Profile
Ever since its founding in 1897, Meidensha Corporation has been working on the relentless
pursuit of new technology and product developments and witnessed steady growth. Our productofferings cover a wide area, such as generators, substation equipment, electronic equipment andinformation equipment. Our mission is not only to provide these products but also to recommend
the best solutions on the basis of what a customer values best. In order to realize these best solutions,
we engage in the supply of various products and provide related services such as engineering,facility management (including operation and maintenance), repair and product-life support.

Contents

book_annual_report_2008.indb 2

Financial Highlights

3

Message from Management

4

Topics6

Operating Performance Highlights

11

Overseas Operations

13

R & D Highlights

14

Financial Section

16

Overseas Affiliates

40

Corporate Data

43

Board of Directors

43

08.8.28 4:38:02 PM

FINANCIAL HIGHLIGHTS
Years ended March 31

Millions of yen

Thousands of U.S.dollars

2008

2007

2006

2008

Net Sales¥203,515¥194,194¥183,747$2,035,150

Net Income

2,405

2,314

3,252

24,050Net Income Per Share (yen, U.S.dollars)

10.59

10.18

14.12

0.11

Cash Dividends Paid

1,363

1,137

909

13,630236,415

223,386

201,274

2,364,150

6,825

6,775

6,561

—

Total Assets
Number of Employees

The consolidated figures in this Annual Report are expressed in yen and solely for the convenience of thereader, translated into United States dollars at the rate of ¥100 = U.S.$1, the approximate exchange rate prevailingon the Tokyo Foreign Exchange Market as of March 31, 2008. See Note 1 to Consolidated Financial Statements.

Net Sales (¥ millions)

Net Income (¥ millions)
10,000250,000

Total Assets (¥ millions)
250,000

223,386
200,000

194,194 203,515

180,595
150,000

150,000
5,000

5,113

100,000

100,000

3,252
2,314

2,405

50,0000201,274

200,000

185,442 183,747

236,415

50,000

05

06

07

08

0

05

06

07

08

0

05

06

07

08

Annual Report 2008

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3

08.8.28 4:38:03 PM

Message from Management
We, at Meidensha Corporation (“Meiden”) and its
consolidated subsidiary companies (collectively the “Meiden
Group” or “the Company”), share the same corporate philosophy.
The mission is: “Illuminating a more affluent tomorrow.” Thevalue is: “For customer peace of mind and satisfaction.” Meiden
Group positively seeks to produce innovations in technology
and new values to realize a more vibrant society and better
living conditions in the future. For customer satisfaction andassurance, we produce eco-friendly designs and approaches. We
strongly promote courteous customer-support service. With topquality products and services, we hope to help our customers insolving their various problems and in realizing their dreams.
Meiden Group products form a broad spectrum, from powersystems, substation equipment, and electronic products to
information and communication products. We not only performthe manufacturing and sales of these products, but also engage
in the solutions business in Japan. This process includes finding
customer-driven optimum solutions and offering engineering,system operations, and system maintenance and management torealize these solutions. Out of our business operations, we would
like to positively seek to offer solutions to the various challenges of
our times, such as the Global Climate Control problem. Throughour contributions to building a more affluent future society,we would like to live up to our social responsibilities and seek
sustainable growth as a company.
During the first half of fiscal 2007, the Japanese economy
showed steady growth in exports and business capital investment.
During the second half of fiscal 2007, the economy faced
inflationary pressure caused by commodity price increases, suchas in crude oil. The bearish stock market, which was triggered by
the sub-prime loan problem in the U.S, was also a problem. Therewas volatility in the currency exchange market, which becamea disruptive factor in the financial market. These economic
conditions worsened business confidence and heightened thesense of uncertainty about the future.
In the heavy electrical industry market, the industry suffereda further decline in demand and a lowering of market prices due
to several factors, including the decline in public investment
spending. In the overseas market, there were the impacts of theabove-mentioned economic situation. The Company faced a very
challenging market situation.
Under these economic circumstances, the Company madevigorous across-the-board efforts to boost sales. Sales for fiscal
2007 totaled 203,514 million yen (consolidated basis); 4.8% up
from the previous fiscal year.
We made efforts across-the-board to cut expenses, reduce
costs, and improve productivity. As a result, net income before
taxes and adjustments came to 4,925 million yen (consolidated
basis), and net income for the year came to 2,405 million yen(consolidated basis).

4Year-end dividends were 5 yen per share. 1 yen was added inmemory of the 110th anniversary and the completion of the newhead office building construction project, for a total declared
dividend of 6 yen per share.
Under these conditions, the Company was able to welcome
its 110th anniversary year. We were able to achieve this longevity
thanks to special support by all the stakeholders, including
shareholders and customers. In September 2007, we completed
construction of a new building in Osaki, Tokyo, and moved ourhead office to this building. Osaki is the Meiden Group’s foundingsite. Our head office returned to Osaki after about 50 years. By
taking this opportunity, and with renewed passion, the Meiden
Group plans to work harder to increase the corporate value of
our Group. We value our relationships with the local community
in Japan, including the Osaki community, and abroad. We alsoplan to see our overseas companies engaged in manufacturingcontributing more to their local communities.
In fiscal 2008, the Company is working on the “Value-up
Plan,” which is a medium-term management plan. This year
marks the last year of the three-year management plan. Under thisPlan, the goals are to develop high value-added products, systems,
and services by drawing on the solid basis of our engineeringresources. By releasing such offerings to growing markets, wehope to build strong revenue sources. Our key specific action
items are as follows:(1) Strengthen Strategy for the Overseas Market BusinessFor overseas markets, we are promoting new productdevelopment, overseas production and improved service andmaintenance systems, and are increasing the number of Japaneseemployees experienced in the overseas markets by having themwork at overseas Meiden Group companies. Through thesepolicies, we are expecting a revenue increase from the overseas
markets and we plan to reinforce our overseas operations andexport business so that the overseas markets will become a key
revenue source for the Meiden Group.
(2) Promote Technology-driven Management
We will put our human and financial resources into R & D.
In line with the marketing strategy, we plan to improve our R &D operations and management. We also plan to reinforce ourintellectual property strategy and human resources development.
With these actions, we would like to develop the solid technicalbases and develop the high value-added products.
(3) New Business Development
While devoting our efforts to developing new businesses inthe technology domain around our core business units of Meiden
Group, we will also improve our ability to locate new areas withbusiness potential, as well as our organizational function of the new

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business incubation support system. Through these actions, we plan
to develop and promote new businesses in an efficient fashion.
(4) Promote CSR-based Management
We established a CSR (Corporate Social Responsibility)
Promotion Committee and we will improve Group-wide CSR
initiatives and promote CSR activities as an integral part ofour corporate strategy. We will review the Group’s businessactivities in light of compliance (with laws, rules and regulations),
environmental conservation, labor safety and health, customer
satisfaction (CS), quality control, etc. We would like to upgrade
the quality of our overall corporate activities.
(5) Strengthen Group Strategy
Each Meiden Group company will improve its organization
to efficiently promote synergy among Meiden Group’s businesses
and thereby maximize the overall corporate value of the Meiden
Group. We will define the inherent challenge that each Meiden
Group company has in terms of (1) the synergy level among
Meiden Group’s businesses and (2) the profitability level. We

Keiji Kataoka, Chairman

will implement policies, including the reform and consolidationof the Group businesses, to realize the efficient management of
all Meiden Group companies.
In addition to the above, we will enhance our offerings(products and services) to produce a new market segment and torelease for the segment with high growth potential. To be specific,
we will establish the following as strategic key businesses: theelectric double layer capacitor (EDLC)-based dynamic voltage
compensator, the drive system for an electric vehicle, etc. We
will work hard to turn these products into core products for the
Meiden Group.
From April, 2009, we will start a new medium-term
management plan (fiscal 2009 – 2011). We will formulate a new
management plan after a review of the current management
plan, including remaining challenges and issues. In drafting the
new management plan, we will incorporate input to resolve such
issues and to strengthen our business further. We will reflect the
specific measures to realize such objectives.
We ask every shareholder, as well as our customers and business
partners, to give us your continued guidance and support.

Junzo Inamura, President

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Topics

A ribbon-cutting ceremonymarked the grand opening ofThinkPark Tower(October 25, 2007)

Building construction
completion ceremony ofThinkPark Tower(September 4, 2007)

The Grand
Opening ofThinkPark

6‘Windy Road’ inThinkPark Forest

ThinkPark Tower, a joint project of Meidensha Corporation and theWorld Trade Center Building, Inc., a Tokyo-based company, completed its
construction and held its grand opening on October 25, 2007.
Located on the site of the former Meiden Tokyo Works near the West Exitof JR Osaki Station in Shinagawa City, Tokyo, ThinkPark Tower is a 30-story
business and commercial building. The first and second floors comprise‘Think Park Plaza,’ with shops and restaurants. Inside the ThinkPark Zone,
there is ‘Think Park Forest’ (a.k.a. ‘Osaki Forest’), which is a spacious open
and natural zone.
Meidensha Corporation moved its head office functions to ThinkPark
Tower in September 2007. Osaki isa memorial and the founding site of
our company. We were able to returnto this head office site about a half
century after the Company moved its
head office location to other Tokyo
area in 1958.
Remembering the enterprisingspirits of the founder and with a spiritof challenge and renewed passion, we
would like to work harder to enhance
our corporate value.

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NewDevelopmentsin the Motorand Inverter
Business—Drive Equipment
for Electric Vehicle
Application—

The Company is developing a motor and inverter for electric vehicle
application as a new business area.
Mitsubishi Motor Corporation developed a next generation electricvehicle (‘EV’) called “i MiEV.” We are now conducting field-testing on
various roads. The i MiEV uses Meiden’s motor and inverter for EV
application.
For use in EV applications, the motor and inverter have to be compact,
lightweight, and low noise, and at the same time, they have to withstandvibrations and climate changes (high and low temperature) with a highdegree of reliability.
Drawing on engineering resources developed over a century, and withrenewed passion, we plan to make further refinements and innovations inthis field.
The market release for the i MiEV is scheduled to be made in 2009, andto meet this target, development and field-testing work is now on track.

i MiEV

Inverter
Motor

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Topics

Completionof the New
Main Building
at Meiden
NumazuWorks

The new main building was completed on May 24, 2007 at Meiden
Numazu Works, which is a major production base for the Meiden Group.
The new main building is eight stories tall and is equipped with anearthquake resistant system that uses a hydraulic damper.
It uses the latest energy-saving systems, including an advanced lighting
control system, a human-detection sensor (for lighting control), an ice
thermal storage air-conditioning system (that makes the best use of thecheap nighttime power), building frame thermal storage, an energy-saving
air barrier system for air conditioning the perimeter (the area from theexterior wall of a building to about five meters inside the building) of glassbuildings, and Meiden products such as a building and energy management
system (BEMS) and a solar power system.
With the completion of the new main building, which functions as a
new entry point welcoming customers, we aim to improve the effective useof the office space in the Meiden Numazu Works and improve the efficiencyof the factories.

The main building of
Meiden Numazu Works

8

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Internal view of EDLC

CapaPost

Deliveryof the First
Commercial
Unit of the
CapaPost

We commercialized a regenerative power storage system for the railway
industry, called “CapaPost,” and shipped the first commercial unit to Seibu
Railway Co., Ltd., in November 2007.
A train requires a huge amount of energy to start up, but it discharges
energy to stop. Formerly, the energy discharged was simply lost, but the
CapaPost stores this discharged energy in a double layer capacitor and canuse it effectively by supplying the power to another train when it starts up.
This allows greater system-wide energy efficiency for railways.
It can also stabilize voltage fluctuations in the power supply system while
trains are in operation, and makes possible a stable and reliable traction
power supply.
We are strongly promoting this product as it is a vital applicationof our key product: the electric double layer capacitor (EDLC). Another
EDLC application product we are promoting is the dynamic voltage
compensator.

