap contract was executed), the sum of principal and the interest processed as interest rate swaps are discounted byusing the reasonably estimated loan interest rate applied to the same kind of loans.
(viii). Derivative transactions
Please refer to Note 13.
(2) Unlisted securities of \1,092 million yen ($13,299 thousand) and \1,099 million yen, for which fair value is determined to be extremely difficult to determine because
the securities without fair market value as of March 31, 2012 and 2011 are not included in the above table.
(c) The redemption schedule for financial instruments and securities with maturity as of March 31, 2012 and 2011 is as follows:
2012
Millions of yen

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

Due in one
year

Due after one
year throughDue after five
year throughor less

five years

ten years

Due after ten
years

3,752 \
219
12,635

- \
-

- \
-

-

16,606 \

- \

- \

-

2012
Thousands of U.S. dollars

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

Due after one

Due after fiveDue after ten

year

year throughyear throughyears

or less

five years

ten years

45,679 $2,667
153,836

- $
-

- $
-

-

202,182 $

- $

- $

-

2011
Millions of yen

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

Due after one
year throughDue after five
year throughor less

five years

ten years

Due after ten
years

2,509 \
219
14,634

-\
-

-\
-

-

17,362 \

-\

-\

-

25

13. Derivatives
Derivative transactions for which hedge accounting has been applied for the years ended March 31, 2012 and 2011 are as follows:

2012

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

Long-term
borrowings \Millions of yen
Contract
amountdue after
Fair value
one yearThousands of U.S. dollars
Contract
amountContract
due after
Fair value
amountone year

17,242 \11,688 \(232) $

209,931 $

142,308 $(2,821)

944 \

- \

1,031 $

11,489 $- $12,554

Commodity related :Benchmark Method
Copper price swaps
Rawmaterials\

Contract
amountHedged item

2011
Millions of yen
Contract
amountdue after
one year

Fair value

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

Long-term
borrowings\

17,239 \12,354 \(227)

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

Long-term
borrowings

\

667 \

- \

(5)

Raw
materials

\

140 \

- \

178

Commodity related :Benchmark Method
Copper price swaps

Fair value is principally based on quoted price obtained from financial institutions signing the contract.
There are no derivative transactions for which hedge accounting has not been applied for the years ended March 31, 2012 and 2011.

14. Loss on Disaster
Loss on disaster is due to the Great East Japan Earthquake that occurred on March 11, 2011.
Loss on disaster for the year ended March 31, 2012 mainly consists of disposal of inventories and the relief money.
Loss on disaster for the year ended March 31, 2011 consists of the following:
2011

Inventories ........................................................................................ \Property, plant and equipment ...........................................................
Intangible assets ................................................................................
Provision for loss on disaster ............................................................
Other ................................................................................................
Total ................................................................................................ \Millions of yen
801
3,063
1
773
305
4,943

26

15. Compensation Income
Compensation income consists of compensation payments from Tokyo Electric Power Company for lost earnings for the period from March 11, 2011 to November 30, 2011
due to accidents at Fukushima Daiichi Nuclear Power Station ("NPS") and Fukushima Daini NPS of Tokyo Electric Power Company.

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

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

18. Comprehensive Income
Reclassifications and income tax effects attributable to other comprehensive income for the year ended March 31, 2012 are as follows:2012
Thousands ofMillions of yen
Unrealized gains (losses) on available-for sale securities:
Gains (losses) arising during the year ............................................... \Reclassifications and adjustments ....................................................
Before income tax effects ..................................................................
Income tax effects ...........................................................................
Total ................................................................................................ \Deferred gains (losses) on hedges:
Gains (losses) arising during the year ............................................... \Reclassifications and adjustments ....................................................
Before income tax effects ..................................................................
Income tax effects ...........................................................................
Total ................................................................................................ \Foreign currency translation adjustments:
Adjustments arising during the year .................................................. \Total ................................................................................................ \Total other comprehensive income .....................................................\

U.S. dollars(171) $
(171)
99(72) $(2,086)(2,086)
1,200
(886)

247 $
(195)
52
62
114 $

3,002
(2,370)
632
760
1,392

847 $
847 $
889 $

10,314
10,314
10,820

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 ......................................
Deferred gains on hedges ......................................................................
Foreign currency translation adjustments ...............................................
Total other comprehensive income ......................................................

