Annual Report 2020: Meiko Electronics Co., LTD

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Annual Report 2020

For the year ended March 31, 2020
Meiko Electronics Co., Ltd.

The Meiko Group consists of Meiko Electronics Co., Ltd. (the “Company”), and its 22
subsidiaries (10 consolidated subsidiaries and 12 non-consolidated subsidiaries) (the
“Group”). As the Group’s businesses are primarily in PCB design, manufacturing, sales,
and ancillary operations, the description of other businesses is omitted as they are of little
significance.
Forward-looking Statements:
This annual report contains forward-looking statements that are based on the information
currently available to management, and estimates involving uncertain factors thought likely
to have an effect on future results. As such, they include various risks and uncertainties.
Actual results may differ materially from these projections for a variety of reasons, including
changes in business environments, market trends and exchange rate fluctuations relevant
to the business of Meiko Electronics Co., Ltd.
1
Contents
Five-year Financial Summary.............................................................................................. 3

Financial Review: Management’s Discussion and Analysis ........................................... 5
Business Risks ..................................................................................................................... 8
Consolidated Financial Statements ................................................................................. 13
Principal Subsidiaries and Affiliates ................................................................................ 37
Principal Shareholders ...................................................................................................... 38
Corporate History ............................................................................................................... 39
Corporate Data (As of March 31, 2020) ............................................................................ 41
Meiko Share Performance in FY2020 Compared with Indices ...................................... 42
2
Five-year Financial Summary
(For the years ended/as of March 31)
2016 2017 2018 2019 2020
(millions of yen, except per share amounts)
Consolidated financial indicators:
Net sales ¥95,287 ¥95,912 ¥108,542 ¥118,911 ¥115,479
Ordinary income (loss) (492) 2,981 4,795 8,611 4,790

Profit (loss) attributable to owners
of parent (11,250) 1,767 4,373 6,744 2,586
Comprehensive income (14,709) (32) 5,633 6,482 (419)
Net assets 28,764 28,540 33,042 33,588 32,482
Total assets 109,605 103,578 110,316 120,656 129,238

Net assets per share (yen) 897.97 882.84 1,071.37 1,283.24 1,233.61
Net income (loss) per share (yen) (429.83) 54.14 160.34 257.65 98.81
Net income per share (diluted)
— 44.06 108.67 — —
(yen)
Equity ratio 26.0% 27.3% 30.0% 27.8% 25.0%
Return on equity (ROE) -33.5% 6.2% 14.3% 20.2% 7.9%

Price earnings ratio (PER) (times) — 16.2 11.4 6.7 13.5
Cash flows from operating activities 9,932 11,612 10,429 11,467 11,240
Cash flows from investing activities (1,737) (4,322) (8,868) (17,293) (14,937)
Cash flows from financing activities 1,967 (9,030) (3,531) 1,957 6,249
Cash and cash equivalents
19,313 17,196 15,190 11,419 13,646
at the end of the period
Number of employees 9,491 10,677 11,640 11,899 12,232
[Average number of temporary
[633] [885] [1,182] [1,351] [1,450]
staff]
3
Net sales Net income (loss), basic per share
Net income, diluted per share
(millions of yen) ¥150,000 ¥300.00
¥200.00
(yen)
¥120,000 ¥100.00
¥0.00
¥90,000
(¥100.00)
¥60,000 (¥200.00)
(¥300.00)
¥30,000 (¥400.00)
(¥500.00)
¥0 2016 2017 2018 2019 2020
2016 2017 2018 2019 2020
Net income (loss), basic per share (yen) Net income, diluted per share (yen)
Profit (loss) attributable to owners of Cash flows

parent ¥15,000
(millions of yen)
¥8,000
(millions of yen)
¥10,000
¥4,000 ¥5,000
¥0
¥0 (¥5,000)
(¥10,000)
(¥4,000)
(¥15,000)
(¥8,000) (¥20,000)
2016 2017 2018 2019 2020
(¥12,000)
Cash flows from operating activities Cash flows from investing activities
2016 2017 2018 2019 2020
Cash flows from financing activities
Net assets Return on equity (ROE)

¥50,000 30.0%
(millions of yen)
(percentage)
20.0%
¥40,000
10.0%
¥30,000
0.0%
2016 2017 2018 2019 2020
¥20,000 -10.0%
¥10,000 -20.0%
-30.0%
¥0
2016 2017 2018 2019 2020 -40.0%
Total assets Price earnings ratio (PER)
¥150,000 25.0 times

(times)
20.0 times
(millions of yen)
¥120,000
¥90,000 15.0 times
¥60,000 10.0 times
¥30,000 5.0 times
¥0 0.0 times
2016 2017 2018 2019 2020 2016 2017 2018 2019 2020
Net assets per share
¥2,000.00
(yen)
¥1,500.00
¥1,000.00
¥500.00
¥0.00
2016 2017 2018 2019 2020
4
Financial Review: Management’s Discussion and Analysis
The forward-looking statements in this section are based on the Group’s assumptions
as of the end of the current consolidated fiscal year.
(1) Significant accounting policies and estimates

The consolidated financial statements of the Group have been prepared in conformity
with accounting principles generally accepted in Japan (“Japanese GAAP”). The
presentation of these consolidated financial statements requires estimates that affect
the selection and application of accounting policies, the reporting amounts of assets,
liabilities, profits and expenses and the disclosure thereof. The management has
assessed those estimates in view of past results and reasonable assumptions,
however, actual results may differ from the estimates presented due to uncertainties
that are intrinsic to estimates.
(2) Analysis of the Group’s financial position

Assets
Assets as of March 31, 2020 were ¥129,238 million, up ¥8,582 million from the end of
the previous fiscal year. This change mainly comprised an increase of ¥2,227 million in
cash and cash equivalents, a decrease of ¥1,386 million in trade notes and accounts
receivable, and an increase of ¥2,981 million in inventories in current assets, in
addition to an increase of ¥4,443 million in property, plant and equipment, an increase
of ¥1,696 million in investment securities and a ¥2,038 million decrease in other in
investments and other assets in non-current assets.
Liabilities
Liabilities as of March 31, 2020 were ¥96,756 million, up ¥9,688 million from the end of
the previous fiscal year. This change mainly comprised an increase of ¥1,935 million in
trade notes and accounts payable, an increase of ¥2,048 million in short-term
borrowings, an increase of ¥1,158 million in the current portion of long-term
borrowings, and a ¥897 million decrease in other in current liabilities, in addition to an
increase of ¥5,714 million in long-term borrowings in non-current liabilities.
Net assets
Net assets as of March 31, 2020 were ¥32,482 million, down ¥1,106 million from the
end of the previous fiscal year. This mainly reflected a ¥1,670 million increase in
retained earnings, and a ¥2,947 million decrease in foreign currency translation
adjustment.
5
(3) Analysis of business results
1) Net sales
The Group’s net sales for the fiscal year under review decreased ¥3,432 million, or
2.9%, from the previous fiscal year to ¥115,479 million, primarily due to poor sales of
PCBs (printed circuit boards) for smartphones caused by a sluggish smartphone
market.
2) Gross profit
Cost of sales decreased ¥130 million, or 0.1%, from the previous fiscal year to ¥98,733
million, reflecting a decline in net sales. Gross profit for the fiscal year under review fell
¥3,302 million, or 16.5%, from the previous fiscal year to ¥16,746 million. The gross
margin dropped 2.4 percentage points from the previous fiscal year to 14.5%.
3) Operating income
Selling, general and administrative expenses increased ¥435 million, or 3.9%, from the
previous fiscal year to ¥11,557 million due to an increase in research and development
costs. Operating income for the fiscal year under review decreased ¥3,737 million, or
41.9%, from the previous fiscal year to ¥5,189 million, with an operating margin of
4.5%, down 3.0 percentage points, from the previous fiscal year.
4) Ordinary income
Non-operating income decreased ¥992 million to ¥761 million primarily due to a
decrease in foreign exchange gains. Non-operating expenses decreased ¥908 million
to ¥1,160 million, mainly due to declines in interest expenses and commission for
syndicated loans. As a result, ordinary income for the fiscal year under review
decreased ¥3,821 million, or 44.4%, from the previous fiscal year to ¥4,790 million.
5) Profit attributable to owners of parent

In the fiscal year under review, extraordinary income amounted to ¥332 million due to
the recording of gain on reversal of loss on valuation of investment securities of ¥327
million. Extraordinary losses totaled ¥1,856 million. This reflected the recording of
expenses for factory shutdown of ¥1,250 million. The total amount of income taxes–
current and income taxes–deferred decreased ¥402 million to ¥717 million. The loss
attributable to non-controlling interests was ¥37 million.
As a result of the above, the profit attributable to owners of parent was ¥2,586 million,
down 61.6% compared with the previous fiscal year.
6
(4) Analysis of source of funds and liquidity
1) Cash flows
Cash and cash equivalents (hereafter, “net cash”) as of March 31, 2020 increased
¥2,227 million from the previous fiscal year, to ¥13,646 million.
Cash flows of each category and their causes during the consolidated fiscal year
ended March 31, 2020 were as follows.
Net cash provided by operating activities for the fiscal year under review was ¥11,240
million, down ¥227 million from the previous fiscal year. Increases were mainly from
profit before income taxes of ¥3,266 million, depreciation and amortization of ¥6,587
million, a decrease in trade notes and accounts receivable of ¥2,362 million and an
increase in trade notes and accounts payable of ¥1,006 million. The major decrease
was an increase in inventories of ¥2,449 million.
Net cash used in investing activities was ¥14,937 million, down ¥2,356 million from the
previous fiscal year. The major outflows were ¥13,570 million for the purchase of
property, plant and equipment and ¥1,502 million for the purchases of investment
securities.
Net cash provided by financing activities was ¥6,249 million, up ¥4,292 million from the
previous fiscal year. The major inflows comprised a net increase in short-term
borrowings of ¥1,133 million and proceeds from long-term borrowings of ¥21,500
million. The major outflows comprised repayments of long-term borrowings of ¥14,672
million and cash dividends paid of ¥915 million.
Trends in cash flow indicators of the Group are as follows:
Year ended Year ended Year ended

March 31, 2018 March 31, 2019 March 31, 2020
Equity ratio (%) 30.0 27.8 25.0
Market value equity ratio (%) 43.2 37.6 27.1

Cash flows versus Interest-bearing debt ratio
4.9 5.2 6.1
(years)
Interest coverage ratio (times) 8.8 14.0 16.3

Equity ratio = Equity capital / Total assets
Market value equity ratio = Stock market capitalization / Total assets
Cash flow versus interest-bearing debt ratio = Interest-bearing debt / Operating cash flow
Interest coverage ratio = Operating cash flow / Interest payment
Notes:
1. Each indicator is calculated based on consolidated financial values.
2. The stock market capitalization is calculated as follows: term-end closing stock price x term-end
number of shares issued (after deducting shares of treasury stock). Common stocks are subject to
the calculation.
3. The operating cash flow represents the cash flow provided by (used in) operating activities as
indicated in the consolidated statements of cash flows. Of the liabilities posted on the consolidated
balance sheets, the interest-bearing debt covers all the liabilities for which interest was paid. The
interest payment represents the payment of interest indicated in the consolidated statements of
cash flows.
2) Financial policy
The Group procures funds for its operations from funds on hand or borrowings from
financial institutions. The Group has a policy of procuring funds for investment and
loans as well as funds to acquire manufacturing equipment inside and outside Japan
via long-term borrowings from financial institutions. With regard to procuring such
funds and the conditions of procurement, the Group strives to select the most
favorable timing and conditions.
7
Business Risks
Below are some of the major risks from among those described in the securities report
(provided/filed in Japanese only) which may significantly affect any decisions made by
investors.
Forward-looking statements are based on the Group’s best judgment during the
consolidated fiscal year under review.
(1) Risks related to the business environment

(External factors)
1) Risk related to the Group’s major customers and their industries’ trends
The Group’s major customers are manufacturers of automotive products, smartphones
and tablets, IoT & AI household appliances, amusement equipment, and storage
devices, among others. The Group’s major business is the manufacture and sale of
PCBs, which are parts that constitute a core function of finished products. Furthermore,
the Group endeavors to strengthen and expand the module board and EMS businesses
as new mainstay businesses with the aim of minimizing influence from overdependence
on PCBs. However, should economic trends or a natural disaster adversely impact the
Group’s major customers or the markets of the industries in which the Group’s
customers operate, or lead to sluggish sales of their finished products, such factors
could impact the volume of orders received by the Group and affect the Group’s
business performance and financial position. The monitoring of customers and trends in
their industries and measures to minimize influence implemented by the Group cannot
eliminate said risk completely. Therefore, the Group realizes that such risk could emerge
in the event of a sudden change in market conditions, with the influence depending on
the timing and size of the incident.
2) Raw materials market fluctuation risk

The Group purchases the raw materials necessary for manufacturing from external
materials manufacturers and trading companies. The Group strives to minimize risk to
some extent, using commodity derivatives. However, an unexpected surge in the prices
of crude oil, copper, gold, etc., could impact the prices of the raw materials the Group
purchases and adversely affect the Group’s business performance and financial
position. As said risk cannot be lessened or eliminated completely by the above
mentioned measures to minimize risk alone, the Group realizes that it is inevitable that it
will suffer some degree of impact if such risk actually emerges.
3) Risk related to technological development and price competition