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Topics

Release of
Five-rack
Medium Voltage
Combination
Starter—Realizing spacesavings through a
40 percent smaller
footprint—

Conventional triple
rack model

10

The Company commercialized a new Medium Voltage combination
starter (motor control center) for switching and control of motors,
transformers and capacitors.
This product comes with the industry-leading top-class design ofa quintuple rack enclosure, which features space saving and improved
performance.
Recently, there has been a growing demand for electrical appliances inthe energy sector for new installation, expansion and renewal. At the sametime, there is an increasing demand for better safety design, including electric
shock prevention, easy maintenance and eco-friendly features.
Reflecting these market needs, we made our electric appliances morecompact (by improving the printed board packaging density), added ecofriendly feature through better performance, and improved the enclosure
design and module unit development for easy maintenance and better safety.
We were able to incorporate five medium voltage vacuum magnet contactors(VMC) instead of the conventional three VMCs.
The controllable load capacity under the given footprint increased 2.3
times compared with the conventional model and the footprint space was
reduced to 40 percent compared with the conventional design.
We will continue to work hard to improve our product to provide thecustomer with the best product experience.

New quintuple
rack model

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Operating Performance Highlights
Social Infrastructure Systems Business Sector
In the domestic market, the business climate remained
very challenging, due to cuts in the public works budget andintensified price competition. However, our overseas business
operations, especially those in Southeast Asia and the Middle
East, showed significant growth.
In the Power, Railways & Private Sector Business Segment,
the demand for electrical equipment for public facilities was
sluggish due to budget cuts in the domestic market, but demand
for traction substations for the railroad industry was high in boththe foreign and domestic markets. Our Company is trying tolaunch a virtual organization called the “Electric Railway Project”
across the Company that will comprehensively handle order entry,
product development, production, shipment and service in theJapanese market to develop the traction substation business.
In the Environment Engineering Segment, we focused ourmarketing efforts on the replacement demand for aged electricalequipment in water supply and sewage treatment plants. However,demand is still sluggish due to cuts in public spending. In thissegment, we received orders for our new product, WATERCUBE,
an in-house water supply system. In addition, we are also focusing
on orders from private financial initiatives (PFI) projects, which
represent such project activities to improve public facilities, etc.,
by utilizing private sector financing and other sources of funds.
We are working to expand our business domain.
In the International Business Segment, demand for Meiden
substation products has grown significantly, especially inSoutheast Asia and the Middle East, including a traction
substation for a new light rail transit (LRT) system for Dubai
in the United Arab Emirates, and substation facilities for a
petrochemical plant in Saudi Arabia. In addition, we saw solid
growth of sales in terms of gas turbine generators and powerconditioning systems for solar power.

The Nippori-Toneri Liner

Substation Equipment

WATERCUBE

Okubo Water Purification
Plant (a PFI project)

The new light trail transit(LRT) system in Dubai

Industrial Systems Business Sector
The investment climate for facilities in the domestic
industry showed steady growth. Due to our selection of andfocus on certain businesses, there was a slight decrease insales, but overall operating profit increased compared with theprevious fiscal year.
In the Information and Communication Business Segment,
we saw an increase in sales of major products, such as pulsed
power generators and vacuum capacitors for semiconductor
manufacturing equipment, which is one of our key supply areas.
In this segment, we started our release of information security
products and are trying to provide other products with highadded value.
In the Motor Drive Application Business Segment, salesof our main product, motor drive systems for elevators andPulsed power generator

Vacuum capacitors

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Operating Performance Highlights
textile machinery, were strong, especially in overseas markets.
Furthermore, increased awareness of the environment led tomajor growth in demand for electric forklifts. In this segment,
the development of a motor drive system for electric vehicles
gained momentum, and a project to commercialize electricvehicles using our product is in the pipeline. We are proactively
looking for other new applications for our motor drive system
in order to increase our business.
In the Dynamometer System Business Segment, given
active investment in R&D in the automobile industry, sales ofvarious dynamometer-applied automotive testing systems forJapanese automakers showed steady growth. As a new businessdevelopment in the overseas market, we started contract
automotive testing services for the auto industry in North
America. Thus, we are positively promoting a policy that helps
our business to go global.

Motor for electric forklift

Dynamometer

Engineering System Business Sector
In the Maintenance Service and Facility Management
Service Segment, in addition to maintenance and inspection
services for electrical equipment, we are also actively promoting
our solutions business by proposing such items as energy saving,extending product life or renovating products on the basis ofdiagnostic findings of aged facilities. Thus, we are working hardto develop a new service business.
In the Maintenance Service for Semiconductor Manufacturing
Equipment Segment, we are offering contract maintenance andinspection services to the semiconductor manufacturing systemline of the device manufacturers. Thus, we are reinforcing ourexisting services.

Real Estate Business Sector
ThinkPark Tower, a business and commercial building,
had its grand opening on 25 October 2007 as a joint venture
between the World Trade Center Building, Inc., a Tokyo-based
company, and our Company. ThinkPark Tower is located in
Osaki, Shinagawa City, Tokyo. We are conducting a real estate
rental service primarily out of this building.

ThinkPark Tower

Other Business Sectors
Other Meiden Group businesses and companies include themarketing companies, which cover a vast array of business areas,
the welfare program service for Meiden Group associates, and thebusiness process outsourcing service for accounting work. Orders
and revenue remained steady for all these business sectors.

12

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Overseas Operations
During fiscal year 2007, global expansion was
losing speed in the face of a major ﬁ nancial crisis
triggered by the sub-prime mortgage loan problem
and related ﬁnancial instruments. The U.S. economic
slowdown intensiﬁed in ﬁscal 2007, remaining at a
growth level of around 2% due to the continuing
housing market correction. Emerging and developing
economies were less affected by the ﬁnancial market
developments and continued to grow at a rapid pace,
led by China and India.
The Middle East showed strong growth at around
6% . High oil prices are supporting increasing
government spending on infrastructure and social
projects.
The Southeast Asian economy, which is Meidensha
Corporation’s major market, posted about 6% growthin ﬁscal 2007. Singapore showed strong performance,at around 7%, led by brisk domestic demand (private
investment and consumption), despite the slowdown
of exports.
In the U.S. power sector, there was about a 3%
level increase in total net power generation due to thepower generation increase of natural gas-ﬁred plants,
coal-ﬁred plants and renewable power (wind and solar
power) plants.
In the automotive market in the U.S., the industry
showed a 4% sales decline. U.S. auto sales in ﬁscal
year 2007 were around 16 million vehicles. In
particular, the sales of full-size pickup trucks andsport-utility vehicle, inﬂuenced by a shift in buyer
preferences toward smaller, more fuel-efficient
vehicles and crossovers, showed a signiﬁcant decline.
U.S. automakers faced high oil prices, weak consumer
conﬁdence and tighter credit.
The major products ordered in ﬁscal year 2007
were as follows:
In the ﬁeld of power generation, GE Aero Energy
Products in Texas placed orders as part of an ongoing purchasing contract for generators for the GE
LM6000 gas turbine. We also received orders for a
power conditioning system (PCS) from a photovoltaic
system integrator in Korea.
In the utility power substation market, we received
orders for mobile substations for the Middle East
market.
In the electric railroad substations market, we
received an order for traction power substations for
Dubai Municipality Head Quarters, U.A.E.
In the automotive market in North America, we

received orders for seven automotive test systems forautomaker’s technical centers and factories.
In the Asia-Pacific automotive market (except
Japan), we received orders for seven automotive
test systems for automakers’ technical centers andfactories in Asia.
The major products manufactured and shipped
during ﬁscal year 2007 were as follows:
In the substation market, we supplied and installed
substations for the Rabigh Reﬁning & Petrochemical
Company, which is a joint venture between Saudi
Arabian Oil Co. (“Saudi Aramco”) and Sumitomo
Chemical Co., Ltd., for the development of an
integrated reﬁ nery and petrochemicals complex in
Saudi Arabia. We also supplied substations for the
Middle East.
In the electric railroad substation market, weshipped and installed traction substations for theDubai Metro Project, U.A.E.
In the dynamometer ﬁeld in North America, we
supplied and installed six test systems for automobile
and truck transmissions and engines for several
customers. We mostly completed the testing facility
installation and the related building renovation workin March 2008 for Meiden Technical Center North
America LLC, which is our new company for contract
automotive testing service. The service was scheduled
to start from May 2008.
In the Asia-Paciﬁc automotive market (except
Japan), we also shipped and supplied 16 test systems
for automobile truck transmissions and engines forseveral customers.
In the power generation market, we shipped andinstalled a 10 MW biomass power generation plant(using waste coconut shell as a resource) for the
Seguntor Bioenergy Power Plant Project in Malaysia,
and shipped and installed a 10 MW biomass power
generation plant (using empty fruit bunch (“EFB”) asa resource) for the Kina Biopower Power Plant Projectin Malaysia. We also supplied generators for Korea
and the Middle East.
In other noteworthy events in our overseas
operations, we established an ofﬁce in Dubai, United
Arab Emirates, in July 2007 for assisting the abovementioned Dubai Metro Project and other businessdevelopments for our products. We also established
Meiden India Pvt. Ltd. in New Delhi, India, inNovember 2007 for the business development ofvarious Meiden products.

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13

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R & D Highlights
The Company is engaging in the full spectrum of R&D activities, such as the long-term development of core technology
development, other wide-range development on core technologies, material development, product development, andmanufacturing technology.
The following is a summary of the major R&D operations in each business segment.
Social Infrastructure Systems Business Sector
Energy Business Segment
We are enhancing our efforts to meet increased needs for a high-quality power supply. In particular, we are working on
developing application products that use Electric Double Layer Capacitors (EDLC). In addition to large capacity dynamic
voltage compensators, we commercialized a regenerative power storage system for DC electric railways, called “CapaPost.”
We shipped the first commercial model for the Japanese market in November 2007.
Environmental Engineering Business Segment
In addition to our core engineering resources on water quality control in water supply and sewage systems, we incorporated theengineering services of operation, facility management, and system design technology to promote our solutions business.
We developed and launched sales of an in-house water supply system called “WaterCube,” which processes groundwater(water source) into safe and highly economical water for factory, school or hospital, etc. We are constantly working on productdevelopment of a membrane treatment system for water supply and sewage treatment system. The other challenge is to develop
an advanced processing system for nitrogen and phosphorus removal from sewage water.
Industrial Systems Business Sector
Information and Communications Business Segment
We are working on improving the performance and reliability of pulsed power supply and vacuum capacitors forsemiconductor manufacturing systems. We are also enhancing our product portfolio: (1) for application software for improving
security and control accuracy for stable operation of the semiconductor manufacturing system and (2) for a built-in industrial
controller for the semiconductor manufacturing system. We are aiming to drive sales growth.
Motor Drive Application Business Segment
We are focusing innovations on the development of a permanent magnet synchronous motor that offers high efficiency
and energy savings and high compact design potential. Combining this motor with the inverter, we are developing variable
speed systems for elevator, forklift and electric vehicle applications.
Dynamometer Systems Business Segment
We are working on developing a wide variety of applied technologies and testing systems for various applications. These
include a slim-type engine dynamometer system that can use the actual exhaust pipe layout of a vehicle. This system performs
engine and exhaust pipe tests using actual exhaust pipe and layouts similar to those in an actual vehicle. We are also developing
an advanced high-performance engine testing system that combines the software tools for engine optimization with vehicle
model simulation software. Using this product, an automaker could test engine performance with the engine under test byusing component modeling simulation software that contains simulation models of other (non-engine) vehicle components
influencing the fuel economy and the driving performance.
Engineering System Business Sector
We are working on reductions of electrical facility management costs as well as the extension of life of products used in suchelectrical facilities. In this connection, we have developed a method to perform periodic inspections of electrical systems bymonitoring under the live-wire operation. This is an example of the diagnostic technology improvement to monitor and detectthe deterioration of the insulation or performance of the electrical facility. We are offering a consulting service for electricalfacility management, such as reviews of the overall health level of the electrical facility and cost reduction and product life
extension proposals for such facility. Thus, we are developing ‘life-cycle engineering services.’

