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Annual Report 2021

For the year ended March 31, 2021

Meiko Electronics Co., Ltd.

The Meiko Group consists of Meiko Electronics Co., Ltd. (the “Company”), elevenconsolidated subsidiaries, eleven non-consolidated subsidiaries, and one affiliated company(the “Group”). As the Group’s businesses are primarily in PCB design, manufacturing, sales,
and ancillary operations, the descriptions of other businesses are omitted as they are of little
significance.

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

1

Contents
Five-year Financial Summary.............................................................................................. 3
Financial Review: Management’s Discussion and Analysis ........................................... 5
Business Risks ..................................................................................................................... 9
Consolidated Financial Statements ................................................................................. 14
Principal Subsidiaries and Affiliates ................................................................................ 40
Principal Shareholders ...................................................................................................... 41
Corporate History ............................................................................................................... 42
Corporate Data (As of March 31, 2021) ............................................................................ 44
Meiko Share Performance in FY2021 Compared with Indices ...................................... 452

Five-year Financial Summary(For the years ended/as of March 31)
2017

2018

2019

2020

2021

(millions of yen, except per share amounts)
Consolidated financial indicators:
Net sales¥95,912¥108,542¥118,911¥115,479¥119,257

Ordinary income

2,981

4,795

8,611

4,790

5,698

Profit attributable to owners ofparent

1,767

4,373

6,744

2,586

4,641

(32)

5,633

6,482

(419)

8,629

Net assets

28,54033,04233,58832,482

40,611

Total assets

103,578

110,316

120,656

129,238

142,040

Net assets per share (yen)882.84

1,071.37

1,283.24

1,233.61

1,551.93

Net income per share (yen)54.14

160.34257.6598.81

177.33

Net income per share (diluted)
(yen)

44.06

108.67———

Equity ratio

27.3%

30.0%

27.8%

25.0%

28.5%

Return on equity (ROE)

6.2%

14.3%

20.2%

7.9%

12.8%

Price earnings ratio (PER) (times)

16.2

11.4

6.7

13.5

15.2

Cash flows from operating activities

11,612

10,42911,467

11,2407,853

Cash flows from investing activities(4,322)(8,868)(17,293)(14,937)(9,490)Cash flows from financing activities(9,030)(3,531)

1,957

6,249

(619)

Cash and cash equivalents
at the end of the period

17,19615,19011,41913,646

12,122

Number of employees

10,677

11,64011,89912,232

13,721[885][1,182][1,351][1,450][1,117]

Comprehensive income[Average number of temporary
staff]

3

Net sales

Net income, basic per share
Net income, diluted per share¥300.00(yen)(millions of yen)

¥150,000¥120,000¥90,000¥100.00¥50.00¥30,000

¥0.00
2017

2018

2019

2020

2021

Profit attributable to owners ofparent¥4,000¥5,000¥0(¥5,000)(¥20,000)

2017

2018

2019

2020

2021

2019

2020

2021

Cash flows from investing activities

30.0%(percentage)(millions of yen)

2018

Return on equity (ROE)¥40,000¥30,000¥20,000

25.0%
20.0%
15.0%
10.0%
5.0%

2017

2018

2019

2020

2021

0.0%

Total assets

2017

2018

2019

2020

2021

Price earnings ratio (PER)
25.0 times(times)¥150,000(millions of yen)

2017

Cash flows from operating activities
Cash flows from financing activities¥10,000¥120,000¥90,000

20.0 times
15.0 times¥60,000

10.0 times¥30,000

5.0 times
2017

2018

2019

2020

0.0 times

2021

Net assets per share¥2,000.00
(yen)

2021

(¥15,000)¥50,000¥1,500.00¥1,000.00¥500.00
¥0.00

2020

Net income, diluted per share (yen)¥10,000

Net assets

¥0

2019

(¥10,000)¥2,000¥0

2018

Cash flows¥15,000¥6,000¥0

2017

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

¥8,000¥200.00¥150.00¥60,000¥0¥250.00

2017

2018

2019

2020

2021

4

2017

2018

2019

2020

2021

Financial Review: Management’s Discussion and Analysis
The forward-looking statements in this section are based on the Group’s assumptions
as of the end of the current consolidated fiscal year.
(1) Significant accounting policies and estimates
The consolidated financial statements of the Group have been prepared in conformity
with accounting principles generally accepted in Japan (“Japanese GAAP”). The
presentation of these consolidated financial statements requires estimates that affectthe selection and application of accounting policies, the reporting amounts of assets,
liabilities, profits and expenses and the disclosure thereof. The management has
assessed those estimates in view of past results and reasonable assumptions,however, actual results may differ from the estimates presented due to uncertainties
that are intrinsic to estimates.
(2) Analysis of the Group’s financial position
AssetsAssets as of March 31, 2021 were ¥142,040 million, up ¥12,802 million from the end of
the previous fiscal year. This change mainly comprised a decrease of ¥1,524 million in
cash and cash equivalents, an increase of ¥5,056 million in trade notes and accounts
receivable, and an increase of ¥3,204 million in inventories in current assets, inaddition to an increase of ¥5,790 million in property, plant and equipment in noncurrent assets.
Liabilities
Liabilities as of March 31, 2021 were ¥101,429 million, up ¥4,673 million from the endof the previous fiscal year. This change mainly comprised an increase of ¥2,734 million
in trade notes and accounts payable, an increase of ¥11,148 million in short-termborrowings, a decrease of ¥7,240 million in the current portion of long-term borrowings,
in addition to a decrease of ¥2,253 million in long-term borrowings in non-current
liabilities.
Net assets
Net assets as of March 31, 2021 were ¥40,611 million, up ¥8,129 million from the endof the previous fiscal year. This mainly reflected a ¥4,489 million increase in retained
earnings, and a ¥3,753 million increase in foreign currency translation adjustment.

5(3) Analysis of business results
1) Net sales
Although the automotive industry, where our major customers operate, was on arecovery track with the recovery of production and accelerated electrification ofvehicles and components, our automotive PCB sales declined due to the impact oflower demand in the first half of the year. In the smartphone market, sales ofsmartphone PCBs were strong due to rising demand for 5G. Consequently, net sales
for the fiscal year under review increased ¥3,778 million, or 3.3%, from the previous
fiscal year to ¥119,257 million.
2) Gross profit
Cost of sales increased ¥2,999 million, or 3.0%, from the previous fiscal year to¥101,732 million due to the impact of the steep rise in raw material prices. Gross profit
for the fiscal year under review increased ¥779 million, or 4.7%, from the previous yearto ¥17,525 million. The gross margin rose 0.2 percentage points from the previous
fiscal year to 14.7%.
3) Operating income
Selling, general and administrative expenses decreased ¥690 million, or 6.0%, fromthe previous fiscal year to ¥10,867 million, due to a decline in sales commissions andtravel expenses. Operating income for the fiscal year under review increased ¥1,469
million, or 28.3%, from the previous fiscal year to ¥6,658 million, with an operating
margin of 5.6%, up 1.1 percentage points, from the previous fiscal year.
4) Ordinary income
Non-operating income increased ¥34 million to ¥795 million, mainly due to increased
subsidy income partially offset by a decrease in insurance claim income. Non-operating
expenses increased ¥595 million to ¥1,755 million, mainly due to an increase incommission for syndicated loans. As a result, ordinary income for the fiscal year underreview increased ¥908 million, or 19.0%, from the previous fiscal year to ¥5,698 million.
5) Profit attributable to owners of parent
In the fiscal year under review, extraordinary income amounted to ¥4 million due to therecording of gain on sales of non-current assets. Extraordinary losses totaled ¥642
million due to loss on sales and retirement of non-current assets of ¥198 million andbusiness restructuring expenses of ¥310 million. The total amount of income taxes–
current and income taxes–deferred decreased ¥294 million to ¥423 million. The loss
attributable to non-controlling interests was ¥4 million. As a result of the above, theprofit attributable to owners of parent was ¥4,641 million, up 79.4% compared with theprevious fiscal year.

6(4) Analysis of source of funds and liquidity
1) Cash flows
Cash and cash equivalents (hereafter, “net cash”) as of March 31, 2021 decreased¥1,524 million from the previous fiscal year, to ¥12,122 million.
The amount above included net cash increased ¥230 million by including Guangzhou
Speed Trading Co., Ltd., which was previously a non-consolidated subsidiary, in thescope of consolidation.
Cash flows of each category and their causes during the consolidated fiscal year
ended March 31, 2021 were as follows.
Net cash provided by operating activities for the fiscal year under review was ¥7,853
million, down ¥3,387 million from the previous fiscal year. Increases were mainly fromprofit before income taxes of ¥5,060 million, depreciation and amortization of ¥7,449
million, and an increase in trade notes and accounts payable of ¥1,770 million. The
major decreases were increases in trade notes and accounts receivable of ¥4,643
million and inventories of ¥2,431 million.
Net cash used in investing activities was ¥9,490 million, down ¥5,447 million from theprevious fiscal year. The major outflow was ¥9,738 million for the purchase of property,
plant and equipment.
Net cash used in financing activities was ¥619 million (compared to net inflow of¥6,249 million in the previous fiscal year). The inflows comprised a net increase in
short-term borrowings of ¥10,574 million and proceeds from long-term borrowings of¥42,598 million. The outflows comprised repayments of long-term borrowings of¥52,485 million, repayments of lease obligations of ¥563 million, purchase of treasury
shares of ¥349 million, and cash dividends paid of ¥394 million.
Trends in cash flow indicators of the Group are as follows:Year ended
March 31, 2019Year ended
March 31, 2020

Year ended
March 31, 2021

Equity ratio (%)

27.8

25.0

28.5

Market value equity ratio (%)

37.6

27.1

49.3

Cash flows versus interest-bearing debt ratio(years)

5.2

6.1

8.9

Interest coverage ratio (times)

14.0

16.3

12.4

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

72) Financial policy
The Group procures funds for its operations from funds on hand or borrowings fromfinancial institutions. The Group has a policy of procuring funds for investment andloans as well as funds to acquire manufacturing equipment inside and outside Japan
via long-term borrowings from financial institutions. With regard to procuring suchfunds and the conditions of procurement, the Group strives to select the mostfavorable timing and conditions.

8Business Risks
Below are some of the major risks from among those described in the securities report(provided/filed in Japanese only) which may significantly affect any decisions made byinvestors.
Forward-looking statements are based on the Group’s best judgment during theconsolidated fiscal year under review.
(1) Risks related to the business environment
1) Risk related to the Group’s major customers and their industries’ trends
The Group’s major customers are manufacturers of automotive products, smartphones
and tablets, IoT & AI household appliances, amusement equipment, and storage
devices, among others. The Group’s major business is the manufacture and sale ofPCBs, which are parts that constitute a core function of finished products. Furthermore,
the Group endeavors to strengthen and expand the module board and EMS businesses
as new mainstay businesses with the aim of minimizing influence from overdependence
on PCBs. However, should economic trends or a natural disaster adversely impact theGroup’s major customers or their industry markets, such factors could affect thebusiness performance and financial position. The monitoring of customers and trends intheir industries and measures to minimize influence implemented by the Group cannot
eliminate said risk completely. Therefore, the Group realizes that such risk could emerge
in the event of a sudden change in market conditions, with the influence depending on
the timing and size of the incident.
2) Raw materials market fluctuation risk
The Group strives to minimize risk using commodity derivatives. However, if an
unexpected surge in the procurement prices of crude oil, copper, gold, or any othermaterials is not able to be passed on to our selling prices to customers, or if we may
miss business opportunities due to difficulty in procuring materials, the businessperformance and financial position could thus be adversely affected. As said risk cannot
be lessened or eliminated completely by the above mentioned measures to minimize
risk alone, the Group realizes that it is inevitable that it will suffer some degree of impact
if such risk actually emerges.
3) Risk related to technological development and price competition
The time will come when all things are connected, due to the increase in the use ofelectronics in vehicles, the dissemination of electric vehicles, the emergence ofconnected cars based on 5G communication, and the worldwide spread of IoT. Although
the Group expects expansion of demand for PCBs, to address intensifying global
competition stemming from downward pressure on prices from China and Southeast
Asia, the Group needs to differentiate its products with technology. To this end, theGroup is developing technologies such as element technologies to make wires thinnerand hole diameters smaller, as well as cost-reduction technologies. However, shouldsuch technologies diverge from market needs and not be accepted, the Group may getembroiled in a price war, which could affect its business performance and financial
position. The Group closely monitors customers’ needs, competitors’ technology, andprice movements, etc. However, as this type of risk is inherent in business management
and is difficult to eliminate completely, such risk might ordinarily emerge in the processof business management. The Group realizes that it is difficult to make a definite
estimate of the influence when such risk actually emerges, since the influence may
depend on the timing and conditions of the incident.
4) Risks related to the timing of capital investments
The Group conducts appropriate capital investment to enhance productivity andmaintain product competitiveness in accordance with demand trends. Although capital
9

