40th Interim

MEIKO REPORT(April 1, 2014 to September 30, 2014)
CONTENTSInterview with the President
Operating results in the first halfand efforts in the second half

P01

Consolidated financial data

P04

Global network

P05

Corporate Data

P06

Meiko News / Introduction of Meiko Website

Back Cover

Securities code: 6787

Interview with the President

Capturing the market needs accurately, we willcontinue to offer the best printed circuit boards.
Please describe the business environment and operating results for the
first half ended September 30, 2014.

Meiko achieved growth in net sales
due to brisk market conditions, but it
faced a tough earnings environment.

I would like to express my sincere gratitude
to all shareholders and investors for their outstanding support for our business.
I am pleased to take the opportunity of pre-In the automobile industry, one of the Meiko Group's major business partners, globally vigorous demand for vehicles
contributed to steady growth in markets. In the electronics industry, in particular, smartphone-related markets mainly in
China have been on upward trends. Under such circumstances, the Group concentrated its management resources on fa-

In the business environment surrounding the Meiko Group,

vorable automobile-related and overseas smartphone-related

the U.S. economy continued showing moderate upwardbusinesses through the selection and focus of business. It

trends, while economies in countries of Europe and Asia havealso executed the following measures: staff composition andslowed down, showing signs of uncertainty over the future

product mix aimed at the expansion of orders and improve-

outlook. In the Japanese economy, on the other hand, a mod-ment in productivity; review of production facilities; thorougherate recovery continued on the back of the government's

reduction in fixed costs and expenses, etc.

economic policies.

The efforts for strengthening the organization and its

Key points in the first half of FY2014

senting our interim MEIKO REPORT for the
40th fiscal term (ending March 31, 2015) toOverview of operating
results

explain the business conditions for the firsthalf period ended September 30, 2014 and ourPositive factors(year-on-year change)

future strategy.
President & CEO

01

MEIKO REPORT

Yuichiro Naya

Negative Factors(year-on-year change)

Increase in sales and decrease in earnings on a year-on-year basis
Net sales: up 17%, Operating income: down 1.95 billion yen
Strong growth in sales
Steady performance of automotive PCBs: Guangzhou, Wuhan
Increasing orders of smartphone PCBs: Wuhan, Vietnam
Rising personnel expenses in China's factories
Worsening profit margins due to the buildup of unprofitable goodsmarketing ability helped to boost net sales, which posted

For the full-year forecast, we expect net sales to grow steadi-

results will come out gradually. For these aforementioned rea-

44.2 billion yen, greater than the business plan. However, op-ly, backed by strong performance in vehicle-related sales andsons, we forecast full-year financial results for FY2014 will beerating income fell below the initial plan mainly due to the fol-orders received for smartphones primarily in the Chinese

as shown in the table on page 3.

lowing reasons: a surge in labor costs in overseas operations,markets. For earnings, we are now examining the details ofa decline in orders from some overseas customers, and a falleach factor which brought about such poor performancesin productivity caused by the drastic change in personnel.

and developing measures for improvement. For instance, we

What is your management strategy
for the future?

We will aim to expand business globally withthe focus on automobile-related and smartphone-related products, and thereby, willachieve a robust management structure.

Regrettably, the overall operating performances ended

will take the following measures to manage soaring laborwith an unsatisfactory outcome, as the Group was unable tocosts in overseas plants and to improve productivity. They

meet shareholders' expectations. However, we identified fac-

are: to review the allocation of resources and place adequate

tors which caused the poor results and are now forming mea-

personnel in the right positions; to replace aging productionsures by examining each factor.

equipment and enhance automation; and to boost profit mar-As the Group management strategy, we have an eye on ex-

gins by expanding orders of high-value-added products, etc.

panding business on a global-scale by surely capturing mar-

We will exert companywide efforts to execute these measures

kets which have potential for solid growth from worldwide

and resolve problems as quickly as possible while bolstering

viewpoints, and achieving stable growth with high profitability.

profitability. To produce significant effects in a short time

We believe auto-related and smartphone-related markets

through these efforts would be tough, but we expect positive

have growth potential. Being in line with the management

Please provide your forecasts for the fullyear operating performances of FY2014.