297(1,370)(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 ............................................................................
Minority interests ..................................................................................
Total comprehensive income...............................................................

557
0
557

27

19. Segment Information
Effective from the year ended March 31, 2011, the Company adopted “Accounting Standard for Disclosures about Segments of an Enterprise and RelatedInformation” (ASBJ Statement No. 17, issued on March 27, 2009) and “Guidance on Accounting Standard for Disclosures about Segments of an Enterpriseand Related Information” (ASBJ Guidance No. 20, issued on March 21, 2008).
Information about reported segment sales, segment profit, segment assets and other items under the new accounting standards is not disclosed as the Group's
reportable segment is solely printed circuit boards (“PCB”) and the related business.
(Supplementary information)(1) Information about products and services
Information about products and services is not disclosed since sales amount of single unit of product or service to external customers accounted for more than
90% of consolidated net sales.
(2) Information about geographical areas(a) Net sales

2012
Millions of yen
Japan

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

\

27,694Asia\

27,225

North America\

Europe

\

4,870

Other

3,180

\

Total

4

\

62,973

48$

766,746

14

\

0

\

56,4273$

687,050

2\

2012
Thousands of U.S. dollars
Japan

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

$

337,202

Asia$ 331,490

North America$

Europe59,293$

Other

38,713

$

Total

2011
Millions of yen
Japan

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

\

35,253

Asia\

30,735

North America\

Europe

\

6,000

Other

2,722

\

Total

74,724

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

2012
Millions of yen
Japan

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

\

6,578

Asia

\

49,849North America\-

Europe

\

Other

-

\

-

$

-

\

Total

2012
Thousands of U.S. dollars
Japan

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

$

80,089Asia$ 606,958

North America$-

Europe

$

Other

Total

2011
Millions of yen
Japan

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

\

7,202

Asia

\

45,131

North America

\

-

28

Europe

\

Other

Total

52,335

(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 year ended March 31, 2010 based on the previous accounting standard is as follows:Business segment information is not disclosed as the Group's reportable segment is solely PCB and the related business.
Segment information by geographical area for the year ended March 31, 2010 under accounting standards previously applied is summarized as follows:
Segment information by geographical Area:
Millions of yen
Corporate Assets
Japan

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

Asia

North America

Total

and Eliminations

Consolidated\

41,6382,600\

26,857
20,468

\

1,328
85

\

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

69,823-

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

\

44,238\47,325

\

1,413

\

92,976\(23,153)\

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

\\

43,212
1,026\\

44,631
2,694

\
\

1,389
24

\
\

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

66,030
3,793

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

\

54,100\52,752\

427\

107,279\(22,551)\

84,728The geographical areas consist primarily of the following countries and regions:Asia....................................... China, Hong Kong, Philippines and Vietnam
North America....................... United States
Overseas Sales:
Millions of yen
Asia

North America

Europe

Other

Total

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

\

30,571

\

3,035

\

857

\

7

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

43.8%

4.3%

1.2%

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

29

0.0%

\

34,470\69,82349.4%

20. 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 the Group makes effective use of the managerial resources and conducts businesses efficiently andswiftly by integrating their businesses into the Company.
2. Overview of accounting procedures implemented
This merger was accounted for as a transaction under common control in accordance with “Accounting Standard for Business Combinations” (ASBJ
Statement No. 21, issued on December 26, 2008) and “Guidance on Accounting Standard for Business Combinations and Accounting Standard forBusiness Divestitures” (ASBJ Guidance No.10, issued on December 26, 2008).

30

31

Principal Subsidiaries and Affiliates

Name or Trade Name

Paid-in Capital

Address(Millions of yen)

Principal Business

Investment
Ratio (%)

Meiko Tech Co., Ltd.

Ayase City,
Kanagawa Prefecture

20

PCBs in theElectronics business

100.0

Yamagata Meiko
Electronics Co., Ltd.