The time will come when all things are connected, due to the increase in the use of
electronics in vehicles, the dissemination of electric vehicles, the emergence of
connected cars based on 5G communication, and the worldwide spread of IoT. Although
the Group expects expansion of demand for PCBs, to address intensifying global
competition stemming from downward pressure on prices from China and Southeast
Asia, the Group needs to differentiate its products with technology. To this end, the
Group is developing technologies such as element technologies to make wires thinner
and hole diameters smaller, as well as cost-reduction technologies. However, should
such technologies diverge from market needs and not be accepted, the Group may get
embroiled in a price war, which could affect its business performance and financial
position. The Company closely monitors customers’ needs, competitors’ technology, and
price movements, etc. However, as this type of risk is inherent in business management
and is difficult to eliminate completely, such risk might ordinarily emerge in the process
of business management. The Group realizes that it is difficult to make a definite
estimate of the influence when such risk actually emerges, since the influence may
depend on the timing and conditions of the incident.
8
(Internal factors)
4) Risks related to the timing of capital investments
The Group conducts appropriate capital investment to enhance productivity and
maintain product competitiveness in accordance with demand trends. Although
overseas and domestic capital investments are carefully determined considering market
trends and brand manufacturers’ business performance, should the Group’s capital
investments become excessive upon a downturn in the economy or manufacturers
change strategies, or the operation of new facilities be delayed, factors such as the
burden of depreciation costs could adversely affect the Group’s business results and
financial position. In addition, should the Group’s asset value or business profitability
decline, it could result in the occurrence of impairment loss, adversely affecting the
Group’s business performance and financial position. The Group believes that there is
not a high possibility that any individual capital investment will lead to the occurrence of
impairment loss. However, risk caused by external factors, such as a sudden change in
market conditions, natural disasters, and infectious diseases, cannot be lessened or
eliminated by the Group’s risk management alone. There is a possibility that the Group
will suffer impact in the event of the occurrence of such risk, with the influence
depending on the timing and size of the incident.
5) Risk related to equipment failures and accidents

Although the Group conducts regular inspections and maintenance work on its
production equipment as well as plant monitoring using IoT technology in manufacturing
bases inside and outside Japan and strives to minimize the occurrence of equipment
failures, fire, or other accidents, which may result in the suspension of line operations,
there is no guarantee that these will be prevented or reduced completely. Should
production or shipping be suspended for a long period of time due to these factors, the
Group’s business performance and financial position could be adversely affected. Said
risk cannot be lessened or eliminated by the Group’s own risk management alone.
There is a possibility that the Group will suffer impact in the event of the occurrence of
such risk, with the influence depending on the frequency and size of the incident.
However, the Group realizes that it is difficult to make a definite estimate of the influence
in light of the conditions of such risk.
6) Risk related to product defects

PCBs are mounted with electronic components and then embedded in finished products
by brand manufacturers. The Group manufactures PCBs in compliance with globally
accepted quality control standards. In addition, brand manufacturers conduct
inspections upon receipt of the finished product checking for product defects. However,
should a large-scale recall or a product liability claim occur, such an incident would incur
significant costs that cannot be covered by insurance amounts and harm the value of
our corporate brand, which could adversely affect the Group’s business performance
and financial position. The Group believes that there is not a high possibility that said
risk will emerge. However, as such risk cannot be lessened or eliminated by the Group’s
own risk management alone, the Group realizes that it is inevitable that it will suffer
some degree of impact if such risk actually emerges.
(2) Risk related to natural disasters, etc.

1) Risk related to natural disasters
As the Group has manufacturing bases inside and outside Japan, there is a possibility
that part or all of facilities will be suspended, causing production and shipment to be
delayed, if natural disasters, such as earthquakes, tsunami, floods, storms, and
torrential downpours occur. As its Ishinomaki Factory suffered damage from the Great
East Japan Earthquake, the Group reviews its risk management system and tries to
secure the safety of its employees and protect its facilities against natural disasters.
9
However, should a disaster of that scale occur in the future, it could adversely affect the
Group’s business performance and financial position due to the payment of expenses to
restore facilities and decreases in production and sales. Said risk cannot be lessened or
eliminated by the Group’s own risk management alone. There is a possibility that the
Group will suffer impact in the event of the occurrence of such risk, with the influence
depending on the frequency and size of the incident. However, the Group realizes that it
is difficult to make a definite estimate of the influence in light of the conditions of such
risk.
2) Risk related to infectious diseases

At the onset of the novel coronavirus infection (COVID-19), the Group conducted
several measures, including thorough implementation of preventive measures based on
the guidance issued by the health authorities in each country, prohibition in principle of
journeys and business trips to countries and areas where the risk of infection is high,
and telecommuting mainly in indirect departments, to secure the safety of customers,
business partners, and employees and to prevent the further spread of COVID-19
cases. However, should a continuation of the pandemic, such as a prolonging of or a
second wave of COVID-19, or the spread of a new infectious disease occur, such an
incident would result in the suspension of the Group’s factories, worsening of the
Japanese and global economy and contraction of economic activities, which could
adversely affect the Group’s business performance and financial position. Said risk
cannot be lessened or eliminated by the Group’s own risk management alone. There is
a possibility that the Group will suffer impact in the event of the occurrence of such risk,
with the influence depending on the frequency and size of the incident. However, the
Group realizes that it is difficult to make a definite estimate of the influence in light of the
conditions of such risk.
(3) Risk related to compliance

As the Group operates its business in bases inside and outside Japan, it needs to
comply with a wide range of laws and regulations and restrictions. In Japan, the Group
is required to obey the Companies Act, Financial Instruments and Exchange Act, Anti-
Monopoly Act, tax laws, labor laws, and environmental laws, etc. while it must observe
laws and regulations and restrictions in each country and region it operates in overseas.
The Group not only established the Risk and Compliance Committee to supervise
compliance with laws and regulations and restrictions but also strives to raise its
employees’ awareness of compliance issues by formulating and implementing its own
compliance measures. However, there is a possibility that risk related to compliance will
not be dodged completely by implementing these measures. Should the Group fail to
perform obligations required by laws and regulations and restrictions, it could adversely
affect the Group’s business performance and financial position. The Group believes that
there is not a high possibility that risk related to compliance will emerge. However, as
the type and timing of the occurrence, etc. of such incident cannot be controlled by the
Group, it realizes that it is difficult to make an estimate of the influence beforehand.
(4) Risk related to finance, etc.

1) Financial risks
The Group has made aggressive capital investments of amounts higher than the funds it
has acquired from operating activities to prepare for the anticipated increase in demand
for PCBs for automotive products and smartphones, as well as responses to new
products in line with technological innovation. As a result, the ratio of borrowings to total
assets as of March 31, 2020, was 50.8%. Should new borrowings or refinancing of
outstanding borrowings for capital investments necessary from the perspective of its
business strategy become difficult in the future due to a change in monetary conditions
or banks’ situations, it could affect the Group’s fund raising plans. In addition, a rise in
interest rates on borrowings could adversely affect the Group’s business performance
10
and financial position. As risk related to monetary conditions or each bank’s situation is
hard to reduce or eliminate by the Group’s own measures, the Group believes that it will
suffer impact in the event of the occurrence of such risk, with the influence depending on
the timing, size, and conditions of the incident. However, the Group realizes that it is
difficult to make a definite estimate of the influence.
2) Credit risk
As the Group extends credit to its business partners in the form of trade credit, including
accounts receivables and advance payments, it is therefore exposed to credit risk in the
form of losses arising from deterioration in the credit of or bankruptcy of business
partners. To manage such risk, the Group responds depending on the credit profile of
the counterparty based on internal rules that determine the credit limit for each business
partner. However, failure to collect receivables and other credit could affect the Group’s
business performance and financial position. The Group believes that it will suffer only
limited impact, even if said risk emerges, since it monitors obligors’ credit conditions and
diversifies risk, which maintains the frequency and influence within the range of normal
fluctuation of business results. Although the possibility of the abrupt emergence of
unexpected credit risk from a large obligor is not completely eliminated, the Group
realizes that the probability is quite low.
3) Risk related to foreign currency rate fluctuation

To operate plants in China and Vietnam, we need to hold U.S. dollars and other foreign
currency-denominated assets. Therefore, the Group is exposed to yen-to-yuan, yen-to-
U.S. dollar and other currencies exchange rate fluctuations. These fluctuations could
result in losses. The Group strives to minimize risks to some extent by conducting
exchange marry or currency exchange hedge, etc. However, should an unexpected
foreign currency rate fluctuation occur, it could adversely affect the Group’s business
performance and financial position. As said risk depends on the fluctuation of foreign
exchange rates and cannot be lessened or eliminated by its effort alone, the Group
realizes that it is difficult to make a definite estimate on the timing of the occurrence and
influence.
4) Risk related to M&A, joint venture, and alliance

The Group forms capital alliances with and conducts joint ventures with other companies
that have the technology, products, sales network, customer base, and personnel
necessary for business growth. However, there is a possibility that the Group may not
receive the anticipated effects or will need to spend additional expenses or incur
impairment loss when the market and competition environments significantly change or
the business does not develop as planned. Should such incident occur, the Group may
fail to earn the forecast profits, adversely affecting its business performance and
financial position. As such risk cannot be lessened or eliminated by its own risk
management alone, the Group realizes that it is inevitable that it would suffer some
degree of impact if such risk actually emerges.
(5) Other risk

1) Risk inherent in plant operations in China and Vietnam
To expand productivity and reduce production costs, the Group has established local
corporations in Hong Kong, Guangzhou and Wuhan in China, and in Vietnam,
conducting manufacturing and sales activities. In these countries, the Group may face
the following difficulties—hygiene-related issues such as infectious diseases; change or
introduction of environmental regulations, legal restrictions and the tax system; failure of
infrastructure such as electricity, water and transportation; political uncertainty and public
security-related issues; anti-Japanese demonstrations and/or labor disputes;
expropriation of assets, destruction of facilities by wars and conflicts, and limitation on
the transfer of funds (transfer restriction), etc. Should unexpected events such as
changes in the political or legal environment, economic situation or environmental
11
regulations occur, the Group’s business performance and financial position could be
adversely affected as a result of the issues which might arise in the management of
production facilities and equipment and in the execution of other operations, or a large
amount of liabilities or obligations associated with the compliance of environmental
conservation and other regulations. Said risk cannot be lessened or eliminated by the
Group’s own risk management alone. There is a possibility that the Group will suffer
impact in the event of the occurrence of such risk, with the influence depending on the
frequency and size of the incident. However, the Group realizes that it is difficult to make
a definite estimate of the influence in light of the conditions of such risk.
2) Risk related to information security

The Group sometimes obtains customer information, etc. through its business activities
and also owns confidential information on technology, sales, and individual persons, and
overall business. It pays the closest attention to the protection of its confidential
information. To prevent unauthorized access, falsification, corruption, leakage, and loss,
etc. of information caused by cyberattacks, etc. and human errors, etc., the Group
established its information management system, takes appropriate safety procedures,
such as the implementation of rational technological measures, and conducts drills to
prepare for cyber security risk. However, should the leakage or loss of information occur,
it could adversely affect the Group’s business performance and financial position. As the
Group strives to appropriately operate its confidential information management system, it
realizes that the probability of emergence of such risk is quite low.
3) Risk related to intellectual property rights

The Group recognizes intellectual properties as its significant management resources
and seeks to acquire intellectual property rights by applying for patents, etc. for
proprietary technologies, etc. developed by the Group with the aim of protecting
intellectual properties. However, not all applications may be approved and it is also
possible that obtained rights may be rendered void due to objections by third parties.
Although the Company’s responsible department manages obtained intellectual
properties and pays attention to violation of rights by external parties, anticipated profits
could be lost in the event of illegal use, etc. Meanwhile, should a lawsuit be filed against
the Group with regard to a violation of intellectual property rights of third parties, the
Group’s business performance and financial position could be adversely affected as a
result of the compensation or damages paid to customers due to the suspension of
production and payment of license fees, etc., related to patent use in order to resume
production. Although the possibility of abrupt emergence of the risk is not completely
eliminated, the Group realizes that the probability is quite low.
12
Consolidated Financial Statements
Consolidated Balance Sheets

Meiko Electronics Co., Ltd. and Consolidated Subsidiaries
As of March 31, 2020 and 2019
Thousands of
Millions of yen U.S. dollars (Note 1)
ASSETS 2020 2019 2020
Current Assets:
\ 13,646 \
Cash and cash equivalents (Notes 3, 6 and 17) ............................................................................................................................ 11,419 $ 125,414
Receivables －
Trade notes and accounts receivable (Notes 6 and 17) ...................................................................................................................
24,448 25,834 224,687
Other receivables ........................................................................................................................................
1,505 1,479 13,830
Less: Allowance for doubtful accounts ........................................................................................................................
(135) (144) (1,244)
Inventories －
Merchandise and finished goods .........................................................................................................5,148 5,885 47,315
Work in process ..................................................................................................................................5,505 4,675 50,595
Raw materials and supplies .................................................................................................................8,302 5,414 76,300
Other (Note 17) ...................................................................................................................................................................
1,298 1,460 11,922
Total current assets ..........................................................................................................................
59,717 56,022 548,819
Property, Plant and Equipment, at Cost:

Land ................................................................................................................................................................
1,488 1,488 13,678
Buildings and structures (Note 5)..........................................................................................................................
43,779 36,732 402,340
Machinery and vehicles (Note 5)..........................................................................................................................
83,588 76,155 768,202
Leased assets..............................................................................................................................................................
4,120 6,476 37,868
Construction in progress ............................................................................................................. 4,909 9,581 45,118
Other (Note 5)........................................................................................................................................................................
4,914 4,458 45,154
142,798 134,890 1,312,360
Less: Accumulated depreciation ........................................................................................................ (79,801) (76,336) (733,396)
Net property, plant and equipment ...................................................................................................... 62,997 58,554 578,964
Intangible Assets 828 269 7,606
Investments and Other Assets:

Investment securities (Notes 4 and 17) ....................................................................................................................
3,221 1,525 29,603
Long-term loans receivable .................................................................................................................... 256 238 2,355
Deferred tax assets (Note 16) ..................................................................................................................1,029 867 9,456
Other .....................................................................................................................................................................
1,296 3,334 11,908
Less: Allowance for doubtful accounts .......................................................................................................... (106) (153) (973)
Total investments and other assets .......................................................................................................... 5,696 5,811 52,349
\
Total ..............................................................................................................................................
129,238 \ 120,656 $ 1,187,738
See notes to consolidated financial statements.
13
Thousands of
LIABILITIES AND Millions of yen U.S. dollars (Note 1)
NET ASSETS 2020 2019 2020
Current Liabilities:
\ 17,732 \
Trade notes and accounts payable (Notes 6 and 17) .................................................................................................................. 15,797 $ 162,963
Short-term borrowings (Notes 7 and 17) ............................................................................................................…
9,686 7,638 89,021
Current portion of long-term borrowings (Notes 7 and 17) ........................................................................................................
15,544 14,386 142,859
Income taxes payable (Note 16) .....................................................................................................................204 221 1,877
Accrued bonuses .................................................................................................................................. 688 667 6,320
Accrued bonuses to directors and corporate auditors ..................................................................................................................................
40 19 369
Lease obligations (Notes 7 and 17)..................................................................................................................................
561 698 5,151
Other (Notes 7 and 17) ................................................................................................................................................................
7,610 8,507 69,931
Total current liabilities ..................................................................................................................52,065 47,933 478,491
Long-term Liabilities:
Long-term borrowings (Notes 7 and 17) ........................................................................................................ 40,479 34,765 372,013
Lease obligations (Notes 7 and 17) .............................................................................................................................
935 1,112 8,590
Provision for directors' retirement benefits ................................................................................................217 217 1,997
Net defined benefit liability (Note 8) ............................................................................................. 2,696 2,689 24,781
Other (Note 16)......................................................................................................................................................................
364 352 3,345
Total long-term liabilities ..................................................................................................................................................
44,691 39,135 410,726
Commitments and Contingent Liabilities (Note 12) :
Net Assets (Note 9):

Shareholders' Equity:
Common stock:
Authorized:
70,000,000 shares in 2020 and 2019
Issued:
26,803,320 shares in 2020 and 2019
Preferred stock:
Authorized:
None in 2020 and 2019
Issued:
None in 2020 and 2019............................................................................................................... 12,889 12,889 118,450
Capital surplus ................................................................................................................................................................
6,464 6,464 59,411
Retained earnings ......................................................................................................................................................................
13,160 11,490 120,944
Less: Treasury stock, at cost; Common stock,
629,427 shares in 2020, 629,378 shares in 2019 .......................................................................................(397) (397) (3,646)
Total shareholders' equity...............................................................................................................................................…
32,116 30,446 295,159
Accumulated Other Comprehensive Income:
Unrealized gains on available-for-sale securities .......................................................................................................................
(8) (65) (78)
Deferred gains on hedges ...........................................................................................................................… 30 183 277
Foreign currency translation adjustments .................................................................................. 375 3,322 3,451
Remeasurements of defined benefit plans (Note 8) ...................................................................... (225) (298) (2,067)
Total accumulated other comprehensive income...............................................................................................................................................…
172 3,142 1,583
Non-controlling interests........................................................................................................................................................
194 - 1,779
Total net assets ..................................................................................................................................................
32,482 33,588 298,521
\ 129,238 \
Total ........................................................................................................................................................ 120,656 $ 1,187,738
14
Consolidated Statements of Operations
For the Years ended March 31, 2020, 2019 and 2018
Thousands of
2020 2019 2018 2020
\
Net Sales ...........................................................................................................................................................
115,479 \ 118,911 \ 108,542 $ 1,061,292
Cost of Sales (Note 13) ..................................................................................................................................................
98,733 98,863 90,115 907,393
Gross profit ......................................................................................................................................................
16,746 20,048 18,427 153,899
Selling, General and Administrative Expenses (Note 13) ........................................................................................................................................................................
11,557 11,122 10,970 106,207
Operating income ....................................................................................................................................…
5,189 8,926 7,457 47,692
Other Income (Expenses):

Interest expense, net ...............................................................................................................................................
(595) (742) (1,111) (5,470)
Dividend income ...............................................................................................................................................6 7 26 58
Foreign exchange gain (loss).............................................................................…....................… (61) 518 (1,668) (563)
Net loss on sales and disposal of property, plant and equipment (Note 15)............................................… (139) (222) (193) (1,281)
Subsidy income..............................................................................................................................................................…
183 302 93 1,684
Gain on liquidation of subsidiaries ..................................................................................................................... - - 163 -
Insurance income................................................................................................................................................................
325 655 674 2,991
Impairment loss ............................................................................................................ - - (57) -
Gain on sales of investment securities, net (Note 4)........................................................................................... 4 0 136 33
Gain on reversal of loss on valuation of investment securities (Note 14)...........................................................................................
327 - - 3,009
Expenses for business structure improvement (Note 10).........................................................................................................
(210) (526) - (1,929)
Expenses for factory shutdown (Note 11)......................................................................................................... (1,250) - - (11,487)
Other, net ......................................................................................................................................................................................
(513) (1,055) (676) (4,723)
Total ...............................................................................................................................................
(1,923) (1,063) (2,613) (17,678)
Income before Income Taxes .......................................................................................... 3,266 7,863 4,844 30,014
Income Taxes (Note 16):

Current ...............................................................................................................................................…875 753 834 8,043
Deferred .................................................................................................................................................
(158) 366 (337) (1,452)
Total income taxes ............................................................................................................................717 1,119 497 6,591
Net income...........................................................................................................................… 2,549 6,744 4,347 23,423
Net Loss attributable to non-controlling interests............................................................................................ (37) - (26) (346)
\ 2,586 \ 6,744 \
Net Income attributable to owners of the Company .......................................................................................................................................... 4,373 $ 23,769
Yen U.S. dollars (Note 1)

Per Share of Common Stock:
Net income per share..........................................................................................................................................
\ 98.81 \
Basic ...............................................................................................................................................................................
257.65 \ 160.34 $ 0.91
Diluted .......................................................................................................................................... - - 108.67 -
Cash dividends applicable to the year ......................................................................................................................
30.00 35.00 20.00 0.28
15
Consolidated Statements of Comprehensive Income
Thousands of
2020 2019 2018 2020
\ 2,549 \
Net Income ........................................................................................................................................................... 6,744 \ 4,347 $ 23,423
Other Comprehensive Income (Note 19):

Unrealized gains (losses) on available-for-sale securities ......................................................................................................................................................
57 (87) (64) 525
Deferred gains (losses) on hedges ......................................................................................................................................................
(153) (116) 240 (1,408)
Foreign currency translation adjustments ......................................................................................................................................................
(2,945) (190) 1,069 (27,063)
Remeasurements of defined benefit plans ..............................................................................................................
73 131 41 675
Total other comprehensive income ......................................................................................................................................................
(2,968) (262) 1,286 (27,271)
\ (419) \
Comprehensive Income...................................................................................................................................................... 6,482 \ 5,633 $ (3,848)
Comprehensive Income Attributable to:

Owners of the Company ................................................................................................................................…
\ (383) \ 6,482 \ 5,665 $ (3,519)
Non-controlling interests ......................................................................................................................................................
(36) - (32) (329)
16
Consolidated Statements of Changes in Net Assets
Millions of yen
Shareholders' Equity Accumulated Other Comprehensive Income
Common Stock Preferred Stock
Total
Treasury Deferred
Unrealized Gains Accumulated
Stock at Cost; Total (Losses) on Gains Foreign Currency Other
Remeasurements
Number of Number of Capital Retained Common Shareholders' Available-for-sale (Losses) on Translation of Defined Benefit Comprehensive Non-controlling Total Net
Shares Amount Shares Amount Surplus Earnings Stock Equity Securities Hedges Adjustments Plans Income Interests Assets
Balance as at March 31, 2017............................................................................................. 26,803,320 \ 12,889 50 \ - \ 11,745 \ 1,932 \ (396) \ 26,170 \ 85 \ 59 \ 2,438 \ (470) \ 2,112 \ 258 \ 28,540
Net income attributable to owners of the Company............................................................ - - - - - 4,373 - 4,373 - - - - - - 4,373
Cash dividends paid....................................................................................................................................
- - - - - (875) - (875) - - - - - - (875)
Purchase of treasury stock............................................................................................................. - - - - - - (0) (0) - - - - - - (0)
Change in scope of consolidation........................................................................................................................................................................
- - - - - (30) - (30) - - - - - - (30)
Net increase (decrease)............................................................................................................................
- - - - - - - - (63) 240 1,074 41 1,292 (258) 1,034
26,803,320 \
Balance as at March 31, 2018.................................................................................................................... 12,889 50 \ - \ 11,745 \ 5,400 \ (396) \ 29,638 \ 22 \ 299 \ 3,512 \ (429) \ 3,404 \ - \ 33,042
Cash dividends paid.......................................................................................................................................................................................................................................
- - - - - (654) - (654) - - - - - - (654)
Purchase of treasury stock......................................................................................................................................................................................................................................
- - - - - - (5,282) (5,282) - - - - - - (5,282)
Retirement of treasury stock......................................................................................................................................................................................................................................
- - (50) - (5,281) - 5,281 - - - - - - - -
Net increase (decrease)......................................................................................................................................................................................................................................
- - - - - - - - (87) (116) (190) 131 (262) - (262)
26,803,320 \
Balance as at March 31, 2019.................................................................................................................... 12,889 - \ - \ 6,464 \ 11,490 \ (397) \ 30,446 \ (65) \ 183 \ 3,322 \ (298) \ 3,142 \ - \ 33,588
Cash dividends paid.......................................................................................................................................................................................................................................
- - - - - (916) - (916) - - - - - - (916)
Purchase of treasury stock......................................................................................................................................................................................................................................
- - - - - - (0) (0) - - - - - - (0)
- - - - - - - - 57 (153) (2,947) 73 (2,970) 194 (2,776)
26,803,320 \
Balance as at March 31, 2020.................................................................................................................... 12,889 - \ - \ 6,464 \ 13,160 \ (397) \ 32,116 \ (8) \ 30 \ 375 \ (225) \ 172 \ 194 \ 32,482
Thousands of U.S. dollars (Note 1)

Shareholders' Equity Accumulated Other Comprehensive Income
Total
Treasury Deferred
Unrealized Gains Accumulated
Stock at Cost; Total (Losses) on
Gains Foreign Currency Other
Remeasurements
Common Preferred Capital Retained Common Shareholders' Available-for-sale (Losses) on Translation of Defined Benefit Comprehensive Non-controlling Total Net
Stock Stock Surplus Earnings Stock Equity Securities Hedges Adjustments Plans Income Interests Assets
Balance as at March 31, 2019.......................................................................................................................................
$ 118,450 $ - $ 59,411 $ 105,594 $ (3,646) $ 279,809 $ (603) $ 1,685 $ 30,531 $ (2,742) $ 28,871 $ - $ 308,680
Net income attributable to owners of the Company............................................................ - - - 23,769 - 23,769 - - - - - - 23,769
Cash dividends paid......................................................................................... - - - (8,419) - (8,419) - - - - - - (8,419)
Purchase of treasury stock.................................................................................... - - - - (0) (0) - - - - - - (0)
- - - - - - 525 (1,408) (27,080) 675 (27,288) 1,779 (25,509)
Balance as at March 31, 2020.................................................................................................................... $ 118,450 $ - $ 59,411 $ 120,944 $ (3,646) $ 295,159 $ (78) $ 277 $ 3,451 $ (2,067) $ 1,583 $ 1,779 $ 298,521
17
Consolidated Statements of Cash Flows
Thousands of
2020 2019 2018 2020
Operating Activities:
\
Income before income taxes ...................................................................................................................................................... 3,266 \ 7,863 \ 4,844 $ 30,014
Adjustments to reconcile income before income taxes

