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Annual Report 2022
For the year ended March 31, 2022

Meiko Electronics Co., Ltd.

The Meiko Group consists of Meiko Electronics Co., Ltd. (the “Company”), elevenconsolidated subsidiaries, ten 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 areof 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 ............................................................................... 43
Principal Shareholders ..................................................................................................... 44
Corporate History ............................................................................................................. 45
Corporate Data (As of March 31, 2022) ........................................................................... 47
Meiko Share Performance in FY2022 Compared with Indices ...................................... 48

2

Five-year Financial Summary(For the years ended/as of March 31)
2018

2019

2020

2021

2022

(millions of yen, except per share amounts)
Consolidated financial indicators:
Net sales¥108,542¥118,911¥115,479¥119,257¥151,275

Ordinary income

4,795

8,611

4,790

5,698

14,295

Profit attributable to owners of parent

4,373

6,744

2,586

4,641

11,451

Comprehensive income

5,633

6,482

(419)

8,629

20,319Net assets

33,04233,58832,482

40,611

58,686

Total assets

110,316

120,656

129,238

142,040

168,329

Net assets per share (yen)1,071.37

1,283.24

1,233.61

1,551.93

2,281.09

Net income per share (yen)160.34257.6598.81

177.33444.23

Net income per share (diluted) (yen)108.67————

Equity ratio

30.0%

27.8%

25.0%

28.5%

34.7%

Return on equity (ROE)

14.3%

20.2%

7.9%

12.8%

23.2%

Price earnings ratio (PER) (times)

11.4

6.7

13.5

15.2

9.1

Cash flows from operating activities

10,42911,467

11,2407,853

13,975

Cash flows from investing activities(8,868)(17,293)(14,937)(9,490)(11,786)

Cash flows from financing activities(3,531)

1,957

6,249

(619)

(4,730)Cash and cash equivalents
at the end of the period

15,19011,41913,646

12,122

10,451

Number of employees

11,64011,89912,232

13,721

13,637[Average number of temporary staff][1,182][1,351][1,450][1,117][575]

3

Net sales

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

¥180,000¥150,000¥120,000¥90,000¥60,000¥30,000
¥0

2018

2019

2020

2021

2022

(millions of yen)

¥8,000¥6,000¥0(¥5,000)(¥10,000)(¥15,000)(¥20,000)

2021

2022

(percentage)(millions of yen)

¥40,000¥30,000¥20,000

2022

25.0%
20.0%
15.0%

5.0%
2018

2019

2020

2021

2022

0.0%

Total assets

2018

2019

2020

2021

2022

Price earnings ratio (PER)
25.0 times(times)¥180,000(millions of yen)

2021

Cash flows from investing activities

10.0%¥10,000¥150,000¥120,000¥90,000

20.0 times
15.0 times
10.0 times¥60,000

5.0 times¥30,000
2018

2019

2020

2021

0.0 times

2022

Net assets per share¥2,500.00
(yen)

2020

30.0%

¥50,000¥2,000.00¥1,500.00¥1,000.00¥500.00
¥0.00

2019

Return on equity (ROE)¥60,000¥0

2018

Cash flows from operating activities
Cash flows from financing activities

Net assets

¥0

2022

¥5,000¥2,0002020

2021

Net income, diluted per share (yen)¥10,000¥4,0002019

2020

Cash flows¥10,000

2018

2019

¥15,000¥12,000¥0

2018

Net income (loss), basic per share (yen)Profit attributable to owners ofparent(millions of yen)¥450.00¥400.00¥350.00¥300.00¥250.00¥200.00¥150.00¥100.00¥50.00
¥0.00

2018

2019

2020

2021

2022

4

2018

2019

2020

2021

2022

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, 2022 were ¥168,329 million, up ¥26,289 million from the end of
the previous fiscal year. This change mainly comprised a decrease of ¥1,671 million in
cash and cash equivalents, an increase of ¥6,245 million in trade notes and accounts
receivable, and an increase of ¥7,610 million in inventories in current assets, inaddition to an increase of ¥13,775 million in property, plant and equipment in noncurrent assets.
Liabilities
Liabilities as of March 31, 2022 were ¥109,643 million, up ¥8,214 million from the endof the previous fiscal year. This change mainly comprised an increase of ¥3,853 million
in trade notes and accounts payable, an increase of ¥7,333 million in short-termborrowings, a decrease of ¥2,342 million in the current portion of long-term borrowings,
and an increase of ¥4,020 million in other in current liabilities, in addition to a decreaseof ¥5,959 million in long-term borrowings in non-current liabilities.
Net assets
Net assets as of March 31, 2022 were ¥58,686 million, up ¥18,075 million from the endof the previous fiscal year. This mainly reflected a ¥10,413 million increase in retained
earnings, a ¥1,441 million decrease due to the purchase of treasury stock, and a¥9,046 million increase in foreign currency translation adjustment.

5(3) Analysis of business results
1) Net sales
In the electronic components industry, where the Group operates, sales of PCBs
(printed circuit boards) for automotive products were favorable as demand continued to
expand due to the progress of electrification of vehicles, partially offset by the negative
impact of production adjustments by customers owing to semiconductor shortages andother factors. Consequently, net sales for the fiscal year under review increased¥32,018 million, or 26.8%, from the previous fiscal year to ¥151,275 million.
2) Gross profit
Cost of sales increased ¥22,148 million, or 21.8%, from the previous fiscal year to¥123,880 million due to the impact of the steep rise in raw material prices, while net
sales increased and cost reduction measures were implemented throughout theGroup. Consequently, gross profit for the fiscal year under review increased ¥9,870
million, or 56.3%, from the previous fiscal year to ¥27,395 million. The gross marginrose 3.4 percentage points from the previous fiscal year to 18.1%.
3) Operating income
Selling, general and administrative expenses increased ¥3,273 million, or 30.1%, fromthe previous fiscal year to ¥14,140 million, due to increases in research anddevelopment costs and personnel expenses. As a result, operating income for the
fiscal year under review increased ¥6,597 million, or 99.1%, from the previous fiscal
year to ¥13,255 million. The operating margin rose 3.2 percentage points from theprevious fiscal year to 8.8%.
4) Ordinary income
Non-operating income increased ¥1,295 million to ¥2,090 million, mainly due to anincrease in foreign exchange gains and a decrease in subsidy income. Non-operating
expenses decreased ¥705 million to ¥1,050 million, mainly due to decreases incommission for syndicated loans and foreign exchange losses. As a result, ordinary
income for the fiscal year under review increased ¥8,597 million, or 150.9%, from theprevious fiscal year to ¥14,295 million.
5) Profit attributable to owners of parent
In the fiscal year under review, extraordinary income amounted to ¥13 million, mainly
due to the recording of gain on sales of investment securities, net of ¥10 million.
Extraordinary losses totaled ¥1,695 million, mainly due to the recording of loss on saleand retirement of non-current assets of ¥524 million, business restructuring expensesof ¥226 million, and loss related to COVID-19 pandemic of ¥647 million. The total
amount of income taxes–current and income taxes–deferred increased ¥753 million to¥1,176 million. The loss attributable to non-controlling interests was ¥14 million. As aresult of the above, the net income attributable to owners of the Company was ¥11,451
million, up 146.7% compared with the previous fiscal year.