14

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Contents
Consolidated Financial Review

16Five-year Summary

16

Operational Review

17

Consolidated Balance Sheets

18

Consolidated Statements of Income

20

Consolidated Statements of Shareholders’ Equity/
Changes in Net Assets

21

Consolidated Statements of Cash Flows

22

Notes to Consolidated Financial Statements

23

Independent Auditors’ Report

39
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15

08.8.28 4:38:41 PM

CONSOLIDATED FINANCIAL REVIEW
Outline of Profits and Losses
During this consolidated fiscal year, although
Japan’s economy saw exports and investment inequipment growing stronger during the first half ofthe period, a drop in stock prices and confusion in thefinancial markets, impelled by a rise in commodity
prices due to a surge in prices for crude oil and otherraw materials and the subprime loan problem in
the United States, led to an increased sense that theeconomy was slowing and more uncertainty about
the economy in the second half.
The heavy electrical industry market in Japansuffered a further decline in demand and a downward
trend of market prices due to several factors, mainly acurb in public sector capital investment. Meanwhile,in overseas markets, Southeast Asia and the Nearand Middle East saw a continued expansion of theireconomies. In Europe and North America, however, theCompany faced a very challenging market situation.
Under these economic circumstances, theCompany and its consolidated subsidiaries have madea sustained sales effort, yielding major increases in ouroverseas businesses. Sales totaled 203,515 million yen,up 4.8% from the previous fiscal year.
We made group-wide-effort to reduce costs
and cut expenses however, influenced by declining

prices and other factors, income before tax andminority interests declined by 639 million yen overthe previous fiscal year to 4,296 million yen. Net
income for the year increased by 91 million yen to2,405 million yen.

Financial Conditions
With respect to consolidated cash flow, cash
f low from operations saw growth in the rate ofincrease of inventory assets and a greater decrease inliabilities for purchases, but a greater decrease in notes
and accounts receivable led to an increase over theprevious period of ¥722 million, yielding an incomeof ¥4,351 million. Due to the acquisition of property,
plant and equipment, and a resulting decrease in
expenditures, cash flow from investments included¥12,870 million of expenditures, an increase overthe previous period of ¥8,687 million. Concerning
financial cash flow, income from long-term borrowing
decreased, but short-term borrowing grew, increasing¥115 million over the previous period, for a total
income of ¥13,117 million. As a result, the amountof cash and cash equivalents at the end of the period
was ¥4,683 million higher than the previous period,
for a total of ¥10,169 million.

FIVE-YEAR SUMMARY
MEIDENSHA CORPORATION AND CONSOLIDATED SUBSIDIARIES (years ended March 31)
Millions of yen

16

2008

2007

2006

2005

2004

Net Sales¥203,515¥194,194¥183,747¥185,442¥181,560

Net Income

2,405

2,314

3,252

5,113

2,335

Net Income Per Share (Yen)

10.59

10.18

14.12

22.33

10.14

Cash Dividends Paid

1,363

1,137

909

682

—

Depreciation and amortization

6,334

4,369

3,872

3,906

4,262

Total Assets

236,415

223,386

201,274

180,595

194,163

Net property, plant and equipment

66,822

61,52346,50135,83843,215

Shareholders’ equity per share (Yen)

255.31

272.20265.64232.19209.91

Annual Report 2008

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08.8.28 4:38:41 PM

OPERATIONAL REVIEWSocial Infrastructure Systems(Millions of yen)

98,044

95,395

105,339

This segment includes business related to the construction of social infrastructure. We
provide solution services of all kinds in relation to electric power quality, energy conservation,and related matters, and we engage in the manufacturing and marketing of all types ofelectrical equipment involved in power generation, transmission, transforming, distribution,and other related functions, for power companies, government and other public agencies andoffices, railroads, highways, private facilities, and other such establishments.
We are also involved in the field of water supply and sewerage treatment for local governments.
Our activities include manufacturing and marketing products for the control of treatment
equipment and processes of all kinds, and for the improvement of IT networks. We are further
developing environmental solution services that include contracting for the maintenancemanagement of water treatment plants, and so on.

06

07

08

51.8%

Industrial Systems(Millions of yen)07

57,04706

60,45650,503This segment includes business operations related to product systems used in the manufacturingindustry, IT, and other general industry operations. In addition to providing private industry withpower substations, motor vehicle testing systems, and logistics support systems, we engage in the
manufacture and marketing of motors, inverters, and other products for use in textile machinery,elevators, and other such equipment.
We are active in the information and telecommuni-cations field, manufacturing and marketing
component products for industrial computer and networking systems. We also provide IT solutionsin an effort to promote the greater operational sophistication and efficiency of corporations andlocal governments through the use of IT.

28.0%

08

Engineering Systems(Millions of yen)

23,23706

22,911

20,359This segment provides services relating to the remote management and monitoring of facilities
and the proposal of measures for extending the life of facilities, energy conservation, and othersuch services related primarily to the maintenance of products we supply. We also engage inthe maintenance of semiconductor manufacturing equipment and the reconditioning of used
manufacturing equipment.

07

08

11.4%

Real EstateThis segment includes rentals of real estate holdings, including Think Park
(Tokyo and Osaki).

(Millions of yen)

0.4%
798

0
06

0
07

08

Others(Millions of yen)

15,43206

07

17,093

14,841This segment includes marketing companies not tied to specific business fields, and companies
that contract accounting, payroll, and other administrative functions, as well as welfare services
for employees.

8.4%

08

Annual Report 2008

book_annual_report_2008.indb 171708.8.28 4:38:41 PM

CONSOLIDATED BALANCE SHEETSMEIDENSHA CORPORATION AND CONSOLIDATED SUBSIDIARIES (as of March 31, 2008 and 2007)
Millions of yen

Thousands of U.S.dollars (Note1)

2008

2007

2008

¥10,284¥5,452$102,840—

34—

Trade notes (Note 3)

5,209

6,515

52,090Trade accounts

64,06065,284

640,600

Loans and advances

4,294

2,273

42,940Due from unconsolidated subsidiaries and affiliates

4,167

1,584

41,670Allowance for doubtful accounts

(915)

(955)

(9,150)Inventories (Note 5)

37,231

29,679372,310Deferred income taxes (Note 16)

2,829

2,852

28,290

Other current assets

4,015

3,511

40,150Total current assets

131,174

116,229

1,311,740

Land (Note 9)

8,211

7,989

82,110

Buildings and structures (Notes 7 and 9)

71,56643,391

715,660

Machinery and equipment (Notes 7 and 9)

54,16953,121

541,690

Construction in progress (Note 9)

1,533

23,907

15,330Less: Accumulated depreciation(68,657)(66,885)(686,570)

66,822

61,523

668,220

Investment securities (Notes 4 and 9)

19,87027,602

198,700

Investments in unconsolidated subsidiaries and affiliates (Note 4)

9,600

9,216

96,000

423

82

4,230

Deferred income taxes (Note 16)

1,884

45

18,840

Other assets

6,737

8,831

67,370Allowance for doubtful accounts

(95)

(142)

(950)

38,41945,634384,190¥236,415¥223,386$2,364,150

AssetsCurrent assets:
Cash and time deposits (Note 17)
Short-term securities (Notes 4 and 17)
Receivables:

Property, plant and equipment:

Net property, plant and equipment
Investment and other assets:Long-term loans

Total investment and other assets
Total assets
See accompanying notes.
18

Annual Report 2008

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08.8.28 4:38:42 PM

Millions of yen

Thousands of U.S.dollars (Note1)

2008

2007

2008

Short-term borrowings (Note 8)¥14,349¥9,814$143,490

Commercial paper (Note 8)

30,00020,000300,000

Current portion of long-term debt (Notes 8 and 9)

2,435

1,519

24,350Trade notes (Note 3)

8,347

11,05983,470Trade accounts

25,83926,538258,390

Due to unconsolidated subsidiaries and affiliates

7,052

5,921

70,520

Advances received from customers

13,392

9,976

133,920

Accrued income taxes

1,166

4,624

11,660Accrued bonuses for employees

4,915

4,472

49,150

Other current liabilities

21,262

18,978

212,620

Total current liabilities

128,757

112,901

1,287,570

Long-term debt (Notes 8 and 9)

26,23327,827

262,330

Employees’ severance and retirement benefits (Note 10)17,193

15,505

171,930

Reserve for retirement allowance for directors and corporate auditors

152

426

1,520

Deferred income taxes (Note 16)

30

1,721

300

Other Long-term liabilities

3,875

871

38,750Total Long-term liabilities

47,48346,350474,830

17,07017,070170,700

Capital surplus

13,205

13,204132,050

Retained earnings

21,625

20,681

216,250

Less:Treasury stock, at cost

(77)

(57)

(770)

Unrealized gains on securities, net of taxes

6,241

11,06362,410

Unrealized losses on hedging derivatives, net of taxes

(65)

(37)

(650)

3

(73)

30

Minority interests

2,173

2,284

21,730Total net assets

60,17564,135

601,750¥236,415¥223,386$2,364,150

Liabilities and net assets
Current liabilities:

Payables:Contingent liabilities (Note 12)
Net assets (Notes 2 and 11)
Common stock
Authorized– 576,000,000 shares

Issued and outstanding – 227,637,704 shares

Foreign currency translation adjustment

Total liabilities and net assets

Annual Report 2008

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1908.8.28 4:38:42 PM

CONSOLIDATED STATEMENTS OF INCOMEMEIDENSHA CORPORATION AND CONSOLIDATED SUBSIDIARIES (years ended March 31, 2008, 2007 and 2006)
Millions of yen

Thousands of U.S.dollars (Note1)

2008

2007

2006

2008

Net sales (Note 15)¥203,515¥194,194¥183,747$2,035,150

Cost of sales (Notes 14 and 15)

159,094

152,731

141,776

1,590,940

Selling, general and administrative expenses (Notes 14 and 15)

36,83535,23835,473368,350

7,586

6,225

6,498

75,860

548

471

382

5,480

(1,027)

(606)

(627)

(10,270)

Equity in net income (loss) of affiliated companies

344

180

(289)

3,440

Gain on sales of marketable securities and investment securities

242

272

579

2,420

Loss on devaluation of securities

(168)

(127)

(37)

(1,680)Loss on disposal of inventories

(141)

(100)

(21)

(1,410)Loss on disposal of fixed assets

(294)

(337)

(152)

(2,940)Gain on sales of fixed assets

4

217

3

40

Development working expenses for the Osaki station west exit

—

(93)

(59)

—

(657)

—

—

(6,570)

—

—

(250)

—

Restructuring charges on a consolidated subsidiary

(382)

—

—

(3,820)

Others(1,759)(1,167)(1,704)(17,590)

4,296

4,935

4,323

42,960Current

2,143

1,325

329

21,430

Past

—

3,655

—

—

(381)

(2,421)591(3,810)

1,762

2,559

920

17,620Minority interests

129

62

151

1,290

Net income¥2,405¥2,314¥3,252$24,050

Operating income
Other income (expenses):
Interest and dividend income
Interest expense

Moving expenses of office
Impairment loss of fixed assets (Note 6)

Income before income taxes and minority interests
Income taxes (Note 16):

Deferred

Yen

U.S.dollars (Note1)

2008

2007

2006

2008

¥10.59¥10.18¥14.12

$0.11

6.00

5.00

5.00

0.06

Amounts per share of common stock (Note 2):
Net income
Cash dividends applicable to the year
See accompanying notes.