to net cash provided by operating activities: 　　
　　
Depreciation and amortization ...................................................................................................................................................... 6,587 　 6,281 　 5,816 60,541
Amortization of goodwill ...................................................................................................................................................... 20 　 - 　 - 187
- 　 - 　
Impairment loss........................................................................................................................................................................................................................................... 57 -
Increase (decrease) in allowance for doubtful accounts ................................................................................................................................... (46) 　 (170) 　 239 (426)
Increase in net defined benefit liability ...........................................................................................................................................................................
80 161 147 740
Increase in accrued bonuses .......................................................................................................................…........................ 22 　 25 　 132 199
Increase (decrease) in accrued bonuses to directors and corporate auditors .......................................................................................................................… 21 (41) 20 196
Decrease in provision for directors' retirement benefits........................................................................................................................................................
- - (22) -
(103) 　
Interest income and dividend income .................................................................................................................................................................................... (66) 　 (67) (947)
692 　 801 　
Interest expenses ............................................................................................................................................................................................................................ 1,152 6,358
249 　
Foreign exchange loss (gain).................................................................................................................................................................................................. (55) 　 709 2,290
Net loss on sales and disposal of property, plant and equipment................................................................................................................................ 139 　 222 　 193 1,281
Gain on sales of investment securities, net..............................................................................................................................................................................
(4) (0) (136) (33)
Loss on valuation of investment securities..............................................................................................................................................................................
168 - - 1,543
Gain on reversal of loss on valuation of investment securities..............................................................................................................................................................................
(327) - - (3,009)
Insurance income ......................................................................................................................................................................................................................
(325) (655) (674) (2,991)
Expenses for business structure improvement...................................................................................................................................................… 210 526 - 1,929
Expenses for factory shutdown...................................................................................................................................................… 1,250 - - 11,487
Decrease (increase) in trade notes and accounts receivable .......................................................................................................................... 2,362 　 (1,205) 　 (3,464) 21,707
Increase in inventories ........................................................................................................................................... (2,449) 　 (1,528) 　 (1,949) (22,505)
Increase (decrease) in trade notes and accounts payable ................................................................................................................................... 1,006 　 (310) 　 2,884 9,243
Decrease (increase) in other assets ........................................................................................................................................................... 614 　 183 　 (575) 5,644
Increase in other liabilities .................................................................................................................................................. (85) 19 1,800 (781)
Other ...........................................................................................................................................................................................................
35 　 272 　 725 322
Subtotal 13,382 12,323 11,831 122,989
101 　
Interest and dividend received .................................................................................................................................................................................... 67 　 67 929
(689) 　
Interest paid ................................................................................................................................................................................................................. (821) 　 (1,192) (6,329)
Proceeds from insurance income .......................................................................................................................................................................325 655 674 2,991
Payments for business structure improvement ................................................................................................................................................................
(210) - - (1,929)
Payments for factory shutdown ................................................................................................................................................................ (760) - - (6,985)
(909) 　
Income taxes paid ............................................................................................................................................................................................................. (757) 　 (951) (8,362)
Net cash provided by operating activities .........................................................................................................................................................................................
11,240 11,467 10,429 103,304
　　
Investing Activities: 　　
Payments for purchases of property, plant and equipment .......................................................................................................................... (13,570) 　 (14,719) 　 (8,381) (124,710)
Proceeds from sales of property, plant and equipment ................................................................................................................................ 1 　 40 　 4 11
Payments for purchases of intangible assets .......................................................................................................................... (182) 　 (113) 　 (81) (1,672)
Payments for liquidation of subsidiaries and affiliates .......................................................................................................................... - 　 - 　 (279) -
Payments for purchases of investment securities .......................................................................................................................... (1,502) 　 (974) 　 (188) (13,806)
Proceeds from sales of investment securities .......................................................................................................................... 6 　 1 　 588 55
Purchase of shares of subsidiaries resulting in change in scope of consolidation (Note 3)................................................................................................ (562) 　 - 　 - (5,163)
(2) 　
Payments for insurance policies ................................................................................................................................................................................. (2) 　 (3) (22)
Proceeds from maturity of insurance funds .............................................................................…................................................. - 　 - 　 98 -
874 　 (1,526) 　
Other, net ................................................................................................................................................................................................................................................. (626) 8,029
Net cash used in investing activities .................................................................................................................................................. (14,937) (17,293) (8,868) (137,278)
　　
Financing Activities: 　　
Increase (decrease) in short-term borrowings .......................................................................................................................... 1,133 　 (5,725) 　 993 10,414
Proceeds from long-term borrowings ........................................................................................................................................... 21,500 　 25,655 　 10,017 197,592
Payments for long-term borrowings ........................................................................................................................................... (14,672) 　 (10,841) 　 (12,273) (134,840)
Repayments of lease obligations...........................................................................................................................................................(797) (1,197) (1,392) (7,323)
Payments for purchase of treasury stock ...............................................................................................................................................................................
(0) (5,282) (0) (1)
(915) 　
Cash dividends paid ................................................................................................................................................................................................................ (653) 　 (875) (8,409)
Dividends paid to non-controlling interests............................................................................................................................................ - - (1) -
Net cash provided by (used in) financing activities ..................................................................................................................................................
6,249 　 1,957 　 (3,531) 57,433
18
Thousands of
2020 2019 2018 2020
Effect of Exchange Rate Changes 　　
(325) 　
on Cash and Cash Equivalents ...................................................................................................................................................................................... 98 　 (36) (2,994)
　　
Net Increase (Decrease) in Cash and Cash Equivalents .......................................................................................................................... 2,227 (3,771) (2,006) 20,465
　　
11,419 　
Cash and Cash Equivalents at the Beginning of the Year ............................................................................................................................................. 15,190 　 17,196 104,949
\ 13,646 \
Cash and Cash Equivalents at the End of the Year (Note 3)..................................................................................................................................................................
11,419 \ 15,190 $ 125,414
19
Notes to Consolidated Financial Statements
(f) Leased Assets
1. Basis of Presenting Consolidated Financial Statements Leased property under finance lease arrangements that transfer ownership
The accompanying consolidated financial statements of Meiko Electronics of the leased property to the lessee is depreciated using the same method as
Co., Ltd. (the “Company”) have been prepared in accordance with the one applied to property, plant and equipment owned by the Company.
the provisions set forth in the Financial Instruments and Exchange Law of Japan Leased property under finance lease arrangements that do not transfer
and its related accounting regulations, and in conformity with accounting ownership of the leased property to the lessee is capitalized to recognize
principles generally accepted in Japan (“Japanese GAAP”), which are different leased assets and lease obligations in the balance sheets and depreciated
in certain respects as to the application and disclosure requirements of over the lease term of the respective assets with zero residual value.
International Financial Reporting Standards.
In preparing the accompanying consolidated financial statements, (g) Allowance for Doubtful Accounts
certain reclassifications and rearrangements have been made to present The Company and its consolidated subsidiaries provide for doubtful
them in a form that is more familiar to readers outside Japan. accounts principally at an amount computed based on the historical bad debt
In addition, the notes to the consolidated financial statements include ratio during a certain reference period plus an estimated uncollectible amount
information that is not required under Japanese GAAP, but is based on the analysis of certain individual accounts including claims in
presented herein as additional information. bankruptcy.
The consolidated financial statements are denominated in Japanese yen,
the currency of the country in which the Company is incorporated (h) Accrued Bonuses
and operated. The conversion of Japanese yen amounts into U.S. dollar Accrued bonuses to employees are provided for the estimated amounts,
amounts is included solely for the convenience of readers outside Japan which the Company and its consolidated subsidiaries are obligated to
and has been made at the approximate exchange rate as at March 31, 2020 pay to employees after the fiscal year end based on services rendered during
($1=\108.81). Such translation should not be construed the current fiscal year.
as representation that the Japanese yen amounts could be converted
into U.S. dollars at that or any other rate of exchange. (i) Accrued Bonuses to Directors and Corporate Auditors
The Company provides allowance for directors' and corporate auditors'
2. Significant Accounting Policies accrued bonuses based on the estimated amounts as at the balance sheet date.
The following is a summary of the significant accounting policies
adopted by the Company and its consolidated subsidiaries (j) Impairment Losses on Fixed Assets
in the preparation of the consolidated financial statements. The Group reviews its long-lived assets for impairment whenever events
or changes in circumstance indicate the carrying amount of an asset or
(a) Consolidation asset group may not be recoverable. An impairment loss would be
The consolidated financial statements include the accounts of recognized if the carrying amount of an asset or asset group exceeds
the Company and its significant 10 subsidiaries (together, the “Group”). the sum of the undiscounted future cash flows expected to result from
All significant inter-company accounts and transactions have been eliminated. the continued use and eventual disposition of the asset or asset group.
In the elimination of investments in subsidiaries, the assets and liabilities of The impairment loss would be measured as the amount by which
the subsidiaries, including the portion attributable to minority shareholders, the carrying amount of the asset exceeds its recoverable amount,
are recorded based on the fair value at the time the Company acquired which is higher of asset's or cash-generating unit's fair value
control of the respective subsidiaries. Investments in certain unconsolidated less costs to sell and its value in use.
subsidiaries are accounted for by the cost method due to immateriality
in view of consolidation. (k) Investment Securities
The Company has classified all the equity securities as available-for-
(b) Cash Equivalents sale securities based on management’s intention. Available-for-sale
Cash equivalents are short-term investments that are readily convertible securities other than non-marketable securities are reported at fair value with
into cash and are exposed to insignificant risk of changes in value. unrealized gains or losses, net of applicable taxes, reported in a separate
Cash equivalents include time deposits that mature or become due component of net assets.
within three months of the date of acquisition. Non-marketable available-for-sale securities are stated at cost determined
by the moving-average method.
(c) Translation of Foreign Currency Accounts
Current and non-current receivables and payables in foreign currencies (l) Income Taxes
are translated at current rates prevailing at the balance sheet date and The provision for income taxes is computed based on the pretax
the resulting exchange gains or losses are recognized in the consolidated income included in the consolidated statements of operations. The asset
statements of operations. and liability approach is used to recognize deferred tax assets and
Financial statements of consolidated overseas subsidiaries are translated liabilities for the expected future tax consequences of temporary
into Japanese yen at the exchange rate as at the balance sheet date, except differences between the carrying amounts and the tax bases of
that shareholders' equity accounts are translated at historical rates and assets and liabilities. Deferred tax assets are measured by applying
statement of income items resulting from transactions with the Company currently enacted tax laws to the temporary differences.
at the rates used by the Company.
Foreign currency translation adjustments resulting from translation of
foreign currency financial statements prepared by consolidated overseas
subsidiaries are presented in net assets in the consolidated balance sheets.
(d) Inventories
Inventories are stated at cost, determined by the first-in-first-out method.
However, they are written down based on decreased profitability,
where appropriate.
(e) Depreciation and Amortization (excluding leased assets)

Depreciation of property, plant and equipment for the Company and its
domestic subsidiaries is computed mainly by the declining-balance method.
Buildings (excluding facilities attached to buildings), acquired on or after
April 1, 1998 and facilities attached to buildings and structures, acquired
on or after April 1, 2016 are computed by the straight-line method.
Certain buildings and property, plant and equipment for overseas
subsidiaries are computed by the straight-line method.
The ranges of useful lives are summarized as follows:
Buildings and structures: 2–47 years
Machinery and vehicles: 2–10 years
Software for company use is carried at cost less accumulated amortization,
which is calculated by the straight-line method over its estimated useful
life of five years.
20
(m) Derivative Financial Instruments (s) Change in Accounting Policy
The Group uses interest rate swaps, currency swaps and From the beginning of the fiscal year ended March 31, 2020, overseas consolidated
copper price swaps as a means of hedging exposure to foreign subsidiaries of the Company subject to application of IFRS have applied
currencies, interest risks and market fluctuation. The Group IFRS 16 ("Leases"), an accounting method in which borrower lease transactions
does not enter into derivatives for trading or speculative purposes. are viewed either as right-of-use assets or lease obligations.
Derivative financial instruments are classified and accounted for as Accordingly, an approach was adopted in which any cumulative impact of the application
follows: a) all derivatives are recognized as either assets or liabilities and of this standard, regarded as a transitional measure, is recognized on the start date of its
measured at fair value, and gains or losses on transactions arising from application.
derivative except for hedge purposes are recognized in the consolidated As a result, "Other" in Current Assets decreased by \27 million ($250 thousand), "Leased
statements of operations and b) for derivatives used for hedging purposes, assets (net)" in Property, Plant and Equipment, at Cost increased by \1,204 million ($11,067
if derivatives qualify for hedge accounting because of high correlation and thousand), "Other" in Investments and Other Assets decreased by \790 million ($7,261 thousand),
effectiveness between the hedging instruments and the hedged items, while "Lease obligations" in Current Liabilities and Long-term Liabilities increased by \105 million
gains or losses on derivatives are deferred until maturity of the hedged ($962 thousand) and \268 million ($2,460 thousand), respectively, as of March 31, 2020.
transactions. The impact of this change on profit or loss for the year ended March 31, 2020 was immaterial.
If interest rate swap contracts are used as hedge and meet certain
criteria, the net amount to be paid or received under the swap (t) Accounting Standards and Guidance Issued but Not Yet Adopted
contract is added to or deducted from the interest on the assets or “Accounting Standard for Revenue Recognition” (ASBJ Statement No.
liabilities for which the swap contract was executed. 29, March 31, 2020) and
For currency swaps that qualify for hedge accounting, gain or loss “Implementation Guidance on Accounting Standard for Revenue
is translated at the exchange rate stipulated in the contract under Recognition” (ASBJ Guidance No. 30, March 31, 2020)
the allocation method. (1) Overview
The above standard and guidance provide comprehensive principles for revenue
(n) Retirement Benefits for Employees recognition. Under the standard and guidance, revenue is recognized by applying the
The benefit formula method is used as a method of attributing following five steps:
expected benefits to the periods through the end of the fiscal year Step 1: Identify contract(s) with customers.
in calculating projected benefit obligation. Step 2: Identify the performance obligations in the contract.
Actuarial gain or loss is amortized using the declining balance method Step 3: Determine the transaction price.
over 10 years, which is less than the average remaining years of service Step 4: Allocate the transaction price to the performance obligation in the contract.
of the employees, and the amortization will be started in the following year Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation.
in which the gain or loss is recognized. (2) Effective date
Past service cost is amortized using the straight-line method over 10 The above standard and guidance will become effective from the beginning of the
years, which is less than the average remaining years of service of the fiscal year ending March 31, 2022.
employees. (3) Impact of the adoption of the standard and guidance
Certain consolidated subsidiaries apply the simplified method in which The Company and its domestic consolidated subsidiaries are currently in the process of
the retirement benefit amount required for voluntary termination at year end determining the impact of the new standard and guidance on the consolidated financial statements.
is deemed a projected benefit obligation for the calculation of liability
associated with retirement and retirement benefit expenses. “Accounting Standard for Accounting Policy Disclosures, Accounting Changes and
Error Corrections” (ASBJ Statement No. 24, March 31, 2020)
(o) Provision for Directors' Retirement Benefits (1) Overview
The Company and its domestic consolidated subsidiaries account for the provision The ASBJ made required revisions and issued the revised “Accounting Standard for Accounting
for directors' retirement benefits as at the balance sheet date in accordance with Policy Disclosures, Accounting Changes and Error Corrections” for the purpose of disclosing
internal regulations. the outline on accounting policies and procedures adopted when requirements under the relating
accounting standards are not clearly defined.
(p) Appropriations of Retained Earnings (2) Effective date
Appropriations of retained earnings are reflected in the accompanying The above standard will become effective at the end of the fiscal year ending March 31, 2021.
consolidated financial statements for the following year upon
shareholders' approval. “Accounting Standard for Disclosure of Accounting Estimates”
(ASBJ Statement No. 31, March 31, 2020)
(q) Per Share Information (1) Overview
Dividends per share shown in the consolidated statements of operations have The ASBJ developed and issued “Accounting Standard for Disclosure of Accounting Estimates”
been presented on an accrual basis and include, in each fiscal period, for the purpose of disclosing information on the items of accounting estimates made on financial
dividends approved after each balance sheet date, but applicable to the fiscal statements of the current fiscal year that may significantly affect financial statements of the next
period then ended. fiscal year, which is highly useful for users of financial statements.
Net income per share is computed by dividing net income attributable (2) Effective date
to common shareholders of the Company by the weighted-average The above standard will become effective at the end of the fiscal year ending March 31, 2021.
number of common shares outstanding for the period.
The diluted net income per share is omitted as the Company has no dilutive shares (u) Additional Information
for the year ended March 31, 2020. (Accounting Estimates Relating to the Spread of the Novel Coronavirus (COVID-19))
The Company made accounting estimates for recoverability of deferred tax assets, impairment
(r) Unification of Accounting Policies Applied to Foreign Subsidiaries of fixed assets and others, based on the information available at the time of the preparation of the
for Consolidated Financial Statements consolidated financial statements.
The Accounting Standards Board of Japan has issued ASBJ Practical Issues Task Force The spread of COVID-19 infection has far-reaching effects on economies and corporate activities, and
No. 18 “Practical Solution on Unification of Accounting Policies Applied to Foreign it is difficult to forecast the spread of the infection and the timing of the return to normal in the future.
Subsidiaries for Consolidated Financial Statements” (“PITF No. 18”). PITF No. 18 However, the Company made accounting estimates based on the assumption that the impact
requires that accounting policies and procedures applied by a parent company and its of the COVID-19 will continue for a certain period of time for the year ending March 31, 2021.
subsidiaries to similar transactions and events under similar circumstances should, There are many uncertain factors for estimating the impact of the spread of COVID-19, which may
in principle, be unified for the preparation of the consolidated financial statements. influence the Company's financial conditions and operating results for the next consolidated
PITF No. 18, however, as a tentative measure, allows a parent company to prepare accounting period.
consolidated financial statements using foreign subsidiaries’ financial statements
prepared in accordance with either International Financial Reporting Standards
or U.S. generally accepted accounting principles. In this case, adjustments
for the following four items are required in the consolidation process so that
their impacts on net income are accounted for in accordance with Japanese GAAP
unless the impact is not material.
(1) Goodwill not subjected to amortization
(2) Actuarial gains and losses of defined benefit plans recognized outside profit or loss
(3) Capitalized expenditures for research and development activities
(4) Fair value measurement of investment properties, and revaluation of
property, plant and equipment, and intangible assets
21
3. Principal Breakdown of Assets and Liabilities of a Company that Became a Consolidated Subsidiary through the Acquisition of Stock