We will aim to overcome challenges in the production system as early as possible and strengthen profitability to achieve higher margins
Overview of consolidated operating results
for the first half of FY2014(in 100 million yen)

Results for the
first half of
FY2014

Results for the
first half of
FY2013Year-on-yearchangeNet sales

442.3

377.2

65.1

Operatingincome(12.6)

6.9(19.5)

Ordinary
income

0.3

9.8

(9.5)

Quarterly net
income

(4.9)

2.4

(7.3)

Sales composition by PCBs
By application

By product

Backed by brisk auto markets, sales of automobile-related products accounted for nearly 50% of total sales, while sales of smartphone-related products gained momentum in rapidly growing markets, posting a 4% year-on-year increase and accounting for 21%.

Sales of four-or-more-layer PCBs for automobiles and sales of HDI
PCBs for smartphones rose 2% on the year respectively, showing
an increase in sales ratio of higher added-value PCBs.

Non-PCB 8%

Non-PCB 8%

Industry, Others 4%

FPC and F/R 2%

Amusement
equipment 3%
Businessmachine 6%
TV 3%
Digital AV 3%
HDD/SSD 6%

First half of
FY201444.2 billion yen

Automobiles
47%

Radiation 1%
HDI PCB 28%

Smartphones
21%

Double-sided PCB
8%First half of
FY201444.2 billion yen

Four-layer PCB
37%
Six-layer PCB
15%

MEIKO REPORT

02

strategy, the Group will aim to surely capture business oppor-

In addition, the Group is going to engage in a new initia-

and other matters comprehensively into consideration fortunities and boost profits by overcoming challenges in thetive, the solar power business, which will be operated by us-

profit sharing as we work to maintain stable dividends. In or-

production structure. At the same time, we will execute vari-ing idle land on the premises of the Fukushima Factory in the

der to secure profits for shareholders in the future, we areous measures which are: improve productivity centered on

Hirono district, Futaba-gun, Fukushima Prefecture. The con-making it a basic policy to allocate internal reserves to invest-

overseas factories; proactively conduct marketing to acquire

struction of buildings commenced recently. Our goal is toments to further strengthen and improve our business base,new customers; and strengthen the ability to receive orders,

contribute to local communities by promoting renewable en-

and to use them to further expand our business.

etc.

ergy as well as to create momentum for the reconstruction ofRegarding the interim dividend payment for the current

the regions damaged by the Great East Japan Earthquake.

fiscal period, we regret to say that it will be postponed in con-

Our rival companies, in particular overseas competitors,
are rapidly expanding their businesses, backed by their up-

sideration of the consolidated financial results for the first half

Please give a message to theshareholders

graded technology and cost competitive edge. The Group willcompete with them by fully using its advantageous aspects.

of the fiscal period.
The business environment surrounding the Group remains

We will focus on maintaining
stable dividend payments
and raising corporate value.

For example, we will develop new technologies and establish
robust production systems, thereby, allowing us to offer superior quality products to corporate customers with short de-difficult. Nevertheless, Meiko will bear in its mind the missionof responding to the support and expectations from shareholders and other stakeholders, and exert its utmost efforts

livery times. Thus, we will strive to achieve stable business

We at Meiko regard returning profits to shareholders as one

for various measures to improve its operating performance

growth.

of our top management priorities, and take business results

and increase its corporate value. We look forward to yourcontinued support and encouragement in the future.

Forecasts of consolidated financial results for FY2014
FY201403

Efforts for improving operating performances

Results for
FY2013Year-on-yearchange

880.0

792.3

87.7

18.6

6.0

9.2

(3.2)

3. Reduction in number of unprofitable products

0.3

10.0

10.3

19.3

(9.0)

4. Quality improvement

(4.9)

7.6

2.7

0.2

2.5

Results for the
first half

Forecasts of financial
results for the second half

Full-year
forecasts

Net sales

442.3

437.7

Operatingincome(12.6)

Ordinary
incomeNet income
MEIKO REPORT(in 100 million yen)

1. Improvement in earnings by the automation of production lines
2. Reduction in fixed costs and sales and administrative expenses

5. Reduction in costs of materials

Consolidated financial data
Overview of consolidated balance sheet

Net sales

44.2

FY2014 interim

Full-year

AssetsLiabilities and net assets(in 100 million yen)(in 100 million yen)billion yen