20

Annual Report 2008

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CONSOLIDATED STATEMENTS OF SHAREHOLDERS’
EQUITY/CHANGES IN NET ASSETSMEIDENSHA CORPORATION AND CONSOLIDATED SUBSIDIARIES (years ended March 31, 2008, 2007 and 2006)
Millions of yen

Balance at March 31, 2005
Net income
Cash dividends
Bonuses to directors and corporate auditors
Decrease in retained earnings due to addition of
consolidated subsidiaries
Adjustments from translation of foreign currency
financial statements (Note 2)
Increase in treasury stock
Retirement of treasury stock
Disposal of treasury stock
Increase in net unrealized holding gains on securities
Balance at March 31, 2006

Number ofshares issued

Common stock

Capital surplus

Retainedearnings

Net unrealized
holding gains
on securities

Foreign currencytranslation
adjustment

Treasury stock,at cost246,252,704———

17,070———14,362———

17,550
3,252
(909)
(38)

5,419
—
—
—

(409)
—
—
—

(1,171)
—
—
—

—

—

—

(112)

—

(4)

—

—

—

—

—

—

97

—

—
(18,615,000)——
227,637,704————
17,070—(1,158)0013,204————
19,743———
5,355
10,774

—
—
—
(26)
(342)

(20)
1,158
1
—
(32)

Minority
interests

Total

Millions of yen

Shareholders’ equity at March 31,
2006 as previously reported
Reclassification due to adoptionof new accounting standards forpresentation of net assets in thebalance sheet at April 1, 2006
Net assets at April 1, 2006
Net income
Cash dividends
Bonuses to directors and corporate
auditors
Decrease in retained earnings
due to addition of consolidated
subsidiaries
Acquisition of treasury stock
Disposal of treasury stock
Net changes during the year
Balance at March 31, 2007
Net assets at April 1, 2007
Net income
Cash dividends
Decrease in retained earnings
due to addition of consolidated
subsidiaries
Acquisition of treasury stock
Disposal of treasury stock
Net changes during the year
Balance at March 31, 2008

Number ofshares issued

Commonstock

CapitalsurplusRetainedearnings

Treasurystock,
at costUnrealized
gains onsecurities,
net of taxes

222,637,704¥17,070¥13,204¥19,743¥(32)¥10,774

222,637,704

17,07013,204

19,7432,314(1,137)(32)

Unrealized losses Foreign currency
on hedging
translation
derivatives,
adjustment
net of taxes—

10,774—¥(342)(342)—¥60,417

1,948

1,948

1,948

62,3652,314(1,137)

(46)

(46)

(193)

(193)
(26)
1

0
222,637,704

17,07013,204

20,681(57)

289
11,063

(37)
(37)

269
(73)

336
2,284

222,637,704

17,07013,204

20,681
2,405(1,136)(57)

11,063

(37)

(73)

2,284

(3 25)

64,135
2,405(1,136)
(325)

(24)
4
(20)
(77)

222,637,704¥17,0701
1
13,205

Number ofshares issued

Commonstock

CapitalsurplusRetainedearnings

Treasurystock,
at cost222,637,704$170,700$132,040$206,810
24,050(11,360)$(570)

944
21,625(26)
1857
64,135(4,822)
6,241

(28)
(65)

(24)
5
(3,960)60,175

76
3

(111)
2,173

Unrealized losses Foreign currency
on hedging
translation
derivatives,
adjustment
net of taxes($370)$(730)

Minority
interests

Total$22,840$641,350
24,050(11,360)

Thousands of U.S. dollars (Note 1)

Net assets at April 1, 2007
Net income
Cash dividends
Decrease in retained earnings
due to addition of consolidated
subsidiaries
Acquisition of treasury stock
Disposal of treasury stock
Net changes during the year
Balance at March 31, 2008

Unrealized
gains onsecurities,
net of taxes$110,630(3,250)222,637,704$170,7001010$132,050

9,440$216,250(3,250)
(240)
40
(200)
($770)(48,220)$ 62,410(280)($ 650)760$ 30(1,110)$21,730(240)
50(39,600)$ 601,750

Annual Report 2008

book_annual_report_2008.indb 21

21

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CONSOLIDATED STATEMENTS OF CASH FLOWSMEIDENSHA CORPORATION AND CONSOLIDATED SUBSIDIARIES (years ended March 31, 2008, 2007 and 2006)
Millions of yen
2008

2007

Thousands of U.S.dollars (Note1)
2008

2006

Operating activities:¥4,296¥4,935¥4,323¥42,960

Depreciation and amortization

6,335

4,369

3,872

63,350

Increase (decrease) in allowances

1,891

(200)

625

18,910Interest and dividend income

(548)

(471)

(382)

(5,480)(3,440)

Income before income taxes and minority interests
Adjustments to reconcile income before income taxes to net cash
provided by operating activities:

Equity in net loss (income) of affiliated companies

(344)

(180)

289

Interest expense

1,027

606

627

10,270Gain on sales of marketable securities and investment securities

(242)

(272)

(579)

(2,420)Gain on sales of fixed assets

(4)

(217)

(3)

(40)

Loss on disposal of fixed assets

294

337

152

2,940

Loss on devaluation of securities

168

124

37

1,680

Decrease (increase) in receivables

2,494(8,466)

1,277

24,940Decrease (increase) in inventories(7,854)(5,846)(2,017)(78,540)

Increase (decrease)in payables(2,794)

6,412

104

(27,940)

5,823

3,283

(622)

58,230

10,542

4,414

7,703

105,420

532

473

387

5,320

Interest expense paid

(1,206)

(805)

(624)

(12,060)

Income taxes paid

(5,517)

(453)

(532)

(55,170)

4,351

3,629

6,934

43,510Purchase of marketable securities and investment securities

(492)

(585)

(801)

(4,920)

Proceeds from sales of marketable securities and investment securities

260

526

754

2,600

(12,647)(20,312)(13,738)(126,470)

Proceeds from sales of property, plant and equipment

65

28

72

650

Proceeds from sale of investment in consolidated subsidiary in resulting
change in scope of consolidation

56

—

—

560

Other-net
Sub-totalInterest and dividend received

Net cash provided by operating activities
Investing activities:

Purchase of property, plant and equipment

Other-net
Net cash used in investing activities(112)(1,214)(1,612)(1,120)(12,870)(21,557)(15,325)(128,700)

Financing activities:
Increase (decrese) in short-term bank loans

4,791(5,870)(457)

47,910

Increase in commercial paper

10,00010,00010,000100,000

Proceeds from long-term debt

830

16,170

3,000

8,300

Repayment of long-term debt

(1,516)(6,358)(4,771)(15,160)

Cash dividends paid

(1,125)(1,126)(899)(11,250)

Other-net
Net cash provided by financing activities
Effects of exchange rate change on cash and cash equivalents

137

186

270

1,370

13,117

13,002

7,143

131,170

71

175

51

710

Net increase (decrease) in cash and cash equivalents

4,669(4,751)(1,197)

46,690Cash and cash equivalents at beginning of year

5,486

10,081

11,04454,860

14

156

234

140

¥10,169¥5,486¥10,081$101,690

Increase in cash and cash equivalents due to addition of
consolidated subsidiaries
Cash and cash equivalents at end of year (Note 17)

See accompanying notes.

22

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MEIDENSHA CORPORATION AND CONSOLIDATED SUBSIDIARIES

1. Basis of Presenting Consolidated
Financial Statements

2. Summary of Significant
Accounting Policies

The accompanying consolidated financial statements
have been prepared in accordance with the provisions set
forth in the Japanese Financial Instruments and Exchange
Law and its related accounting regulations, and in
conformity with accounting principles generally acceptedin Japan (“Japanese GAAP”), which are different in certain
respects as to application and disclosure requirements ofInternational Financial Reporting Standards.
The accounts of overseas subsidiaries are based on
their accounting records maintained in conformity withgenerally accepted accounting principles prevailing in
the respective countries of domicile. The accompanying
consolidated financial statements have been restructured
and translated into English (with some expanded
descriptions and the inclusion of consolidated statementsof shareholders’ equity for 2006) from the consolidated
financial statements of the Company prepared inaccordance with Japanese GAAP and filed with theappropriate Local Finance Bureau of the Ministry of
Finance as required by the Securities and Exchange Law.
Some supplementary information included in the statutory
Japanese language consolidated financial statements, but
not required for fair presentation, is not presented in theaccompanying consolidated financial statements.
As discussed in Note 2 (c), the consolidated statementof changes in net assets for the year ended March 31, 2007,
has been prepared in accordance with the new accounting
standard. The accompanying consolidated statement ofshareholders’ equity for the year ended March 31, 2006,
was voluntarily prepared for the purpose of inclusionin the consolidated financial statements, although suchstatements were not required to be filed with the Local
Finance Bureau.
The translation of the Japanese yen amounts into
U.S. dollars are included solely for the convenience ofreaders outside Japan, using the prevailing exchange
rate at March 31, 2008, which was ¥100 to U.S. $1. The
convenience translations should not be construed as
representations that the Japanese yen amounts have been,
could have been, or could in the future be, converted into
U.S. dollars at this or any other rate of exchange.

a)Principles of Consolidation

The accompanying consolidated financial statements
include the accounts of the Company and its 38
consolidated subsidiaries in 2008 (36 in 2007 and 32
in 2006). All significant intercompany accounts andtransactions have been eliminated in consolidation. The
Company’s remaining subsidiaries, whose total assets,
sales, net income and retained earnings are not significant
in the aggregate in relation to the comparable figuresin the consolidated financial statements, have not been
consolidated.
In the elimination of investments in subsidiaries,
the assets and liabilities of the subsidiaries, including
the portion attributable to minority shareholders, areevaluated using the fair value when the Company acquired
control of the respective subsidiaries.

b)

Accounting Standard for Presentation of
Net Assets in the Balance Sheet

Effective from the year ended March 31, 2007, theCompany and its consolidated subsidiaries adopted the
new accounting standard, “Accounting Standard for
Presentation of Net Assets in the Balance Sheet” (Statement
No. 5 issued by the Accounting Standards Board ofJapan on December 9, 2005), and the implementation
guidance for the accounting standard for presentation of
net assets in the balance sheet (the Financial AccountingStandard Implementation Guidance No. 8 issued by the
Accounting Standards Board of Japan on December 9,2005), (collectively referred to as “the New AccountingStandards”).
The consolidated balance sheet as of March 31,
2007 prepared in accordance with the New AccountingStandards, is comprised of three sections covering assets,
liabilities and net assets sections. The consolidatedbalance sheet as of March 31, 2006, prepared pursuant
to the previous presentation rules is comprised of four
sections covering assets, liabilities, minority interests andshareholders’ equity.
Under the New Accounting Standards, the following
items are presented differently at March 31, 2007 compared
Annual Report 2008

book_annual_report_2008.indb 23

23

08.8.28 4:38:43 PM

to March 31, 2006. The net assets section includes
unrealized gains/losses on hedging derivatives, net oftaxes. Under the previous presentation rules, unrealized
gains/losses on hedging derivatives were included in theassets or liabilities section without considering the related
income tax effects. Minority interest is included in the
net assets section at March 31, 2007. Under the previous
presentation rules, companies were required to present
minority interests between the non-current liabilities andshareholders’ equity sections.
The adoption of the New Accounting Standards had
no impact on the consolidated statement of income for theyear ended March 31, 2007. Also, if the New AccountingStandards had not been adopted at March 31, 2007, theshareholders’ equity amounting to ¥61,888 million would
have been presented.

c)Accounting Standard for Statement of
Changes in Net Assets

Effective from the year ended March 31, 2007, theCompany and its consolidated subsidiaries adopted
the new accounting standard, “Accounting Standard
for Statement of Changes in Net Assets” (Statement
No. 6 issued by the Accounting Standards Board ofJapan on December 27, 2005), and the implementation
guidance for the accounting standard for statementof changes in net assets (the Financial AccountingStandard Implementation Guidance No. 9 issued by the
Accounting Standards Board of Japan on December 27,2005), (collectively referred to as “the Additional New
Accounting Standards”).
T he Compa ny prepa red t he accompa ny i ng
consolidated statement of changes in net assets forthe year ended March 31, 2007, in accordance witht he Additiona l New Accounting Standards. The
accompanying consolidated statement of shareholders’equity for the year ended March 31, 2006, which wasvoluntarily prepared for inclusion in the consolidated
financial statements, has not been adapted to the newpresentation rules of 2007.