Breakdown of assets and liabilities at the time of commencement of consolidation in connection with the new consolidation of Meiko Towada Vietnam Co., Ltd.
through the acquisition of stock and the relationship between acquisition cost of shares and expenditures for acquisition (net) are as follows:
Millions Thousands of
of yen U.S. dollars
\
Current assets ...........................................................................................................................................................................................................................................................................................................................................
2,265 $ 20,819
Non-current assets ......................................................................................................................................................................................................................................................................................................................................................................
873 8,027
Goodwill ................................................................................................................................................................................................................................................................................................
406 3,730
Current liabilities .........................................................................................................................................................................................................................................................................................................................................................................
(2,467) (22,671)
Non-current liabilities ...................................................................................................................................................................................................................................................................................................................................................................
(98) (904)
Non-controlling interests ..............................................................................................................................................................................................................................................................................................................................................................
(229) (2,108)
Acquisition cost of shares........................................................................................................................................................................................................................................................................................................................................................
750 6,893
Cash and cash equivalents ...........................................................................................................................................................................................................................................................................................................................................................
(188) (1,730)
\
Expenditures for acquisition ....................................................................................................................................................................................................................................................................................................................................................
562 $ 5,163
There were no applicable matters for the year ended March 31, 2019.
4. Investment Securities
All the equity securities, classified as available-for-sale securities, are included in non-current investment securities.
The carrying amounts and aggregate fair values of the available-for-sale securities as of March 31, 2020 and 2019 are as follows:
2020
Millions of yen Thousands of U.S. dollars
Fair Acquisition Unrealized Fair Acquisition Unrealized
Value Cost Gains (Losses) Value Cost Gains (Losses)
Securities whose carrying values
exceed their acquisition cost:
\ 38 \
Equity securities ............................................................................................................... 20 \ 18 $ 347 $ 180 $ 167
Securities whose carrying values do not
Equity securities .................................................................................................................................................................................................................
153 309 (156) 1,412 2,845 (1,433)
\ 191 \
Total ............................................................................................................... 329 \ (138) $ 1,759 $ 3,025 $ (1,266)
2019
Millions of yen
Fair Acquisition Unrealized
Value Cost Gains (Losses)
Securities whose carrying values
\ 64 \
Equity securities ............................................................................................................... 26 \ 38
Other ...............................................................................................................
99 96 3
Securities whose carrying values do not
Equity securities .................................................................................................................................................................................................................
199 306 (107)
\ 362 \
Total ............................................................................................................... 428 \ (66)
Information on available-for-sale securities whose fair values are not readily determinable as of March 31, 2020 and 2019 are described in Note 17.
Information regarding the sale of securities classified as available-for-sale securities for the years ended March 31, 2020 and 2019 are summarized as follows:
2020
Proceeds Aggregate Aggregate Proceeds Aggregate Aggregate
from Sales Gains on Losses on from Sales Gains on Losses on
Sales Sales Sales Sales
\ 6\
Equity securities ............................................................................................................... 4\ 0$ 55 $ 33 $ 0
\ 6\
Total ............................................................................................................... 4\ 0$ 55 $ 33 $ 0
2019
Millions of yen
Proceeds Aggregate Aggregate
from Sales Gains on Losses on
Sales Sales
\ 1\
Equity securities ............................................................................................................... 0\ 0
\ 1\
Total ............................................................................................................... 0\ 0
The Company recorded impairment loss of investment securities in the amount of \168 million ($1,543 thousand) for the year ended March 31, 2020.
It consists of \118 million ($1,084 thousand) for available-for-sale securities and \50 million ($459 thousand) for shares of subsidiaries and associates.
The Company recorded no impairment loss of investment securities for the year ended March 31, 2019.
5. Reduction Entry for Property, Plant and Equipment
The amount deducted from the acquisition costs of property, plant and equipment due to government subsidies received and others as of March 31, 2020 and 2019 is as follows:
Thousands of
Millions of yen U.S. dollars
2020 2019 2020
\ 270 \
Buildings and structures ..........................................................................................................................................................................................................................................
- $ 2,483
Machinery and vehicles ..........................................................................................................................................................................................................................................
162 - 1,489
Other ..........................................................................................................................................................................................................................................
7 - 60
\ 439 \
Total ..........................................................................................................................................................................................................................................
- $ 4,032
6. Notes that Matured at the End of the Fiscal Year
March 31, 2019, the end of fiscal year, coincided with a bank holiday and the following notes that matured at the end of the fiscal year
were accounted for as if they were settled on their dates of maturity.
Thousands of
2020 2019 2020
\ - \
Notes receivable ......................................................................................................................................................................................................................................
120 $ -
\ - \
Notes payable - trade .........................................................................................................................................................................................................................................
217 $ -
22
7. Short-term Borrowings and Long-term Debt
Short-term borrowings and long-term debt as of March 31, 2020 and 2019 consist of the following:
Thousands of
2020 2019 2020
\ 9,686 \
Short-term borrowings with average interest rate of 0.98% for 2020 and 1.19% for 2019..........................................................................................................................................................................
7,638 $ 89,021
Current portion of long-term borrowings with average interest rate of 0.95% for 2020 and 1.34% for 2019........................................................................................................................................................
15,544 14,386 142,859
Current portion of lease obligations ........................................................................................................................................................... 561 698 5,151
Current portion of other liabilities with average interest rate of 0.57% for 2020 and 2019...........................................................................................................................................................
1,300 1,300 11,948
Total short-term borrowings ................................................................................................................................................................................................
27,091 24,022 248,979
Long-term borrowings with average interest rate of 0.73% for 2020 and 0.91% for 2019, less current portion ....................................................................................................................................................
40,479 34,765 372,013
Lease obligations, less current portion .................................................................................................................................................................................................................
935 1,112 8,590
Total long-term borrowings...................................................................................................................................................................................................................................…
41,414 35,877 380,603
\ 68,505 \
Total ..............................................................................................................................................................................................................................................
59,899 $ 629,582
* Average interest rate of borrowings represents the weighted average rate for the outstanding balances as at March 31, 2020 and 2019.
Average interest rate of lease obligations is not disclosed since the amount equivalent to interest expense included in total lease payments is allocated over the lease term using the straight-line method.
Average interest rate of other liabilities represents the weighted average rate for the average of the outstanding balances as at April 1, 2019 and March 31, 2020.
The aggregate annual maturities of long-term debt as of March 31, 2020 are as follows:
Year ending March 31 of yen U.S. dollars
\
2021........................................................................................................................................................................................................................................................... 14,163 $ 130,163
2022........................................................................................................................................................................................................................................................... 11,919 109,540
2023........................................................................................................................................................................................................................................................... 10,330 94,936
2024........................................................................................................................................................................................................................................................... 4,067 37,374
\
Total ........................................................................................................................................................................................................................................................... 40,479 $ 372,013
The aggregate annual maturities of lease obligations as of March 31, 2020 are as follows:
Year ending March 31 of yen U.S. dollars
\
2021........................................................................................................................................................................................................................................................... 505 $ 4,640
2022........................................................................................................................................................................................................................................................... 109 1,001
2023........................................................................................................................................................................................................................................................... 88 808
2024........................................................................................................................................................................................................................................................... 91 835
2025 and thereafter ................................................................................................................................................................................................................................. 142 1,306
\
Total ......................................................................................................................................................................................................................................................... 935 $ 8,590
Financial covenants

Short-term borrowings and long-term borrowings, including the current portion amounting to \58,091 million ($533,880 thousand), include certain financial covenants that forfeit the benefit of term
with regard to the debts on certain loan agreement in the event the Company is in breach of either of the following covenants (stricter covenants are described if there are several covenants).
(1) For each fiscal year, ordinary losses shall not be recorded on the consolidated statement of operations under Japanese GAAP for two consecutive years.
(2) Total net assets on the consolidated balance sheet at each fiscal year end shall be maintained at least higher of either (i) \20,589 million ($189,220 thousand), or (ii) 75% of the total net assets
recorded on the consolidated balance sheet as of the end of the previous fiscal year.
(3) The total amount of interest-bearing debts on the consolidated balance sheet at each fiscal year end shall be lower than the amount equivalent to the net sales on the consolidated statement of operations
for that fiscal year divided by 12 and multiplied by 8.

Short-term borrowings and long-term borrowings, including the current portion amounting to \49,628 million, include certain financial covenants that forfeit the benefit of term
with regard to the debts on certain loan agreement in the event the Company is in breach of either of the following covenants (stricter covenants are described if there are several covenants).
(1) For each fiscal year, ordinary losses shall not be recorded on the consolidated statement of operations under Japanese GAAP for two consecutive years.
(2) Total net assets on the consolidated balance sheet at each fiscal year end shall be maintained at least higher of either (i) \21,962 million, or (ii) 80% of the total net assets
recorded on the consolidated balance sheet as of the end of the previous fiscal year.
(3) The total amount of interest-bearing debts on the consolidated balance sheet at each fiscal year end shall be lower than the amount equivalent to the net sales on the consolidated statement of operations
for that fiscal year divided by 12 and multiplied by 8.
23
8. Retirement Benefits
The Company and some of its consolidated subsidiaries provide a lump-sum retirement plan and a defined contribution plan as a defined benefit pension plan for employees' retirement benefits.
Certain consolidated subsidiaries apply the simplified method in computing net defined benefit liability and benefit costs for their lump-sum retirement plans.
Defined benefit pension plans, except plan applying the simplified method
(1) Movement in projected benefit obligations

Thousands of
2020 2019 2020
Balance at the beginning of the year .............................................................................................................................................................................................…
\ 2,300 \ 2,244 $ 21,138
Service cost ...........................................................................................................................................................................................… 135 127 1,243
Interest cost .............................................................................................................................................................................................… 5 7 42
Actuarial loss.............................................................................................................................................................................................… (29) (67) (265)
Benefits paid .............................................................................................................................................................................................… (99) (12) (906)
Other ............................................................................................................................................................................................................… - 1 -
Balance at the end of the year.............................................................................................................................................................................................…
\ 2,312 \ 2,300 $ 21,252
(2) Reconciliation from projected benefit obligations to net defined benefit liability
Thousands of
2020 2019 2020
Unfunded projected benefit obligations ...........................................................................................................................................................................................…
\ 2,312 \ 2,300 $ 21,252
Total liability at the end of the year ...........................................................................................................................................................................................…
\ 2,312 \ 2,300 $ 21,252
Net defined benefit liability ...........................................................................................................................................................................................…

\ 2,312 \ 2,300 $ 21,252
\ 2,312 \ 2,300 $ 21,252
(3) Retirement benefit costs

Thousands of
2020 2019 2020
Service cost ...........................................................................................................................................................................................…
\ 135 \ 127 $ 1,243
Interest cost ...........................................................................................................................................................................................… 5 7 42
Amortization of actuarial loss .............................................................................................................................................................… 6 24 53
Amortization of past service cost .............................................................................................................................................................................................…
38 39 357
Total benefit costs .............................................................................................................................................................................................…
\ 184 \ 197 $ 1,695
(4) Remeasurements of defined benefit plans

Thousands of
2020 2019 2020
Past service cost ...........................................................................................................................................................................................…
\ (38) \ (39) $ (357)
Actuarial loss ............................................................................................................................................................................................................
(35) (92) (318)
Total ......................................................................................................................................................................................................….
\ (73) \ (131) $ (675)
(5) Accumulated remeasurements of defined benefit plans

Thousands of
2020 2019 2020
Unrecognized past service cost ...........................................................................................................................................................................................…
\ 231 \ 270 $ 2,126
Unrecognized actuarial loss (gain)................................................................................................................................................................… (6) 28 (59)
Total ......................................................................................................................................................................................................….
\ 225 \ 298 $ 2,067
(6) Actuarial assumptions
2020 2019
Discount rate .................................................................................................................................................................................................................................................
0.4% 0.2%
Defined benefit pension plan applying the simplified method
(1) Movement in net defined benefit liability