Total assets(in 100 million yen)

Total assets

1,000

1,154

(Forecast)

800

Cash and deposits
89
Notes and accounts
receivable-trade
175

600
400
200
2012/3

2013/3

Property, plantand equipment675

2015/3

2014/3Current
assetsCurrent
assets516

427

0
2011/3

1,288

Noncurrent
assetsNoncurrent
assets771

726

Cash and deposits
103
Notes and accounts
receivable-trade
218

Property, plantand equipment
713

Operating income / Operating margin-1.2

FY2014 interim

Full-year
Full-year

billion yen(in 100 million yen)

(%)

40

6
3

20
(Forecast)

0

0
-3

-20
2011/3

2012/3

2013/3

2014/3

2015/3

Net income / Net margin-0.4

FY2014 interim

Full-year
Full-year

billion yen(in 100 million yen)

End of the 39th term(as of March 31, 2014)

End of the second quarter of the 40th term(as of Sept. 30, 2014)

Notes and accounts
payable-trade99
Short-term loans payable
83
Current portion of long-termloans payable
118

Total liabilities
and net assets

1,154

513

369

Notes and accounts
payable-trade151
Short-term loans payable
165
Current portion of long-termloans payable127

Long-term loans payable292

Noncurrent
liabilities

Noncurrent
liabilities

Long-term loans payable
269

Retained earnings
137
Foreign currencytranslation adjustment
37

Net
assetsNet
assetsRetained earnings
131
Foreign currencytranslation adjustment
54

338
447

318

456

End of the 39th term

End of the second quarter of the 40th term(as of Sept. 30, 2014)

Major changes: In current liabilities, notes and accounts payable-trade,and short-term loans payable increased about 5.3 billion yen, about 8.2
billion yen respectively, while in noncurrent liabilities, long-term loans
payable declined about 2.2 billion yen.

Overview of consolidated statement of income

Overview of consolidated statement of cash flows(in 100 million yen)(in 100 million yen)

Net sales
377

Net sales
442

Ordinary income
9Operating loss
∆12
Ordinary income
0

Quarterly
net income
2

Quarterly
net income∆4

Operating income
6

Net cash expended
in investment activities

Net cash generated
from financing activities
The effect of changes
in the exchange rateon cash and cash equivalents

Net cash generated
from operating activities

47

88

3

101

9

(%)

∆45

5

20

1,288

Current
liabilities

Current
liabilities(as of March 31, 2014)

Major changes: In current assets, notes and accounts receivable-trade,and cash and deposits increased by about 4.3 billion yen and about
1.4 billion yen respectively. In noncurrent assets, property, plant andequipment rose about 3.7 billion yen.

Total liabilities
and net assets(Forecast)00Cash and cash equivalents
at the beginning of the period

-5

-20
-40
2011/3

2012/3

2013/3

2014/3

2015/3(as of April 1, 2014)

First half of the 39th term (year to date)

First half of the 40th term (year to date)(April 1 to Sept.30, 2013)(April 1 to Sept.30, 2014)

Cash and cash equivalents
at the end of the period(as of Sept. 30, 2014)

Major changes: Cash and cash equivalents during the first half from
April 1 to September 30, 2014 increased about 1.4 billion yen from theend of the previous fiscal year to about 10.1 billion yen.

MEIKO REPORT

04

Global network

Meiko’s production and sales systems
that meet global customer needs
Meiko Electronics Europe GmbH

Production base

R&D base

Sales Bases

Affiliated Companies

Shanghai Sales Office

Tianjin Sales OfficeWuhan Plant(Meiko Electronics (Wuhan) Co., Ltd.)

Meiko Electronics America, Inc.

Taiwan Branch

Guangzhou Plant
Meiko Electronics(Guangzhou Nansha) Co., Ltd.
Guangzhou Sales Headquarters
Overseas Sales Department

Yamagata Factory(Yamagata Meiko Electronics Co., Ltd.)

Vietnam Factory(Meiko Electronics Vietnam Co., Ltd.)

Ishinomaki Factory

Thang Long Factory(Meiko Electronics Thang Long Co., Ltd.)