Kahoku-cho,Nishimurayama-gun,
Yamagata Prefecture

75

PCBs in theElectronics business

100.0

M.D. Systems Co., Ltd.

Atsugi City,
Kanagawa Prefecture

15

PCBs in theElectronics business

100.0

Meiko Elec. Hong Kong.
Co., Ltd.

Hong Kong

US$72,669
thousand

PCBs in theElectronics business

100.0

Meiko Electronics(Guangzhou Nansha)
Co., Ltd.

Guangzhou,
Guangdong Province,
P.R.China

US$120,800
thousand

PCBs in theElectronics business

100.0

Meiko Electronics(Wuhan) Co., Ltd.

Wuhan,
Hubei Province,
P.R.China

US$115,800
thousand

PCBs in theElectronics business

100.0

MDS Circuit Technology,
Inc.

Manila, Philippine

12 PH peso
million

PCBs in theElectronics business

Meiko Electronics
America, Inc.

CA, U.S.A.

US$1,500
thousand

PCBs in theElectronics business

100.0

Guangzhou Meiko PCBCo., Ltd.

Guangzhou,
Guangdong Province,
P.R. China

US$10,000
thousand

PCBs in theElectronics business

100.0

Meiko Electronics
Vietnam Co., Ltd.

Hanoi, Vietnam

US$90,000
thousandElectronicequipment in theElectronics business32(66.3)(54.0)
100.0(100.0)(100.0)100.0(100.0)Principal Shareholders
As of March 31, 2012
Number of
Shares Held

Name of Shareholder(Thousands of shares)

Percentage ofTotal Number of
Shares Issued (%)

Yuichiro Naya

4,696

24.20

Japan Trustee Services Bank, Ltd.

1,279

6.59

631

3.26

Meiko Kosan Co., Ltd.

608

3.14

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

551

2.84

Yuho, Ltd.

521

2.69

Haruyuki Naya

487

2.51

Seiichi Naya

438

2.26

HILLCREST, L.P.

379

1.96

377

1.94

9,972

51.40

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

33

Corporate History
November 1975

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

April 1978

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

October 1978

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

September 1980

Constructed a new headquarters building and factory, 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 PCBs.

December 1981

Developed the world’s first multi-video processor.

March 1982

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

September 1982

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

August 1984

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

June 1986

Established Meiko Fine Co., Ltd. to mount components on PCBs. (liquidated
in January 2012)

July 1988

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

June 1990

Constructed the Fukushima Factory.

April 1991

Changed company name to Meiko Electronics Co., Ltd.

November 1997

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

August 1998

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

December 1998

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

June 1999

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

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

34

December 2004

Stock listed on the JASDAQ Securities Exchange, Inc.

July 2005

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

November 2005

Constructed a new factory building at the Miyagi Factory.

April 2006

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

July 2006

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

January 2007

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

November 2007

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

March 2008

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

April 2009

Started operation of the EMS Plant in Vietnam.

May 2009

Established the Meiko R&D Center.

July 2009

Started operation of second plant in WUHAN.

April 2010

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

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

July 2011

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

November 2011

Started operation of the PCB Plant in Vietnam.

35

Corporate Data (As of March 31, 2012)
Corporate Name:
Meiko Electronics Co., Ltd.
Date of Establishment:
November 25, 1975
Paid-in Capital:¥10,545 million
Fiscal Year:
April 1 to March 31
Number of Shares Authorized:
63,200,000
Number of Shares Issued:
19,403,320
Number of Shareholders:
5,891
Securities Code:
6787
Stock Exchange Listing:Osaka Securities Exchange, JASDAQ standard market
Number of Employees:
9,948 (Consolidated)
Number of Subsidiaries:
13
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/

36

Meiko Share Performance in FY2012 Compared with Indices

160.0
150.0
140.0
130.0
120.0
110.0
100.0
90.0
80.0
70.0
60.0

Meiko Electronics (JASDAQ: 6787)
JASDAQ INDEX

50.0

Fiscal year 2012 ended March 31, 2012
Index
In %

37

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