d)Equity Method

Investments in affiliated companies (all 20% to
50% owned and certain others 15% to 20% owned) areaccounted for by the equity method in the years ended
March 31, 2008, 2007 and 2006.
Investments in six affiliated companies are accounted
for by the equity method in 2008, and investments in five24

affiliated companies are accounted for by the equity method
in 2007 and 2006. Investments in all unconsolidated
subsidiaries and other affiliated companies, that would
not have material effect on the consolidated financial
statements, are stated at cost.

e)Securities

Securities are classified based on the intent of holdingas (a) securities held for trading purposes (hereafter,“trading securities”), (b) debt securities intended to be held
to maturity (hereafter, “held-to-maturity debt securities”),(c) equity securities issued by non-consolidated subsidiaries
and affiliated companies, or (d) all other securities thatare not classified in any of the above categories (hereafter,“available-for-sale securities”).
The Company and its consolidated subsidiaries
do not have trading securities and held-to-maturity
debt securities. Equity securities issued by subsidiaries
and affiliated companies which are not consolidated or
accounted for using the equity method are stated at themoving-average cost. Available-for-sale securities withno available fair market values are stated at the movingaverage cost.
If the market value of equity securities issued byunconsolidated subsidiaries and affiliated companies andavailable-for-sale securities declines significantly, suchsecurities are stated at fair market value and the difference
between fair market value and the carrying amount isrecognized as loss in the period of the decline unless thedeclines are considered temporary. If the fair market valueof equity securities issued by unconsolidated subsidiaries
and affiliated companies not accounted for on the equity
method is not readily available, such securities should
be written down to net asset value with a corresponding
charge in the statement of income in the event net asset
value declines significantly unless the decline is considered
as recoverable.
Available-for-sale securities with available fairmarket values are stated at fair market value. Unrealized
gains and unrealized losses on these securities arereported, net of applicable income taxes, as a separate
component of net assets. Realized gains and losses onsale of such securities are computed using the movingaverage cost.

f)Derivatives and Hedge Accounting

Derivative financial instruments are stated at fairvalue, and the Company and its consolidated subsidiaries

Annual Report 2008

book_annual_report_2008.indb 24

08.8.28 4:38:43 PM

recognize changes in the fair value as gains or losses unlessderivative financial instruments are used for hedging
purposes.
If derivative financial instruments are used as hedges
and meet certain hedging criteria, the Company and its
consolidated subsidiaries defer recognition of gains orlosses resulting from changes in fair value of derivative
financial instruments until the corresponding losses orgains on the hedged items are recognized.
However, in cases where forward foreign exchange
contracts are used as hedges and meet certain hedging
criteria, forward foreign exchange contracts and hedged
items are accounted for in the following manner:
1.

If a forward foreign exchange contract is executedto hedge an existing foreign currency receivable orpayable,(a)the difference, if any, between the Japanese yenamount of the hedged foreign currency receivableor payable translated using the spot rate at the
inception date of the contract and the book valueof the receivable or payable is recognized in thestatement of income in the period which includes
the inception date, and(b)the discount or premium on the contract (that is,the difference between the Japanese yen amount of
the contract translated using the contracted forward
rate and that translated using the spot rate at the
inception date of the contract) is recognized over
the term of the contract.

2.

If a forward foreign exchange contract is executed tohedge a future transaction denominated in a foreign
currency, the future transaction will be recorded
using the contracted forward rate, and no gains orlosses on the forward foreign exchange contract arerecognized.

Also, if interest rate swap contracts are used as hedge
and meet certain hedging criteria, the net amount to be
paid or received under the interest rate swap contract is
added to or deducted from the interest on the assets or
liabilities for which the swap contract is executed.

g)

Inventories

Inventories are stated at cost, which is mainly
determined by the average method as to raw materials andsupplies and the specific identification method as to finishedproducts, semi-finished products and work in process.

h) Property, Plant and Equipment andDepreciation
Depreciation is mainly computed using the decliningbalance method. However, depreciation is mainly computed
using the straight-line method with respect to the buildings(exclusive of building improvements) acquired on or after
April 1, 1998, and building improvements, structuresand machinery belonging to the Company’s Real Estate
Division (Tokyo, Osaki). Their useful lives and residual
values are mainly based on the Corporation Tax Law.
<Changes in Accounting Policy>
With the revision of the Corporation Tax Law
in FY2007, the Company and certain consolidated
subsidiaries changed the depreciation method forproperty, plant and equipment acquired on or after April
1, 2007.
As a result of this change, operating income andincome before income taxes and minority interests
decreased by ¥212 million ($2,120 thousand) in the year
ended March 31, 2008. The impact of such change on
segment information is stated in Segment Information.
<Additional Information>
With the revision of the Corporation Tax Law
in FY2007, the Company and certain consolidated
subsidiaries have depreciated the difference between
memorandum price and 5% of acquired amount ofproperty, plant and equipment acquired on or before
March 31, 2007, equally over the five years from proceeding
consolidated accounting year at the year in which theCompany and certain consolidated subsidiaries completed
the depreciation for 95% of acquired amount.
As a result, operating income and income before
income taxes and minority interests decreased by¥309 million ($3,090 thousand) in the year ended
March 31, 2008. The impact of such change on segment
information is stated in Segment Information.

i)

Allowance for Doubtful Accounts

The Company and its consolidated subsidiaries
provide the allowance for doubtful accounts in an
amount sufficient to cover possible losses on collection
by estimating individually uncollectible amounts andapplying a percentage based on collection experience tothe remaining accounts.

j)Accrued Bonuses for Employees
The Company provides for the payment of employee

Annual Report 2008

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bonuses, based on the estimated projected amounts for
employee bonus payments.

The Company and some subsidiaries adopted
consolidated tax return system.

k)

Reserve for Retirement Allowance for
Directors and Corporate Auditorsn) Interest Cost on Borrowing Included in
Acquisition Cost of Fixed Assets

Certain consolidated subsidiaries recorded 100%of obligation based on their rules and regulations under
the assumption that all directors and corporate auditors
retired at the balance sheet date.

The company capitalizes interest cost on borrowing
before the operation of the fixed asset as part of the cost of
construction in progress on the Osaki Station West Exit
Area Project. The capitalized interest cost recorded as apart of construction in progress for the year ended March
31, 2008 and 2007, were ¥214 million ($2,140 thousand)and ¥242 million, respectively.

l)

Employees’ Severance and Retirement
Benefits

The Company and its consolidated subsidiaries
provide two types of severance and retirement benefit
plans, unfunded lump-sum payment plans and funded
non-contributory pension plans, under which all eligible
employees are entitled to benefits based on the level ofwages and salaries at the time of retirement or termination,
length of service and certain other factors.
The liabilities and expenses for severance andretirement benefits are determined based on the amounts
actuarially calculated using certain assumptions.
The Company and its consolidated subsidiaries
provided allowance for employees’ severance andretirement benefits based on the estimated amounts ofprojected benefit obligation and the fair value of the plan
assets at each balance sheet date.
Prior service costs are recognized in expenses inequal amounts over the average of the estimated remaining
service lives of the employees (10 years), and actuarial gains
and losses are recognized in income or expenses using thestraight-line method over the average of the estimatedremaining service lives (from 12 to 15 years) commencing
with the following period.
The net transition obligation (¥38,222 million) has beenrecognized in expenses in equal amounts over 15 years.

m) Income Tax
The Company and its consolidated subsidiaries
recognize tax effects of temporary differences between the
carrying amounts of assets and liabilities for tax and financial
reporting. The provision for income taxes is computed
based on the pretax income included in the consolidated
statement of income. The asset and liability approach isused to recognize expected future tax consequences of
temporary differences between the carrying amounts ofassets and liabilities for financial reporting purposes andthe amounts used for income tax purposes.

26

o)Amounts Per Share of Common Stock

The computation of net income per share is based on
the weighted average number of shares of common stock
outstanding during the year.
For the years ended March 31, 2008, 2007 and 2006,
diluted net income per share was not shown since theCompany had no securities with dilutive effect.
Cash dividends per share presented in the consolidated
statements of income represent actual amounts applicableto the respective years.

p)Statements of Cash Flows

In preparing the consolidated statements of cash
flows, cash on hand, readily-available deposits and shortterm highly liquid investments with maturities that do
not exceed three months at the time of purchase, areconsidered to be cash and cash equivalents.

q)Translation of Foreign Currency
Accounts and Financial Statements

Receivables and payables denominated in foreign
currencies are translated into Japanese yen at the yearend rates.
Financial statements of consolidated overseas
subsidiaries are translated into Japanese yen at the yearend rate, except that net asset accounts are translated athistorical rates and statement of income items resulting
from transactions with the Company at the rates used by
the Company.
Foreign currency translation adjustments resulting
from translation of foreign currency financial statements
were presented separately in the foreign currencytranslation adjustment and minority interests in the
consolidated balance sheets.

Annual Report 2008

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3. Trade Notes Receivable and Payable Matured on March 31, Which Is a
Bank Holiday
The year-end date of March 31, 2007 was a bank holiday. The amount of unsettled trade notes receivable and payablethat matured on March 31, 2007, in the financial statement are as follows;
Millions of yen

Thousands of U.S.dollars

2008

2007

2008

Trade notes receivable

—

¥461

—

Trade notes payable

—

39

—

4. Securities
A. The following tables summarize acquisition costs and book values of securities with fair value as of March 31, 2008 and 2007.
Millions of yen
2008

Acquisition cost

Book value

Difference¥8,149¥18,532¥10,383¥8,149¥18,532¥10,383

¥673

¥569

¥(104)

55

52

(3)

¥728

¥621

¥(107)

Securities with book value (fair value) exceeding acquisition cost:
Equity securities
Securities with book value (fair value) not exceeding acquisition cost:
Equity securities
OthersMillions of yen
2007

Acquisition cost

Book value

Difference¥8,193¥26,519¥18,325¥8,193¥26,519¥18,325

¥306

¥272

¥(35)

74

55

(18)

¥380

¥327

¥(53)

Securities with book value (fair value) exceeding acquisition cost:
Equity securities
Securities with book value (fair value) not exceeding acquisition cost:
Equity securities
OthersThousands of U.S. dollars
2008

Acquisition cost

Book value

Difference$81,490$185,320$103,830$81,490$185,320$103,830$6,730$5,690$(1,040)

550

520

(30)

$7,280$6,210$(1,070)

Securities with book value(fair value) exceeding acquisition cost:
Equity securities
Securities with book value(fair value) not exceeding acquisition cost:
Equity securities
OthersAnnual Report 2008

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B. The following table summarizes book values of securities with no fair value as of March 31, 2008 and 2007.
(a) Available-for-sale securities;
Book value
Millions of yen

Thousands of U.S.dollars

2008

2007

2008

Non-listed foreign securities

—

¥34

—

Non-listed equity securities

717

757

7,170

Total

¥717

¥791

$7,170(b) Equity securities issued by subsidiaries and affiliated companies;
Book value
Millions of yen

Thousands of U.S.dollars

2008

2007

2008

Investments in unconsolidated subsidiaries

¥314

¥344

$3,140Investments in affiliated companies

9,286

8,872

92,860Total¥9,600¥9,216$96,000

C. Maturities of available-for-sale securities with maturities as of March 31, 2008 and 2007.

Year ended March 31, 2008

Within 1 year—

OthersYear ended March 31, 2007

Within 1 year

OthersYear ended March 31, 2008

Millions of yen
Over 1 year but
Over 5 years but
within 5 years
within 10 years—

Millions of yen
Over 1 year but
Over 5 years but
within 5 years
within 10 years—¥34

Within 1 year—

Millions of yen
Over 1 year but
Over 5 years but
within 5 years
within 10 years—

Others———Over 10 years­—

Over 10 years­—

Over 10 years­—

D. Total sales amounts of available-for-sale securities sold, gains and losses, in the years ended March 31, 2008, 2007 and2006 are as follows:
Millions of yen

28

Thousands of U.S.dollars

2008

2007

2006

2008

Sales amount

¥260

¥311

¥754

$2,600

Gains

242

272

579

2,420

Losses————Annual Report 2008

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5. Inventories
Inventories as of March 31, 2008 and 2007 were as follows.
Millions of yen

Thousands of U.S.dollars

2008

2007

2008

Finished products¥3,659¥2,897$36,590

Semi-finished products

5,466

3,682

54,660Work-in-process

26,461

21,156

264,610Materials and supplies

1,645

1,944

16,450¥37,231¥29,679$372,310

Total

6. Impairment of Fixed Assets
Impairment loss of fixed assets for the year ended March 31, 2006 consisted of the following.
Location

Use

Type

Millions of yen

Numazu city, Shizuoka Prefecture

Business asset

Land

¥250

The Company and its consolidated subsidiaries have grouped their fixed assets principally based on their divisions
or business units. Certain consolidated subsidiaries reduced the book value of above assets to the recoverable amounts
because their market value had come down in price and their profitability had worsened.
Recoverable amounts are stated in net realizable values based on assessments by third-party licensed appraisers.

7. Subsidies received from the Japanese Government
The Company received a portion of the acquisition costs of certain tangible fixed assets from the Japanese Government.
The aggregated amount of the subsidies deducted from the acquisition costs of the tangible fixed assets as of March 31,
2008 and 2007, were ¥1,331 million ($13,310 thousand) and ¥1,235 million, respectively.

8. Short-Term Borrowings, Long-Term Debt and Commercial Paper
Short-term borrowings are bank loans and represented by notes. The weighted average interest rate was 1.5% as ofMarch 31, 2008 and 1.6% as of March 31, 2007, respectively.
Long-term debt and commercial paper as of March 31, 2008 and 2007 consisted of the following.
Millions of yen

Thousands of U.S.dollars

2008

2007

2008

0.4% to 6.0% loans from banks and insurance companies¥28,668¥29,346$286,680

Less: Current portion(2,435)(1,519)(24,350)

Total¥26,233¥27,827$262,330

Commercial paper, bearing interest rates of 0.8%¥30,000¥20,000$300,000

The annual maturities of long-term debts as of March 31, 2008 were as follows.

Annual Report 2008

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Year ended March 31

Millions of yen

Thousands of U.S.dollars

2009¥2,435$24,350

2010

6,270

62,700

2011

4,458

44,580

2012

2,956

29,560

2013

1,843

18,4302014 and thereafter

10,706

107,060

Commitment Line Agreement
The Company renewed an agreement with a syndicate of 16 Japanese banks to set up a commitment line by multiple
finance institutions for Meidensha Corporation in Japan.
The unexecuted balance of lending commitments at the company as of March 31, 2008 and 2007 were as follows:

Millions of yen

Thousands of U.S.dollars

2008

2007

2008

Total lending commitments:¥35,000¥30,000$350,000

Less amounts currently executed:

12,6008,100

126,000

Unexecuted balance¥22,400¥21,900

224,000

9. Pledged Assets
The following assets were pledged as collateral as of March 31, 2008 and 2007.
Millions of yen

Thousands of U.S.dollars

2008

2007

2008

Land

¥1,479¥1,479$14,790

Buildings and structures

21,691—

216,910

Machineries & equipments

323

—

3,230

Investment securities

20

32

200

Construction in progress—

19,029—¥23,513¥20,540$235,130

Total

Obligation with collateral pledged as of March 31, 2008 and 2007 was as follows.

Millions of yen
Long-term debt (Including current portion of long-term debt)

30

Thousands of U.S.dollars

2008

2007

2008

¥14,000¥14,000$140,000

Annual Report 2008

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In addition to the above, investment securities of ¥2 million ($20 thousand) as of March 31, 2008 and 2007 were
pledged as collateral for borrowing from financial institutions by an affiliate.
An affiliate engaged in the wind farm business has a project finance loan that is secured by pledged business assets
amounting to ¥2,150 million ($21,500 thousand) and ¥2,280 million as of March 31, 2008 and 2007, respectively.
Total business assets of this affiliate are amounting to ¥3,237 million ($32,370 thousand) and ¥3,390 million as ofMarch 31, 2008 and 2007, respectively.

10. Employees’ Severance and Retirement Benefits
The Company and its consolidated subsidiaries adopted the accounting standard for employees’ severance andretirement benefits, under which the liabilities and expenses for severance and retirement benefits are determined basedon the amounts obtained by actuarial calculations.
The liabilities for severance and retirement benefits included in the liability section of the consolidated balance sheets
as of March 31, 2008 and 2007 consist of the following.
Millions of yen

Thousands of U.S.dollars

2008

2007

2008

¥53,475¥51,681$534,750

Unrecognized prior service costs

1,737

2,074

17,370

Unrecognized actuarial differences(6,105)(1,896)(61,050)

Less fair value of pension assets(20,037)(22,779)(200,370)

Less unrecognized net transition obligation(11,877)(13,575)(118,770)

Liability for severance and retirement benefits¥17,193¥15,505$171,930

Projected benefit obligation

Included in the consolidated statements of income for the years ended March 31, 2008, 2007 and 2006 are severance
and retirement benefit expenses comprising the following.

2008

2007

2006

Thousands of
U.S.dollars
2008

Service costs - benefits earned during the year

¥2,243¥2,080¥2,266$22,430

Interest cost on projected benefit obligation

1,344

1,226

1,174

13,440

Expected return on plan assets

(656)

(495)

(239)

(6,560)

Amortization of prior service costs

(337)

(405)

(460)

(3,370)

Amortization of net transition obligation

1,698

1,698

1,698

16,980

Amortization of actuarial defferences

268

290

395

2,680

¥4,560¥4,394¥4,834$45,600

Millions of yen

Severance and retirement benefit expenses

The discount rate and the rate of expected return on plan assets used by the Company and its consolidated subsidiaries
are 2.7% and 3.0% for 2008 and 2007, 2.7% and 2.0% for 2006, respectively.

Annual Report 2008

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The estimated amount of all retirement benefits to be paid at the future retirement date is allocated equally to eachservice year using the estimated number of total service years. (i) Severance and retirement benefit expenses of consolidated
subsidiaries using the simplified method are included in the “Service Costs” above, excluding the amortization of net
transition obligation. (ii) Major expenses of the universally-established welfare program service are included in the “Service
Costs” above.

11. Net Asets
The Japanese Corporate Law (“the Law”) became effective on May 1, 2006, replacing the Japanese Commercial Code(“the Code”). The Law is generally applicable to events and transactions occurring after April 30, 2006 and for fiscal years
ending after that date.
Under Japanese laws and regulations, the entire amount paid for new shares is required to be designated as common
stock. However, a company may, by a resolution of the Board of Directors, designate an amount not exceeding one-half ofthe price of the new shares as additional paid-in capital, which is included in capital surplus.
Under the Law, in cases where a dividend distribution of surplus is made, the smaller of an amount equal to 10% of
the dividend or the excess, if any, of 25% of common 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.
Under the Code, companies were required to set aside an amount equal to at least 10% of the aggregate amount ofcash dividends and other cash appropriations as legal earnings reserve until the total of legal earnings reserve and additional
paid-in capital equaled 25% of common stock.
Under the Code, legal earnings reserve and additional paid-in capital could be used to eliminate or reduce a deficit
by a resolution of the shareholders’ meeting or could be capitalized by a resolution of the Board of Directors. Under theLaw, both of these appropriations generally require a resolution of the shareholders’ meeting.
Additional paid-in capital and legal earnings reserve may not be distributed as dividends. Under the Code, however,on condition that the total amount of legal earnings reserve and additional paid-in capital remained equal to or exceeded
25% of common stock, they were available for distribution by resolution of the shareholder’s meeting. Under the Law, alladditional paid-in-capital and all legal earnings reserve may be transferred to other capital surplus and retained earnings,
respectively, which are potentially available for dividends.
The maximum amount that the Company can distribute as dividends is calculated based on the non-consolidated
financial statements of the Company in accordance with Japanese laws and regulations.
At the annual shareholders’ meeting held on June 27, 2008, the shareholders approved cash dividends amounting to1,363 million ($13,630 thousand). Such appropriations have not been accrued in the consolidated financial statements asof March 31, 2008. Such appropriations are recognized in the period in which they are approved by the shareholders.

12. Contingent Liabilities
Contingent liabilities as of March 31, 2008 and 2007, were as follows.

Millions of yen

32

Thousands of U.S.dollars

2008

2007

2008

Repurchase of note discounted and endorsed

¥88

¥767

$ 880

Guarantees of loans from banks to employees andunconsolidated subsidiaries and affiliates

392

¥363

3,920

Annual Report 2008

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13. Lease Information:(1)

Finance leases, which do not transfer ownership of properties to lessees, are not capitalized and are accounted
for in the same manner as operating leases. Certain related information are summarized as follows:(i)

Assumed amounts (inclusive of interest) of acquisition cost, accumulated depreciation and net book value
as of March 31, 2008 and 2007, are summarized as follows.
Millions of yen

Thousands of U.S.dollars

2008

2007

2008

¥1,489¥787$14,890

207

319

2,070

Accumulated depreciation

(851)

(772)

(8,510)Net book value

¥845

¥334

$ 8,450

Assumed acquisition cost
Machinery and equipment
Others(ii)

Future minimum lease payments, inclusive of interest, as of March 31, 2008 and 2007 totaled ¥845 million($8,450 thousand) and ¥334 million, including ¥180 million ($1,800 thousand) and ¥59 million due within
one year, respectively.

(iii) Lease payments, which are equal to assumed depreciation charges for the years ended March 31, 2008,2007 and 2006, were ¥229 million ($2,290 thousand), ¥192 million and ¥294 million, respectively.
(iv) Assumed depreciation charges are computed using the straight-line method over lease terms assuming
no residual value.
(2)

Future lease receivable under non-cancelable operating leases as lessor as of March 31, 2008 and 2007 totaled¥51 million ($510 thousand) and ¥119 million, including ¥37 million ($370 thousand) and ¥68 million due
within one year, respectively.

14. Research and Development Expenses
Research and development expenses are charged to income as incurred. The amounts charged to income for the years ended
March 31, 2008, 2007 and 2006 were ¥6,530 million ($65,300 thousand), ¥6,041 million, and ¥5,494 million, respectively.

15. Segment Information
Industry segments:
The Company and its consolidated subsidiaries operate principally in five industrial sectors: Social Infrastructure
Systems, Industrial Systems, Engineering, Real Estate and Other sectors.
Effective for the year ended March 31, 2008, the Company has changed its classification of businesses. The Real Estatebusiness which was included in the other sectors for the year ended March 31, 2007 and 2006, is disclosed as a separate
segment because Real Estate business become material.

Annual Report 2008

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Millions of yen
Year ended March 31, 2008

SocialIndustrial
Infrastructure
Systems
Systems

Real
EstateEngineering

OthersTotal

Eliminations
Consolidated
or Corporate

Net sales:
Outside customers¥105,340¥57,047¥23,237¥798¥17,093¥203,515—¥203,515

5,910

6,665

510

241

12,001

25,327(25,327)—

111,250

63,712

23,747

1,039

29,094

228,842(25,327)

203,515

Operating expenses

107,554

61,43822,094902

28,331

220,319(24,390)

195,929

Operating income (loss)¥3,696¥2,274¥1,653¥137¥763¥8,523¥(937)¥7,586

Identifiable assets¥77,987¥56,738¥14,654¥24,202¥5,917¥179,498¥56,917¥236,415

Depreciation and amortization

2,256

1,017

334

549

206

4,362

1,972

6,334

Capital expenditures

1,908

2,219

117

4,796

450

9,490

4,662

14,152

Inter-segment
Total

Millions of yen
Year ended March 31, 2007

SocialIndustrial
Infrastructure
Systems
Systems

Real
EstateEngineering

OthersTotal

Eliminations
Consolidated
or Corporate

Net sales:
Outside customers¥95,395¥60,456¥22,911—¥15,432¥194,194—¥194,194

5,126

6,497

394

259

9,113

21,389(21,389)—

100,52166,95323,305259

24,545215,583(21,389)

194,194

Operating expenses

97,41465,54321,51050

23,994

208,511(20,542)

187,969

Operating income (loss)¥3,107¥1,410¥1,795¥209¥551¥7,072¥(847)¥6,225

Identifiable assets¥75,996¥51,107¥18,288¥598¥31,928¥177,917¥45,469¥223,386

Depreciation and amortization

1,683

754

317

—

142

2,896

1,473

4,369

Capital expenditures

2,795

812

294

13,511

158

17,5703,944

21,514

Inter-segment
Total

Millions of yen
Year ended March 31, 2006

SocialIndustrial
Infrastructure
Systems
Systems

Engineering

RealEstateOthersTotal

Eliminations
Consolidated
or Corporate

Net sales:
Outside customers¥98,044¥50,503¥20,359—¥14,841¥183,747—¥183,747

4,804

7,942

251

259

8,720

21,976(21,976)—

102,848

58,445

20,610259

23,561

205,723(21,976)

183,747

Operating expenses

98,60957,64419,082

82

23,383

198,800(21,551)

177,249

Operating income (loss)¥4,239¥802¥1,528¥177¥177¥6,923¥(425)¥6,498

Identifiable assets¥69,053¥46,978¥12,441—¥5,926¥134,398¥66,876¥201,274

Depreciation and amortization

1,439

803

332

—

173

2,747

1,125

3,872

Capital expenditures

5,404

518

305

—

298

6,525

10,554

17,079Inter-segment
Total

34

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Thousands of U.S. dollars
SocialIndustrial
Infrastructure
Systems
Systems

Engineering$1,053,400$570,470$232,370$7,980$170,930 $2,035,150

59,10066,650

5,100

2,410

120,010

1,112,500

637,120

237,470

10,390290,940 2,288,420 (253,270) 2,035,150

Operating expenses

1,075,540

614,380

220,940

9,020

283,3102,203,190(243,900)

1,959,290

Operating income (loss)$36,960$22,740$16,530$1,370$7,630$85,230$(9,370)$75,860

Identifiable assets$779,870$567,380$146,540$242,020

Depreciation and amortization

22,56010,170

3,340

5,490

2,060

43,62019,72063,340Capital expenditures

19,08022,1901,170

47,9604,500

94,90046,620141,520

Year ended March 31, 2008

Real
EstateOthersTotal

Eliminations
Consolidated
or Corporate

Net sales:
Outside customers
Inter-segment
Total

253,270$59,170 $1,794,980— $2,035,150(253,270)—$569,170 $2,364,150

The above Industry segment information for the year ended March 31, 2007 and 2006 was restated based on the newclassification.
Changes in Accounting Policy
As noted in the “NOTES TO CONSOLIDATED FINANCIAL STATEMENTS” 2 h), with the revision of the Corporation
Tax Law in FY2007 from the beginning of the current consolidated accounting period, the depreciation method for property,
plants, and equipment acquired on or after April 1, 2007 has been changed to one based on the revised Corporation Tax
Law. As a result, the operating expenses in this consolidated accounting period increased by ¥82 million ($820 thousand)in the social infrastructure systems business, ¥43 million ($430 thousand) in the industrial systems business, ¥7 million($70 thousand) in the engineering business, ¥13 million ($130 thousand) in the real estate business, and ¥4 million($40 thousand) in the other businesses. ‘Eliminates or corporate’ increased by ¥64 million ($640 thousand) and operating
profits also decreased by a similar amount.
Additional Information
As noted in the “NOTES TO CONSOLIDATED FINANCIAL STATEMENTS” 2 h), with the revision of the Corporation
Tax Law in FY2007, due to the application of depreciation methods based the Corporation Tax Law prior to its revision,
property, plant and equipment acquired on or before March 31, 2007, was treated as follows: Beginning with the next
consolidated accounting year after the consolidated accounting year in which the value reaches 5% of the acquisition price,
the difference between 5% of the acquisition price and the memorandum price was amortized in equal amounts over a
five-year period and included in the posting of depreciation expenses. As a result, the operating expenses for the current
consolidated accounting year increased by ¥159 million ($1,590 thousand) for the social infrastructure systems business,¥80 million ($800 thousand) for the industrial systems business, ¥15 million ($150 thousand) for the engineering business,and ¥4 million ($40 thousand) for other businesses. ‘Eliminates or corporate’ increased by ¥52 million ($520 thousand)and operating profits also decreased by a similar amount.
Geografic information:
Geografic information is not disclosed due to its insignificance.
Overseas sales information:
Overseas sales information for the year ended March 31, 2008 and 2007 are as follows: the information for 2006 is
not disclosed due to its insignificance.

Annual Report 2008

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Millions of yen
Year ended March 31, 2008

Asia

Other Areas

Total

Overseas sales¥31,325¥2,773¥34,098

Consolidated sales——¥203,515

Percentage of total sales

15.4

1.4

16.8

Millions of yen
Year ended March 31, 2007

Asia

Other Areas

Total

Overseas sales¥21,146¥3,628¥24,774

Consolidated sales——¥194,194

Percentage of total sales

10.9

1.9

12.8

Thousands of U.S.dollars
Year ended March 31, 2008

Asia

Other Areas

Total$313,250$27,730$340,980

Consolidated sales——$2,035,150

Percentage of total sales

15.4

1.4

16.8

Overseas sales

16.		Income Taxes
The Company and its consolidated subsidiaries are subject to a number of taxes based on income, which in aggregate,
resulted in normal statutory tax rates of approximately 39.69% for the years ended March 31, 2008, 2007 and 2006,
respectively.
The following table summarizes the significant differences between the statutory tax rate and the Company’s effective
tax rate for financial statement purposes for the years ended March 31, 2008, 2007 and 2006.
2008

2007

2006

39.69%

39.69%

39.69%

Permanent difference (Social expenses,etc.)

3.25

5.99

(3.68)Per capital inhabitant tax

2.60

2.39

2.67

Net changes in valuation allowance

1.37

1.52

(18.46)Equity in loss (income) of affiliated companies(3.18)(1.44)

2.65

Tax deduction(4.29)(7.41)—

Additional taxes

—

7.58

—

Other-net

1.57

3.54

(1.60)

41.01%

51.86%

21.27%

Statutory tax rate

Effective tax rate

36

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Significant components of deferred tax assets and liabilities of the Company and its consolidated subsidiaries as ofMarch 31, 2008 and 2007 are as follows.
Millions of yen
2008

Thousands of U.S.dollars
2008

2007

Deferred tax assets:
Net operating loss carry forwards

¥172

¥150

$1,720Allowance for retirement benefits

6,330

5,654

63,300Bonuses

1,922

1,783

19,220

Other

2,676

3,012

26,760

11,10010,599111,000(1,091)(1,033)(10,910)

10,0099,566

100,090

101

—

1,010

Unrealized holding gains on securities

4,081

7,261

40,810

Deferred gain from division of corporation

1,131

1,131

11,31012—120Gross deferred tax liabilities

5,325

8,392

53,250Net deferred tax assets¥4,684¥1,174$46,840

Gross deferred tax assets
Less:Valuation allowance

Deferred tax liabilities:
Reserve for special depreciation

Other

17. Cash and Cash Equivalents
A. Reconciliations of cash and time deposits shown in the consolidated balance sheets and cash and cash equivalents
shown in the consolidated statements of cash flows as of March 31, 2008 and 2007 are as follows:
Millions of yen
Cash and time deposits

2008

2007

2008

¥10,284¥5,452$102,840

—

34

—

(115)

—

(1,150)¥10,169¥5,486$101,690

Short-term securities
Time deposits with maturities exceeding three months
Cash and cash equivalents

Thousands of U.S.dollars

B. In the year ended March 31 2008, the Company sold a part of shares of MEIDEN HOIST SYSTEM COMPANY,
LTD. and excluded MEIDEN HOIST SYSTEM COMPA N Y, LTD. f rom t he scope of consolidation.
The assets and liabilities amounts of MEIDEN HOIST SYSTEM COMPANY, LTD. related to the sales prices of sharesand proceeds from the sale of the investment were as follows:

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08.8.28 4:38:45 PM

MEIDEN HOIST SYSTEM COMPANY, LTD. (as of March 31, 2008)
Millions of yen

Thousands of U.S.dollars¥2,001$20,01051

510(1,416)(14,160)

Non-current liabilities

(28)

(280)

Minority interets(511)(5,110)Gain on sale of investments in affiliate

152

1,520

Sales price of shares

249

2,490

Cash and cash equivalents owned by the subsidiary(193)(1,930)56

560

Current assets
Non-current assets
Current liabilities

Proceeds from sale of investment in consolidated subsidiary resulting in change inscope of consolidation

18.		Related Party Transactions
Significant transactions with related parties for the years ended March 31, 2008, 2007 and 2006 are as follows:
Millions of yen
Year ended March 31, 2008

Purchase of finished products

Accounts payable

Japan AE Power Systems Corporation¥10,042¥3,069Japan Motor & Generator Co., Ltd.

7,620

2,702
Millions of yen

Year ended March 31, 2007

Purchase of finished products

Accounts payable

Japan AE Power Systems Corporation¥7,044¥2,525

Japan Motor & Generator Co., Ltd.

6,372

2,320
Millions of yen

Year ended March 31, 2006

Purchase of finished products

Accounts payable

Japan AE Power Systems Corporation¥6,713¥2,287

Japan Motor & Generator Co., Ltd.

6,715

2,963
Thousands of U.S. dollars

Year ended March 31, 2008

38

Purchase of finished products

Accounts payable

Japan AE Power Systems Corporation$100,420$30,690

Japan Motor & Generator Co., Ltd.

76,20027,020

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INDEPENDENT AUDITORS’ REPORTTo the Board of Directors of MEIDENSHA CORPORATION:
We have audited the accompanying consolidated balance sheets of MEIDENSHA CORPORATION andconsolidated subsidiaries as of March 31, 2008 and 2007, the related consolidated statements of income for thethree years in the period ended March 31, 2008, the consolidated statements of changes in net assets for the years
ended March 31, 2008 and 2007, the consolidated statement of shareholders’ equity for the year ended March
31, 2006, and the consolidated statements of cash flows for the three years in the period ended March 31, 2008,
expressed in Japanese yen. These consolidated financial statements are the responsibility of the Company’s
management. Our responsibility is to independently express an opinion on these consolidated financial statements
based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in Japan. Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes assessing the accounting principles used andsignificant estimates made by management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects,
the consolidated financial position of MEIDENSHA CORPORATION and subsidiaries as of March 31, 2008
and 2007, and the consolidated results of their operations and their cash flows for each of the three years in the
period ended March 31, 2008, in conformity with accounting principles generally accepted in Japan.
The U.S. dollar amounts in the accompanying consolidated financial statements with respect to the year
ended March 31, 2008 are presented solely for convenience. Our audit also included the translation of yen amounts
into U.S. dollar amounts and, in our opinion, such translation has been made on the basis described in Note 1
to the consolidated financial statements.

Tokyo, Japan
June 27, 2008

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OVERSEAS AFFILIATES(AS OF JULY, 2008)

CHINA• DONGGUAN MEIDEN

ELECTRICAL ENGINEERING
CO., LTD.
Yan Wu Industrial District,
Wan Jiang Country, Dongguan,
Guangdong 523049 P.R.China
Phone: 86-769-22285210
Facsimile: 86-769-22285250• MEIDEN HANGZHOUDRIVE SYSTEMS CO., LTD.
No.168, Hongxing Road, Qiaonan
District, Xiaoshan Economic &Technological Development Zone,
Hangzhou, Zhejiang, P.C. 311231
P.R.Chaina
Phone: 86-571-8369-6808
Facsimile: 86-571-8369-6818• MEIDEN ZHENGZHOUELECTRIC CO., LTD.