6(4) Analysis of source of funds and liquidity
1) Cash flows
Cash and cash equivalents (hereafter, “net cash”) as of March 31, 2022 decreased¥1,671 million from the previous fiscal year, to ¥10,451 million.
Cash flows of each category and their causes during the consolidated fiscal year
ended March 31, 2022 were as follows.
Net cash provided by operating activities for the fiscal year under review was ¥13,975
million, up ¥6,122 million from the previous fiscal year. Increases were mainly fromincome before income taxes of ¥12,613 million, depreciation and amortization of¥7,995 million, and an increase in trade notes and accounts payable of ¥1,567 million.
The major decreases were increases in trade notes and accounts receivable of ¥3,618
million and inventories of ¥5,385 million.
Net cash used in investing activities was ¥11,786 million, up ¥2,296 million from theprevious fiscal year. The major outflow was ¥11,835 million for the purchase ofproperty, plant and equipment.
Net cash used in financing activities was ¥4,730 million, an increase of ¥4,111 million
from the previous fiscal year. The major inflow was a net increase in short-termborrowings of ¥6,195 million. The major outflows comprised payments for long-termborrowings of ¥8,305 million, purchase of treasury stock of ¥1,222 million, and cash
dividends paid of ¥1,038 million.
Trends in cash flow indicators of the Group are as follows:Year ended
March 31, 2020

Year ended
March 31, 2021

Year ended
March 31, 2022

Equity ratio (%)

25.0

28.5

34.7

Market value equity ratio (%)

27.1

49.3

61.8

Cash flows versus interest-bearing debt ratio(years)

6.1

8.9

4.9

Interest coverage ratio (times)

16.3

12.4

22.0

Equity ratio = Equity capital / Total assets
Market value equity ratio = Stock market capitalization / Total assets
Cash flow versus interest-bearing debt ratio = Interest-bearing debt / Operating cash flow
Interest coverage ratio = Operating cash flow / Interest payment
Notes:
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, SSD and IoT modules, AI household appliances, amusement equipment,
and industrial equipment, among others. The Group’s major business is the manufactureand sale of PCBs, which are parts that constitute a core function of finished products.
Furthermore, the Group endeavors to strengthen and expand the package board and
EMS businesses as new mainstay businesses with the aim of minimizing influence fromoverdependence on PCBs. However, should economic trends or a natural disasteradversely impact the Group’s major customers or their industry markets, such factors
could affect the business performance and financial position. The monitoring ofcustomers and trends in their industries and measures to minimize influence
implemented by the Group cannot eliminate said risk completely. Therefore, the Grouprealizes 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
become embroiled in a price war, or the yield rate may decline, which could affect its
business performance and financial position. The Group closely monitors customers’
needs, competitors’ technology, and price 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 process of 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.

9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
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 finished products.
The Group manufactures PCBs in compliance with globally accepted quality control
standards. In addition, brand manufacturers conduct inspections upon receipt of thefinished product checking for product defects. However, should a large-scale recall or a
product liability claim occur, such an incident would incur significant costs that cannot becovered 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, theGroup 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 and10endeavors 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 of
the influence in light of the conditions of such risk.
2) Risk related to infectious diseases
During the COVID-19 pandemic, the Group has continued thorough implementation of
preventive measures to secure the safety of customers, business partners, andemployees and prevent the further spread of infection in accordance with the guidanceof health authorities in each country where we operate. However, situations such as thehealth crisis becoming prolonged, pandemic conditions continuing, or new types ofinfections occurring might result in suspension of the Group’s factories, worsening of theJapanese and global economy, and contraction of economic activities, which could
adversely affect the business performance and financial position. 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.
(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, 2022 was 39.4%. 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

11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 theform 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 or12introduction of environmental regulations, legal restrictions and the tax system; failure of
infrastructure such as electricity, water and transportation; political uncertainty andpublic 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.
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,and overall business. To prevent unauthorized information access, falsification,
corruption, leakage, loss, and any other damages caused by cyberattacks, humanerrors, and any other incidents, the Group established its information management
system and conducts appropriate safety procedures, including rational technologicalmeasures and drills to prepare for cybersecurity risk. However, should the leakage orloss of information occur, it could adversely affect the business performance andfinancial position. As the Group strives to appropriately operate its confidential
information management system, it realizes that the probability of emergence of suchrisk 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, 2022 and 2021
Thousands ofMillions of yen

ASSETS

2022

Current Assets:
Cash and cash equivalents (Note 17) ...............................................................................
Receivables －Trade notes (Note 17) .................................................................................................
Accounts receivable (Note 17) .....................................................................................
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 4).....................................................................................
Machinery and vehicles (Note 4)......................................................................................
Leased assets.................................................................................................................
Construction in progress ................................................................................................
Other (Note 4)................................................................................................................
Less: Accumulated depreciation .....................................................................................
Net property, plant and equipment ...........................................................................
Intangible Assets
Investments and Other Assets:
Investment securities (Notes 3 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\

10,451

U.S. dollars (Note 1)

2022

2021

\

12,122$85,373

2,093
33,656
1,117(165)

29,504
1,114(147)

17,098274,944
9,127(1,347)

10,238
8,074
11,457
1,447
78,368

6,254
6,954
8,951
1,586
66,33883,641
65,957
93,596
11,818640,207

2,445
53,491
114,369
2,844
9,926
6,834
189,909(107,347)
82,562

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

19,975436,986
934,31223,23781,08455,828
1,551,422(876,948)
674,474

955

928

7,799

2,555
553
1,841
1,518
(23)
6,444
168,329

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

20,8694,515
15,042
12,403(186)
52,643
1,375,123\$Thousands of

LIABILITIES AND
NET ASSETS

Millions of yen

2022

Current Liabilities:
Trade notes and accounts payable ................................................................................
Short-term borrowings (Note 5) ......................................................................................
Current portion of long-term borrowings (Note 5) ...........................................................
Income taxes payable (Note 16) ......................................................................................
Accrued bonuses ...........................................................................................................
Accrued bonuses to directors .........................................................................................
Lease obligations (Notes 5 and 17)..................................................................................
Other (Notes 5, 12, 17 and 20) .......................................................................................
Total current liabilities .............................................................................................

\

Long-term Liabilities:
Long-term borrowings (Notes 5 and 17) .........................................................................
Lease obligations (Notes 5 and 17) .................................................................................
Provision for directors' retirement benefits ......................................................................
Provision for share awards..............................................................................................
Provision for share awards for directors .........................................................................
Net defined benefit liability (Note 6) ................................................................................
Other (Note 16)..............................................................................................................
Total long-term liabilities .........................................................................................

24,31928,167
5,962
985
1,064
59
214
12,25873,028

U.S. dollars (Note 1)

2022

2021

\

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

198,670
230,101
48,703
8,046
8,692
480
1,747
100,141596,580

32,267
392
216
115
25
2,717
883
36,61538,226
603
216
2,767
435
42,247

263,595
3,204
1,764
936
204
22,1997,218
299,120

12,8896,700
28,062

12,8896,464
17,649105,289
54,739229,242(2,186)45,465(745)
36,257(17,861)
371,4094(42)
13,174(113)
13,023
198
58,686
168,329

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

39(342)
107,620(916)
106,401
1,613
479,423
1,375,123

Commitments and Contingent Liabilities (Note 11) :Net Assets (Note 7):
Shareholders' Equity:
Common stock:
Authorized:
70,000,000 shares in 2022 and 2021
Issued:26,803,320 shares in 2022 and 2021
Preferred stock:
Authorized:
None in 2022 and 2021
Issued:None in 2022 and 2021....................................................................................................

Capital surplus ...............................................................................................................
Retained earnings ...........................................................................................................
Less: Treasury stock, at cost; Common stock,
1,162,643 shares in 2022, 759,506 shares in 2021 ...........................................................
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 6) ..........................................................
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, 2022, 2021 and 2020
Thousands ofMillions of yen

2022
Net Sales (Note 20) ......................................................................................................
Cost of Sales (Note 13) ................................................................................................
Gross profit .................................................................................................................
Selling, General and Administrative Expenses (Note 13) ...........................................
Operating income .........................................................................................................

\

151,275
123,880
27,39514,14013,255

U.S. dollars (Note 1)

2021\

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

2022

2020
\

115,479
98,733
16,746
11,5575,189$

1,235,807
1,012,013
223,794
115,510108,284

Other Income (Expenses):
Interest expense, net .......................................................................................................
Dividend income ............................................................................................................
Foreign exchange gain (loss).............................................................................…...........
Net loss on sales and disposal of property, plant and equipment (Note 15)........................
Gain on sales of investment securities, net (Note 3)..........................................................
Gain on reversal of loss on valuation of investment securities (Note 14).............................
Expenses for business structure improvement (Note 9).....................................................
Loss related to COVID-19 pandemic (Note 10)................................................................
Loss on disaster (Note 8) .............................................................................................
Other, net ......................................................................................................................
Total ......................................................................................................................

(594)
16
1,498
(521)
10
(226)
(647)
(116)
(62)
(642)

(592)
4
(345)
(194)
(310)
(13)
(49)
(99)
(1,598)

(595)
6
(61)
(139)
4
327
(210)
(1,250)(5)(1,923)(4,852)
130
12,236(4,260)80(1,848)(5,283)(949)(503)(5,249)

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

12,613

5,060

3,266

103,035

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 ...................................................

1,348
(172)
1,176
11,437(14)
11,451

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

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

11,009(1,405)9,604
93,431(118)
93,549

\

\

\

Yen

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

See notes to consolidated financial statements.

16\444.2345.00\

177.33
20.00

U.S. dollars (Note 1)\

98.81 $
30.00

3.63
0.37

Consolidated Statements of Comprehensive Income
Meiko Electronics Co., Ltd. and Consolidated Subsidiaries
For the Years Ended March 31, 2022, 2021 and 2020
Thousands ofMillions of yen

2022
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\

11,437

\

(35)
(292)
9,066
143
8,882
20,319\20,314
5

U.S. dollars (Note 1)

2021
\

4,637

\

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

\

8,630
(1)

2022

2020
\

2,549

$

93,431\57(153)(2,945)73(2,968)(419) $

(283)
(2,386)74,057
1,172
72,560165,991(383) $
(36)

165,95239\

Consolidated Statements of Changes in Net Assets
Meiko Electronics Co., Ltd. and Consolidated Subsidiaries
For the Years Ended March 31, 2022, 2021 and 2020

Millions of yen
Shareholders' Equity
Common Stock

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..........................................................................
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, 2022..........................................................................

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

\

\

\

\

Amount12,88912,88912,88912,889

Accumulated Other Comprehensive Income

Preferred Stock

Number of
SharesAmount
-

-

\

\

\

\

\

\

\

\

CapitalSurplus
6,464
6,464
6,464
236
6,700

\

\

\

\

Retained
Earnings
11,4902,586(916)
13,160
4,641
(392)
240
17,64911,451(1,038)28,062

Treasury
Stock at Cost;
Common
Stock
(397)
\
(0)
(397)
\
(348)
(745)
\
(1,596)155(2,186)\

Retained
Earnings
144,175
93,549(8,482)229,242

Treasury
Stock at Cost;
CommonStock$(6,086)(13,044)
1,269$(17,861)

\

\

\

\

Total
Shareholders'Equity30,446
2,586
(916)
(0)
32,116
4,641
(392)
(348)
240
36,257
11,451(1,038)(1,596)391
45,465

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

(65)
57
(8)
47
39
(35)
4

\

\

\

\

\

\

\

\

Deferred
Gains(Losses) on
Hedges
183
(153)
30
220
250
(292)
(42)

Foreign Currency
Translation
Adjustments

\

\

\

\

3,322
(2,947)
375
3,753
4,128
9,046
13,174

Total
Accumulated
Other
Comprehensive
IncomeRemeasurementsof Defined Benefit
Plans

(298)
73
(225)
(31)
(256)
143
(113)

\

\

\

\

\

\

\

\

3,142 \
(2,970)172 \
3,989
4,161 \
8,862
13,023 \Non-controlling
Interests
194
194
(1)
193
5
198

\

Total Net
Assets33,588
2,586
(916)
(0)
(2,776)32,482
4,641
(392)
(348)
240
3,988
40,611
11,451(1,038)(1,596)391
8,867
58,686

Non-controlling
Interests
1,574 $
39
1,613 $

Total Net
Assets331,760
93,549(8,482)(13,044)
3,197
72,443
479,423\\\

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

Balance as at March 31, 2021..........................................................................
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, 2022..........................................................................

$$

CommonStock105,289
105,289

Preferred
Stock
$

$

-

$

$

CapitalSurplus52,811
1,928
54,739

Accumulated Other Comprehensive Income$$

See notes to consolidated financial statements.

18

Total
Shareholders'Equity$296,189
93,549(8,482)(13,044)
3,197$
371,409

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

$

$

322
(283)
39

Deferred
Gains(Losses) on
Hedges$
2,044(2,386)$(342)

Foreign Currency
Translation
Adjustments$$

33,71973,901
107,620

Total
Accumulated
Other
Comprehensive
IncomeRemeasurementsof Defined Benefit
Plans

$

$

(2,088)
1,172
(916)

$

$

33,997 $72,404
106,401 $Consolidated Statements of Cash Flows
Meiko Electronics Co., Ltd. and Consolidated Subsidiaries
For the Years Ended March 31, 2022, 2021 and 2020
Thousands ofMillions of yen

2022
Operating Activities:
Income before income taxes ..................................................................................................................................

\

12,613

U.S. dollars (Note 1)

2021
\

5,060

2022

2020
\

3,266

$

103,035

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 in accrued bonuses to directors ................................................................................................................
Decrease in provision for directors' retirement benefits............................................................................................
Increase in provision for share awards....................................................................................................................
Increase in provision for share awards for directors.................................................................................................
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.........................................................................................................
Loss related to COVID-19 pandemic......................................................................................................................
Loss on disaster....................................................................................................................................................
Decrease (increase) in trade notes and accounts receivable .....................................................................................
Increase in inventories ...........................................................................................................................................
Increase in trade notes and accounts payable .........................................................................................................
Decrease (increase) in other assets .........................................................................................................................
Increase (decrease) in other liabilities .....................................................................................................................
Other ....................................................................................................................................................................
SubtotalInterest and dividend received ...............................................................................................................................
Interest paid ..........................................................................................................................................................
Proceeds from insurance income ...........................................................................................................................
Payments for business structure improvement ........................................................................................................
Payments for loss related to COVID-19 pandemic .................................................................................................
Income taxes paid .................................................................................................................................................
Net cash provided by operating activities ...............................................................................................................

7,995
41
(101)
44
321
16
115
25
(65)
643
(654)
521
(10)
(80)
226
647
116
(3,618)(5,385)
1,567
(265)
933
15
15,660
64
(634)
80
(38)
(529)
(628)
13,975

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)
11,24065,313
332
(824)
360
2,625
128
936
204
(528)
5,250
(5,342)
4,260
(80)
(651)
1,848
5,283
949
(29,555)(43,988)
12,802(2,163)
7,619
114
127,927522(5,180)651(307)(4,318)(5,129)114,166

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 ........................................................
Payments for insurance policies ...............................................................................................................................
Proceeds from maturity of insurance funds .............................................................................….............................
Other, net ...............................................................................................................................................................
Net cash used in investing activities ..........................................................................................................................

(11,835)
5
(138)
(105)
98
(2)
191
(11,786)(9,738)
565
(220)
(237)
(2)
25
117
(9,490)(13,570)1(182)(1,502)
6
(562)
(2)
874
(14,937)(96,680)40(1,131)
(856)
804
(20)
1,564
(96,279)

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

6,195(8,305)(360)(1,222)0(1,038)(4,730)

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

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

50,609(67,844)(2,940)(9,985)2(8,483)(38,641)

See notes to consolidated financial statements.

19

Thousands ofMillions of yen

U.S. dollars (Note 1)

2022

2021

2020

2022

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

870

502

(325)

7,102

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

(1,671)(1,754)

2,227(13,652)

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 ............................................................................................

12,122

13,646

11,41999,025

See notes to consolidated financial statements.

20\

10,451\

230
12,122\

13,646$85,373

Notes to Consolidated Financial Statements
Meiko Electronics Co., Ltd. and Consolidated Subsidiaries
For the Years Ended March 31, 2022, 2021 and 2020
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, 2022($1 = \122.41). 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.
(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.

(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
The Company provides allowance for directors' accrued bonuses
based on the estimated amounts as at the balance sheet date.
(j) Provision for share awards
The Company accounts for the provision for share awards for employees based on theestimated amounts as at the balance sheet date in accordance with internal
regulations.
(k) Provision for share awards for directors
The Company accounts for the provision for share awards for directors
based on the estimated amounts as at the balance sheet date in accordancewith internal regulations.
(l) Impairment Losses on Fixed Assets
The Group reviews its long-lived assets for impairment whenever eventsor changes in circumstances 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 the higher of the asset's or cash-generating unit's fair valueless costs to sell and its value in use.
(m) Investment Securities
The Company has classified all the equity securities as available-forsale securities based on management’s intention. Available-for-salesecurities other than equity securities without market price are reported
at fair value with unrealized gains or losses, net of applicable taxes,
reported in a separate component of net assets.
Equity securities without market prices are stated at cost determinedby the moving-average method.
(n) Revenue Recognition
The Group mainly engages in electronic business such as designing, manufacturing
and sales of electronic circuit boards (“PCB”), and the related businesses.
The Group recognizes revenue, determining its performance obligation to be satisfied,at the time of the transfer of control of promised goods and products to customers, or at the timeof acceptance inspection by customers.
However, for domestic sales of goods and products, the Group recognizes revenue at thetime of shipment when the periods between the shipment and the transfer of control ofpromised goods and products to customers are considered normal.
Consideration for goods and products received within one year from the time when performanceobligation is determined to be satisfied and there is no significant financing component.
(o) 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.