investments are carefully determined considering market trends and brandmanufacturers’ business performance, should the Group’s capital investments become
excessive upon a downturn in the economy or manufacturers change strategies, or theoperation of new facilities be delayed, factors such as the burden of depreciation costs
could adversely affect the business results and financial position. In addition, should theasset value or business profitability decline, it could result in the occurrence ofimpairment loss, adversely affecting the business performance and financial position.
The Group believes that there is not a high possibility that any individual capital
investment will lead to the occurrence of impairment loss. However, risk caused byexternal factors, such as a sudden change in market conditions, natural disasters, andinfectious diseases, cannot be lessened or eliminated by the Group’s risk management
alone. There is a possibility that the Group will suffer impact in the event of theoccurrence of such risk, with the influence depending on the timing and size of theincident.
5) Risk related to equipment failures and accidents
Although the Group conducts regular inspections and maintenance work on its
production equipment as well as plant monitoring using IoT technology in its
manufacturing bases and strives to minimize the occurrence of equipment failures, fire,or other accidents, which may result in the suspension of line operations, there is no
guarantee that these will be prevented or reduced completely. Should production orshipping be suspended for a long period of time due to these factors, the businessperformance and financial position could be adversely affected. Said risk cannot be
lessened or eliminated by the Group’s own risk management alone. There is apossibility that the Group will suffer impact in the event of the occurrence of such risk,
with the influence depending on the frequency and size of the incident. However, theGroup realizes that it is difficult to make a definite estimate of the influence in light of theconditions of such risk.
6) Risk related to product defects
PCBs are mounted with electronic components and then embedded in finishedproducts. The Group manufactures PCBs in compliance with globally accepted quality
control standards. In addition, brand manufacturers conduct inspections upon receipt of
the finished product checking for product defects. However, should a large-scale recall
or a product liability claim occur, such an incident would incur significant costs thatcannot be covered by insurance amounts and harm the value of our corporate brand,which could adversely affect the business performance and financial position. The
Group believes that there is not a high possibility that said risk will emerge. However, as
such risk cannot be lessened or eliminated by the Group’s own risk management alone,
the Group realizes that it is inevitable that it will suffer some degree of impact if such risk
emerges.
(2) Risk related to natural disasters, etc.
1) Risk related to natural disasters
If natural disasters, such as earthquakes, tsunami, floods, storms, or torrential
downpours occur, operation of the Group’s facilities may be partially or totally
suspended, resulting in delays in production and shipments. Having learned from pastexperiences, the Group reviews its risk management system appropriately andendeavors to secure the safety of its employees and protect its facilities against natural
disasters. However, should a disaster of an enormous scale occur in the future, we may
consume expenses required to restore damaged production facilities and experience asales decline, resulting in an adverse effect on the business performance and financial
position. Said risk cannot be lessened or eliminated by the Group’s own risk
management alone. There is a possibility that the Group will suffer impact in the event of
the occurrence of such risk, with the influence depending on the frequency and size ofthe incident. However, the Group realizes that it is difficult to make a definite estimate of10the influence in light of the conditions of such risk.
2) Risk related to infectious diseases
Under the novel coronavirus infection (COVID-19) crisis, the Group has continued
thorough implementation of preventive measures to secure the safety of customers,
business partners, and employees and prevent further expansion of infections according
to the guidance of the health authorities of each country, including refraining from taking
business trips to countries and areas with a high risk of infection and encouraging
remote work mainly in indirect departments. However, situations such as the healthcrisis becoming prolonged, pandemic conditions continuing, or new types of infections
occurring might result in suspension of the Group’s factories, worsening of the Japaneseand global economy, and contraction of economic activities, which could adversely affectthe business performance and financial position. Said risk cannot be lessened oreliminated by the Group’s own risk management alone. There is a possibility that theGroup will suffer impact in the event of the occurrence of such risk, with the influence
depending on the frequency and size of the incident. However, the Group realizes that itis difficult to make a definite estimate of the influence in light of the conditions of suchrisk.
(3) Risk related to compliance
As the Group operates its business in bases inside and outside Japan, it needs tocomply with a wide range of laws and regulations and restrictions. In Japan, the Groupis required to obey the Companies Act, Financial Instruments and Exchange Act, AntiMonopoly Act, tax laws, labor laws, and environmental laws, etc. while it must observe
laws and regulations and restrictions in each country and region it operates in overseas.
The Group not only established the Risk and Compliance Committee to supervise
compliance with laws and regulations and restrictions but also strives to raise its
employees’ awareness of compliance issues by formulating and implementing its own
compliance measures. However, there is a possibility that risk related to compliance will
not be dodged completely by implementing these measures. Should the Group fail toperform obligations required by laws and regulations and restrictions, it could adversely
affect the business performance and financial position. The Group believes that there is
not a high possibility that risk related to compliance will emerge. However, as the type
and timing of the occurrence, etc. of such incident cannot be controlled by the Group, it
realizes that it is difficult to make an estimate of the influence beforehand.
(4) Risk related to finance, etc.
1) Financial risks
The Group has made aggressive capital investments to prepare for the anticipatedincrease in demand for PCBs for automotive products and smartphones, as well as inresponse to new products in line with technological innovation. As a result, the ratio ofborrowings to total assets as of March 31, 2021 was 47.4%. Should new borrowings orrefinancing of outstanding borrowings for capital investments necessary from theperspective of its business strategy become difficult in the future due to a change inmonetary conditions or banks’ situations, it could affect the Group’s fund raising plans. In
addition, a rise in interest rates on borrowings could adversely affect the businessperformance and financial position. As risk related to monetary conditions or eachbank’s situation is hard to reduce or eliminate by the Group’s own measures, the Group
believes that it will suffer impact in the event of the occurrence of such risk, with the
influence depending on the timing, size, and conditions of the incident. However, theGroup realizes that it is difficult to make a definite estimate of the influence.
2) Credit risk
As the Group extends credit to its business partners in the form of trade credit, including
accounts receivables and advance payments, it is therefore exposed to credit risk in the11form of losses arising from deterioration in the credit of or bankruptcy of business
partners. To manage such risk, the Group responds depending on the credit profile ofthe counterparty based on internal rules that determine the credit limit for each business
partner. However, failure to collect receivables and other credit could affect the businessperformance and financial position. The Group believes that it will suffer only limited
impact, even if said risk emerges, since it monitors obligors’ credit conditions anddiversifies risk, which maintains the frequency and influence within the range of normal
fluctuation of business results. Although the possibility of the abrupt emergence of
unexpected credit risk from a large obligor is not completely eliminated, the Grouprealizes that the probability is quite low.
3) Risk related to foreign currency rate fluctuation
To operate plants in China and Vietnam, we need to hold U.S. dollars and other foreign
currency-denominated assets. Therefore, the Group is exposed to yen-to-yuan, yen-toU.S. dollar and other currencies exchange rate fluctuations. These fluctuations could
result in losses. The Group strives to minimize risks to some extent by conducting
exchange marry or currency exchange hedge, etc. However, should an unexpected
foreign currency rate fluctuation occur, it could adversely affect the businessperformance and financial position. As said risk depends on the fluctuation of foreignexchange rates and cannot be lessened or eliminated by the Group’s own effort alone,
the Group realizes that it is difficult to make a definite estimate on the timing of theoccurrence and influence.
4) Risk related to M&A, joint venture, and alliance
The Group forms capital alliances with and conducts joint ventures with other companies
that have the technology, products, sales network, customer base, and personnel
necessary for business growth. However, there is a possibility that the Group may notreceive the anticipated effects or will need to spend additional expenses or incur
impairment loss when the market and competition environments significantly change or
the business does not develop as planned. Should such incident occur, the Group may
fail to earn the forecast profits, adversely affecting its business performance andfinancial position. As such risk cannot be lessened or eliminated by the Group’s own risk
management alone, the Group realizes that it is inevitable that it would suffer somedegree of impact if such risk actually emerges.
(5) Other risk
1) Risk 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. In these countries, the Group may face
the following difficulties—hygiene-related issues such as infectious diseases; change or
introduction of environmental regulations, legal restrictions and the tax system; failure of
infrastructure such as electricity, water and transportation; political uncertainty and public
security-related issues; anti-Japanese demonstrations and/or labor disputes;
expropriation of assets, destruction of facilities by wars and conflicts, and limitation on
the transfer of funds (transfer restriction), etc. Should unexpected events such aschanges in the political or legal environment, economic situation or environmental
regulations occur, the business performance and financial position could be adversely
affected as a result of the issues which might arise in the management of production
facilities and equipment and in the execution of other operations, or a large amount ofliabilities or obligations associated with the compliance of environmental conservationand other regulations. Said risk cannot be lessened or eliminated by the Group’s own
risk management alone. There is a possibility that the Group will suffer impact in theevent of the occurrence of such risk, with the influence depending on the frequency andsize of the incident. However, the Group realizes that it is difficult to make a definite
estimate of the influence in light of the conditions of such risk.
122) Risk related to information security
The Group obtains customer information, etc. through its business activities from time totime and also owns confidential information on technology, sales, individual persons, andoverall business. To prevent unauthorized information access, falsification, corruption,
leakage, loss, and any other damages caused by cyberattacks, human errors, and anyother incidents, the Group established its information management system and conducts
appropriate safety procedures, including rational technological measures and drills to
prepare for cybersecurity risk. However, should the leakage or loss of information occur,
it could adversely affect the business performance and financial position. As the Group
strives to appropriately operate its confidential information management system, it
realizes that the probability of emergence of such risk is quite low.
3) Risk related to intellectual property rights
The Group recognizes intellectual properties as its significant management resources
and seeks to acquire intellectual property rights by applying for patents, etc. forproprietary technologies, etc. developed by the Group with the aim of protecting
intellectual properties. However, not all applications may be approved and it is also
possible that obtained rights may be rendered void due to objections by third parties.
Although the responsible department manages obtained intellectual properties and pays
attention to violation of rights by external parties, anticipated profits could be lost in theevent of illegal use, etc. Meanwhile, should a lawsuit be filed against the Group withregard to a violation of intellectual property rights of third parties, the businessperformance and financial position could be adversely affected as a result of thecompensation or damages paid to customers due to the suspension of production andpayment of license fees, etc., related to patent use in order to resume production.
Although the possibility of abrupt emergence of the risk is not completely eliminated, theGroup realizes that the probability is quite low.

13

Consolidated Financial Statements

Consolidated Balance Sheets

Meiko Electronics Co., Ltd. and Consolidated Subsidiaries
As of March 31, 2021 and 2020

Thousands ofMillions of yen

2021

ASSETS
Current Assets:
Cash and cash equivalents (Notes 3 and 17) ....................................................................
Receivables －Trade notes and accounts receivable (Note 17) .............................................................
Other receivables ........................................................................................................
Less: Allowance for doubtful accounts ........................................................................
Inventories －Merchandise and finished goods ..................................................................................
Work in process .........................................................................................................
Raw materials and supplies ..........................................................................................
Other (Note 17) ..............................................................................................................
Total current assets .................................................................................................

\

Property, Plant and Equipment, at Cost:
Land ..............................................................................................................................
Buildings and structures (Note 5).....................................................................................
Machinery and vehicles (Note 5)......................................................................................
Leased assets..................................................................................................................
Construction in progress ................................................................................................
Other (Note 5)................................................................................................................
Less: Accumulated depreciation ......................................................................................
Net property, plant and equipment ...........................................................................
Intangible Assets
Investments and Other Assets:
Investment securities (Notes 4 and 17) ............................................................................
Long-term loans receivable .............................................................................................
Deferred tax assets (Note 16) ..........................................................................................
Other .............................................................................................................................
Less: Allowance for doubtful accounts ...........................................................................
Total investments and other assets ...........................................................................
Total ...............................................................................................................

See notes to consolidated financial statements.