No.87 Hehuan Street,
Zhengzhou Hi-Tech Industries
Development Zone,
Zhengzhou, Henan Province,
P.C. 450001, P.R.China
Phone: 86-371-67848800
Facsimile: 86-371-67848797

40• MEIDEN SHANGHAI CO., LTD.
15F, Hengji Plaza, No.99
Huaihai-Donglu, Huangpu-Qu,
Shanghai, P.C. 200021, P.R.China
Phone: 86-21-63860358
Facsimile: 86-21-63860058

HONG KONG• MEIDEN PACIFIC (CHINA) LTD.

Unit 01-02A, 16/F, Tower 1, Ever
Gain Plaza, 88 Container Port Road,
Kwai Chung, N.T., Hong Kong
Phone: 852-2503-2468
Facsimile: 852-2887-8046

INDIA• MEIDEN INDIA PVT. LTD.

910, International Trade Tower,
Nehru Place, New Delhi-110019,
India
Phone: 91-11-46539381
Facsimile: 91-11-46539385

INDONESIA• P.T. MEIDEN ENGINEERINGINDONESIA

20th Floor, Summitmas I,
Jl. Jenderal Sudirman Kaveling 61-62
P.O.BOX 6920/KBY/Summitmas I
Jakarta Selatan 12190, Indonesia
Phone: 62-21-520-0612		
Facsimile: 62-21-520-0240

KOREA• MEIDEN KOREA CO., LTD.

Royal Building No.410,
5 Dangju-Dong, Chongro-ku,
Seoul, Korea
Phone: 82-2-736-0232~3
Facsimile: 82-2-736-0234

MALAYSIA• MEIDEN ELECTRIC

ENGINEERING SDN. BHD.
G. 03, Ground Floor, 		Wisma Academy, 4A, Jalan 19/1,
46300 Petaling Jaya,
Selangor Darul Ehsan, Malaysia
Phone: 60-3-79554646
Facsimile: 60-3-79546466

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SINGAPORE• MEIDEN ASIA PTE. LTD.

5, Jalan Pesawat, Jurong Industrial
Estate, Singapore 619363
Phone: 65-6268-8222
Facsimile: 65-6264-4292• MEIDEN SINGAPORE PTE. LTD.

5, Jalan Pesawat, Jurong Industrial
Estate, Singapore 619363
Phone: 65-6268-8222
Facsimile: 65-6264-4292• MEIDEN POWER SOLUTIONS(SINGAPORE) PTE. LTD.
14 Penjuru Close,
Singapore 608610
Phone: 65-6377-5387
Facsimile: 65-6377-5386

THAILAND• THAI MEIDENSHA CO., LTD.

15th Floor, Rasa Tower II, 		
555 Phaholyothin Road, Chatuchak,Chatuchak, Bangkok 10900,Thailand
Phone: 66-2792-4200
Facsimile: 66-2792-4299• MEIDEN ELECTRIC(THAILAND) LTD.

898 Moo 2, Bangpa-in Industrial
Estate, Udomsorayuth Rd., Klongjig,
Bangpa-in, Ayudhaya 13160,
ThailandPhone: 66-35-258258
Facsimile: 66-35-221388

United Arab Emirates• MEIDENSHA CORPORATION
Room 905, AI Reem Tower		AI Maktoum Street, Deira,		
P.O.Box 117841, Dubai,		
United Alab Emirates
Phone: 971-4-229-9653
Facsimile: 971-4-229-9654

THE UNITED KINGDOM• MEIDEN EUROPE LTD.

NYK Complex, Bradbourne Drive,
Tilbrook, Milton Keynes MK7 8BN,
England, U.K.
Phone: 44-1908-276000
Facsimile: 44-1908-276010

THE UNITED STATES• MEIDEN AMERICA, INC.

15800 Centennial Drive, NorthvilleTownship, MI 48168, U.S.A.
Phone: 1-734-656-1400
Facsimile: 1-734-459-1863• MEIDEN TECHNICAL CENTERNORTH AMERICA LLC

15800 Cetennial Drire, NorthvilleTownship, MI 48168, U.S.A.
Phone: 1-734-656-1400
Facsimile: 1-734-459-1863

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41

08.9.1 11:52:40 AM

CONSOLIDATED SUBSIDIARY COMPANIESMEIDEN SHOJI Co., Ltd.

Meiden Kankyo Service Co., Ltd.

❖ MEIDEN ELECTRIC (THAILAND) LTD.

Sales of electric products and components

Maintenance and control service of water
treatment equipment

Manufacture and sales of switchgears

Capital ¥300 million

Mitomi New Building, 20-18,
Ebisu 1-chome, Shibuya-ku,
Tokyo 150-0013 Japan
Phone: 3-5449-3700 Fax: 3-5449-3701

Capital ¥30 million

Meiko Building, 5-5, Osaki 5-chome,
Shinagawa-ku, Tokyo 141-8616 Japan
Phone: 3-3490-0630 Fax: 3-3490-0623

Capital TB70 million❖ P.T.MEIDEN ENGINEERINGINDONESIA

Capital US$320 thousand

Engineering and constructing service

Kofu Meidensha Electric Mfg.
Co., Ltd.

HOKUTO DENKO CORPORATION

Manufacture and sales of electric motors

22-13, Himonya 4-chome, Meguro-ku,
Tokyo 152-0003 Japan
Phone: 3-3716-3686 Fax: 3-3793-8787

Capital ¥400 million

825 Nakadate, Chuo-shi,
Yamanashi 409-3801 Japan
Phone: 55-274-7910 Fax: 55-274-7996

Meiden Plant Engineering &Construction Co., Ltd.
Constructing service

Capital ¥130 million

Meiko Building, 5-5, Osaki 5-chome,
Shinagawa-ku, Tokyo 141-8616 Japan
Phone: 3-5487-6426 Fax: 3-5487-6487

Capital ¥25 million

Manufacture and sales of electric sensors

MEIDEN SYSCON Co., Ltd.

Capital ¥20 million

Manufacture and sales of switchgear and relays
726-1, Osuwa, Numazu-shi,
Shizuoka 410-0873 Japan
Phone: 55-924-4630 Fax: 55-922-4013

Meiden Kiden Kogyo Co., Ltd.

Capital ¥20 million

MEIDEN CHEMICAL CO., LTD.

Capital ¥95 million

Insulating varnish and molded instrumenttransformer

515, Kaminakamizo, Higashimakado-aza,
Numazu-shi, Shizuoka 410-0865 Japan
Phone: 55-923-0238 Fax: 55-923-0886

Machining and repairing service

127, Nishishinmachi,
Oota-shi, Gunma 373-0847 Japan
Phone: 276-20-6371 Fax: 276-32-7999

MEIDEN MEDIAFRONT CORPORATION
Printing and copy service

Capital £750 thousand

Sales of electric products and components❖ MEIDEN PACIFIC (CHINA) LTD.

Capital HK$10 million

Sales of electric products and components,
and constructing service❖ MEIDEN AMERICA, Inc.

Capital US$16.5 million

Sales of dynamometer products andengineering and consulting services❖ MEIDEN HANGZHOU DRIVESYSTEMS Co., Ltd.

Capital US$8.6 million

Manufacture and sales of electrical morors❖ DONGGUAN MEIDEN ELECTRICAL
ENGINEERING CO., LTD.

Capital HK$8.4 million

Manufacture and sales of switchgears andslaes of electric products and components

Sales of products and materials, and agent
service of insurance

Maruki Building, 13-7, Nishigotanda
1-chome, Shinagawa-ku,
Tokyo 141-0031 Japan
Phone: 3-3490-4767 Fax: 3-3779-3083❖ MEIDEN ZHENGZHOU ELECTRIC
CO., LTD.

Meiko Building, 5-5, Osaki 5-chome,
Shingawa-ku, Tokyo 141-8616 Japan
Phone: 3-3490-3737 Fax: 3-3490-3906

Meiden Sheet Metal Products
Corporation❖ MEIDEN SHANGHAI CO., LTD.

Meiden Kohsan Co., Ltd.

Capital ¥100 million

MEIDEN SOFTWARE CORPORATION

Capital ¥50 million

Engineering and programming of software

515, Kaminakamizo, Higashimakado-aza,
Numazu-shi, Shizuoka 410-0865 Japan
Phone: 55-923-4966 Fax: 55-923-1191

MEIDEN FOUNDRY INDUSTRIAL
Co., Ltd.
Casting

Capital ¥50 million

4, Nyogetsu, Heisaka-cho, Nishio-shi,
Aichi 444-0305 Japan
Phone: 563-59-6181 Fax: 563-59-4132

MEIDEN SYSTEM ENGINEERING
Co., Ltd.
System engineering of plants

Capital ¥50 million

Meiko Building, 5-5, Osaki 5-chome,
Shingawa-ku, Tokyo 141-8616 Japan
Phone: 3-5487-6500 Fax: 3-5487-6516

42

Capital ¥40 million❖ MEIDEN EUROPE LTD.

Capital ¥90 million

Manufacture and sales of sheet metal

515, Kaminakamizo, Higashimakado-aza,
Numazu-shi, Shizuoka 410-0865 Japan
Phone: 55-929-5555 Fax: 55-929-5566

MSA Co., Ltd.

Capital CNY30 million

Manufacture and sales of surge arresters

Capital ¥320 million

Sales of electric products and components❖ MEIDEN TECHNICAL CENTERNORTH AMERICA LLC

Capital US$16.2 million

Testing service of engine and drive train
Capital ¥400 million

Manufacture and sales of surge arresters

515, Kaminakamizo, Higashimakado-aza,
Numazu-shi, Shizuoka 410-0865 Japan
Phone: 55-929-4300
Fax: 55-929-4399❖ MEIDEN SINGAPORE PTE. LTD.

Capital S$25.4 million

Manufacture and sales of transformers,
switchgears and circuit-breakers and related
engineering and constructing service❖ THAI MEIDENSHA CO., LTD.

Capital TB20 million❖ MEIDEN ASIA PTE. LTD.

Capital S$6.6 million

Business management for Southeast Asia
operations❖ MEIDEN POWER SOLUTIONS(SINGAPORE) PTE. LTD.

Capital S$1 million
Manufacture and sales of dynamic voltage
compensators

Plus 7 domestic subsidiaries.
❖ Please see page 40-41 to find contact information foroverseas affiliates.

Engineering and constructing service

Annual Report 2008

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CORPORATE DATACORPORATE NAMEMEIDENSHA CORPORATION (Kabushiki Kaisha Meidensha)

HEAD OFFICE
ThinkPark Tower, 2-1-1, Osaki, Shinagawa-ku, Tokyo 141-6029 Japan

FOUNDED
1897

COMMON STOCK
Authorized
576,000,000 shares
Issued227,637,704 shares¥17,070 million ($161,038 thousand)

SHAREHOLDERS
19,259TRANSFER AGENTThe Sumitomo Trust & Banking Co., Ltd.

BOARD OF DIRECTORS(AS OF JUNE 27, 2008)

CHAIRMANPRESIDENT

Keiji Kataoka

Junzo Inamura

EXECUTIVE VICE PRESIDENTEXECUTIVE VICE PRESIDENT

Masaaki Kato

Kosuke Sato

DIRECTOR AND
SENIOR MANAGINGEXECUTIVE OFFICERDIRECTORSSENIOR CORPORATE
AUDITORSCORPORATE AUDITORS

Hiroshi Sugiyama
Ken Torikai
Noriyasu Nagai

Tetsuro Kawakami
Yasuo Matoi

Kazuo Hosoya
Sumio Kimura

Hideo Fujii
Sanpei Nozaki

Annual Report 2008

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