21

(p) 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 fromderivatives except for hedging 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 a 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.
(q) 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.

(u) Significant Accounting Estimates(Recoverability of deferred tax assets)(1) Amount recorded in the consolidated financial statements for the years ended March 31, 2022 and 2021
Thousands ofMillions of yen

Deferred tax assets.......................................................................... \2022
1,841 \

U.S. dollars

2021
1,254 $

2022
15,042(2) Information on identified items regarding significant accounting estimates① Method to calculate the amount
As of March 31, 2022, the Company recorded deferred tax assets worth \1,841 million ($15,042 thousand),to the extent that it is expected to reduce future taxable income.
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 thebusiness plan.
Deferred tax assets before offset by the deferred tax liabilities were \2,063 million ($16,851 thousand).
Deferred tax assets of \741 million ($6,053 thousand) are recognized for tax loss carryforwards of\2,126 million ($17,370 thousand), calculated using the enacted statutory tax rates.
This is recognized as tax loss carryforwards of the Company's consolidated subsidiaries.
② Assumptions used in significant accounting estimates
Future taxable income used in assessment of recoverability of deferred tax assets was estimatedbased on the business plan, taking into consideration estimated sales reflecting order backlogs
and estimated future orders as key assumptions.
③ Impact on the consolidated financial statements for the next consolidated accounting period
Deferred tax assets were calculated based on the estimated future taxable income in the expectedperiod 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.
(v) Changes in Presentation Method“Expenses for factory shutdown” previously presented independently in “Other Income (Expenses)” has beenrenamed “Loss related to COVID-19 pandemic” on the consolidated statements of operations for the fiscal year
ended March 31, 2022, in order to make the presentation clearly and more in line with actual conditions.

(r) 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.

“Expenses for factory shutdown” and “Payments for factory shutdown” previously presented independently
in “Operating Activities” have been renamed “Loss related to COVID-19 pandemic” and “Payments for loss related to
COVID-19 pandemic”, respectively on the consolidated statements of cash flows for the year ended March 31, 2022,
in order to make the presentation clearly and more in line with actual conditions.

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

(w) Changes in Accounting Policy(Adoption of “Accounting Standard for Revenue Recognition”)
From the beginning of the fiscal year ended March 31, 2022, the Group adopted “Accounting Standard
for Revenue Recognition” (ASBJ Statement No. 29, March 31, 2020) and other related guidance.
The Group recognizes revenue at the time of the transfer of control of promised goods and products to customers
in an amount to which the Group expects to be entitled in exchange for those goods and products.
The Group applied the transitional treatment as stipulated in Paragraph 98 of “Implementation
Guidance on Accounting Standard for Revenue Recognition” and recognizes revenue for domestic
sales of goods and products at the time of shipment, when the periods between the shipment
and the transfer of control of promised goods and products to customers are considered normal.
The transitional treatment as stipulated in Paragraph 84 of the “Accounting Standard for Revenue
Recognition” is applied. The cumulative impact of retrospective application of the new accounting policy
prior to the beginning of the fiscal year ended March 31, 2022 is added to or deducted from retained earnings
at the beginning of the fiscal year ended March 31, 2022 so that the new accounting policy is applied
from the balance at the beginning of the fiscal year ended March 2022.
In addition, “Trade notes and accounts receivable” which was presented in “Current Assets”
in the consolidated balance sheets as of March 31, 2021, are presented as “Trade notes” and “Accounts receivable”
in the consolidated balance sheets as of March 31, 2022.
In accordance with the transitional treatment stipulated in paragraph 89-2 of the “Accounting Standard
for Revenue Recognition”, no reclassification of previously reported amounts has been made to conformwith the new presentation.
There is no effect of adopting these standards and guidance on net income, net income per share andthe beginning balance of retained earnings for the fiscal year ended March 31, 2022.
Notes disclosure on revenue recognition for the years ended March 31, 2021 and 2020 were omitted in accordancewith the transitional treatment as stipulated in Paragraph 89-3 of “Accounting Standard for Revenue Recognition”.

(t) Per Share Information
Dividends per share shown in the consolidated statements of operations havebeen presented on an accrual basis and include, in each fiscal period,
dividends approved after each balance sheet date, but applicable to the fiscal
period then ended.
Net income per share is computed by dividing net income 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, 2022, 2021 and 2020.

(Adoption of “Accounting Standard for Fair Value Measurement”)
From the beginning of the fiscal year ended March 31, 2022, the Group adopted “Accounting Standard for Fair Value Measurement”(ASBJ Statement No. 30, July 4, 2019) and other related standards and guidance.
The new accounting policies stipulated in these standards and guidance are applied prospectively in accordancewith the transitional treatment in Paragraph 19 of the “Accounting Standard for Fair Value Measurement”
and Paragraph 44-2 of the “Accounting Standard for Financial Instruments” (ASBJ Statement No. 10, July 4, 2019).
There is no effect of adopting these standards and guidance on the consolidated financial statements for the
fiscal year ended March 31, 2022.
Fair value of financial instruments and breakdown by level of fair values are disclosed in Note 17.
However, notes for the fiscal year ended March 31, 2021 were not disclosed in accordance with the transitional treatment
stipulated in paragraph 7-4 of the “Implementation Guidance on Disclosures about Fair Value of Financial Instruments”(ASBJ Guidance No. 19, July 4, 2019).

22

(x) Accounting Standards and Guidance Issued but Not Yet Adopted“Implementation Guidance on Accounting Standard for Fair Value Measurement”(ASBJ Guidance No. 31, June 17, 2021)(1) Overview
The above standard and guidance provide method of fair value measurement andrequired note disclosures for investment trusts, and investments in partnershipand similar instruments for which net interest amounts are recorded on the balance sheet.
(2) Effective date
The above standard and guidance will become effectivefrom the beginning of the fiscal year ending March 31, 2023.
(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.
(y) Additional Information(Stock Delivery Trust for directors)
At the 46th Ordinary General Meeting of Shareholders held on June 24, 2021,
the Company resolved to introduce a stock compensation plan through trust to
directors (excluding outside directors).
With the plan, the Company expects to increase directors' interest in improvement of
medium to long-term business performance and share price of the Company
by strengthening the linkage of directors' benefits with those factors andby sharing economic benefits with shareholders.
(1) Outline of transactions
With the plan, the Company set up the trust fund by disbursing money and the trust
fund acquires the Company's shares.
The shares are distributed to directors through the trust fund corresponding to
the number of points directors received from the Company.
The Company's shares are distributed to directors incumbent for three years
from the next day of the 46th Ordinary General Meeting of Shareholders held on
June 24, 2021 to the end of the Ordinary General Meeting of Shareholders
to be held in June 2024.
The directors incumbent as of March 31, 2021 and reappointed at the 46th
Ordinary General Meeting of Shareholders are eligible to receive
the compensation based on the plan for the period from the next dayof the 45th Ordinary General Meeting of Shareholders and to the end of the dayof 46th Ordinary General Meeting of Shareholders.
Basically, the Company's shares are distributed to directors at the time of
their resignation as directors.

(1) Outline of transactions
Under the plan, the Company's stock or a payment equivalent to fair values of the Company's
stock are distributed to employees of the Company, subsidiaries and affiliates, who meetcertain requirements based on the stock compensation policy set by the Company,
subsidiaries and affiliates.
The Company, subsidiaries and affiliates grant points to employees according to the degreeof their contribution. If employees meet certain conditions to receive the compensation
under the plan, the shares or payments corresponding to the number of points
are distributed to employees.
The shares to be distributed to employees are acquired by the trust fundset in advance and separately managed as trust assets.
(2) The Company's shares in the trust fund
The Company recorded book values of the Company's shares in the trust fund,except for related expenses, as treasury stock in net assets.
The book values of the treasury stock is \288 million ($2,354 thousand)and number of treasury stock is 106,800 shares as of March 31, 2022.
(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.

(2) The Company's shares in the trust fund
The Company recorded book values of the Company's shares in the trust fund,except for related expenses, as treasury stock in net assets.
The book values of the treasury stock is \96 million ($784 thousand)and the number of treasury stock is 32,800 shares as of March 31, 2022.
(Employee Stock Delivery Trust (the “J-ESOP”))
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 bedelivered 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 andby sharing economic benefits with shareholders.

233. Investment Securities
All the equity securities, classified as available-for-sale securities, are included in non-current investment securities.
The carrying amounts and aggregate fair values of the available-for-sale securities as of March 31, 2022 and 2021 are as follows:
2022
Millions of yen

Thousands of U.S. dollars

Fair

Acquisition

Unrealized

Fair

Acquisition

Unrealized

Value

Cost

Gains (Losses)

Value

Cost

Gains (Losses)

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

58 \

22 \

36 $

477 $

180 $

297

164
222 \

201
223 \

(37)
(1) $

1,340
1,817 $

1,639
1,819 $

(299)
(2)

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 ............................................................................. \Fair

Acquisition

Unrealized

Value

Cost

Gains (Losses)

184 \

111 \

73

84
268 \

100
211 \

(16)
57

Information on available-for-sale securities whose fair values are not readily determinable as of March 31, 2022 and 2021 is described in Note 17.
Information regarding the sale of securities classified as available-for-sale securities for the year ended March 31, 2022 is summarized as follows:
2022
Millions of yen

Equity securities ............................................................ \Total ............................................................................. \Thousands of U.S. dollars

Proceeds

Aggregate

Aggregate

Proceeds

Aggregate

Aggregatefrom Sales

Gains onLosses on

from Sales

Gains onLosses on

Sales

Sales

98 \
98 \

10 \
10 \

Sales

0 $
0 $

804 $
804 $

Sales

80 $
80 $

0
0

There were no sales of securities classified as available-for-sale securities for the year ended March 31, 2021.
The Company recorded no impairment loss of investment securities for the years ended March 31, 2022 and 2021.

4. 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, 2022 and 2021 is as follows:
Thousands of

Buildings and structures ......................................................................................................................................................... \Machinery and vehicles ..........................................................................................................................................................
Other ....................................................................................................................................................................................
Total ..................................................................................................................................................................................... \24

Millions of yen
2022
2021
270 \
270 $
162
162
7
7
439 \
439 $

U.S. dollars

2022
2,207
1,324
53
3,584

5. Short-term Borrowings and Long-term Debt
Short-term borrowings and long-term debt as of March 31, 2022 and 2021 consist of the following:Thousands ofMillions of yen
2022
2021

U.S. dollars

2022

Short-term borrowings with average interest rate of 1.02% for 2022 and 0.97% for 2021................................................................... \Current portion of long-term borrowings with average interest rate of 0.97% for 2022 and 1.09% for 2021.........................................
Current portion of lease obligations ................................................................................................................................................
Current portion of other liabilities with average interest rate of 0.57% for 2022 and 0.58% for 2021....................................................
Total short-term borrowings ................................................................................................................................................

28,167 \
5,962
214
1,299
35,642

20,834 $
8,304
340
1,300
30,778230,101
48,703
1,747
10,620291,171

Long-term borrowings with average interest rate of 0.98% for 2022 and 0.84% for 2021, less current portion ....................................
Lease obligations, less current portion ............................................................................................................................................
Total long-term borrowings..................................................................................................................................................
Total .................................................................................................................................................................................. \32,267392
32,65968,301 \38,226603
38,82969,607 $263,595
3,204
266,799557,970* Average interest rate of borrowings represents the weighted average rate for the outstanding balances as at March 31, 2022 and 2021.
Average interest rate of lease obligations is not disclosed since the amount equivalent to interest expenses 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, 2021 and March 31, 2022.
The aggregate annual maturities of long-term debt as of March 31, 2022 are as follows:Year ending March 31
2023..................................................................................................................................................................................................................................................... \2024.....................................................................................................................................................................................................................................................
2025.....................................................................................................................................................................................................................................................
2026.....................................................................................................................................................................................................................................................
Total ................................................................................................................................................................................................................................................... \Millionsof yen
5,200
4,667
22,40032,267 $Thousands ofMillionsof yen
159
91
95
47
392 $

Thousands of

U.S. dollars

42,48038,123
182,992
263,595

The aggregate annual maturities of lease obligations as of March 31, 2022 are as follows:Year ending March 31
2023..................................................................................................................................................................................................................................................... \2024.....................................................................................................................................................................................................................................................
2025.....................................................................................................................................................................................................................................................
2026.....................................................................................................................................................................................................................................................
2027 and thereafter ..............................................................................................................................................................................................................................
Total ................................................................................................................................................................................................................................................... \U.S. dollars

1,301
742
778
383
3,204

Financial covenants
Short-term borrowings and long-term borrowings, including the current portion amounting to \49,392 million ($403,494 thousand) and \54,753 million for the years ended March 31, 2022 and 2021, respectively,
include certain financial covenants that forfeit the benefit of term with 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 ($168,197 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..................................
1.725

6. 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 the 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
2022
2021
2,389 \
2,312 $
137
133
10
9
(42)
68
(153)
(133)
2,341 \
2,389 $

U.S. dollars

2022
19,519
1,122
78
(343)
(1,253)
19,123(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
2022
2021
2,341 \
2,389 $
2,341 \
2,389 $
2,341 \
2,341 \

2,389 $
2,389 $

U.S. dollars

2022
19,123
19,123
19,123
19,123(3) Retirement benefit costs
Thousands ofService cost .................................................................................................................................................................................. \Interest cost ..................................................................................................................................................................................
Amortization of actuarial loss .........................................................................................................................................................
Amortization of past service cost ...................................................................................................................................................
Total benefit costs ......................................................................................................................................................................... \Millions of yen
2022
2021
137 \
133 $
10
9
13
(1)
39
39
199 \
180 $

U.S. dollars

2022
1,123
78
106
318
1,625

(4) Remeasurements of defined benefit plans
Thousands of

Past service cost ........................................................................................................................................................................... \Actuarial loss ................................................................................................................................................................................
Total ............................................................................................................................................................................................. \Millions of yen
2022
2021
(39) \(39) $(55)
70(94) \
31 $U.S. dollars

2022
(318)
(450)
(768)

(5) Accumulated remeasurements of defined benefit plans
Thousands ofUnrecognized past service cost ...................................................................................................................................................... \Unrecognized actuarial loss (gain)...................................................................................................................................................
Total ............................................................................................................................................................................................. \Millions of yen
2022
2021
154 \
193 $
8
63
162 \
256 $

U.S. dollars

2022
1,254
66
1,320

(6) Actuarial assumptions

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

2022
0.5%

2021
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
2022
2021
378 \
384 $
25
20
(27)
(26)
376 \
378 $

U.S. dollars

2022
3,088
202
(214)
3,076

(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
2022
2021
376 \
378 $
376 \
378 $
376 \
376 \

U.S. dollars

2022
3,076
3,076

378 $
378 $

3,076
3,076

(3) Retirement benefit costThousands ofRetirement benefit costs calculated using the simplified method ....................................................................................................... \Total costs at the end of the year ................................................................................................................................................... \Millions of yen
2022
2021
25 \
20 $
25 \
20 $

U.S. dollars

2022
202
202

Defined contribution plan
The amount required to contribute to the defined contribution plans is \166 million ($1,357 thousand) and \165 million for the years ended March 31, 2022 and 2021, respectively.

26

7. Net Assets
Under the Japanese Corporation Law (“the Law”) and regulations, the entire amount paid for new shares is required to be designated as capital stock.
However, a company may, by a resolution of the Board of Directors, designate an amount not exceeding one half of the price of the new sharesas additional paid-in capital, which is included in capital surplus.
In cases where dividend distribution of surplus is made, the smaller 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.

8. Loss on disasterFor the year ended March 31, 2022
The Group recorded loss on disaster for the disposal cost and restoration cost of damage by the earthquake in Fukushima in March 2022.
For 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 year ended March 31, 2020.

9. Expenses for Business Structure Improvement
For the year ended March 31, 2022
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 and for the valuation loss on inventories in domestic subsidiaries followed by withdrawal from the business.
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.

10. Loss related to COVID-19 pandemic
For the year ended March 31, 2022
The Company recorded \479 million ($3,910 thousand) for the equivalent amount to salaries, depreciations and other fixed costs accrued in oversea subsidiaries
during the period of low operation which was requested by the governments in China and Vietnam, and \168 million ($1,373 thousand) for COVID-19 infection prevention.
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.

11. Contingent Liabilities
Contingent liabilities of the Company as of March 31, 2022 and 2021 are as follows:
Thousands ofMillions of yen
2022

U.S. dollars

2022

2021
23 \

Trade notes discounted............................................................................. \

45 $

190

12. Contract Liabilities
Contract liabilities of the Company as of March 31, 2022, which are included in “Other” in “Current Liabilities” are as follows:
Millions

Thousands ofof yenU.S. dollars

30 $Contract liabilities...................................................................................... \245

13. Research and Development Costs
Research and development costs included in selling, general and administrative expenses and manufacturing costs are \3,074 million ($25,114 thousand),\1,428 million and \1,212 million for the years ended March 31, 2022, 2021 and 2020, respectively.

14. Gain on Reversal of Loss on Valuation of Investment Securities
There were no applicable matters for the years ended March 31, 2022 and 2021.
The Company recorded a gain on the 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.

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, 2022, 2021 and 2020 are as follows:
Thousands ofGain:
Machinery and vehicles............................................................................
Others ...................................................................................................
Total gain .......................................................................................
Loss:
Buildings and structures ..........................................................................
Machinery and vehicles ...........................................................................
Construction in progress ........................................................................
Others ...................................................................................................
Total loss .......................................................................................
Net loss ........................................................................................ \Millions of yen
2021

2022

U.S. dollars

2022

2020

0
3
3

4
4

1
1

(223)
(272)
(29)
(524)
(521) \

(17)
(112)
(59)
(10)
(198)
(194) \

(9)
(115)
(16)
(140)
(139) $

27

3
19
22
(1,826)(2,224)(232)(4,282)(4,260)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, 2022, 2021 and 2020.
The tax effects of significant temporary differences that resulted in deferred tax assets and liabilities as of March 31, 2022 and 2021 are as follows:
Thousands ofMillions of yen
2022
2021
Deferred Tax Assets:
Elimination of unrealized profits .......................................................................................................................... \Accrued bonuses ...............................................................................................................................................
Net defined benefit liability ..................................................................................................................................
Provision for directors' retirement benefits ...........................................................................................................
Provision for share awards .................................................................................................................................
Provision for share awards for directors ..............................................................................................................
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).................................................................................................................................
Deferred gains on hedges.....................................................................................................................................
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 .................................................................................................................................................................... \

164 \
308
845
66
35
8
67
48
202
292
811
5
15
2,126
44
245
173
5,454
(1,385)(2,006)(3,391)
2,063 \

U.S. dollars

2022

81 $
212
782
66
23
71
76
336
866
20
15
2,959
0
444
103
6,054
(2,165)(2,340)(4,505)
1,549 $

1,338
2,515
6,899
539
286
62
550
392
1,649
2,386
6,627
37
124
17,370
360
1,998
1,422
44,554(11,317)(16,386)(27,703)
16,851Thousands ofMillions of yen
2022
2021

U.S. dollars

2022

Deferred Tax Liabilities:
Retained earnings of foreign subsidiaries.............................................................................................................. \Unrealized gains on available-for-sale securities........................................................................................................
Deferred gains on hedges.....................................................................................................................................
Total .................................................................................................................................................................... \(519) \
(2)(26)(547) \

(419) $
(17)(111)(547) $

(4,242)(17)(209)(4,468)Deferred Tax Assets, Net: ..................................................................................................................................... \1,516 \

1,002 $

12,383(*1) The valuation allowance decreased by \1,114 million ($9,099 thousand), mainly due to the decrease of \597 million ($4,878 thousand) invaluation allowance for tax loss carryforwards and the decrease of \199 million ($1,627 thousand) in valuation allowancefor deferred foreign tax credits at the Company for the year ended March 31, 2022.
The valuation allowance decreased by \535 million, mainly due to the decrease of \416 million in valuation allowance for tax loss carryforwards
and the decrease of \220 million in valuation allowance for deferred foreign tax credits at the Company for the year ended March 31, 2021.
(*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, 2022

Within one
year
- \
-

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

March 31, 2021

March 31, 2022

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

- $
-

Thousands of U.S. dollars
One to twoOver two toOver three toOver four toyears
three years
four years
five years
145 $
106 $
4,974 $
1,511 $
(145)
(106)
(70)
(362)
4,904
1,149

One to twoyears

Within one
year

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

Within one
year

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

Millions of yen
One to twoOver two toOver three toOver four toyears
three years
four years
five years
18 \
13 \
609 \
185 \
(18)
(13)
(9)
(44)
600
141

(*a) Gross deferred tax assets for tax loss carryforwards are calculated using the enacted statutory tax rates.
(*b) Deferred tax assets of \741 million ($6,053 thousand) are recognized for tax loss carryforwards of \2,126 million ($17,370 thousand) (calculated using the enacted statutory tax rates),
which the Company's consolidated subsidiaries recognized for tax loss carryforwards of \741 million ($6,053 thousand) for the year ended March 31, 2022.
These tax loss carryforwards resulted from loss before income taxes for the years ended March 31, 2021 and 2022, 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, 2022.
Deferred tax assets of \794 million are recognized for tax loss carryforwards of \2,959 million (calculated using the enacted statutory tax rates),
which the Company and its consolidated subsidiaries recognized for a part of tax loss carryforwards of \1,391 million 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.
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, 2022, 2021 and 2020 is as follows:

Statutory tax rate ...........................................................................................................................................................................
Expenses not deductible for tax purposes ......................................................................................................................................
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 .................................................................................................................................................................

28

2022

2021

2020

30.6%
0.1%
0.1%
0.1%
(3.1)%(11.0)%
0.8%(0.0)%(6.9)%(1.4)%
9.3%

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%

Over five years
1,301 \
(1,301)-

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

Over five years
10,634 $(10,634)
-

Total
2,126
(1,385)(*b) 741

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

Total

(*b)

17,370(11,317)6,053

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 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 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 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 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 interest fluctuation risk. The Group utilizes commodity forward contracts to hedge copper price fluctuation risk.
(3) Policies and processes for managing the risk(i) Credit risk management (risk of default by the counterparties)
The sales management department in the Company follows sales management rules, monitors the customers’ credit conditions periodically and manages the due dateand balance per customer. The Company keeps track of the adverse financial conditions of its customers in the early stages 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. Details of the derivative transactions
are reported to Board of Directors' meeting periodically.
(iii) Liquidity risk management (risk of default at the due dates)
The Company prepares and updates the cash management plan based on the reports from each department to manage liquidity risk on a timely basis.
(4) Supplemental information on fair values
As the calculation of fair values of financial instruments 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, 2022 and 2021 are as follows:
2022
Millions of yen
Book

Fair

Value

Value

Thousands of U.S. dollars
Difference

Book

Fair

Value

Value

Difference

Investment securities
Available-for-sale securities .......................................... \Total assets.................................................................... \

222 \
222 \

222 \
222 \

- $
- $

1,817 $
1,817 $

1,817 $
1,817 $-

Long-term borrowings (*4) ............................................ \Lease obligations (*4) ........................................................
Total Liabilities............................................................... \38,229 \606
38,835 \38,123 \609
38,732 \

106 $
(3)
103 $

312,298 $
4,951
317,249 $311,430 $4,979
316,409 $

868
(28)
840

Derivative financial instruments (*5)................................. \(60) \(60) \- $(492) $

(492) $-

2021
Millions of yen
Book

Fair

Value

Value

Difference

Investment securities
Available-for-sale securities .......................................... \Total assets....................................................................

268 \
268

268 \
268

-

Long-term borrowings (*4) ............................................ \Lease obligations (*4) ....................................................
Total Liabilities............................................................... \46,530 \943
47,473 \46,529 \949
47,478 \

1
(6)
(5)

Derivative financial instruments (*5)................................. \

361 \

361 \

-

(*1) Disclosure of cash and cash equivalents, trade notes and accounts receivable, trade notes and accounts payable and short-term borrowings
is omitted since their book value approximate their fair value because of their short maturities.
(*2) Investments in partnership and similar instruments for which net interest amounts are recorded on the consolidated balance sheet are not includedin the above table as of March 31, 2022. Book value of these financial instruments as of March 31, 2022 is \273 million ($2,228 thousand).
(*3) Unlisted securities of \2,060 million ($16,824 thousand) as of March 31, 2022 and \2,340 million as of March 31, 2021 are not included in the above tablebecause the securities do not have fair market values and it is extremely difficult to estimate fair values.
(*4) Current portion is included.
(*5) Derivative financial instruments are stated in net of assets and liabilities. The figures in parenthesis indicate net liabilities.

29

(c) The redemption schedule for financial instruments as of March 31, 2022 and 2021 is as follows:
2022
Millions of yen

Cash and cash equivalents ..............................................\
Time deposits ................................................................
Trade notes ...................................................................
Accounts receivable .......................................................\

Due in one
year

Due after one
year throughDue after five
years throughor less

five years

ten years

10,451 \249
2,093
33,656- \-Due after ten
years

- \
-

-

2022
Thousands of U.S. dollars

Cash and cash equivalents .............................................. $Time deposits ...............................................................
Trade notes ...................................................................
Accounts receivable ....................................................... $Due in one

Due after one

Due after fiveDue after ten

year

year throughyears throughyears

or less

five years

ten years

85,373 $2,034
17,098274,944

- $
-

- $
-

-

2021
Millions of yen

Cash and cash equivalents .............................................. \Time deposits ................................................................
Trade notes and accounts receivable .............................. \Due in one

Due after one

Due after fiveDue after ten

year
or less

year throughfive years

years throughten years

years

12,122 \249
29,504

30

- \
-

- \
-

-

(d) Fair value information of financial instruments by level of inputs
Based on the observability and the significance of the inputs used to determine fair values, fair value information of financial instruments is presented by categorizing measurements into the following three levels:
Level 1 fair value: the fair value measured by quoted prices of identical assets or liabilities in active markets.
Level 2 fair value: the fair value measured using observable inputs other than Level 1.
Level 3 fair value: fair values measured using unobservable inputs.
When multiple inputs of different categories are used in measuring fair value, the Company and its subsidiaries classified fair values into a category to which the lowest priority is assigned.
(1) Financial instruments measured at fair values in the consolidated balance sheet
2022
Millions of yen
Level 1

Level 2

Level 3Thousands of U.S. dollars
Total

Level 1

Level 2

Level 3

Total

Investment securities
Available-for-sale securities
Equity securities .................................. \

222 \

- \

- \

222 $

1,817 $

- $

- $

1,817

Derivative financial instruments
Interest rate related....................................
Commodity related ..................................
Total Assets.............................................\

222 \

2
84
86 \

- \

2
84
308 $

1,817 $

16
685
701 $

- $

16
685
2,518

Derivative financial instruments
Interest rate related................................ \Total Liabilities.........................................\

- \
- \

146 \
146 \

- \
- \

146 $
146 $

- $
- $

1,194 $
1,194 $

- $
- $

1,194
1,194

- $
- $

311,430
4,979
316,409(2) Financial instruments other than those measured at fair values in the consolidated balance sheet
2022
Millions of yen
Level 1Long-term borrowings.............................. \Lease obligations ........................................
Total Liabilities.........................................\

Level 2

- \- \38,123 \609
38,732 \Level 3Thousands of U.S. dollars
Total

- \
- \

Level 1

38,123 $609
38,732 $Level 2- $- $Level 3

311,430 $4,979
316,409 $Total

Valuation techniques and inputs used in measuring fair values
Investment securities
Listed equity securities are measured using quoted prices. Fair value of listed equity securities are classified as level 1, because they are exchanged in active markets.
Please refer to Note 3. regarding the information of the fair value for the investment securities by classification.
Derivative transactions
The fair value of interest rate swap, currency swap and copper swap are determined by discounted present value method using observable inputs such as interest rates and exchange rates and categorized in Level 2.
Please refer to Note 18.
Long-term borrowings and lease obligations
The fair value of long-term borrowings and lease obligations are determined by discounted present value method using sum of principal and interest, and interest rates which are determined with consideration of
credit risk and remaining periods, and categorized in Level 2.
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.

31

18. Derivatives
There are no derivative transactions for which hedge accounting has not been applied for the years ended March 31, 2022 and 2021.
Derivative transactions for which hedge accounting has been applied for the years ended March 31, 2022 and 2021 are as follows:
2022

Contract
amountHedged item

Millions of yen
Contract
amountdue after
one yearThousands of U.S. dollars
Contract
amountContract
due after
amountone year
Fair value

Fair value

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

Long-term
borrowings \

24 \

- \

(0) $

200 $

0 $

(0)

Currency swap
contracts
Payable fixed/
Receive floating

Long-term
borrowings \29,607 \25,800 \(144) $

241,870 $

210,767 $(1,177)

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

Long-term
borrowings \

600 \

200 \

(2) $

4,902 $

1,634 $

(13)

Long-term
borrowings \

367 \

- \

34 $

3,000 $

- $278

1,443 \

- \84 $11,791 $- $685

Currency related:
Allocation Method
Foreign currency
forward contracts
Currency swap
contracts
Payable in yen/
Receive in U.S.
dollars
Commodity related:
Benchmark Method
Copper swap
contractsRawmaterials\

Contract
amountHedged item

2021
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

\

66 \

22 \

(1)

Currency swap
contracts
Payable fixed/
Receive floating

Long-term
borrowings\

2,437 \

367 \0Special Method*
Interest rate swap
contracts
Payable fixed/
Receive floating

Long-term
borrowings\

1,000 \

600 \

(5)

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)

Raw
materials\

2,065 \

- \362

Commodity related:
Benchmark Method
Copper swap
contracts

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.

32

19. Comprehensive Income
Reclassifications and income tax effects attributable to other comprehensive income for the years ended March 31, 2022, 2021 and 2020 are as follows:
Thousands ofMillions of yen
2021
2020

2022
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 ...................................................................................................................... \U.S. dollars

2022(40) \(10)(50)
15(35) \

65 \
65
(17)
48 \

(57) $
114
57
57 $

(328)
(80)
(408)
125
(283)

77 \
(498)
(421)
129
(292) \

647 \
(330)
317
(97)
220 \

(143) $
(78)
(221)
68
(153) $

633
(4,074)(3,441)
1,055(2,386)

9,066 \
9,066 \

3,755 \
3,755 \

(2,945) $(2,945) $74,05774,057

42 \
52
94
49
143 \
8,882 \

(68) \
37(31)(31) \
3,992 \

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

344
424
768
404
1,172
72,56020. Revenue Recognition
Breakdown of revenue arising from contracts with customers by geographical areas for the year ended March 31, 2022 is as follows:

Japan.................................................................................................................................................................................................................................................. \China...................................................................................................................................................................................................................................................
Vietnam................................................................................................................................................................................................................................................
Asia.....................................................................................................................................................................................................................................................
North America......................................................................................................................................................................................................................................
Europe.................................................................................................................................................................................................................................................
Other...................................................................................................................................................................................................................................................
Revenue arising from contracts with customers .....................................................................................................................................................................................
Other revenues
Sales to external customers .................................................................................................................................................................................................................. \Millionsof yen50,314 $36,79020,101
24,637
14,6394,776
18151,275
151,275 $Thousands ofMillionsof yen29,504 $35,74997
30

Thousands of

U.S. dollars

411,027
300,545
164,207
201,263
119,590
39,018157
1,235,807
1,235,807

Basic information to understand the revenue arising from contracts with customers are disclosed in Note 2 (n).
Receivables from contracts with customers and contract liabilities as of March 31, 2022 are as follows:

Receivables from contracts with customers (balance at the beginning of the year).................................................................................................................................... \Receivables from contracts with customers (balance at the end of the year).............................................................................................................................................
Contract liabilities (balance at the beginning of the year).........................................................................................................................................................................
Contract liabilities (balance at the end of the year).................................................................................................................................................................................
Contract liabilities are advance received from customers before delivery of products and included in “Other” in “Current Liabilities” in the consolidated balance sheet.
Contract liabilities will be reversed as related revenues are recognized.
The amount of contract liabilities as of March 31, 2021 for which revenue is recognized during the year ended March 31, 2022 was \97 million ($791 thousand).
Revenue recognized for the year ended March 31, 2022 for which contract liabilities were satisfied during previous periods are immaterial.
Disclosures about total amount allocated to the remaining performance obligations and the period in which related revenue recognition is expected are omitted, as there areno material contracts for which initially scheduled contract period exceeds one year.

33

U.S. dollars

241,024
292,042791
245

21. 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 is 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

2022
Millions of yen
Japan

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

50,314\

China

Vietnam

36,790\20,101\

Asia\

North America

24,637

14,639\Europe

\

4,776

Other

Total

18

\

151,275

157$

1,235,807\

2022
Thousands of U.S. dollars
Japan

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

$

411,027

China$

Vietnam

300,545$

164,207

Asia$

North America

201,263$

119,590

Europe$39,018

Other

$

Total

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

Other

\

Total

-

\

-

\

119,257

2020
Millions of yen
Japan

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

\

35,174

China\

Vietnam\

34,642

12,747

Asia\

North America

17,225\

13,169Net sales by destination were recognized based on the location of customers and classified by country or region.
(b) Property, plant and equipment

2022
Millions of yen
Japan

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

11,494

\

China

\

Vietnam

30,08840,978

\

Other

\

Total

2

\

16

$

4

\

82,562

2022
Thousands of U.S. dollars
Japan

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

$

93,899China$

245,795

Vietnam$

334,764

Other

$

Total

674,474

2021
Millions of yen
Japan

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

\

7,216

(3) Information about major customers

China

\

26,459Vietnam\

35,108

Other

\

Sales
2022

Name of the major customer
Samsung Electronics Co., Ltd. .....................................................................

Millions of yen

15,564\

Thousands of U.S. dollars$

127,145

Sales
2021

Name of the major customer
Samsung Electronics Co., Ltd. .....................................................................

Millions of yen\

13,564

The above sales amount includes the sales from the major customer and its business group.
Information about reportable segments 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 year ended March 31, 2020.
(4) Information about impairment loss
Information about impairment loss by reportable segment for the year ended March 31, 2022 is not disclosed as the Group's reportable segment issolely printed circuit boards (“PCB”) and the related business, and other business is immaterial.
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 is immaterial.
Information about impairment loss by reportable segment for the year ended March 31, 2020 is not disclosed as the Group's reportable segment ismainly printed circuit boards (“PCB”) and the related business, and other business is immaterial.

34

Total

68,787

Europe

\

2,522

Other

\

Total

115,47922. Related-Party Transactions
For the year ended March 31, 2022
Transactions with related parties(1) Unconsolidated subsidiary
There were no applicable matters for the year ended March 31, 2022.
(2) Directors and major individual shareholders

Name
M.D. Systems Co., Ltd.
※1

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 ※2
Purchase of
products

Transaction
amount\179 million($1,466 thousand)

Balance as at
March 31, 2022
\18 million($148 thousand)in accounts
payableSales of products\19 million($154 thousand)\2 million($15 thousand)in accounts
receivable

Notes: ※1 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.
※2 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.
※1

Dapara Tech Co., Ltd.
※2

Location
Atsugi City,
Kanagawa

Seoul City,
South Korea

Capital\15 million₩50 million

Details of the business
Board design

Sales ofboards andrelatedfacilities

Percentage forpossession of voting rights
Directly own (%)
14.7

Directly own (%)-

Relationship
Businessrelationship

Businessrelationship/
Concurrent positionsof the director

Details of thetransaction ※3
Purchase of
products

Transaction
amount\2 million($19 thousand)

Balance as at
March 31, 2022-

Sales of products\2 million($20 thousand)-Sales commission\483 million($3,948 thousand)\97 million($794 thousand)in otherpayablePurchase of
products\78 million($633 thousand)\4 million($36 thousand)in accounts
payableSales of products\69 million($564 thousand)\4 million($29 thousand)in accounts
receivable

Notes: ※1 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.
※2 Yoon Ho Shin, director of the Company, directly owns 60.0% of voting rights in Dapara Tech 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.
The terms and conditions of the sales commission are determined through negotiations considering those with other companies.

35

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

Balance as at
March 31, 2021
\41 million
in accounts
payableSales of products\14 million\2 million
in accounts
receivable

Details of thetransaction ※4
Purchase of
products

Transaction
amount ※1\10 million

Balance as at
March 31, 2021
\2 million
in accounts
payableSales of products\1 million\0 million
in accounts
receivable

Sales commission\410 million\77 million
in otherpayableSales of products\56 million\5 million
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 ofboards andrelatedfacilities

Percentage forpossession of voting rights
Directly own (%)
14.7

Directly own (%)-

Relationship
Businessrelationship

Businessrelationship/
Concurrent positionsof the director

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.

36

23. Subsequent Events
Business Combination by Acquisition
On July 28, 2022, the Company made an institutional decision to acquire 100% of shares of NEC Embedded Products, Ltd. (hereafter “NECEP”).
(a) Outline of the business combination(1) Name and description of business of the company to be acquired:
Name
NEC Embedded Products, Ltd.
Description of business
Development, design, manufacture of electronic application equipment, machinery and instruments, all kinds of equipment, machinery,
instruments and systems related to electricity, equipment, machinery, instruments and system, and entrusted work, sale and maintenance thereof.
(2) Major reasons for the business combination
The Company has embraced "Providing the best products and services to customers, and happiness for employees and society through manufacturing” as its management philosophy.
To that end, we are taking on the challenge in the field of advanced electronics in terms of electronic PCBs, expanding and strengthening our EMS business, thereby aiming tocontribute to our customers. In its medium-term management plan released on May 19, 2022, the Company has set forth a strategy to position and strengthen electronic PCBs andsemiconductor package boards for automotive and smartphone applications, and the EMS business as new pillars in its business domain.
NECEP is capable to handle orders for a wide variety of electrical and electronic equipment utilizing its embedded product development capabilities and cutting-edge technologies.
Namely, it has a unique competitive advantage in consistent entrusted operations from development and design to mass production, as well as in high-quality and high-reliability
manufacturing capabilities. We believe that NECEP is the best strategic partner for our businesses, based on the fact that the addition of NECEP to the Group will enable it toestablish an ODM-type EMS business structure with development and design functions, and to realize a proposal-based business structure targeting electronic PCBs to highvalue-added electronic products.
In order to expand the EMS business, going forward, the Company will promote collaboration between the electronic PCBs business and the EMS plants in Vietnam conducting
development, design and mass production. Furthermore, the Company will work on building a system that can respond promptly to all needs, including for mass production andsmall- to medium-lot orders, by managing EMS factories in Japan and implementing in house evaluation and prototype development. We strive to provide our customers withthe maximum level of services to further enhance the corporate value of the Group.
(3) Date of the business combination
October 1, 2022 (scheduled)(4) Legal form of the business combination
Acquisition of shares in consideration for cash(5) Name of company after the business combination
Meiko Embedded Products, Ltd.
(6) Ratio of voting rights to be acquired
100%(7) Basis for determining the acquiree
It is based on the fact that the Company acquires shares in consideration for cash(b) Acquisition cost of the acquired company and details of each class of consideration
Cash
Consideration to be paid for acquisition
Acquisition cost

\11,000 million\11,000 million(c) Details and amount of major acquisition-related expenses
To be determined(d) Amount, reasons, amortization method and amortization period of goodwill recognized
To be determined(e) Amount and details of assets acquired and liabilities assumed at the date of the business combination
To be determined

37

38

39

40

41

42

Principal Subsidiaries and Affiliates

Principal
Business

Paid-in Capital

Investment
Ratio (%)

Name or Trade Name

Address

Meiko Tech Co., Ltd.

Ayase City,
Kanagawa Prefecture

95

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

100

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)

Vietnam43(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

18.25

The Master Trust Bank of Japan, Ltd.

2,951

11.45

2,204

8.55

1,025

3.98

1,012

3.93

Meiko Kosan Co., Ltd.

608

2.36

Yuho, Ltd.

521

2.02

Seiichi Naya

405

1.57

Sumitomo Mitsui Banking Corporation

377

1.46

JP MORGAN CHASE BANK 385632

314

1.22

14,12254.78(trust account)
Custody Bank of Japan, Ltd.
(trust account)
BNP PARIBAS SECURITIES SERVICESLUXEMBOURG/JASDEC/FIM/LUXEMBOURG
FUNDS/UCITS ASSETS(Standing Agent: Custody Department, Tokyo
Branch, The Hongkong and Shanghai Banking
Corporation Limited)
CLEARSTREAM BANKING S.A.
(Standing Agent: Custody Department, Tokyo
Branch, The Hongkong and Shanghai Banking
Corporation Limited)(Standing Agent: Settlement & Clearing Services
Department, Mizuho Bank, Ltd.)
Total

44

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).

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.

45

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 First
Section of the Tokyo Stock Exchange.

April 2022

Moved from the First Section of the Tokyo Stock Exchange to the Prime
Market due to the restructuring of the stock market.

46

Corporate Data (As of March 31, 2022)

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:
4,032
Securities Code:
6787
Stock Exchange Listing:Tokyo Stock Exchange, Prime Market
Number of Employees:
13,637 (Consolidated)
Number of Subsidiaries and Affiliates:
22
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/

47

Meiko Share Performance in FY2022 Compared with Indices
200.0
180.0

Meiko Electronics (JASDAQ: 6787)
JASDAQ INDEX

160.0
140.0
120.0
100.0
80.0
60.0
40.0

Fiscal year ended March 31, 2022
Index
In %

48

49