Omiya Sales Office

Meiko Elec. Hong Kong. Co., Ltd.
MDS Circuit Technology, Inc.

Fukushima Factory

Meiko Tech Yokohama Branch Office
Nagoya Sales OfficeOsaka Sales Office
Meiko Tech Osaka Head Office

M.D. Systems Co., Ltd.
Yamato Office
Solder Stencil Dept.
EMS Dept.
Yamato Technology Center

05

MEIKO REPORT

Headquarters
Kanagawa Factory
1st PCB Sales Dept.
2nd PCB Sales Dept.
3rd PCB Sales Dept.
International Sales Dept.
Research and Development Center

Corporate Data (as of Sept. 30, 2014)
Corporate Profile

Stock Information

Shareholders’ Information

Name

MEIKO ELECTRONICS CO., LTD.

Number of Shares Authorized

Established

November 25, 1975

Number of Shares Issued

Headquarters

5-14-15 Ogami, Ayase, Kanagawa

26,174,076 shares(Excluding treasury stock of 629,244 shares)

Capital12,888 million yen

Number of Shareholders

7,135

No. of Employees

11,763 (consolidated)(Japan: 814)
(overseas: 10,949)
Design and manufacturing and sales of PCBs
and auxiliary electronics business

Outline of Business

Executives

63,200,000 shares

Principal Shareholders
Number of Shares held % of shares held
(thousands of shares)

Name of Shareholder

Yuichiro Naya

4,698

18.0

GOLDMAN SACHS INTERNATIONAL

1,054

4.0

Japan Trustee Services Bank, Ltd.
(trust account)

789

3.0

PLEASANT VALLEY

631

2.4

Meiko Kosan Co., Ltd.

608

2.3

Yuho, Ltd.

521

2.0

President & CEO

Yuichiro Naya

Director and Senior Managing Executive Officer

Seiichi Naya

Director and Senior Managing Executive Officer

Takahide Hirayama

Director and Senior Managing Executive Officer

Masakuni Shinozaki

Director

Kunihiko Sato

Director

Marc Schweizer

Haruyuki Naya

488

1.9

Director

Yoon Ho, Shin

Seiichi Naya

441

Senior Corporate Auditor

Hitoshi Iyomoto

HILLCREST, L. P.

Audit & Supervisory Board Member

Hiroshi Tsukii

Sumitomo Mitsui Banking Corporation

Audit & Supervisory Board Member

Yasunobu Koshimura

Affiliated Companies
Yamagata Meiko Electronics Co., Ltd.
M.D. Systems Co., Ltd.
Meiko Tech Co., Ltd.
Meiko Electronics (Guangzhou Nansha) Co., Ltd.
Meiko Electronics (Wuhan) Co., Ltd.
Meiko Elec. Hong Kong. Co., Ltd.
Meiko Electronics Vietnam Co., Ltd.
Meiko Electronics Thang Long Co., Ltd.
MDS Circuit Technology, Inc.
Meiko Electronics America, Inc.
Meiko Electronics Europe GmbH

Manufacturing of PCBs
Design of PCBs
Sales of PCBs
Manufacturing and sales of PCBs
Manufacturing and sales of PCBs
Sales of PCBs
Manufacturing and sales of PCBs
Manufacturing of PCBs
Design of PCBs
Sales of PCBs
Sales of PCBs

Fiscal Year

April 1 to March 31 of the following year

Annual Shareholders’Meeting

June

Record dateYear-end dividends: March 31
Interim dividends: September 30

Method of public notice Electronic public notice. In the event ofaccident or other unforeseen events thatprevent publication of the electronic
public notice, it will be published in The
Nikkei.
Official page:
http://www.meiko-elec.com/ir/pa.shtml
Stock exchange

JASDAQ (Standard), Tokyo Stock Exchange

Administrator of shareholders 1-4-1, Marunouchi, Chiyoda-ku, Tokyo
register and special account Sumitomo Mitsui Trust Bank, Limited
management institution

1.7

Handling office ofAdministrator ofshareholders register

1-4-1, Marunouchi, Chiyoda-ku, Tokyo
Stock Transfer Agency Business Planning
Dept., Sumitomo Mitsui Trust Bank, Limited

379

1.5

(Mailing Address)

377

1.4

168-0063
2-8-4, Izumi, Suginami-ku, Tokyo
Stock Transfer Agency Business Planning
Dept., Sumitomo Mitsui Trust Bank, Limited*	The Company owns treasury stock of 629,244 shares and is excluded from theabove principal shareholders.
	The percentages for the total number of issued shares have been calculated
after excluding treasury stock.