Thousands of
2020 2019 2020
Balance at the beginning of the year .............................................................................................................................................................................................…
\ 389 \ 414 $ 3,578
Benefit costs .........................................................................................................................................................................................................12 2 115
Benefits paid .............................................................................................................................................................................................… (17) (26) (164)
Others .........................................................................................................................................................................................................................................
- (1) -
Balance at the end of the year .............................................................................................................................................................................................…
\ 384 \ 389 $ 3,529
(2) Reconciliation from projected benefit obligations to net defined benefit liability
Thousands of
2020 2019 2020
Unfunded projected benefit obligations ...........................................................................................................................................................................................…
\ 384 \ 389 $ 3,529
\ 384 \ 389 $ 3,529
Net defined benefit liability ...........................................................................................................................................................................................…

\ 384 \ 389 $ 3,529
\ 384 \ 389 $ 3,529
(3) Retirement benefit cost

Thousands of
2020 2019 2020
Retirement benefit costs calculated using the simplified method ...........................................................................................................................................................................................…
\ 12 \ 2$ 115
Total costs at the end of the year ...........................................................................................................................................................................................…
\ 12 \ 2$ 115
Defined contribution plan
The amount required to contribute to the defined contribution plans is \167 million ($1,539 thousand) and \161 million for the years ended March 31, 2020 and 2019, respectively.
24
9. Net Assets
Under the Japanese Corporation Law (“the Law”) and regulations, the entire amount paid for new shares is required to be designated as capital stock.
However, a company may, by a resolution of the Board of Directors, designate an amount not exceeding one-half of the price of the new shares
as additional paid-in capital, which is included in capital surplus.
In cases where dividend distribution of surplus is made, the smaller of an amount equal to 10% of the dividend or the excess, if any, of 25% of
capital stock over the total of additional paid-in capital and legal earnings reserve must be set aside as additional paid-in capital or legal earnings reserve.
Legal earnings reserve is included in retained earnings in the accompanying consolidated balance sheets.
Additional paid-in capital and legal earnings reserve may not be distributed as dividends. However, all additional paid-in capital and all legal earnings
reserves may be transferred to other capital surplus and retained earnings, respectively, which are potentially available for dividends.
The maximum amount that the Company can distribute as dividends is calculated based on the non-consolidated financial statements of
the Company in accordance with the Law.
10. Expenses for Business Structure Improvement

The Group recorded expenses for business structure improvement for the payment of financial compensation, equivalent to severance payment, with the aim of
improving business structure of overseas subsidiaries.

The Group recorded expenses for business structure improvement to correspond to changes in business environment with the aim of improving its corporate
competitiveness and stability in line with the Group's structural reforms through downsizing its total assets and the improvement of asset efficiency.
It consists of \421 million for loss on disposal of fixed assets and \105 million for impairment loss.
11. Expenses for Factory Shutdown
The Company recorded expenses for the shutdown of factories of Meiko Electronics (Wuhan) Co., Ltd. and Meiko Electronics (Guangzhou Nansha) Co., Ltd. caused by
the spread of COVID-19 infection for the year ended March 31, 2020.
12. Contingent Liabilities
Contingent liabilities of the Company as of March 31, 2020 and 2019 are as follows:
Thousands of
2020 2019 2020
\ 33 \
Trade notes discounted........................................................................................................................................................................
37 $ 300
13. Research and Development Costs
Research and development costs included in selling, general and administrative expenses and manufacturing costs are \1,212 million ($11,138 thousand),
\1,041 million and \816 million for the years ended March 31, 2020, 2019 and 2018, respectively.
14. Gain on Reversal of Loss on Valuation of Investment Securities
The Company recorded gain on reversal of loss on valuation of investment securities carried out at overseas subsidiaries under the International Financial Reporting Standards
for the year ended March 31, 2020.
15. Net Gain and Net Loss on Sales and Disposal of Property, Plant and Equipment
Significant components of net gain and net loss on sales and disposal of property, plant and equipment for the years ended March 31, 2020, 2019 and 2018 are as follows:
Thousands of
Gain: 2020 2019 2018 2020
\ - \ - \
Buildings and structures ........................................................................................................................................................................
- $ -
Machinery and vehicles........................................................................ 1 2 0 7
Land .................................................................................................................... - - - -
Construction in progress .........................................................................................................................................................................
- - - -
Others ........................................................................................................................................................................
- - - -
Total gain ................................................................................................................................................................................................
1 2 0 7
Loss:
Buildings and structures ........................................................................................................................................................................
(9) (3) (6) (83)
Machinery and vehicles ........................................................................................................................................................................
(115) (204) (168) (1,057)
Land ................................................................................................................... - - - -
Construction in progress ........................................................................................................................................................................
- (6) (10) -
Intangible assets ........................................................................................................................................................................
- - - -
Others ........................................................................................................................................................................
(16) (11) (9) (148)
Total loss ................................................................................................................................................................................................
(140) (224) (193) (1,288)
\ (139) \ (222) \
Net loss ....................................................................................................................................................................................................................................
(193) $ (1,281)
25
16. Income Taxes
Income taxes applicable to the Company consist of corporate tax, inhabitant tax and enterprise tax, which in the aggregate resulted in the normal statutory
tax rates of approximately 30.6%, 30.6% and 30.8% for the years ended March 31, 2020, 2019 and 2018, respectively.
The tax effects of significant temporary differences that resulted in deferred tax assets and liabilities as of March 31, 2020 and 2019 are as follows:
Thousands of
2020 2019 2020
Deferred Tax Assets:
Elimination of unrealized profits .........................................................................................................................… \ 51 \ 65 $ 473
Accrued bonuses ..................................................................................................................................................... 196 190 1,803
Net defined benefit liability ...................................................................................................................................... 770 745 7,074
Provision for directors' retirement benefits ........................................................................................................................................................................
66 66 611
Accrued enterprise tax ........................................................................................................................................................................
3 22 24
Allowance for doubtful accounts.....................................................................................................................................................................…
66 83 608
Valuation loss of inventories.....................................................................................................................................................................…
80 98 739
Difference on depreciation period.....................................................................................................................................................................…
373 435 3,430
Impairment loss .....................................................................................................................................................................…
1,007 1,248 9,253
Loss on valuation of investment securities.....................................................................................................................................................................…
20 60 183
Loss on revaluation of golf club memberships ........................................................................................................................................................................
15 15 140
Tax loss carryforwards ........................................................................................................................................................................
2,867 2,474 26,344
Unrealized losses on available-for-sale securities.....................................................................................................................................................................…
3 20 24
Deduction of foreign corporation tax carried forward ....................................................................................................................................................
663 600 6,096
Other ...................................................................................................................................................................................................
72 136 656
Gross deferred tax assets................................................................................................................................ 6,252 6,257 57,458
Valuation allowance for tax loss carryforwards (*2).................................................................................. (2,414) (2,371) (22,190)
Valuation allowance for deductible temporary differences....................................................................... (2,625) (2,780) (24,124)
Less: valuation allowance (*1)...................................................................................................................... (5,039) (5,151) (46,314)
Total .................................................................................................................................................................. \ 1,213 \ 1,106 $ 11,144
Thousands of
2020 2019 2020
Deferred Tax Liabilities:
\
Retained earnings of foreign subsidiaries................................................................................................................................... (427) (401) $ (3,920)
Deferred gains on hedges.................................................................................................................................................................. (13) (81) (122)
Other.............................................................................................................................................................................................................
(3) (2) (26)
\ (443) \
Total ......................................................................................................................................................................................... (484) $ (4,068)
\ 770 \
Deferred Tax Assets, Net: ........................................................................................................................................................................ 622 $ 7,076
(*1) The valuation allowance decreased by \112 million ($1,028 thousand), mainly due to the decrease of \106 million ($976 thousand) in
valuation allowance for impairment loss at consolidated subsidiaries for the year ended March 31, 2020.
The valuation allowance decreased by \212 million, mainly due to the decrease of \261 million in valuation allowance
for tax credit carryforwards at the Company and at consolidated subsidiaries for the year ended March 31, 2019.
(*2) Gross deferred tax assets, valuation allowances and total deferred tax assets recognized for tax loss carryforwards, broken down by expiration dates are as follows:
Millions of yen
Within one One to two Over two to Over three to Over four to
March 31, 2020 Over five years Total
year years three years four years five years
\ -\ - \ -\
Gross deferred tax assets for tax loss carryforwards (*a) ...................................................................................................................................................................................... 74 \ 1,194 \ 1,598 \ 2,866
Valuation allowance ......................................................................................................................................................................................
- - - (74) (742) (1,598) (2,414)
Total deferred tax assets recognized ......................................................................................................................................................................................
- - - - 452 - (*b) 452
Millions of yen
\ - \ - \ - \
Gross deferred tax assets for tax loss carryforwards (*a) ...................................................................................................................................................................................... - \ 74 \ 2,400 \ 2,474
- - - - (74) (2,297) (2,371)
- - - - - 103 (*b) 103
Thousands of U.S. dollars

$ -$ - $ -$
Gross deferred tax assets for tax loss carryforwards (*a) ...................................................................................................................................................................................... 684 $ 10,972 $ 14,688 $ 26,344
- - - (684) (6,818) (14,688) (22,190)
- - - - 4,154 - 4,154
(*a) Gross deferred tax assets for tax loss carryforwards are calculated using the enacted statutory tax rates.
(*b) Deferred tax assets of \452 million ($4,154 thousand) are recognized for tax loss carryforwards of \2,866 million ($26,344 thousand) (calculated using the enacted statutory tax rates),
which the Company and its consolidated subsidiaries recognized for a part of tax loss carryforwards of \1,465 million ($13,464 thousand) for the year ended March 31, 2020.
These tax loss carryforwards resulted from loss before income taxes for the year ended March 31, 2016 and the year ended March 31, 2020, which are expected to be recoverable judging from
the estimated taxable income in the future. Accordingly, the Company does not recognize the valuation allowance for this for the year ended March 31, 2020.
Deferred tax assets of \103 million are recognized for tax loss carryforwards of \2,474 million (calculated using the enacted statutory tax rates),
which the Company recognized for a part of tax loss carryforwards of \1,022 million for the year ended March 31, 2019.
These tax loss carryforwards resulted from loss before income taxes of \9,540 million for the year ended March 31, 2016, which are expected to be recoverable judging from
the estimated taxable income in the future. Accordingly, the Company does not recognize the valuation allowance for this for the year ended March 31, 2019.
A reconciliation between the normal effective statutory tax rates and the actual effective tax rates reflected in the accompanying consolidated statements
of income for the years ended March 31, 2020, 2019 and 2018 are as follows:
2020 2019 2018
Statutory tax rate ............................................................................................................................................................................................................................

30.6% 30.6% 30.8%
Expenses not deductible for tax purpose ........................................................................................................................................................................ 0.3% 0.1% 0.2%
Per capita inhabitant tax ............................................................................................................................................................................................
0.5% 0.2% 0.3%
Directors' bonuses ....................................................................................................................................................................................................................................
0.6% 0.1% 0.4%
Tax deduction ....................................................................................................................................................................................................................................
(3.6)% (2.1)% -%
Tax rate difference in foreign subsidiaries ...................................................................................................................................................................................................................
(12.9)% (13.8)% (23.3)%
Retained earnings of foreign subsidiaries ................................................................................................................................................ 0.8% 0.6% (0.4)%
Foreign tax credit ..................................................................................................................................................................................................................................................
8.0% 2.4% 5.0%
Effect of amendments of consolidation ............................................................................................................................................... -% -% (0.2)%
Valuation allowance ............................................................................................................................................................................................................
(3.5)% (1.9)% (15.3)%
Expiration of tax loss carryforwards............................................................................................................................................................................................................
-% -% 7.8%
Other, net ................................................................................................................................................................................................................................
1.2% (2.0)% 5.0%
Actual effective tax rate ....................................................................................................................................................................................................
22.0% 14.2% 10.3%
26
17. Financial Instruments
(a) Qualitative information on financial instruments

(1) Policies for using financial instruments
The Group finances necessary funds mainly through bank loans according to the capital investment plan for the production and sales of PCB.
Temporary and excessive funds are operated by highly stable financial instruments and the Group finances short-term operating capital by bank loans.
Derivative transactions are only utilized to hedge the risks mentioned in (2) below.
(2) Details of financial instruments used and exposures to risk and how they arise
Operating receivables such as trade notes and accounts receivable are exposed to credit risk. Some operating receivables, which are denominated in foreign currencies
due to global operations, are exposed to foreign currency fluctuation risk. The Group might utilize foreign exchange forward contracts, if necessary, except for those
within the range of the operating payables dominated in the same foreign currency. Investment securities mainly consist of securities of companies in which
a business relationship has been established and they are exposed to market fluctuation risk.
Operating payables such as trade notes and accounts payable are due within one year.
Some of the operating payables relating to imports of raw materials are dominated in foreign currencies and exposed to foreign currency fluctuation risk.
The Group might utilize foreign exchange forward contracts, if necessary, except for those within the range of the operating receivables dominated in the same foreign currency.
Loans and lease obligations for finance lease transactions are mainly used for the purpose of financing capital investments.
Some of them are variable interest loans and exposed to interest and foreign currency fluctuation risk.
The Group utilizes interest rate swaps and currency swaps to hedge the risk. Regarding derivative transactions, the Group utilizes foreign exchange forward contracts to
hedge foreign currency fluctuation risk of receivables and payables dominated in foreign currencies. The Group utilizes interest rate swaps and currency swaps
to hedge interest fluctuation risk. The Group utilizes commodity forward contracts to hedge copper price fluctuation risk.
(3) Policies and processes for managing the risk

(i) Credit risk management (risk of default by the counterparties)
The sales management department in the Company follows sales management rules, monitors the customers’ credit conditions periodically and manages the due date
and balance per customer. The Company keeps track of the adverse financial conditions of its customers in the early stage to mitigate the uncollectible risk.
The Company enters into derivative transactions only with the credit-worthy financial institutions to mitigate the credit risk.
(ii) Market risk management (risk of foreign currency fluctuations and interests)
Regarding the trade receivables and trade payables dominated in foreign currencies, the Company utilizes foreign exchange forward contracts, if necessary, to hedge
the foreign currency fluctuation risk, which is controlled by each currency and on a monthly basis. For investment securities, the Company regularly reviews the fair value
and issuers' financial condition and readjusts its portfolio on an ongoing basis considering the business relationship with counterparties. Derivative transactions
are based on the internal rules and executed after getting the approval from the approver and managed by the finance department. Contents of the derivative transactions
are reported to Board of Directors' meeting periodically.
(iii) Liquidity risk management (risk of default at the due dates)