14\

12,122

U.S. dollars (Note 1)

2021

2020

\

13,646$

109,491

29,504
1,114(147)

24,4481,505(135)

266,497
10,060(1,327)

6,254
6,954
8,951
1,586
66,338

5,148
5,505
8,302
1,298
59,71756,49062,81580,84814,333599,207

1,488
47,172
94,528
4,213
7,258
5,650
160,309(91,522)68,787

1,488
43,77983,588
4,120
4,909
4,914
142,798(79,801)
62,997

13,443426,088853,827
38,05765,561
51,0291,448,005(826,680)
621,325

928

828

8,381

2,608
799
1,254
1,438
(112)
5,987
142,040

3,221
256
1,029
1,296
(106)
5,696
129,238

23,555
7,220
11,33012,992(1,017)54,0801,282,993\$

Thousands of

LIABILITIES AND
NET ASSETS

U.S. dollars (Note 1)

Millions of yen

2021

Current Liabilities:
Trade notes and accounts payable (Note 17) ..................................................................
Short-term borrowings (Notes 6 and 17) .........................................................................
Current portion of long-term borrowings (Notes 6 and 17) ...............................................
Income taxes payable (Note 16) ......................................................................................
Accrued bonuses ...........................................................................................................
Accrued bonuses to directors and corporate auditors ......................................................
Lease obligations (Notes 6 and 17)..................................................................................
Other (Notes 6 and 17) ...................................................................................................
Total current liabilities .............................................................................................

\

Long-term Liabilities:
Long-term borrowings (Notes 6 and 17) .........................................................................
Lease obligations (Notes 6 and 17) .................................................................................
Provision for directors' retirement benefits ......................................................................
Net defined benefit liability (Note 7) ................................................................................
Other (Note 16)..............................................................................................................
Total long-term liabilities .........................................................................................

20,466
20,834
8,304
225
733
43
339
8,238
59,182

2021

2020

\

17,732
9,686
15,544
204
688
40
561
7,610
52,065$

184,860
188,189
75,005
2,036
6,622
388
3,065
74,404
534,569

38,226
603
216
2,767
435
42,24740,479
935
217
2,696
364
44,691

345,2815,450
1,950
24,996
3,925
381,602

12,8896,464
17,64912,8896,464
13,160116,41758,391
159,412(745)
36,257(397)
32,116(6,729)327,491

39
250
4,128
(256)
4,161
193
40,611
142,040

(8)
30
375
(225)
172
194
32,482
129,238357
2,260
37,282(2,309)37,5901,741
366,822
1,282,993

Commitments and Contingent Liabilities (Note 12) :Net Assets (Note 8):
Shareholders' Equity:
Common stock:
Authorized:
70,000,000 shares in 2021 and 2020
Issued:26,803,320 shares in 2021 and 2020
Preferred stock:
Authorized:
None in 2021 and 2020
Issued:None in 2021 and 2020....................................................................................................

Capital surplus ...............................................................................................................
Retained earnings ...........................................................................................................
Less: Treasury stock, at cost; Common stock,759,506 shares in 2021, 629,427 shares in 2020 ..............................................................
Total shareholders' equity.........................................................................................
Accumulated Other Comprehensive Income:Unrealized gains on available-for-sale securities ...............................................................
Deferred gains on hedges ...............................................................................................
Foreign currency translation adjustments .........................................................................
Remeasurements of defined benefit plans (Note 7) ..........................................................
Total accumulated other comprehensive income........................................................
Non-controlling interests.................................................................................................
Total net assets .......................................................................................................
Total ...............................................................................................................

See notes to consolidated financial statements.

15

\

\

$

Consolidated Statements of Operations

Meiko Electronics Co., Ltd. and Consolidated Subsidiaries
For the Years Ended March 31, 2021, 2020 and 2019

Thousands ofMillions of yen

2021
Net Sales ......................................................................................................................
Cost of Sales (Note 13) ................................................................................................
Gross profit .................................................................................................................
Selling, General and Administrative Expenses (Note 13) ...........................................
Operating income .........................................................................................................

\

119,257
101,732
17,525
10,867
6,658

U.S. dollars (Note 1)

2020\

115,479
98,733
16,746
11,557
5,189

2021

2019
\

118,91198,86320,048
11,122
8,926$

1,077,203
918,910
158,293
98,15760,136

Other Income (Expenses):
Interest expense, net .......................................................................................................
Dividend income ............................................................................................................
Commission for syndicated loan ...................................................................................
Foreign exchange gain (loss).............................................................................…...........
Net loss on sales and disposal of property, plant and equipment (Note 15)........................
Subsidy income..............................................................................................................
Insurance income............................................................................................................
Gain on sales of investment securities, net (Note 4)..........................................................
Gain on reversal of loss on valuation of investment securities (Note 14).............................
Expenses for business structure improvement (Note 10)...................................................
Expenses for factory shutdown (Note 11)........................................................................
Loss on disaster (Note 9) .............................................................................................
Loss on abandonment of inventories ...............................................................................
Provision of allowance for doubtful accounts .................................................................
Other, net ......................................................................................................................
Total ......................................................................................................................

(592)
4
(630)
(345)
(194)
450
106
(310)
(13)
(49)
(70)
(2)
47
(1,598)

(595)
6
(28)
(61)
(139)
183
325
4
327
(210)
(1,250)(87)(398)(1,923)

(742)
7
(361)
518
(222)
302
655
0
(526)
(694)
(1,063)(5,347)39(5,692)(3,115)(1,755)
4,068
957(2,804)
(115)
(439)
(635)
(15)
421
(14,432)

Income before Income Taxes ......................................................................................

5,060

3,266

7,863

45,704

Income Taxes (Note 16):
Current ........................................................................................................................
Deferred ......................................................................................................................
Total income taxes ..................................................................................................
Net income....................................................................................................................
Net Loss attributable to non-controlling interests.......................................................
Net Income attributable to owners of the Company ...................................................

687
(264)
423
4,637
(4)
4,641

875
(158)
717
2,549
(37)
2,586

753
366
1,119
6,744
6,744

6,203
(2,382)
3,821
41,883(37)
41,920

\

\

\

$

Yen

Per Share of Common Stock:
Net income per share....................................................................................................
Basic .......................................................................................................................
Cash dividends applicable to the year ...........................................................................

See notes to consolidated financial statements.

16\

177.33
20.00

\

98.81
30.00

U.S. dollars (Note 1)\

257.65
35.00

$

1.60
0.18

Consolidated Statements of Comprehensive Income

Meiko Electronics Co., Ltd. and Consolidated Subsidiaries
For the Years Ended March 31, 2021, 2020 and 2019

Thousands ofMillions of yen

2021
Net Income .................................................................................................................
Other Comprehensive Income (Note 19):
Unrealized gains (losses) on available-for-sale securities ...................................................
Deferred gains (losses) on hedges ...................................................................................
Foreign currency translation adjustments .........................................................................
Remeasurements of defined benefit plans .......................................................................
Total other comprehensive income ...........................................................................
Comprehensive Income................................................................................................

Comprehensive Income Attributable to:
Owners of the Company ..............................................................................................
Non-controlling interests ...............................................................................................

See notes to consolidated financial statements.

17

\

4,637

\

48
220
3,755
(31)
3,992
8,629

\

8,630
(1)

U.S. dollars (Note 1)

2020
\

2,549

\

57
(153)
(2,945)73(2,968)
(419)

\

(383)
(36)

2021

2019
\

6,744

$

41,883

\

(87)
(116)
(190)
131
(262)
6,482 $

433
1,988
33,920(277)
36,064
77,947$

77,955
(8)

\

6,482
-

Consolidated Statements of Changes in Net Assets

Meiko Electronics Co., Ltd. and Consolidated Subsidiaries
For the Years Ended March 31, 2021, 2020 and 2019

Common Stock

Balance as at March 31, 2018..........................................................................
Net income attributable to owners of the Company...............................................
Cash dividends paid............................................................................................
Purchase of treasury stock...................................................................................
Retirement of treasury stock................................................................................
Net increase (decrease)........................................................................................
Balance as at March 31, 2019..........................................................................
Net income attributable to owners of the Company...............................................
Cash dividends paid............................................................................................
Purchase of treasury stock...................................................................................
Net increase (decrease)........................................................................................
Balance as at March 31, 2020..........................................................................
Net income attributable to owners of the Company...............................................
Cash dividends paid............................................................................................
Purchase of treasury stock...................................................................................
Change of scope of consolidation
Net increase (decrease)........................................................................................
Balance as at March 31, 2021..........................................................................

Number of
Shares26,803,320
26,803,320
26,803,320
26,803,320

\

\

\

\

Amount12,88912,88912,88912,889Number of
Shares50(50)-

Amount\\\\Millions of yen

Shareholders' Equity

Preferred Stock

-

\

\

\

\

CapitalSurplus11,745(5,281)
6,464
6,464
6,464

\

\

\

\

Retained
Earnings
5,400
6,744
(654)
11,4902,586(916)
13,160
4,641
(392)
240
17,649Balance as at March 31, 2020..........................................................................
Net income attributable to owners of the Company...............................................
Cash dividends paid............................................................................................
Purchase of treasury stock...................................................................................
Change of scope of consolidation
Net increase (decrease)........................................................................................
Balance as at March 31, 2021..........................................................................

$

$

$

$

Preferred
Stock

-

$

$

CapitalSurplus58,391
58,391

\

\

\

\

Total
Shareholders'Equity29,6386,744(654)(5,282)30,446
2,586
(916)
(0)
32,116
4,641
(392)
(348)
240
36,257

Accumulated Other Comprehensive Income

Unrealized Gains(Losses) on
Available-for-sale
Securities

22
(87)
(65)
57
(8)
47
39

\

\

\

\

Thousands of U.S. dollars (Note 1)

Shareholders' Equity

CommonStock116,417
116,417

Treasury
Stock at Cost;
Common
Stock
(396)
\
(5,282)
5,281
(397)
\
(0)
(397)
\
(348)
(745)
\

$

$

Retained
Earnings
118,868
41,920(3,546)
2,170
159,412

See notes to consolidated financial statements.

18

Treasury
Stock at Cost;
CommonStock$(3,583)(3,146)$(6,729)

Total
Shareholders'Equity$290,093
41,920(3,546)(3,146)
2,170$
327,491$

Foreign Currency
Translation
Adjustments

\

\

\

\

3,512
(190)
3,322
(2,947)
375
3,753
4,128

Total
Accumulated
Other
Comprehensive
IncomeRemeasurementsof Defined Benefit
Plans

(429)
131
(298)
73
(225)
(31)
(256)

\

\

\

\

\

\

\

\

3,404 \
(262)
3,142 \
(2,970)172 \
3,989
4,161 \

Non-controlling
Interests
194
194
(1)
193

\

Total Net
Assets
33,042
6,744(654)(5,282)(262)
33,588
2,586
(916)
(0)
(2,776)32,482
4,641
(392)
(348)
240
3,988
40,611

Non-controlling
Interests
1,749 $
(8)
1,741 $

Total Net
Assets293,397
41,920(3,546)(3,146)2,170
36,027366,822\\\

Accumulated Other Comprehensive Income

Unrealized Gains(Losses) on
Available-for-sale
Securities$

Deferred
Gains(Losses) on
Hedges
299
\
(116)
183
\
(153)
30
\
220
250
\

(76)
433
357

Deferred
Gains(Losses) on
Hedges
$
272
1,988
$
2,260

Foreign Currency
Translation
Adjustments

$

$

3,391
33,89137,282

Total
Accumulated
Other
Comprehensive
IncomeRemeasurementsof Defined Benefit
Plans

$

$

(2,032)(277)(2,309)$$1,555 $
36,03537,590 $Consolidated Statements of Cash Flows

Meiko Electronics Co., Ltd. and Consolidated Subsidiaries
For the Years Ended March 31, 2021, 2020 and 2019

Thousands ofMillions of yen

Operating Activities:
Income before income taxes ..................................................................................................................................