(Inquiries by telephone)

0120-782-031(Website) http://www.smtb.jp/personal/agency/index.html

Distribution of Ownership among Shareholders
Individuals and others

58.4%

Foreign institutions and others

15.4%

Financial institutions

12.9%

Other institutions

6.4%

Financial instruments
business operators

4.6%

Treasury stock

2.3%[Inquiries about notices such as a change ofaddress concerning shareholdings]
Shareholders who have accounts with securities companies are advised to contact the securities company
with regard to notices, such as a change of address.
Shareholders who do not hold accounts with a securities company are advised to contact the above telephone number for inquiries.
MEIKO REPORT

06

Introduction of Meiko Website
MEIKO
N E W S

Updated news of Ishinomaki Factory after
it overcame the Great East Japan Earthquake
Three years have quickly passed since the Great East
Japan Earthquake that occurred on March 11, 2011.
The earthquake struck the former Miyagi Factory andseverely damaged the buildings as well as employees,
causing the factory to stop operating and shut down.
Last year, the former Miyagi Factory was renewed as
the Ishinomaki Factory and nearly one year has passed
since operations restarted. In this article,
we are going to give
you an update on the
Ishinomaki Factoryand look back at theFormer Miyagi Factory when it
was struck by the earthquake
past.

Top Page

Current Ishinomaki Factory

New start after the huge loss caused by the Great
East Japan Earthquake

CSR Report

Introduction of our products(A Lot of MEIKO around You)For our latest IR information, news releases, and otherinformation including details on our products and CSR
activities, please visit the Company website.
You can visit the Company website to find otheruseful information as well.
Meiko

The former Miyagi Factory was severely damaged by the Great East Japan Earthquake on March 11, 2011. The first floor of all the factory buildings was submerged inwater and completely destroyed, while the buildings’ second floor was able to avoid
the tsunami, but the equipment collapsed and liquid chemicals leaked. A massive
amount of debris rushed into the areas surrounding the factory. To make mattersmuch worse, six employees lost their lives and more than seventy percent of employees suffered damage. Due to these severe circumstances, the Company abandoned
the idea of reconstructing buildings and decided to suspend the factory operations.
Preparations for resuming factory operations gradually started from the following
year, and the construction work went through several phases. First the factory floors
were cleaned by a small number of people, then useless equipment was dismantled
and moved, and facilities and buildings which were miraculously undamaged were
restored. Finally, in May 2013, a new factory named the Ishinomaki Factory commenced operations.

Aiming to create a new company that starts from scratch
In the beginning when the operations resumed, the factory mainly engaged in setting up
equipment, operating it and checking functions, creating standards, etc. The new factory
obtained approval to start in the formal customer audit last September and also reacquired ISO standards, meaning that its operational functions were all placed in order.
Unlike the former Miyagi Factory, the Ishinomaki Factory has unique features that are notseen in other factories. It engages in the production of a small volume of high-definition, highspec circuits as well as a large volume of modules and special specification products, etc.
The factory is operated by a small number of employees. But because of the smallorganization, the employees appear to be gaining a wider variety of skills and speedilybuilding an environment where team work is possible, thus creating confidence and motivation in the factory. All employees make the most of their abilities as they aim to makethe factory No. 1 in terms of producing high-performance PCBs.

Searchhttp://www.meiko-elec.com/
When the earthquake struck the factory

Today

Notes on Forecasts
Headquarters
URL:

5-14-15, Ogami, Ayase, Kanagawa
TEL: 0467 (76) 6001 (switchboard)
http: //w w w. me iko-e le c.c om/

The information in this report contains future forecasts, such as the plans and business results of
the Company. These forecasts are based on information available at the time when these forecasts were made and certain preconditions that the Company believes to be reasonable. Please
note that actual business results may differ from the forecasts herein due to a variety of factors.

When the earthquake struck the factory

Today