The Company prepares and updates the cash management plan based on the reports from each department to manage liquidity risk on a timely basis.
(4) Supplemental information on fair values

As well as the values based on market prices, fair values of financial instruments include values that are reasonably calculated in case market prices do not exist.
As the calculation of those values adopts certain assumptions, those values may vary in case different assumptions are applied.
Also, for the contract amount regarding derivative transactions described in Note 18, the contract amount itself does not indicate market risk related to derivative
transactions.
(b) Fair values of financial instruments

Book values of the financial instruments included in the consolidated balance sheets and their fair values as at March 31, 2020 and 2019 are as follows:
2020
Book Fair Difference Book Fair Difference
Value Value Value Value
Assets
\ 13,646 \ 13,646 \
Cash and cash equivalents ........................................................................................................... - $ 125,414 $ 125,414 $ -
Time deposits ..................................................................… 244 244 - 2,238 2,238 -
Trade notes and accounts receivable ...................................................................................................
24,448 24,448 - 224,687 224,687 -
Investment securities:
Available-for-sale securities....................................................................................................................
191 191 - 1,759 1,759 -
Liabilities
\
Trade notes and accounts payable ................................................. 17,732 \ 17,732 \ - $ 162,963 $ 162,963 $ -
Short-term borrowings......................................................................................................
9,686 9,686 - 89,021 89,021 -
Long-term borrowings............................................................................
56,023 56,035 12 514,872 514,982 110
Lease obligations ........................................................................…
1,496 1,503 8 13,741 13,812 71
Derivative financial instruments ........................................................................…
\ 44 \ 44 \ - $ 400 $ 400 $ -
2019
Millions of yen
Book Fair Difference
Value Value
Assets
\ 11,419 \ 11,419 \
Cash and cash equivalents ........................................................................................................... -
Time deposits ..................................................................… 238 238 -
25,834 25,834 -
Available-for-sale securities....................................................................................................................
361 361 -
Liabilities
\
Trade notes and accounts payable ................................................. 15,797 \ 15,797 \ -
Short-term borrowings......................................................................................................
7,638 7,638 -
Long-term borrowings..............................................................................................
49,151 49,203 52
Lease obligations.........................................................................................................................
1,810 1,823 13
Derivative financial instruments ........................................................................…
\ 264 \ 264 \ -
The financial instruments whose fair values are extremely difficult to determine are not included above.
Derivative financial instruments are stated in net of assets and liabilities. The figures in parenthesis indicate net liabilities.
27
(1) Valuation method of the fair value of financial instruments and information of investment securities and derivative transactions
(i) Cash and cash equivalents, (ii) Time deposits, (iii) Trade notes and accounts receivable
The carrying value is deemed as the fair value since it is scheduled to be settled in a short period of time.
(iv) Investment securities
Fair value of equity securities is based on the quoted price on stock exchange. Please refer to Note 3 regarding the information of the fair value for the investment
in securities by classification.
(v) Trade notes and accounts payable, (vi) Short-term borrowings
The carrying value is deemed as the fair value since it is scheduled to be settled in a short period of time.
(vii) Long-term borrowings, (viii) Lease obligations
The fair values are measured as the net present value of estimated future cash flows by discounting the principal and interest value using the loan interest rate applied
to the new loans or the lease contracts. If the variable interest rate loans meet certain criteria for the short-cut method for interest rate swaps (if interest rate swap
contracts are used as a hedge and meet certain hedging criteria, the interest rate swaps are not remeasured at market price and the amount to be received under the
interest rate swap contract is added to or deducted from the interest on the liabilities for which the swap contract was executed) and for the allocation method for
currency swaps, the sum of principal and the interest processed as interest rate swaps and currency swaps are discounted by using the reasonably estimated loan
interest rate applied to the same kind of loans.
(ix) Derivative transactions
Please refer to Note 18.
(2) Unlisted securities of \3,030 million ($27,844 thousand) as of March 31, 2020 and \1,164 million as of March 31, 2019 are not included in the above table
because the securities do not have fair market values and it is extremely difficult to estimate fair values.
(c) The redemption schedule for financial instruments as of March 31, 2020 and 2019 is as follows:
2020
Millions of yen
Due in one Due after one Due after five Due after ten
year year through year through years
or less five years ten years
\ 13,646 \ - \
Cash and cash equivalents ........................................................................................................... - \ -
Time deposits ......................................................................................................
244 - - -
24,448 - - -
Available-for-sale securities with maturities....................................................................................................................
- - - -
2020
Cash and cash equivalents ...........................................................................................................

$ 125,414 $ - $ - $ -
Time deposits ......................................................................................................
2,238 - - -
224,687 - - -
- - - -
2019
Millions of yen
\ 11,419 \ - \
Cash and cash equivalents ........................................................................................................... - \ -
Time deposits ......................................................................................................
238 - - -
25,834 - - -
- - - -
28
18. Derivatives
There are no derivative transactions for which hedge accounting has not been applied for the years ended March 31, 2020 and 2019.
Derivative transactions for which hedge accounting has been applied for the years ended March 31, 2020 and 2019 are as follows:
2020
Contract Contract
amount amount
Contract due after Contract due after
Hedged item amount one year Fair value amount one year Fair value
Interest rate related:
Benchmark Method
Interest rate swap
contracts
Payable fixed/ Long-term
Receive floating borrowings \ 996 \ 65 \ (4) $ 9,155 $ 600 $ (40)
Currency swap
contracts
Receive floating borrowings \ 4,507 \ 2,437 \ 40 $ 41,422 $ 22,398 $ 364
Special Method*
Interest rate swap
contracts
Receive floating borrowings \ 1,400 \ 1,000 \ (9) $ 12,866 $ 9,190 $ (86)
Currency related :
Allocation Method
Foreign currency
forward contracts
Currency swap
contracts
Payable in yen/
Receive in U.S. Long-term
dollars borrowings \ 4,507 \ 2,437 \ (168) $ 41,422 $ 22,398 $ (1,547)
Commodity related :
Benchmark Method
Copper swap Raw
contracts materials \ 617 \ - \ 8 $ 5,670 $ - $ 76
2019
Millions of yen
Contract
amount
Contract due after
Hedged item amount one year Fair value
Interest rate related:
Benchmark Method
Interest rate swap
contracts
Receive floating borrowings \ 3,922 \ 1,201 \ (2)
Currency swap
contracts
Receive floating borrowings \ 6,577 \ 4,507 \ 266
Special Method*
Interest rate swap
contracts
Receive floating borrowings \ 2,220 \ 1,400 \ (18)
Currency related :
Allocation Method
Foreign currency
forward contracts
Currency swap
contracts
Payable in yen/
Receive in U.S. Long-term
dollars borrowings \ 6,577 \ 4,507 \ (313)
There were no commodity-related transactions for which hedge accounting has been applied for the year ended March 31, 2019.
Fair value is principally based on quoted price obtained from financial institutions signing the contract.
* Special Method
The interest rate swaps, which qualify for hedge accounting and meet specific matching criteria, are not remeasured at market value but the differential
paid or received under the swap agreements is recognized and included in interest expense or income.
29
19. Comprehensive Income
Reclassifications and income tax effects attributable to other comprehensive income for the years ended March 31, 2020, 2019 and 2018 are as follows:
Thousands of
2020 2019 2018 2020
Unrealized gains (losses) on available-for-sale securities:
\ (57) \ (123) \
Gains (losses) arising during the year ........................................................................................................................................................................ 53 $ (527)
Reclassifications and adjustments ........................................................................................................................................................................
114 26 (145) 1,052
Before income tax effects .....................................................................................................................................................................…
57 (97) (92) 525
Income tax effects .....................................................................................................................................................................… - 10 28 -
\ 57 \
Total ...................................................................................................................................................................................... (87) \ (64) $ 525
Deferred gains (losses) on hedges:
\ (143) \ (100) \
Gains (losses) arising during the year ........................................................................................................................................................................ 441 $ (1,315)
(78) (67) (96) (713)
(221) (167) 345 (2,028)
Income tax effects .....................................................................................................................................................................… 68 51 (105) 620
\ (153) \
Total ...................................................................................................................................................................................... (116) \ 240 $ (1,408)
Foreign currency translation adjustments:
\ (2,945) \ (190) \
Adjustments arising during the year ........................................................................................................................................................................ 1,234 $ (27,063)
- - (165) -
\ (2,945) \
Total ...................................................................................................................................................................................... (190) \ 1,069 $ (27,063)
Remeasurements of defined benefit plans:
\ 28 \ 67 \
Adjustments arising during the year ........................................................................................................................................................................ (23) $ 265
45 64 64 410
73 131 41 675
Income tax effects .....................................................................................................................................................................… - - - -
\ 73 \
Total ...................................................................................................................................................................................... 131 \ 41 $ 675
\ (2,968) \ (262) \
Total other comprehensive income ...................................................................................................................................................................................... 1,286 $ (27,271)
20. Business Combination
Business combination through acquisition
(1) Overview of business acquisition

1) Name and business of acquired company
Name of acquired company ...............................................................................................................................................................................................…
Towada Electronics Vietnam Co., Ltd.
Business of acquired company ...............................................................................................................................................................................................…
Implementation, assembly and sales of electronic parts
2) Purpose of business combination
To increase orders by strengthening the Group's integrated supply system from board design to manufacturing and assembly, and mass production system
in Hanoi, Vietnam
3) Date of business combination
Share acquisition date ...............................................................................................................................................................................................…
November 25, 2019
Deemed acquisition date...............................................................................................................................................................................................…
October 1, 2019
4) Legal form of business combination ...............................................................................................................................................................................................…
Share acquisition
5) Corporate name after business combination ...............................................................................................................................................................................................…
Meiko Towada Vietnam Co., Ltd.
6) Percentage of acquired share...............................................................................................................................................................................................…
60%
7) Grounds for determining acquiring company ...............................................................................................................................................................................................…
The Company's cash acquisition of shares
(2) Period of business results for the acquired company included in the consolidated financial statements.....................................................................................................................................................…
October 1, 2019 to March 31, 2020
(3) Breakdown of acquisition cost and type of compensation of yen U.S. dollars
Cash………………………………………………………………………………………………………………………………………..
\ 750 $ 6,893
Total………………………………………………………………………………………………………………………………………..
\ 750 $ 6,893
(4) Description and amount of principal acquisition-related expenses of yen U.S. dollars
Advisory costs and others………………………………………………………………………………………………………………………………………..
\ 53 $ 485
(5) Amount of goodwill, reasons for occurrence, depreciation method Millions Thousands of
and depreciation period of yen U.S. dollars
1) Amount of goodwill ...............................................................................................................................................................................................…
\ 406 $ 3,730
2) Reasons for occurrence:
Future surplus earning capacity anticipated from business development going forward
3) Depreciation method and depreciation period ...............................................................................................................................................................................................…
Depreciated on a straight-line basis over 10 years
(6) Amount and principal breakdown of assets and liabilities assumed on date of business combination of yen U.S. dollars
Current assets……………………………………………………………………………………………………………………………………….. \ 2,265 $ 20,819
Non-current assets……………………………………………………………………………………………………………………………………….. 873 8,027
Total assets……………………………………………………………………………………………………………………………………….. \ 3,138 $ 28,846
Current liabilities……………………………………………………………………………………………………………………………………….. \ 2,467 $ 22,671
Non-current liabilities……………………………………………………………………………………………………………………………………….. 98 904
Total liabilities……………………………………………………………………………………………………………………………………….. \ 2,565 $ 23,575
30
21. Segment Information
Information about reported segment sales, segment profit, segment assets and other items under the new accounting standards is not disclosed as the Group's
reportable segment is mainly printed circuit boards (“PCB”), and the related business and other business are immaterial.
(Supplementary information)
(1) Information about products and services
Information about products and services is not disclosed since the sales amount of a single unit of product or service to external customers accounted for more than
90% of consolidated net sales.
(2) Information about geographical areas

(a) Net sales 2020
Millions of yen
Japan China Vietnam Asia North America Europe Total
\
Net sales .............................................................................................................................
35,174 \ 34,642 \ 12,747 \ 17,225 \ 13,169 \ 2,522 \ 115,479
2020
Net sales .............................................................................................................................
$ 323,256 $ 318,372 $ 117,153 $ 158,300 $ 121,032 $ 23,179 $ 1,061,292
2019
Millions of yen
\
Net sales ............................................................................................................................. 30,428 \ 40,593 \ 12,168 \ 19,092 \ 13,729 \ 2,901 \ 118,911
2018
Millions of yen
\
Net sales ............................................................................................................................. 26,643 \ 38,860 \ 12,533 \ 15,461 \ 12,091 \ 2,954 \ 108,542
Net sales by destination were recognized based on the location of customers and classified by country or region.
(b) Property, plant and equipment 2020

Millions of yen
Japan China Vietnam Other Total
\ \
Property, plant and equipment .............................................................................................................................
7,588 24,716 \ 30,689 \ 4 \ 62,997
2020
$ 69,739 $ 227,142 $ 282,041 $ 42 $ 578,964
2019
Millions of yen
\ \
7,886 27,710 \ 22,956 \ 2 \ 58,554
(3) Information about major customers

Information about major customers is not presented since no single customer accounts for 10% or more of consolidated net sales.
(4) Information about impairment loss

Information about impairment loss by reportable segment for the year ended March 31, 2020 is not disclosed as the Group's reportable segment is
solely printed circuit boards (“PCB”) and the related business and other business are immaterial.
mainly printed circuit boards (“PCB”) and the related business and other business are immaterial.
solely printed circuit boards (“PCB”) and the related business and other business are immaterial.
31
22. Related Party Transactions