2021
\

5,060

U.S. dollars (Note 1)

2020
\

3,266

2021

2019
\

7,863

$

45,704

Adjustments to reconcile income before income taxes
to net cash provided by operating activities:
Depreciation and amortization ...............................................................................................................................
Amortization of goodwill .......................................................................................................................................
Increase (decrease) in allowance for doubtful accounts ..........................................................................................
Increase in net defined benefit liability ...................................................................................................................
Increase in accrued bonuses .......................................................................................................................…......
Increase (decrease) in accrued bonuses to directors and corporate auditors ............................................................
Decrease in provision for directors' retirement benefits............................................................................................
Interest income and dividend income .....................................................................................................................
Interest expenses ..................................................................................................................................................
Foreign exchange loss (gain)..................................................................................................................................
Net loss on sales and disposal of property, plant and equipment..............................................................................
Gain on sales of investment securities, net...............................................................................................................
Loss on valuation of investment securities...............................................................................................................
Gain on reversal of loss on valuation of investment securities...................................................................................
Insurance income ..................................................................................................................................................
Expenses for business structure improvement.........................................................................................................
Expenses for factory shutdown..............................................................................................................................
Loss on disaster....................................................................................................................................................
Decrease (increase) in trade notes and accounts receivable .....................................................................................
Increase in inventories ...........................................................................................................................................
Increase (decrease) in trade notes and accounts payable .........................................................................................
Decrease in other assets ........................................................................................................................................
Increase in other liabilities ......................................................................................................................................
Other ...................................................................................................................................................................
SubtotalInterest and dividend received ...............................................................................................................................
Interest paid .........................................................................................................................................................
Proceeds from insurance income ...........................................................................................................................
Payments for business structure improvement ........................................................................................................
Payments for factory shutdown .............................................................................................................................
Income taxes paid .................................................................................................................................................
Net cash provided by operating activities ...............................................................................................................

7,449
41
5
40
44
3
(1)
(56)
644
(337)
194
(106)
310
13
49
(4,643)(2,431)
1,770
252
492
630
9,422
52
(632)
106
(292)
(114)
(689)
7,853

6,587
20
(46)
80
22
21
(103)
692
249
139
(4)
168
(327)
(325)
210
1,250
2,362
(2,449)
1,006
614
(85)
35
13,382
101
(689)
325
(210)
(760)
(909)
11,240

6,281
(170)
161
25
(41)
(66)
801
(55)
222
(0)
(655)
526
(1,205)(1,528)
(310)
183
19
272
12,323
67
(821)
655
(757)
11,46767,280
367
50
363
398
26
(13)
(502)
5,810
(3,048)
1,755
(957)
2,804
115
439
(41,936)(21,956)
15,988
2,280
4,441
5,699
85,107470(5,712)957(2,633)(1,026)(6,226)70,937

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 ......................................................................................................
Proceeds from sales of investment securities ............................................................................................................
Purchase of shares of subsidiaries resulting in change in scope of consolidation (Note 3)...........................................
Payments for insurance policies ...............................................................................................................................
Proceeds from maturity of insurance funds .............................................................................….............................
Other, net ...............................................................................................................................................................
Net cash used in investing activities .........................................................................................................................

(9,738)
565
(220)
(237)
(2)
25
117
(9,490)(13,570)1(182)(1,502)
6
(562)
(2)
874
(14,937)(14,719)
40
(113)
(974)
1
(2)
(1,526)(17,293)(87,955)
5,105(1,986)(2,136)
(22)
228
1,050
(85,716)

Financing Activities:
Increase (decrease) in short-term borrowings ...........................................................................................................
Proceeds from long-term borrowings ......................................................................................................................
Payments for long-term borrowings .........................................................................................................................
Repayments of lease obligations...............................................................................................................................
Payments for purchase of treasury stock .................................................................................................................
Cash dividends paid ...............................................................................................................................................
Net cash provided by (used in) financing activities ...................................................................................................

10,574
42,598(52,485)
(563)
(349)
(394)
(619)

1,133
21,500(14,672)
(797)
(0)
(915)
6,249

(5,725)25,655(10,841)(1,197)(5,282)
(653)
1,957

95,513384,767(474,075)(5,088)(3,150)(3,557)(5,590)See notes to consolidated financial statements.

19

Thousands ofMillions of yen

U.S. dollars (Note 1)

2021

2020

2019

2021

502

(325)

98

4,526

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

(1,754)2,227(3,771)(15,843)

Cash and Cash Equivalents at the Beginning of the Year ..................................................................................
Increase in Cash and Cash Equivalents
resulting from Change of Scope of Consolidation ..............................................................................................
Cash and Cash Equivalents at the End of the Year (Note 3)...............................................................................

13,646

11,41915,190123,262

Effect of Exchange Rate Changes
on Cash and Cash Equivalents ...........................................................................................................................

See notes to consolidated financial statements.

20

\

230
12,122\

13,646\

11,419$2,072
109,491

Notes to Consolidated Financial Statements
Meiko Electronics Co., Ltd. and Consolidated Subsidiaries
For the Years Ended March 31, 2021, 2020 and 2019
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 the application and disclosure requirements ofInternational Financial Reporting Standards.
In preparing the accompanying consolidated financial statements,
certain reclassifications and rearrangements have been made to present
them in a form that is more familiar to readers outside Japan.
In addition, the notes to the consolidated financial statements include
information that 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 operated. The conversion of Japanese yen amounts into U.S. dollar
amounts is included solely for the convenience of readers outside Japanand has been made at the approximate exchange rate as at March 31, 2021($1 = \110.71). 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 of exchange.
2. Significant Accounting Policies
The following is a summary of the significant accounting policies
adopted by the Company and its consolidated subsidiaries
in the preparation of the consolidated financial statements.
(a) Consolidation
The consolidated financial statements include the accounts of
the Company and its significant 11 subsidiaries (together, the “Group”).
All significant inter-company accounts and transactions have been eliminated.
In the elimination of investments in subsidiaries, the assets and liabilities ofthe subsidiaries, including the portion attributable to minority shareholders,
are recorded based on the fair value at the time the Company acquired
control of the respective subsidiaries. Investments in certain unconsolidated
subsidiaries are accounted for by the cost method due to immateriality
in view of consolidation.
(b) Cash Equivalents
Cash equivalents are short-term investments that are readily convertible
into cash and are exposed to insignificant risk of changes in value.
Cash equivalents include time deposits that mature or become due
within three months of the date of acquisition.
(c) 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 as 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) Leased Assets
Leased property under finance lease arrangements that transfer ownershipof the leased property to the lessee is depreciated using the same method as
the one applied to property, plant and equipment owned by the Company.
Leased property under finance lease arrangements that do not transfer
ownership of the leased property to the lessee is capitalized to recognize
leased assets and lease obligations in the balance sheets and depreciatedover the lease term of the respective assets with zero residual value.
(g) Allowance for Doubtful Accounts
The Company and its consolidated subsidiaries provide for doubtful
accounts principally at an amount computed based on the historical bad debt
ratio during a certain reference period plus an estimated uncollectible amountbased on the analysis of certain individual accounts including claims inbankruptcy.
(h) Accrued Bonuses
Accrued bonuses to employees are provided for the estimated amounts,
which the Company and its consolidated subsidiaries are obligated to
pay to employees after the fiscal year end based on services rendered during
the current fiscal year.
(i) Accrued Bonuses to Directors and Corporate Auditors
The Company provides allowance for directors' and corporate auditors'
accrued bonuses based on the estimated amounts as at the balance sheet date.
(j) Impairment Losses on Fixed Assets
The Group reviews its long-lived assets for impairment whenever eventsor changes in circumstance indicate the carrying amount of an asset or
asset group may not be recoverable. An impairment loss would berecognized if the carrying amount of an asset or asset group exceeds
the sum of the undiscounted future cash flows expected to result fromthe continued use and eventual disposition of the asset or asset group.
The impairment loss would be measured as the amount by which
the carrying amount of the asset exceeds its recoverable amount,which is higher of asset's or cash-generating unit's fair valueless costs to sell and its value in use.
(k) Investment Securities
The Company has classified all the equity securities as available-forsale securities based on management’s intention. Available-for-salesecurities other than non-marketable securities are reported at fair value withunrealized gains or losses, net of applicable taxes, reported in a separate
component of net assets.
Non-marketable available-for-sale securities are stated at cost determinedby the moving-average method.
(l) Income Taxes
The provision for income taxes is computed based on the pretax
income included in the consolidated statements of operations. The asset
and liability approach is used to recognize deferred tax assets andliabilities for the expected future tax consequences of temporary
differences between the carrying amounts and the tax bases ofassets and liabilities. Deferred tax assets are measured by applying
currently enacted tax laws to the temporary differences.

(d) Inventories
Inventories are stated at cost, determined by the first-in-first-out method.
However, they are written down based on decreased profitability,
where appropriate.
(e) Depreciation and Amortization (excluding leased assets)
Depreciation of property, plant and equipment for the Company and its
domestic subsidiaries is computed mainly by the declining-balance method.
Buildings (excluding facilities attached to buildings) acquired on or after
April 1, 1998 and facilities attached to buildings and structures acquiredon or after April 1, 2016 are computed by the straight-line method.
Certain buildings and property, plant and equipment for overseas
subsidiaries are computed by the straight-line method.
The ranges of useful lives are summarized as follows:
Buildings and structures: 2–47 years
Machinery and vehicles: 2–10 years
Software for company use is carried at cost less accumulated amortization,
which is calculated by the straight-line method over its estimated usefullife of five years.

21

(m) Derivative Financial Instruments
The Group uses interest rate swaps, currency swaps andcopper 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.
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.
For currency swaps that qualify for hedge accounting, gain or loss
is translated at the exchange rate stipulated in the contract under
the allocation method.
(n) Retirement Benefits for Employees
The benefit formula method is used as a method of attributing
expected benefits to the periods through the end of the fiscal year
in calculating projected benefit obligation.
Actuarial gain or loss is amortized using the declining balance method
over 10 years, which is less than the average remaining years of serviceof the employees, and the amortization will be started in the following year
in which the gain or loss is recognized.
Past service cost is amortized using the straight-line method over 10
years, which is less than the average remaining years of service of theemployees.
Certain consolidated subsidiaries apply the simplified method in which
the retirement benefit amount required for voluntary termination at year end
is deemed a projected benefit obligation for the calculation of liability
associated with retirement and retirement benefit expenses.
(o) Provision for Directors' Retirement Benefits
The Company and its domestic consolidated subsidiaries account for the provision
for directors' retirement benefits as at the balance sheet date in accordance withinternal regulations.
(p) Appropriations of Retained Earnings
Appropriations of retained earnings are reflected in the accompanying
consolidated financial statements for the following year uponshareholders' approval.
(q) Per Share Information
Dividends per share shown in the consolidated statements of operations havebeen presented on an accrual basis and include, in each fiscal period,
dividends approved after each balance sheet date, but applicable to the fiscal
period then ended.
Net income per share is computed by dividing net income attributable
to common shareholders of the Company by the weighted-average
number of common shares outstanding for the period.
The diluted net income per share is omitted as the Company has no dilutive sharesfor the years ended March 31, 2021, 2020 and 2019.
(r) Unification of Accounting Policies Applied to Foreign Subsidiaries
for Consolidated Financial Statements
The Accounting Standards Board of Japan has issued ASBJ Practical Issues Task Force
No. 18 “Practical Solution on Unification of Accounting Policies Applied to Foreign
Subsidiaries for Consolidated Financial Statements” (“PITF No. 18”). PITF No. 18
requires that accounting policies and procedures applied by a parent company and its
subsidiaries to similar transactions and events under similar circumstances should,
in principle, be unified for the preparation of the consolidated financial statements.
PITF No. 18, however, as a tentative measure, allows a parent company to prepare
consolidated financial statements using foreign subsidiaries’ financial statements
prepared in accordance with either International Financial Reporting Standards
or U.S. generally accepted accounting principles. In this case, adjustments
for the following four items are required in the consolidation process so that
their impacts on net income are accounted for in accordance with Japanese GAAP
unless the impact is not material.
(1) Goodwill not subjected to amortization(2) Actuarial gains and losses of defined benefit plans recognized outside profit or loss
(3) Capitalized expenditures for research and development activities(4) Fair value measurement of investment properties, and revaluation ofproperty, plant and equipment, and intangible assets(s) Significant Accounting Estimates(Recoverability of deferred tax assets)(1) Amount recorded in the consolidated financial statements for the year ended March 31, 2021

Deferred tax assets......................................................................... \Millions

Thousands ofof yenU.S. dollars

1,254 $

11,330(2) Information on identified items regarding significant accounting estimates① Method to calculate the amount
As of March 31, 2021, the Company recorded deferred tax assets worth \1,254 million ($11,330 thousand),to the extent that it is probable that the tax obligation in the foreseeable future can be offset.
In the calculation, the Company scheduled the period when the deductible temporary differences and tax loss carryforward
would reverse, based on the future taxable income estimated according to the business plan.
Deferred tax assets before offset by the deferred tax liabilities were \1,549 million ($13,991 thousand).
Deferred tax assets of \794 million ($7,171 thousand) are recognized for tax loss carryforwards of \2,959 million ($26,731 thousand),calculated using the enacted statutory tax rates, which the Company and its consolidated subsidiaries recognized for a part of tax loss
carryforwards of \1,391 million ($12,565 thousand).
② Assumptions used in significant accounting estimates
Future taxable income used in assessment of recoverability of deferred tax assets was estimated according to the business plan,
where orders on hand and sales forecast by order prediction were main assumption.
③ Impact on the consolidated financial statements for the next consolidated accounting period
Deferred tax assets were calculated based on the estimated amount of future taxable income in the expected period according to
the business plan. Estimates are potentially affected by uncertain changes in economic conditions.
When the actual taxable income is different from the estimates in the amount and the period of accrual, significant impact
may occur on deferred tax assets on the consolidated financial statements for the next consolidated accounting period.
(t) Changes in Presentation Method(Adoption of “Accounting Standard for Disclosure of Accounting Estimates”)
The Company and its domestic subsidiaries adopted ASBJ Statement No. 31 "Accounting Standard forDisclosure of Accounting Estimates" (March 31, 2020) to the consolidated financial statements for the current
consolidated fiscal year, and therefore significant accounting estimates are disclosed in the note to the consolidated
financial statements. The note does not include information for the prior consolidated fiscal year in accordance withthe transitional provision set out in paragraph 11 of the Accounting Standard.
(u) Accounting Standards and Guidance Issued but Not Yet Adopted“Accounting Standard for Revenue Recognition” (ASBJ Statement No.
29, March 31, 2020) and“Implementation Guidance on Accounting Standard for Revenue
Recognition” (ASBJ Guidance No. 30, March 26, 2021)(1) Overview
The above standard and guidance provide comprehensive principles for revenue
recognition. Under the standard and guidance, revenue is recognized by applying thefollowing five steps:
Step 1: Identify the contract(s) with customers.
Step 2: Identify the performance obligations in the contract.
Step 3: Determine the transaction price.
Step 4: Allocate the transaction price to the performance obligation in the contract.
Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation.
(2) Effective date
The above standard and guidance will become effective from the beginning of the
fiscal year ending March 31, 2022.
(3) Impact of the adoption of the standard and guidance
The Company and its domestic consolidated subsidiaries are currently in the process ofdetermining the impact of the new standard and guidance on the consolidated financial statements.
(v) Additional Information(Accounting Estimates Relating to the Spread of the Novel Coronavirus (COVID-19 pandemic))
The Company made accounting estimates for recoverability of deferred tax assets, impairmentof fixed assets and others, based on the information available at the time of the preparation of theconsolidated financial statements.
Although it is difficult to forecast the spread of the COVID-19 pandemic and the timing of the return to normal in the future,
the Company made accounting estimates based on the assumption that the impact of the COVID-19 pandemic on the Company's
business operation is limited, considering the latest operating activities.
However, there are still many uncertain factors for estimating the impact of the spread of the COVID-19 pandemic, which may
influence the Company's financial conditions and operating results for the next consolidated accounting period.

22

3. Principal Breakdown of Assets and Liabilities of a Company that Became a Consolidated Subsidiary through the Acquisition of Stock
There were no applicable matters for the year ended March 31, 2021.
For the year ended March 31, 2020
Breakdown of assets and liabilities at the time of commencement of consolidation in connection with the new consolidation of Meiko Towada Vietnam Co., Ltd.
through the acquisition of stock and the relationship between acquisition cost of shares and expenditures for acquisition (net) are as follows:

Current assets ..................................................................................................................................................................................................................................... \Non-current assets ..............................................................................................................................................................................................................................
Goodwill ............................................................................................................................................................................................................................................
Current liabilities .................................................................................................................................................................................................................................
Non-current liabilities ...........................................................................................................................................................................................................................
Non-controlling interests ......................................................................................................................................................................................................................
Acquisition cost of shares................................................................................................................................................................................................................
Cash and cash equivalents ...................................................................................................................................................................................................................
Expenditures for acquisition ............................................................................................................................................................................................................ \Millionsof yen
2,265
873
406
(2,467)
(98)
(229)
750
(188)
562

4. 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, 2021 and 2020 are as follows:
2021

Millions of yen

Securities whose carrying values
exceed their acquisition cost:
Equity securities .............................................................\
Securities whose carrying values do not
exceed their acquisition cost:
Equity securities .............................................................
Total ............................................................................. \Thousands of U.S. dollars

Fair

Acquisition

Unrealized

Fair

Acquisition

Unrealized

Value

Cost

Gains (Losses)

Value

Cost

Gains (Losses)

184 \

111 \

73 $

1,662 $

1,000 $

662

84
268 \

100
211 \

(16)
57 $

758
2,420 $

908
1,908 $

(150)
512

2020
Millions of yen

Securities whose carrying values
exceed their acquisition cost:
Equity securities ............................................................. \Securities whose carrying values do not
exceed their acquisition cost:
Equity securities .............................................................
Total ............................................................................. \Fair

Acquisition

Unrealized

Value

Cost

Gains (Losses)

38 \

20 \

18

153
191 \

309
329 \

(156)
(138)

Information on available-for-sale securities whose fair values are not readily determinable as of March 31, 2021 and 2020 are described in Note 17.
There were no sales of securities classified as available-for-sale securities for the year ended March 31, 2021.
Information regarding the sale of securities classified as available-for-sale securities for the year ended March 31, 2020 are summarized as follows:
2020
Millions of yen
Proceeds

Aggregate

Aggregatefrom Sales

Gains onLosses on

Sales

Equity securities ............................................................. \Total ............................................................................. \

6\
6\

Sales

4\
4\

0
0

The Company recorded no impairment loss of investment securities for the year ended March 31, 2021.
The Company recorded impairment loss of investment securities in the amount of \168 million for the year ended March 31, 2020.
It consists of \118 million for available-for-sale securities and \50 million for shares of subsidiaries and associates.

5. Reduction Entry for Property, Plant and Equipment
The amount deducted from the acquisition costs of property, plant and equipment due to government subsidies received and others as of March 31, 2021 and 2020 is as follows:
Thousands of

Buildings and structures ........................................................................................................................................................ \Machinery and vehicles .........................................................................................................................................................
Other ...................................................................................................................................................................................
Total .................................................................................................................................................................................... \23

Millions of yen
2021
2020
270 \
270 $
162
162
7
7
439 \
439 $

U.S. dollars

2021
2,440
1,464
59
3,963

6. Short-term Borrowings and Long-term Debt
Short-term borrowings and long-term debt as of March 31, 2021 and 2020 consist of the following:Thousands ofMillions of yen
2021
2020

U.S. dollars

2021

Short-term borrowings with average interest rate of 0.97% for 2021 and 0.98% for 2020.................................................................. \Current portion of long-term borrowings with average interest rate of 1.09% for 2021 and 0.95% for 2020........................................
Current portion of lease obligations ...............................................................................................................................................
Current portion of other liabilities with average interest rate of 0.58% for 2021 and 0.57% for 2020...................................................
Total short-term borrowings ...............................................................................................................................................

20,834 \
8,304
340
1,300
30,7789,686 $
15,544561
1,300
27,091

188,189
75,005
3,065
11,742
278,001

Long-term borrowings with average interest rate of 0.84% for 2021 and 0.73% for 2020, less current portion ...................................
Lease obligations, less current portion ...........................................................................................................................................
Total long-term borrowings..................................................................................................................................................
Total ................................................................................................................................................................................. \38,226603
38,82969,607 \40,479935
41,41468,505 $345,2815,450
350,731
628,732* Average interest rate of borrowings represents the weighted average rate for the outstanding balances as at March 31, 2021 and 2020.
Average interest rate of lease obligations is not disclosed since the amount equivalent to interest expense included in total lease payments is allocated over the lease term using the straight-line method.
Average interest rate of other liabilities represents the weighted average rate for the average of the outstanding balances as at April 1, 2020 and March 31, 2021.
The aggregate annual maturities of long-term debt as of March 31, 2021 are as follows:Year ending March 31
2022.................................................................................................................................................................................................................................................... \2023....................................................................................................................................................................................................................................................
2024....................................................................................................................................................................................................................................................
2025....................................................................................................................................................................................................................................................
Total .................................................................................................................................................................................................................................................. \Millionsof yen6,059 $
5,200
4,667
22,30038,226 $Thousands ofMillionsof yen
207 $
163
91
95
47
603 $

Thousands of

U.S. dollars

54,732
46,97042,152
201,427
345,281

The aggregate annual maturities of lease obligations as of March 31, 2021 are as follows:Year ending March 31
2022.................................................................................................................................................................................................................................................... \2023....................................................................................................................................................................................................................................................
2024....................................................................................................................................................................................................................................................
2025....................................................................................................................................................................................................................................................
2026 and thereafter ..............................................................................................................................................................................................................................
Total .................................................................................................................................................................................................................................................. \U.S. dollars

1,870
1,475
820
860
425
5,450

Financial covenants
For the year ended March 31, 2021
Short-term borrowings and long-term borrowings, including the current portion amounting to \54,753 million ($494,564 thousand), include certain financial covenants that forfeit the benefit of termwith regard to the debts on certain loan agreement in the event the Company is in breach of either of the following covenants (stricter covenants are described if there are several covenants).
(1) For each fiscal year, ordinary losses shall not be recorded on the consolidated statement of operations under Japanese GAAP for two consecutive years.
(2) Total net assets on the consolidated balance sheet at each fiscal year end shall be maintained at least higher of either (i) \20,589 million ($185,972 thousand), or (ii) 75% of the total net assets
recorded on the consolidated balance sheet as of the end of the previous fiscal year.
(3) The total amount of interest-bearing debts on the consolidated balance sheet at each fiscal year end shall be lower than the amount equivalent to the net sales on the consolidated statement of operations
for that fiscal year divided by 12 and multiplied by 8.
(4) The ratio of interest-bearing debts divided by the amount equal to the total net assets minus foreign currency translation adjustments, using the amount on the consolidated balance sheet at each fiscal year end,
shall be maintained on or below the level specified as follows:Year ending March 31
2021...................................
2.5
2022...................................
2.3
2023...................................
2.1
2024...................................
1.9
2025...................................
1.7
For the year ended March 31, 2020
Short-term borrowings and long-term borrowings, including the current portion amounting to \58,091 million, include certain financial covenants that forfeit the benefit of termwith regard to the debts on certain loan agreement in the event the Company is in breach of either of the following covenants (stricter covenants are described if there are several covenants).
(1) For each fiscal year, ordinary losses shall not be recorded on the consolidated statement of operations under Japanese GAAP for two consecutive years.
(2) Total net assets on the consolidated balance sheet at each fiscal year end shall be maintained at least higher of either (i) \20,589 million, or (ii) 75% of the total net assets
recorded on the consolidated balance sheet as of the end of the previous fiscal year.
(3) The total amount of interest-bearing debts on the consolidated balance sheet at each fiscal year end shall be lower than the amount equivalent to the net sales on the consolidated statement of operations
for that fiscal year divided by 12 and multiplied by 8.

24

7. Retirement Benefits
The Company and some of its consolidated subsidiaries provide a lump-sum retirement plan and a defined contribution plan as a defined benefit pension plan for employees' retirement benefits.
Certain consolidated subsidiaries apply the simplified method in computing net defined benefit liability and benefit costs for their lump-sum retirement plans.
Defined benefit pension plans, except plan applying the simplified method(1) Movement in projected benefit obligations
Thousands ofBalance at the beginning of the year ............................................................................................................................................... \Service cost .................................................................................................................................................................................
Interest cost .................................................................................................................................................................................
Actuarial loss................................................................................................................................................................................
Benefits paid ................................................................................................................................................................................
Balance at the end of the year......................................................................................................................................................... \Millions of yen
2021
2020
2,312 \
2,300 $
133
135
9
5
68
(29)
(133)
(99)
2,389 \
2,312 $

U.S. dollars

2021
20,8871,201
84
616(1,206)
21,582(2) Reconciliation from projected benefit obligations to net defined benefit liability
Thousands ofUnfunded projected benefit obligations .......................................................................................................................................... \Total liability at the end of the year ................................................................................................................................................ \Net defined benefit liability ............................................................................................................................................................ \Total liability at the end of the year ................................................................................................................................................ \Millions of yen
2021
2020
2,389 \
2,312 $
2,389 \
2,312 $
2,389 \
2,389 \

2,312 $
2,312 $

U.S. dollars

2021
21,582
21,582
21,582
21,582(3) Retirement benefit costs
Thousands ofService cost ................................................................................................................................................................................. \Interest cost .................................................................................................................................................................................
Amortization of actuarial loss ........................................................................................................................................................
Amortization of past service cost ..................................................................................................................................................
Total benefit costs ........................................................................................................................................................................ \Millions of yen
2021
2020
133 \
135 $
9
5
(1)
6
39
38
180 \
184 $

U.S. dollars

2021
1,201
84
(12)
351
1,624

(4) Remeasurements of defined benefit plans
Thousands of

Past service cost .......................................................................................................................................................................... \Actuarial loss ...............................................................................................................................................................................
Total ............................................................................................................................................................................................ \Millions of yen
2021
2020
(39) \(38) $
70(35)
31 \(73) $

U.S. dollars

2021
(351)
628
277

(5) Accumulated remeasurements of defined benefit plans
Thousands ofUnrecognized past service cost ..................................................................................................................................................... \Unrecognized actuarial loss (gain)..................................................................................................................................................
Total ............................................................................................................................................................................................ \Millions of yen
2021
2020
193 \
231 $
63
(6)
256 \
225 $

U.S. dollars

2021
1,739
570
2,309

(6) Actuarial assumptions

Discount rate ................................................................................................................................................................................

2021
0.4%

2020
0.4%

Defined benefit pension plan applying the simplified method(1) Movement in net defined benefit liability
Thousands ofBalance at the beginning of the year ............................................................................................................................................... \Benefit costs ................................................................................................................................................................................
Benefits paid ................................................................................................................................................................................
Balance at the end of the year ........................................................................................................................................................ \Millions of yen
2021
2020
384 \
389 $
20
12
(26)
(17)
378 \
384 $

U.S. dollars

2021
3,469
179
(234)
3,414

(2) Reconciliation from projected benefit obligations to net defined benefit liability
Thousands ofUnfunded projected benefit obligations .......................................................................................................................................... \Total liability at the end of the year ................................................................................................................................................ \Net defined benefit liability ............................................................................................................................................................ \Total liability at the end of the year ................................................................................................................................................ \Millions of yen
2021
2020
378 \
384 $
378 \
384 $
378 \
378 \

U.S. dollars

2021
3,414
3,414

384 $
384 $

3,414
3,414

(3) Retirement benefit costThousands ofRetirement benefit costs calculated using the simplified method ...................................................................................................... \Total costs at the end of the year ................................................................................................................................................... \Millions of yen
2021
2020
20 \
12 $
20 \
12 $

U.S. dollars

2021
179
179

Defined contribution plan
The amount required to contribute to the defined contribution plans is \165 million ($1,486 thousand) and \167 million for the years ended March 31, 2021 and 2020, respectively.

25

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
reserves 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. Loss on disasterFor the year ended March 31, 2021
The Group recorded loss on disaster for the disposal cost of the flooded raw materials and restoration cost in the factories devastated by the heavy rain in July 2020,
and restoration cost of damage by the earthquake in Fukushima in February 2021.
There were no applicable matters for the years ended March 31, 2020 and 2019.

10. Expenses for Business Structure Improvement
For the year ended March 31, 2021
The Group recorded expenses for business structure improvement for the payment of financial compensation, equivalent to severance payment, with the aim of
improving business structure of overseas subsidiaries.
For the year ended March 31, 2020
The Group recorded expenses for business structure improvement for the payment of financial compensation, equivalent to severance payment, with the aim of
improving business structure of overseas subsidiaries.
For the year ended March 31, 2019
The Group recorded expenses for business structure improvement to correspond to changes in business environment with the aim of improving its corporate
competitiveness and stability in line with the Group's structural reforms through downsizing its total assets and the improvement of asset efficiency.
It consists of \421 million for loss on disposal of fixed assets and \105 million for impairment loss.

11. Expenses for Factory Shutdown
For the year ended March 31, 2021
The Company recorded expenses for the shutdown of factories of Meiko Towada Vietnam Co., Ltd. caused by the spread of the COVID-19 pandemic.
For the year ended March 31, 2020
The Company recorded expenses for the shutdown of factories of Meiko Electronics (Wuhan) Co., Ltd. and Meiko Electronics (Guangzhou Nansha) Co., Ltd. caused by
the spread of the COVID-19 pandemic.
There were no applicable matters for the year ended March 31, 2019.

12. Contingent Liabilities
Contingent liabilities of the Company as of March 31, 2021 and 2020 are as follows:
Thousands ofMillions of yen
2021
2020
45 \

Trade notes discounted............................................................................. \U.S. dollars

2021
33 $

409

13. Research and Development Costs
Research and development costs included in selling, general and administrative expenses and manufacturing costs are \1,428 million ($12,894 thousand),\1,212 million and \1,041 million for the years ended March 31, 2021, 2020 and 2019, respectively.

14. Gain on Reversal of Loss on Valuation of Investment Securities
There were no applicable matters for the year ended March 31, 2021.
The Company recorded gain on reversal of loss on valuation of investment securities carried out at overseas subsidiaries under the International Financial Reporting Standards
for the year ended March 31, 2020.
There were no applicable matters for the year ended March 31, 2019.

15. Net Gain and Net Loss on Sales and Disposal of Property, Plant and Equipment
Significant components of net gain and net loss on sales and disposal of property, plant and equipment for the years ended March 31, 2021, 2020 and 2019 are as follows:
Thousands of

Gain:
Buildings and structures ..........................................................................\
Machinery and vehicles........................................................................
Land ......................................................................................................
Construction in progress .........................................................................
Others ....................................................................................................
Total gain .......................................................................................
Loss:
Buildings and structures ..........................................................................
Machinery and vehicles ...........................................................................
Land ......................................................................................................
Construction in progress .........................................................................
Others ....................................................................................................
Total loss .......................................................................................
Net loss ........................................................................................ \2021

Millions of yen
2020
- \
4
4
(17)
(112)
(59)
(10)
(198)
(194) \

U.S. dollars

- \
1
1

(9)
(115)
(16)
(140)
(139) \

26

2019

- $
2
2

(3)
(204)
(6)
(11)
(224)
(222) $

2021

35
35

(156)
(1,012)(531)(91)(1,790)(1,755)

16. 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 30.6% for the years ended March 31, 2021, 2020 and 2019.
The tax effects of significant temporary differences that resulted in deferred tax assets and liabilities as of March 31, 2021 and 2020 are as follows:
Thousands ofDeferred Tax Assets:
Elimination of unrealized profits .........................................................................................................................…
\
Accrued bonuses ...............................................................................................................................................
Net defined benefit liability ..................................................................................................................................
Provision for directors' retirement benefits ..........................................................................................................
Accrued enterprise tax ........................................................................................................................................
Allowance for doubtful accounts.........................................................................................................................
Valuation loss of inventories................................................................................................................................
Difference on depreciation period........................................................................................................................
Impairment loss .................................................................................................................................................
Loss on valuation of investment securities............................................................................................................
Loss on revaluation of golf club memberships ....................................................................................................
Tax loss carryforwards (*2)................................................................................................................................
Unrealized losses on available-for-sale securities...................................................................................................
Deduction of foreign corporation tax carried forward ..........................................................................................
Other .................................................................................................................................................................
Gross deferred tax assets....................................................................................................................................
Valuation allowance for tax loss carryforwards (*2)..............................................................................................
Valuation allowance for deductible temporary differences.....................................................................................
Less: Valuation allowance (*1)............................................................................................................................
Total .................................................................................................................................................................. \Millions of yen
2021
2020
81 \
212
782
66
23
71
76
336
866
20
15
2,959
444
103
6,054
(2,165)(2,340)(4,505)
1,549 \

U.S. dollars

2021

51 $
196
770
66
3
66
80
373
1,007
20
15
2,867
3
663
72
6,252
(2,414)(2,625)(5,039)1,213 $

732
1,917
7,061
596
208
641
690
3,035
7,818
180
138
26,731
4,007
928
54,682(19,560)(21,131)(40,691)
13,991Thousands ofDeferred Tax Liabilities:
Retained earnings of foreign subsidiaries.............................................................................................................. \Unrealized gains on available-for-sale securities....................................................................................................
Deferred gains on hedges....................................................................................................................................
Other..................................................................................................................................................................
Total ................................................................................................................................................................... \Deferred Tax Assets, Net: .................................................................................................................................... \Millions of yen
2021
2020

U.S. dollars

2021

(419)
(17)
(111)
(547) \

(427) $
(13)(3)(443) $

(3,782)(157)(999)(4,938)1,002 \

770 $

9,053

(*1) The valuation allowance decreased by \535 million ($4,828 thousand), mainly due to the decrease of \416 million ($3,756 thousand) invaluation allowance for tax loss carryforwards and the decrease of \220 million ($1,984 thousand) in valuation allowancefor deferred foreign tax credits at the Company for the year ended March 31, 2021.
The valuation allowance decreased by \112 million, mainly due to the decrease of \106 million in valuation allowance
for impairment loss at consolidated subsidiaries for the year ended March 31, 2020.
(*2) Gross deferred tax assets, valuation allowances and total deferred tax assets recognized for tax loss carryforwards, broken down by expiration dates are as follows:
March 31, 2021
Gross deferred tax assets for tax loss carryforwards (*a) .......................................................................................\
Valuation allowance ..............................................................................................................................................
Total deferred tax assets recognized .....................................................................................................................

March 31, 2020
Gross deferred tax assets for tax loss carryforwards (*a) .......................................................................................\
Valuation allowance ..............................................................................................................................................
Total deferred tax assets recognized .....................................................................................................................

March 31, 2021
Gross deferred tax assets for tax loss carryforwards (*a) .......................................................................................$
Valuation allowance ..............................................................................................................................................
Total deferred tax assets recognized .....................................................................................................................

Within one
year

Within one
year

Within one
year

-\
-

- \
-

-$
-

One to twoyears

One to twoyears

One to two
years

Millions of yen
Over two toOver three toOver four tothree years
four years
five years
51 \
- \
586 \
825 \
(51)
(342)
(275)
244
550

- \
-

Over two to
three years

Millions of yen
Over three toOver four tofour years
five years- \74 \1,194 \
(74)
(742)
452

Thousands of U.S. dollars
Over two toOver three toOver four tothree years
four years
five years
- $
460 $
5,294 $
7,450 $
(460)
(3,093)(2,480)
2,201
4,970

(*a) Gross deferred tax assets for tax loss carryforwards are calculated using the enacted statutory tax rates.
(*b) Deferred tax assets of \794 million ($7,171 thousand) are recognized for tax loss carryforwards of \2,959 million ($26,731 thousand) (calculated using the enacted statutory tax rates),
which the Company and its consolidated subsidiaries recognized for a part of tax loss carryforwards of \1,391 million ($12,565 thousand) for the year ended March 31, 2021.
These tax loss carryforwards resulted from loss before income taxes for the year ended March 31, 2016 and the year ended March 31, 2021, which are expected to be recoverable judging fromthe estimated taxable income in the future. Accordingly, the Company does not recognize the valuation allowance for this for the year ended March 31, 2021.
Deferred tax assets of \452 million are recognized for tax loss carryforwards of \2,866 million (calculated using the enacted statutory tax rates),
which the Company and its consolidated subsidiaries recognized for a part of tax loss carryforwards of \1,465 million for the year ended March 31, 2020.
These tax loss carryforwards resulted from loss before income taxes for the year ended March 31, 2016 and the year ended March 31, 2020, which are expected to be recoverable judging fromthe estimated taxable income in the future. Accordingly, the Company does not recognize the valuation allowance for this for the year ended March 31, 2020.
A reconciliation between the normal effective statutory tax rates and the actual effective tax rates reflected in the accompanying consolidated statements
of income for the years ended March 31, 2021, 2020 and 2019 is as follows:

Statutory tax rate ..........................................................................................................................................................................
Expenses not deductible for tax purpose .......................................................................................................................................
Per capita inhabitant tax ................................................................................................................................................................
Directors' bonuses ........................................................................................................................................................................
Tax deduction ..............................................................................................................................................................................
Tax rate difference in foreign subsidiaries ......................................................................................................................................
Retained earnings of foreign subsidiaries .......................................................................................................................................
Foreign tax credit .........................................................................................................................................................................
Valuation allowance ......................................................................................................................................................................
Other, net .....................................................................................................................................................................................
Actual effective tax rate .................................................................................................................................................................

27

2021

2020

2019

30.6%
0.1%
0.3%
0.2%
(3.2)%(13.2)%(0.2)%
2.8%(7.5)%(1.5)%
8.4%

30.6%
0.3%
0.5%
0.6%
(3.6)%(12.9)%
0.8%
8.0%(3.5)%
1.2%
22.0%

30.6%
0.1%
0.2%
0.1%
(2.1)%(13.8)%
0.6%
2.4%(1.9)%(2.0)%
14.2%

Over five years
1,497 \
(1,497)-

Over five years
1,598 \
(1,598)-Over five years
13,527 $(13,527)
-

Total
2,959
(2,165)(*b) 794

Total
2,866
(2,414)(*b) 452

Total
26,731(19,560)(*b) 7,171

17. Financial Instruments(a) Qualitative information on financial instruments(1) Policies for using financial instruments
The Group finances necessary funds mainly through bank loans 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 the credit risk. Some operating receivables, which are denominated in foreign currencies
due to global operations, are exposed to the foreign currency fluctuation risk. The Group might utilize foreign exchange forward contracts, if necessary, except for thosewithin the range of the operating payables denominated in the same the foreign currency. Investment securities mainly consist of securities of companies in whicha business relationship has been established and they are exposed to the 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 denominated in foreign currencies and exposed to the foreign currency fluctuation risk.
The Group might utilize foreign exchange forward contracts, if necessary, except for those within the range of the operating receivables denominated in the same foreign currency.
Loans and lease obligations for finance lease transactions are mainly used for the purpose of financing capital investments.
Some of them are variable interest loans and exposed to the interest and foreign currency fluctuation risk.
The Group utilizes interest rate swaps and currency swaps to hedge the risk. Regarding derivative transactions, the Group utilizes foreign exchange forward contracts tohedge the foreign currency fluctuation risk of receivables and payables denominated in foreign currencies. The Group utilizes interest rate swaps and currency swaps
to hedge the interest fluctuation risk. The Group utilizes commodity forward contracts to hedge the 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 denominated 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 readjusts its 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 the finance department. Contents of the derivative transactions
are reported to Board of Directors' meeting periodically.
(iii) Liquidity risk management (risk of default at the due dates)
The Company prepares and updates the cash management plan based on the reports from each department to manage liquidity risk on a timely basis.
(4) Supplemental information on fair values
Along with the values based on market prices, fair values of financial instruments include values that 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 18, 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 as at March 31, 2021 and 2020 are as follows:
2021

Millions of yen

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

Book

Fair

Value

Value

Difference

Fair

Value

Value

Difference

12,122 \249
29,504

12,122 \249
29,504- $-109,491 $2,249
266,497

109,491 $2,249
266,497

-

268

268

-

2,420

2,420

-

20,466 \20,83446,530943
361 \20,466 \20,834
46,529
949
361 \

- $
(1)
6
- $

184,860 $
188,189420,286
8,515
3,260 $

184,860 $
188,189420,2808,569
3,260 $

(6)
54
-

2020
Millions of yen

AssetsCash and cash equivalents ............................................ \Time deposits ..............................................................
Trade notes and accounts receivable .............................
Investment securities:
Available-for-sale securities.........................................
Liabilities
Trade notes and accounts payable ................................ \Short-term borrowings..................................................
Long-term borrowings...................................................
Lease obligations..........................................................
Derivative financial instruments ....................................... \Thousands of U.S. dollars
Book

Book

Fair

Value

Value

Difference

13,646 \244
24,44813,646 \244
24,448

-

191

191

-

17,732 \9,686
56,023
1,496
44 \

17,732 \9,686
56,035
1,503
44 \

12
8
-

The financial instruments whose fair values are extremely difficult to determine are not included above.
Derivative financial instruments are stated in net of assets and liabilities. The figures in parenthesis indicate net liabilities.

28

(1) Valuation method of the fair value of financial instruments and information of investment securities and derivative transactions(i) Cash and cash equivalents, (ii) Time deposits, (iii) Trade notes and accounts receivable
The carrying value is deemed as the fair value since it is scheduled to be settled in a short period of time.
(iv) Investment securities
Fair value of equity securities is based on the quoted price on stock exchange. Please refer to Note 4 regarding the information of the fair value for the investment
in securities by classification.
(v) Trade notes and accounts payable, (vi) Short-term borrowings
The carrying value is deemed as the fair value since it is scheduled to be settled in a short period of time.
(vii) Long-term borrowings, (viii) Lease obligations
The fair values are measured as the net present value of estimated future cash flows by discounting the principal and interest value using the loan interest rate applied
to the new loans or the lease contracts. If the variable interest rate loans meet certain criteria for the short-cut method for interest rate swaps (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 theinterest rate swap contract is added to or deducted from the interest on the liabilities for which the swap contract was executed) and for the allocation method for
currency swaps, the sum of principal and the interest processed as interest rate swaps and currency swaps are discounted by using the reasonably estimated loaninterest rate applied to the same kind of loans.
(ix) Derivative transactions
Please refer to Note 18.
(2) Unlisted securities of \2,340 million ($21,135 thousand) as of March 31, 2021 and \3,030 million as of March 31, 2020 are not included in the above tablebecause the securities do not have fair market values and it is extremely difficult to estimate fair values.
(c) The redemption schedule for financial instruments as of March 31, 2021 and 2020 is as follows:

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

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

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

2021
Millions of yen

Due in one
year

Due after one
year throughDue after five
years throughor less

five years

ten years

Due after ten
years

12,122 \249
29,504

- \
-

- \
-

-

-

2021
Thousands of U.S. dollars--

Due in one

Due after one

Due after fiveDue after ten

year

year throughyears throughyears

or less

five years

ten years

109,491 $2,249
266,497
-

- $
-

- $
-

-

2020
Millions of yen--

Due in one

Due after one

Due after fiveDue after ten

year
or less

year throughfive years

years throughten years

years

13,646 \244
24,448

- \
-

- \
-

-

-

-

-

-

29

18. Derivatives
There are no derivative transactions for which hedge accounting has not been applied for the years ended March 31, 2021 and 2020.
Derivative transactions for which hedge accounting has been applied for the years ended March 31, 2021 and 2020 are as follows:

Contract
amountHedged item

Millions of yen
Contract
amountdue after
one year

2021

Fair value

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

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

Long-term
borrowings \

66 \

22 \

(1) $

600 $

200 $

(10)

Currency swap
contracts
Payable fixed/
Receive floating

Long-term
borrowings \2,437 \

367 \

0 $

22,014 $3,317 $

2

Special Method*
Interest rate swap
contracts
Payable fixed/
Receive floating

Long-term
borrowings \1,000 \

600 \

(5) $

9,033 $

5,420 $

(43)

Currency related:
Allocation Method
Foreign currency
forward contracts
Currency swap
contracts
Payable in yen/
Receive in U.S.
dollars

Long-term
borrowings \2,437 \

367 \(21) $

22,014 $3,317 $

(187)

Commodity related:
Benchmark Method
Copper swap
contractsRawmaterials

2,065 \

- \

362 $

18,653 $

- $

3,268

\

Contract
amountHedged item

2020
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

\

996 \

65 \

(4)

Currency swap
contracts
Payable fixed/
Receive floating

Long-term
borrowings\

4,507 \

2,437 \

40

Special Method*
Interest rate swap
contracts
Payable fixed/
Receive floating

Long-term
borrowings\

1,400 \

1,000 \

(9)

Currency related:
Allocation Method
Foreign currency
forward contracts
Currency swap
contracts
Payable in yen/
Receive in U.S.
dollars

Long-term
borrowings\

4,507 \

2,437 \

(168)

Commodity related:
Benchmark Method
Copper swap
contractsRawmaterials

\

617

-

8

Fair value is principally based on the quoted price obtained from financial institutions signing the contract.
* Special Method
The interest rate swaps, which qualify for hedge accounting and meet specific matching criteria, are not remeasured at the market value but the differential
paid or received under the swap agreements is recognized and included in interest expense or income.

30

19. Comprehensive Income
Reclassifications and income tax effects attributable to other comprehensive income for the years ended March 31, 2021, 2020 and 2019 are as follows:
Thousands of

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 ................................................................................................................... \Reclassifications and adjustments .....................................................................................................................
Total ................................................................................................................................................................. \Remeasurements of defined benefit plans:
Adjustments arising during the year .................................................................................................................... \Reclassifications and adjustments .....................................................................................................................
Before income tax effects ...................................................................................................................................
Income tax effects ............................................................................................................................................
Total ................................................................................................................................................................. \Total other comprehensive income ......................................................................................................................\

31

Millions of yen
2020

2021

U.S. dollars

2019

2021

65 \
65
(17)
48 \

(57) \
114
57
57 \(123) $
26(97)10(87) $

590
590
(157)
433

647 \
(330)
317
(97)
220 \

(143) \
(78)
(221)
68
(153) \

(100) $
(67)
(167)
51
(116) $

5,846
(2,979)
2,867
(879)
1,988

3,755 \
3,755 \

(2,945) \(2,945) \(190) $
(190) $

33,92033,920(68) \
37(31)(31) \
3,992 \

28 \
45
73
73 \
(2,968) \

67 $
64
131
131 $
(262) $

(616)
339
(277)
(277)
36,064

20. Segment Information
Information about reported segment sales, segment profit, segment assets and other items under the new accounting standards is not disclosed as the Group's
reportable segment is mainly printed circuit boards (“PCB”), and the related business and other business are immaterial.
(Supplementary information)(1) Information about products and services
Information about products and services is not disclosed since the sales amount of a 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

2021
Millions of yen
Japan

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

41,103\

China

Vietnam

29,804\

16,140\

Asia\

North America

17,747\

11,335

Europe

\

3,128

Total

\

119,257$

1,077,203

2021
Thousands of U.S. dollars
Japan

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

$

371,265

China$

Vietnam269,203$145,790

Asia$

North America

160,306$

102,384

Europe$28,255Total

2020
Millions of yen
Japan

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

35,174\

China

Vietnam

34,642\

12,747\

Asia\

North America

17,225\

13,169Europe

\

2,522

Total

\

115,479

2019
Millions of yen
Japan

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

30,428\China

Vietnam

40,593\

12,168\

Asia\

North America

19,092\

13,729Net sales by destination were recognized based on the location of customers and classified by country or region.
(b) Property, plant and equipment

2021
Millions of yen
Japan

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

7,216

\

China

\

Vietnam

26,45935,108

\

Other

\

Total

4

\

32

$

4

\

68,787

2021
Thousands of U.S. dollars
Japan

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

$

65,182

China$

Vietnam

238,993$

317,118

Other

$

Total

621,325

2020
Millions of yen
Japan

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

7,588

\

(3) Information about major customers
Name of the major customer
Samsung Electronics Co., Ltd. .....................................................................

China

\

Vietnam

24,716\30,689

Other

\

Total

Sales
2021
Millions of yen\

13,564

Thousands of U.S. dollars$

122,514

The above sales amount includes the sales from the major customer and its business group.
Information about reportable segment is not disclosed as the Group has one segment.
Information about major customers is not presented since no single customer accounts for 10% or more of consolidated net sales for the years ended March 31, 2020 and 2019.
(4) Information about impairment loss
Information about impairment loss by reportable segment for the year ended March 31, 2021 is not disclosed as the Group's reportable segment issolely printed circuit boards (“PCB”) and the related business and other business are immaterial.
Information about impairment loss by reportable segment for the year ended March 31, 2020 is not disclosed as the Group's reportable segment issolely printed circuit boards (“PCB”) and the related business and other business are immaterial.
Information about impairment loss by reportable segment for the year ended March 31, 2019 is not disclosed as the Group's reportable segment ismainly printed circuit boards (“PCB”) and the related business and other business are immaterial.

32

62,997

Europe

\

2,901

Total

\

118,911

21. Related-Party Transactions
For the year ended March 31, 2021
Transactions with related parties(1) Unconsolidated subsidiary
There were no applicable matters for the year ended March 31, 2021.
(2) Directors and major individual shareholders

Name
M.D. Systems Co., Ltd.
※2

Location
Atsugi City,
Kanagawa

Capital\15 million

Details of the business
Board design

Percentage forpossession of voting rights
Directly own (%)
14.7

Relationship
Businessrelationship

Details of thetransaction ※3
Purchase of
products

Transaction
amount ※1\240 million($2,171 thousand)Sales of products\14 million($122 thousand)

Balance as at
March 31,2021
\41 million($371
thousand)in accounts
payable\2 million($22 thousand)in accounts
receivable

Notes: ※1 Consumption taxes are not included in the transaction amount, and included in the balance as at March 31, 2021.
※2 Seiichi Naya, a close relative of Yuichiro Naya, representative director and executive officer of the Company, directly owns 81.3% of voting rights in M. D. Systems Co., Ltd.
※3 The terms and conditions of the transactions for sales and purchase of products are determined through negotiations considering the market price, total costs and others.

Transactions between consolidated subsidiaries and related parties
Directors and major individual shareholders

Name
M.D. Systems Co., Ltd.
※2

Dapara Tech Co., Ltd.
※3

Location
Atsugi City,
Kanagawa

Seoul City,
South Korea

Capital\15 million₩50 million

Details of the business
Board design

Sales ofboard and its
relatedfacilities

Percentage forpossession of voting rights
Directly own (%)
14.7

Directly own (%)-

Relationship
Businessrelationship

Businessrelationship/
Concurrent positionsof the director

Transaction
amount ※1\10 million($91 thousand)Sales of products\1 million($12 thousand)\0 million($1 thousand)in accounts
receivable

Sales commission\410 million($3,706 thousand)\77 million($696
thousand)in otherpayableSales of products\56 million($508 thousand)\5 million($50 thousand)in accounts
receivable

Notes: ※1 Consumption taxes are not included in the transaction amount, and included in the balance as at March 31, 2021.
※2 Seiichi Naya, a close relative of Yuichiro Naya, representative director and executive officer of the Company, directly owns 81.3% of voting rights in M. D. Systems Co., Ltd.
※3 Yoon Ho Shin, director of the Company, directly owns 60.0% of voting rights in Dapara Tech Co., Ltd.
※4 The terms and conditions of the transactions for sales and purchase of products are determined through negotiations considering the market price, total costs and others.
The terms and conditions of the sales commission are determined through negotiations considering those with other companies.

33

Balance as at
March 31,2021
\2 million($15 thousand)in accounts
payableDetails of thetransaction ※4
Purchase of
products

For the year ended March 31, 2020
Transactions with related parties(1) Unconsolidated subsidiary
There were no applicable matters for the year ended March 31, 2020.
(2) Directors and major individual shareholders

Name
M.D. Systems Co., Ltd.
※2

Location
Atsugi City,
Kanagawa

Capital\15 million

Details of the business
Board design

Percentage forpossession of voting rights
Directly own (%)
14.7

Relationship
Businessrelationship

Details of thetransaction ※3
Purchase of
products

Transaction
amount ※1\219 million

Sales of products\13 million

Balance as at
March 31,2020
\24 million
in accounts
payable\3 million
in accounts
receivable

Notes: ※1 Consumption taxes are not included in the transaction amount, and included in the balance as at March 31, 2020.
※2 Seiichi Naya, a close relative of Yuichiro Naya, representative director and executive officer of the Company, directly owns 81.3% of voting rights in M. D. Systems Co., Ltd.
※3 The terms and conditions of the transactions for sales and purchase of products are determined through negotiations considering the market price, total costs and others.

Transactions between consolidated subsidiaries and related parties
Directors and major individual shareholders

Name
M.D. Systems Co., Ltd.
※2

Dapara Tech Co., Ltd.
※3

Location
Atsugi City,
Kanagawa

Seoul City,
South Korea

Capital\15 million₩50 million

Details of the business
Board design

Sales ofboard and its
relatedfacilities

Percentage forpossession of voting rights
Directly own (%)
14.7

Directly own (%)-

Relationship
Businessrelationship

Businessrelationship/
Concurrent positionsof the director

Transaction
amount ※1\11 million

Sales of products\4 million\0 million
in accounts
receivable

Sales commission\340 million\20 million
in otherpayableSales of products\131 million\18 million
in accounts
receivable

Notes: ※1 Consumption taxes are not included in the transaction amount, and included in the balance as at March 31, 2020.
※2 Seiichi Naya, a close relative of Yuichiro Naya, representative director and executive officer of the Company, directly owns 81.3% of voting rights in M. D. Systems Co., Ltd.
※3 Yoon Ho Shin, director of the Company, directly owns 60.0% of voting rights in Dapara Tech Co., Ltd.
※4 The terms and conditions of the transactions for sales and purchase of products are determined through negotiations considering the market price, total costs and others.
The terms and conditions of the sales commission are determined through negotiations considering those with other companies.

34

Balance as at
March 31,2020
\1 million
in accounts
payableDetails of thetransaction ※4
Purchase of
products

22. Subsequent Events
Disposal of treasury stock by way of third-party allotment with introduction of 'Employee Stock Delivery Trust (the “J-ESOP”)
At a meeting of the Board of Directors held on March 22, 2021, the Company resolved to conduct disposal of treasury stock through a third-party allotment
with the introduction of the J-ESOP, which the Company resolved at a meeting of the Board of Directors held on February 22, 2021.
(1) Outline of transactions
Disposition date
Number of shares to be disposed
Disposition priceTotal amount of disposition price
Subscriber

April 16, 2021
109,500 shares of common stock\2,698 ($24.37) per share\295 million ($2,669 thousand) per share
Custody Bank of Japan, Ltd. (“Custody Bank of Japan”)(2) Objectives and reasons for disposition
At a meeting of the Board of Directors held on February 22, 2021, the Company resolved to introduce an incentive plan referred to as the Employee Stock Delivery Trust (the “J-ESOP”)
under which the Company’s shares will be delivered to employees of the Company, subsidiaries and affiliates.
With the plan, the Company expects to increase employees' interest in improvement of business performance and share price of the Company
by strengthening the linkage of employees' benefits with those factors and by sharing economic benefits with shareholders.
The Company makes disposition of its treasury stock through third-party allotment to the Trust Account E in Custody Bank of Japan (“Trust Account E”),
for the management of the treasury stock under the plan.
Custody Bank of Japan acts as the sub-entrustee, entrusted by Mizuho Trust & Banking Co., Ltd. (“Mizuho Trust & Banking”) who is the primary trustee of the trusted assets
according to the trust agreement with the Company.
Stock compensation plan to directors
The Company resolved to introduce stock compensation plan through trust to directors (excluding outside directors) at a meeting of the Board of Directors held on February 22, 2021,
and the 46th Ordinary General Meeting of Shareholders held on June 24, 2021.

35

36

37

38

39

Principal Subsidiaries and Affiliates

Principal
Business

Paid-in Capital

Investment
Ratio (%)

Name or Trade Name

Address

Meiko Tech Co., Ltd.

Ayase City,
Kanagawa Prefecture

45

PCBs forelectronics

100.0

Yamagata Meiko
Electronics Co., Ltd.

Kahoku-cho,Nishimurayama-gun,
Yamagata Prefecture

75

PCBs forelectronics

100.0

Meiko Techno Co.,Ltd.

Yamato City,
Kanagawa Prefecture

50

PCBs forelectronics

100.0

Meiko Elec. HongKong. Co., Ltd.

Hong Kong

US$391,179
thousand

PCBs forelectronics

100.0

Meiko Electronics(Guangzhou Nansha)
Co., Ltd.

Guangzhou,
Guangdong Province,
P.R.C.

US$120,800
thousand

PCBs forelectronics

100.0

Meiko Electronics(Wuhan) Co., Ltd.

Wuhan,
Hubei Province,
P.R.C.

US$173,800
thousand

PCBs forelectronics

100.0

Guangzhou Speed
Trading Co., Ltd.

Guangzhou,
Guangdong Province,
P.R.C.

US$785thousand

PCBs forelectronics

Meiko Electronics
America, Inc.

CA, U.S.A.

US$1,500
thousand

PCBs forelectronics

Meiko Electronics
Vietnam Co., Ltd.

Hanoi, Vietnam

US$90,000
thousand

PCBs forelectronics

Meiko Electronics
Thang Long Co., Ltd.

Hanoi, Vietnam

US$15,000
thousand

PCBs forelectronics

100.0

Meiko Towada
Vietnam Co., Ltd.

Hai Duong Province,

US$21,000
thousand

PCBs forelectronics

60.0(Millions of yen)

Vietnam40(66.3)(40.7)
100.0(100.0)
100.0

100.0
(100.0)Principal Shareholders

Number of
Shares Held

Name of Shareholder(Thousands of shares)

Percentage ofTotal Number of
Shares Issued(excluding treasury
stock) (%)

Yuichiro Naya

4,703

18.06

Custody Bank of Japan, Ltd.

1,997

7.67

1,458

5.60

1,333

5.12

1,280

4.91

1,031

3.96

Meiko Kosan Co., Ltd.

608

2.34

Yuho, Ltd.

521

2.00

STATE STREET BANK AND TRUST COMPANY
505019

450

1.73

435

1.67

13,82053.07(trust account)
CLEARSTREAM BANKING S.A.
(Standing Agent: Custody Department, Tokyo
Branch, The Hongkong and Shanghai Banking
Corporation Limited)
PICTET AND CIE (EUROPE) S.A.
(Standing Agent: MUFG Bank, Ltd.)BNP PARIBAS SECURITIES SERVICESLUXEMBOURG/JASDEC/FIM/LUXEMBOURG
FUNDS/UCITS ASSETS(Standing Agent: Custody Department, Tokyo
Branch, The Hongkong and Shanghai Banking
Corporation Limited)
The Master Trust Bank of Japan, Ltd.
(trust account)(Standing Agent: Custody Department, Tokyo
Branch, The Hongkong and Shanghai Banking
Corporation Limited)
Seiichi Naya
Total

41

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 Meiko TechnoCo., Ltd./ Meiko Tech Co., Ltd.) to develop electronics application products.

October 1978

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

September 1980

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

December 1980

Introduced a multi-layer press machine and started manufacturing multilayer PCBs.

December 1981

Developed the world’s first multi-video processor.

March 1982

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

September 1982

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

August 1984

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

June 1990

Constructed the Fukushima Factory.

April 1991

Changed company name to Meiko Electronics Co., Ltd.

November 1997

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

August 1998

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

December 1998

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

June 1999

Changed the name of the PCB manufacturing department of headquarters
to Kanagawa Factory (currently, Advanced PCB Center).

December 2000

Stock listed on the Japan Securities Dealers Association.

January 2001

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

December 2004

Stock listed on JASDAQ Securities Exchange, Inc.

July 2005

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

November 2005

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

42

April 2006

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

July 2006

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

January 2007

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

November 2007

Constructed a new headquarters building on the premises of the Kanagawa
Factory (currently, Advanced PCB Center).

March 2008

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

April 2009

Started operation of the EMS Plant in Vietnam.

May 2009

Established the Meiko R&D Center.

July 2009

Started operation of second plant in WUHAN.

April 2010

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

October 2010

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

July 2011

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

November 2011

Started operation of the PCB Plant in Vietnam.

May 2013

Started operation of the Ishinomaki Factory.

July 2013

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

August 2014

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

June 2015

Established Meiko Solar Park Fukushima, a solar power generation plant on
the premises of the Fukushima Factory.

August 2015

Established Meiko Techno Co., Ltd. (currently a consolidated subsidiary of
the Company) in Yamato, Kanagawa Prefecture, to mount PCBs andmanufacture and sell imaging equipment and industrial equipment.

November 2019

Acquired equity interests in EMS (Electronic Manufacturing Services) in
Vietnam and turned it into a subsidiary (currently consolidated subsidiary),
Meiko Towada Vietnam Co., Ltd.

June 2021

Transferred the stock market from the JASDAQ (standard) to the firstsection of the Tokyo Stock Exchange.

43

Corporate Data (As of March 31, 2021)
Corporate Name:
Meiko Electronics Co., Ltd.
Date of Establishment:
November 25, 1975
Paid-in Capital:¥12,888 million
Fiscal Year:
April 1 to March 31
Number of Shares Authorized:
70,000,000
Number of Shares Issued:
26,803,320
Number of Shareholders:
3,602
Securities Code:
6787
Stock Exchange Listing:Tokyo Stock Exchange, first section
Number of Employees:
13,721 (Consolidated)
Number of Subsidiaries:
23
Transfer Agent:
Sumitomo Mitsui Trust Bank, Limited
Accounting Auditor:
KPMG AZSA LLC
Headquarters:
5-14-15, Ogami, Ayase, Kanagawa Prefecture, Japan 252-1104
Investor Relations Contact:- Tel:+81-(0)467-76-6001- E-mail: Meiko_Eng@meiko-elec.com- URL: https://www.meiko-elec.com/

44

Meiko Share Performance in FY2021 Compared with Indices
240.0
220.0
200.0

Meiko Electronics (JASDAQ: 6787)
JASDAQ INDEX

180.0
160.0
140.0
120.0
100.0
80.0
60.0
40.0

Fiscal year ended March 31, 2021
Index
In %

45

46