Transactions with related parties
(1) Unconsolidated subsidiary
(2) Directors and major individual shareholders
Balance as at
Percentage for Details of Transaction March 31,
Name Location Capital Details of business possession of voting rights Relationship transaction ※3 amount ※1 2020
M.D. Systems Co., Ltd. Atsugi City, \15 million Board design Directly own (%) Business Purchase of \219 million \24 million
※2
Kanagawa 14.7 relationship products ($2,016 thousand) ($218
thousand)
in accounts
payable
Sales of products \13 million \3 million

($124 thousand) ($23 thousand)
in accounts
receivable
Notes: ※1 Consumption taxes are not included in the transaction amount, and included in the balance as at March 31, 2020.
※2 Seiichi Naya, a close relative of Yuichiro Naya, representative director and executive officer of the Company, directly owns 81.3% of voting rights in M. D. Systems Co., Ltd.
※3 The terms and conditions of the transactions for sales and purchase of products are determined through negotiations considering the market price, total costs and others.
Transactions between consolidated subsidiaries and related parties

Directors and major individual shareholders
Balance as at
※2
Kanagawa 14.7 relationship products ($98 thousand) ($11 thousand)
in accounts
payable

($33 thousand) ($1 thousand)
in accounts
receivable
Dapara Tech Co., Ltd. ※ Seoul City, ₩50 million Sales of Directly own (%) Business Sales commission \340 million \20 million
3
South Korea board and its - relationship/ ($3,124 thousand) ($187
related Concurrent positions thousand)
facilities of director in other
payable
($1,202 thousand) ($162
thousand)
in accounts
receivable
※3 Yoon Ho Shin, director of the Company, directly owns 60.0% of voting rights in Dapara Tech Co., Ltd.
The terms and conditions of the sales commission are determined through negotiations considering those with other companies.
32
Transactions with related parties
(1) Unconsolidated subsidiary
(2) Directors and major individual shareholders
Balance as at
※2
Kanagawa 14.7 relationship products in accounts
payable

in accounts
receivable
Transactions between consolidated subsidiaries and related parties

Directors and major individual shareholders
Balance as at
※2
Kanagawa 14.7 relationship products in accounts
payable

in accounts
receivable
Dapara Tech Co., Ltd. ※ Seoul City, ₩50 million Sales of Directly own (%) Business Sales commission \398 million \29 million
3
South Korea board and its - relationship/ in other
related Concurrent positions payable
facilities of director

in accounts
receivable
※3 Yoon Ho Shin, director of the Company, directly owns 60.0% of voting rights in Dapara Tech Co., Ltd.
The terms and conditions of the sales commission are determined through negotiations considering those with other companies.
33
34
35
36
Principal Subsidiaries and Affiliates
Paid-in Capital Principal Investment

Name or Trade Name Address (Millions of yen) Business Ratio (%)
Meiko Tech Co., Ltd. Ayase City, 45 PCBs for 100.0

Kanagawa Prefecture electronics
Yamagata Meiko Kahoku-cho, 75 PCBs for 100.0

Electronics Co., Ltd. Nishimurayama-gun, electronics
Yamagata Prefecture
Meiko Techno Co., Yokohama City, 50 PCBs for 100.0
Ltd. Kanagawa Prefecture electronics
Meiko Elec. Hong Hong Kong US$391,179 PCBs for 100.0

Kong. Co., Ltd. thousand electronics
Meiko Electronics Guangzhou, US$120,800 PCBs for 100.0

(Guangzhou Nansha) Guangdong Province, thousand electronics (66.3)
Co., Ltd. P.R.C.
Meiko Electronics Wuhan, US$173,800 PCBs for 100.0
(Wuhan) Co., Ltd. Hubei Province, thousand electronics (40.7)
P.R.C.
Meiko Electronics CA, U.S.A. US$1,500 PCBs for 100.0
America, Inc. thousand electronics
Meiko Electronics Hanoi, Vietnam US$90,000 PCBs for 100.0

Vietnam Co., Ltd. thousand electronics (100.0)
Meiko Electronics Hanoi, Vietnam US$15,000 PCBs for 100.0

Thang Long Co., Ltd. thousand electronics
Meiko Towada Hai Duong Province, US$21,000 PCBs for 60.0

Vietnam Co., Ltd. Vietnam thousand electronics
37
Principal Shareholders
Percentage of
Number of Total Number of
Name of Shareholder Shares Held Shares Issued
(Thousands of shares) (excluding treasury
stock) (%)
Yuichiro Naya 4,703 17.97
Japan Trustee Services Bank, Ltd. 2,650 10.12
(trust account)
The Master Trust Bank of Japan, Ltd. 1,114 4.26

(trust account)
BNP PARIBAS SECURITIES SERVICES 1,080 4.13
LUXEMBOURG/JASDEC/FIM/LUXEMBOURG
FUNDS/UCITS ASSETS
(Standing Agent: Custody Department, Tokyo
Branch, The Hongkong and Shanghai Banking
Corporation Limited)
JP MORGAN CHASE BANK 385632 684 2.62
(Standing Agent: Mizuho Bank, Ltd. Settlement &
Clearing Services Department)
Meiko Kosan Co., Ltd. 608 2.32
Trust & Custody Services Bank, Ltd. 551 2.11
(securities investment trust account)
Yuho, Ltd. 521 1.99
STATE STREET BANK AND TRUST COMPANY 484 1.85
505019
(Standing Agent: Custody Department, Tokyo
Branch, The Hongkong and Shanghai Banking
Corporation Limited)
Seiichi Naya 435 1.66
Total 12,832 49.03
38
Corporate History
November 1975 Established Meiko Denshi Kogyo Co., Ltd. to manufacture and sell PCBs.
Started selling double-sided PCBs.
April 1978 Established the System Development Department (currently Meiko Techno
Co., Ltd./ Meiko Tech Co., Ltd.) to develop electronics application products.
October 1978 Developed in-house use PCB Testers for the PCB final inspection process.
September 1980 Constructed a new headquarters and factory, establishing an integrated
production system for the entire process from design to finished product.
December 1980 Introduced a multi-layer press machine and started manufacturing multi-
layer PCBs.
December 1981 Developed the world’s first multi-video processor.
March 1982 Established Multitech Co., Ltd. (currently Meiko Tech Co., Ltd.) to
manufacture single-sided PCBs (currently a consolidated subsidiary of the
Company).
September 1982 Established Yamagata Meiko Electronics Co., Ltd. (currently a consolidated
subsidiary of the Company) to manufacture PCBs.
August 1984 Completed construction to expand the headquarters/factory in Ayase,
Kanagawa Prefecture, and started operations.
June 1990 Constructed the Fukushima Factory.
April 1991 Changed company name to Meiko Electronics Co., Ltd.
November 1997 Constructed a new manufacturing building on the premises of the Yamagata
Factory (Yamagata Meiko Electronics Co., Ltd.) to manufacture PCBs using
the new PCB Build-Up technology.
August 1998 Established Meiko Elec. Hong Kong. Co., Ltd. in Hong Kong, China
(currently a consolidated subsidiary of the Company), mainly to expand
transactions with overseas manufacturers and purchase materials locally.
December 1998 Established Meiko Electronics (Panyu Nansha) Co., Ltd. in Guangzhou,
Guangdong, China [currently Meiko Electronics (Guangzhou Nansha) Co.,
Ltd., a consolidated subsidiary of the Company], to manufacture PCBs.
June 1999 Changed the name of the PCB manufacturing department of headquarters
to Kanagawa Factory.
December 2000 Stock listed on the Japan Securities Dealers Association.
January 2001 Started operations at the Guangzhou Plant [Meiko Electronics (Guangzhou
Nansha) Co., Ltd.].
December 2004 Stock listed on JASDAQ Securities Exchange, Inc.
July 2005 Established Meiko Electronics (Wuhan) Co., Ltd. in Wuhan, Hubei, China
(currently a consolidated subsidiary of the Company) to manufacture PCBs.
November 2005 Constructed a new factory building at Miyagi Factory (currently the
Ishinomaki Factory).
39
April 2006 Established Meiko Electronics America, Inc. in the United States (currently a
consolidated subsidiary of the Company) to sell PCBs.
July 2006 Started operations at the WUHAN Plant [Meiko Electronics (Wuhan) Co.,
Ltd.].
January 2007 Established Meiko Electronics Vietnam Co., Ltd. (currently a consolidated
subsidiary of the Company) in Hanoi, Vietnam, to manufacture PCBs.
November 2007 Constructed a new headquarters building on the premises of the Kanagawa
Factory.
March 2008 Purchased the Circuit Business from Victor Company of Japan, Limited.
April 2009 Started operation of the EMS Plant in Vietnam.
May 2009 Established the Meiko R&D Center.
July 2009 Started operation of second plant in WUHAN.
April 2010 Upon the merger of JASDAQ Securities Exchange, Inc. and Osaka Securities
Exchange Co., Ltd., the Company’s stock is listed on the Osaka Securities
Exchange, JASDAQ market.
October 2010 Subsequent to the integration of the Hercules, JASDAQ and NEO markets of
the Osaka Securities Exchange, Meiko Electronics Co., Ltd. had its stock
listed on the JASDAQ Standard market of the exchange.
July 2011 Transferred the imaging equipment and industrial equipment businesses
to Multitech Co., Ltd., and changed the trade name to Meiko Tech Co., Ltd.
November 2011 Started operation of the PCB Plant in Vietnam.
May 2013 Started operation of the Ishinomaki Factory.
July 2013 Subsequent to the integration of cash equity markets of the Osaka Securities
Exchange Co., Ltd. and Tokyo Stock Exchange Group, Inc., Meiko
Electronics Co., Ltd. had its stock listed on the JASDAQ standard market of
the Tokyo Stock Exchange.
August 2014 Established Meiko Electronics Thang Long Co., Ltd. (currently a consolidated
subsidiary of the Company) in Hanoi, Vietnam, to manufacture and sell
PCBs.
June 2015 Established Meiko Solar Park Fukushima, a solar power generation plant on
the premises of the Fukushima Factory.
August 2015 Established Meiko Techno Co., Ltd. (currently a consolidated subsidiary of
the Company) in Yamato, Kanagawa Prefecture, to mount PCBs and
manufacture and sell imaging equipment and industrial equipment.
November 2019 Acquired equity interests in EMS (Electronic Manufacturing Services) in
Vietnam and turned it into a subsidiary (currently consolidated subsidiary),
Meiko Towada Vietnam Co., Ltd.
40
Corporate Data (As of March 31, 2020)
Corporate Name:
Meiko Electronics Co., Ltd.
Date of Establishment:
November 25, 1975
Paid-in Capital:
¥12,888 million
Fiscal Year:
April 1 to March 31
Number of Shares Authorized:

70,000,000
Number of Shares Issued:

26,803,320
Number of Shareholders:
4,504
Securities Code:
6787
Stock Exchange Listing:

Tokyo Stock Exchange, JASDAQ standard market
Number of Employees:
12,232 (Consolidated)
Number of Subsidiaries:
22
Transfer Agent:
Sumitomo Mitsui Trust Bank, Limited
Accounting Auditor:
KPMG AZSA LLC
Headquarters:
5-14-15, Ogami, Ayase, Kanagawa Prefecture, Japan 252-1104
Investor Relations Contact:

- Tel: +81-(0)467-76-6001
- E-mail: [email protected]
- URL: https://www.meiko-elec.com/
41
Meiko Share Performance in FY2020 Compared with Indices
160.0
Meiko Electronics (JASDAQ: 6787)
140.0 JASDAQ INDEX
120.0
100.0
80.0
60.0
40.0
Fiscal year ended March 31, 2020
Index
In %
42
43

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Annual Report 2020

Meiko Electronics Co., Ltd.

Five-year Financial Summary.............................................................................................. 3

(For the years ended/as of March 31)

2016 2017 2018 2019 2020

(millions of yen, except per share amounts)

Consolidated financial indicators:

Net sales ¥95,287 ¥95,912 ¥108,542 ¥118,911 ¥115,479

Ordinary income (loss) (492) 2,981 4,795 8,611 4,790

Comprehensive income (14,709) (32) 5,633 6,482 (419)

Net assets 28,764 28,540 33,042 33,588 32,482

Total assets 109,605 103,578 110,316 120,656 129,238

Return on equity (ROE) -33.5% 6.2% 14.3% 20.2% 7.9%

Profit (loss) attributable to owners of Cash flows

Net assets Return on equity (ROE)

Total assets Price earnings ratio (PER)

¥150,000 25.0 times

¥90,000 15.0 times

¥60,000 10.0 times

¥30,000 5.0 times

Net assets per share

(1) Significant accounting policies and estimates

(2) Analysis of the Group’s financial position

5) Profit attributable to owners of parent

Trends in cash flow indicators of the Group are as follows:

Year ended Year ended Year ended

Equity ratio (%) 30.0 27.8 25.0

Market value equity ratio (%) 43.2 37.6 27.1

Interest coverage ratio (times) 8.8 14.0 16.3

(1) Risks related to the business environment

2) Raw materials market fluctuation risk

3) Risk related to technological development and price competition

5) Risk related to equipment failures and accidents

6) Risk related to product defects

(2) Risk related to natural disasters, etc.

2) Risk related to infectious diseases

(3) Risk related to compliance

(4) Risk related to finance, etc.

3) Risk related to foreign currency rate fluctuation

4) Risk related to M&A, joint venture, and alliance

(5) Other risk

2) Risk related to information security

3) Risk related to intellectual property rights

Consolidated Balance Sheets

Property, Plant and Equipment, at Cost:

Intangible Assets 828 269 7,606

Investments and Other Assets:

See notes to consolidated financial statements.

Commitments and Contingent Liabilities (Note 12) :

Net Assets (Note 9):

See notes to consolidated financial statements.

Other Income (Expenses):

Income before Income Taxes .......................................................................................... 3,266 7,863 4,844 30,014

Income Taxes (Note 16):

Yen U.S. dollars (Note 1)

See notes to consolidated financial statements.

Other Comprehensive Income (Note 19):

Comprehensive Income Attributable to: