PEOPLE AND TECHNOLOGY
LEADING THE WAY TO THE FUTURE
Annual Report 2014
Year ended March 31, 2014
Features
Features of the Meitec Group
1. The largest in the regular full-time employment
engineer staffing industry
〈Largest number of transactions in the industry & the best quality
in the industry; a pioneer〉
2. The largest“group of professional engineers”in Japan
〈A platform that produces Lifetime Professional Engineers®〉
3. Clients include approx. 1,000 major manufacturing
companies in Japan
〈More than 4,000 companies in total over the 40 years since the
company was established〉
C o n t e n t s
1
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2
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3
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4
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10
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14
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15
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18
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20
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21
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22
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23
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24
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40
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42
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44
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Management Concept and Policy
To Our Shareholders
Consolidated Financial Highlights
A Message from the President
Corporate Governance
Detailed information on financial results
Please refer to the Annual Securities Report
for detailed financial results for fiscal 2013
ended March 31, 2014.
Five-Year Summary
Management's Discussion and Analysis
Consolidated Balance Sheets
Disclaimer regarding earnings forecasts and forwardlooking statements
Consolidated Statements of Income
Earnings forecasts, estimates, business plans, business
Consolidated Statements of Comprehensive Income
strategies and other information released by the Meitec
Consolidated Statements of Changes in Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Supplemental Non-Consolidated Balance Sheets (Unaudited)
Supplemental Non-Consolidated Statements of Income (Unaudited)
Corporate Data
Group are all for ward -looking statements, excluding
historical facts. These forward-looking statements are
based on the management's judgments and assumptions
made using the information available as of the day of the
public release of the forward-looking statements.
Actual results and performance may therefore differ
significantly from these forward-looking statements.
Management Concept and Policy
Meitec Group Management Concept
Mutual Growth
&
Prosperity
Core Concept
Using engineering outsourcing (EO) services and
management resources (people and information) to
continue developing in step with industry and society
Meitec Group Management Policy
“Ideal State”of the Meitec Group
We, the Meitec Group, with cooperation of all the employees, shall improve the
five values continuously from the "Value to Engineers" as a starting point.
❶ Value to Engineers
We continue to provide optimum “opportunities and
placement”for all engineers who aim for affluent“Career
Style of Engineer”.
Value to the
Society
Value to
Clients
Value to
Engineers
❷ Value to Employees
We continue to provide optimum “oppor tunities and
placement”for employees who sympathize with the intension
of“independence and mutual supports”and continue to
grow as professional.
Value to
Employees
❸ Value to Clients
We continue to provide optimal services of“People and
Technology”, aiming to becoming a“reliable Best-Partner”
for all clients.
❹ Value to Shareholders
Value to
Shareholders
We maximize mid and long-term shareholders returns by
creating“sound profits”based on continuous improvement
of the Values.
❺ Value to the Society
We will be a pioneer in creating a“Professional Labor
Market”in Japan, through establishing a career style of
“lifetime professional engineers”.
Meitec Corporation Annual Report 2014
1
To Our Shareholders
Challenge to sustainable growth to the future as a Pioneer in
the Temporary Engineer Staffing Industry
Since its establishment in 1974, Meitec Corporation (the Company) have been
providing services of“People and Technology”to over 4,000 clients in Japanese
manufacturing industries as a pioneer in the temporary engineer staffing industry.
Also the Meitec Group had built the largest "group of professional engineers”in
Japan with approximately 7,500 engineers (6,000 for the Company) who provide
design and development technical services.
I believe that, now after 40 years in the business, a
fact that we were able to turning out the professional
engineers (Life Time Professional Engineer) who can
continue to work in front line until their retirement age, is
significantly valuable to the society.
Hereafter, by repeating efforts of further challenges
and creations and realize sustainable growth under the
corporate slogan of“Develop a new era by People and
Technology”, Meitec Group will continue to expand
selections for“opportunities and placement”to realize
affluent“Career Style of Engineer. Also we will continue
our effort to continue to be the“best partner”and provide
“expanded selections of services” for the Japanese
manufactures.
We will aim to be corporate groups which continue our
sustainable growth toward future as a leading company in
creation of Value.
Hideyo Kokubun
President and CEO, COO, MEITEC CORPORATION CEO,
MEITEC Group CEO
2
Meitec Corporation Annual Report 2014
Consolidated Financial Highlights
MEITEC CORPORATION and Subsidiaries
For the Years Ended March 31
Thousands of
U.S. dollars (Note 1)
Millions of yen
For the year
2014
2013
2012
2014
¥74,906
¥70,331
¥66,955
$727,243
Operating income
6,979
6,354
5,450
67,759
Net income
3,974
5,993
2,827
38,581
Total assets
61,446
58,002
57,559
596,561
Total equity
36,189
38,423
37,209
351,345
Net sales
At year-end
Per share of common stock
Total equity
Yen
¥1,182.84
¥1,229.63
¥1,135.10
72.00
99.00
58.50
0.70
128.30
186.08
85.45
1.25
Cash dividends
Basic net income (Note 2)
U.S. Dollars (Note 1)
Ratio
%
Return on average equity
10.7
15.9
7.6
Equity ratio
58.9
66.1
64.5
Dividend payout ratio
56.1
53.2
68.5
Notes: 1. U.S. dollar amounts are translated from Japanese yen, for convenience only, at the rate of ¥103 to US$1, the approximate rate of exchange at March 31, 2014.
2. Basic net income per share is computed based on the weighted average number of shares outstanding during each term.
NET
NET
SALES
NET
SALES
SALES
（Millions
（Millions
（Millions
of Yen）
of Yen）
of Yen）
100,000
100,000
100,000
NET
NET
INCOME
NET
INCOME
INCOME
(LOSS)
(LOSS)
(LOSS)
（Millions
of Yen）
（Millions
（Millions
of Yen）
of Yen）
（Yen）
（Yen）
（Yen）
7,000
7,000
7,000
250250250
5,993
5,993
5,993
6,000
6,000
6,000
80,000
80,000
80,000
74,906
74,906
74,906
70,331
70,331
70,331
66,955
66,955
66,955
61,791
61,791
61,791
60,000
60,000
60,000
53,776
53,776
53,776
40,000
40,000
40,000
NET
NET
INCOME
NET
INCOME
INCOME
(LOSS)
(LOSS)
(LOSS)
PER
PER
SHARE
PER
SHARE
SHARE
200200200
186.08
186.08
186.08
5,000
5,000
5,000
4,000
4,000
4,000
3,000
3,000
3,000
2,000
2,000
2,000
3,690
3,690
3,690
2,827
2,827
2,827
3,974
3,974
3,974
150150150
111.33
111.33
111.33
100100100
128.30
128.30
128.30
85.45
85.45
85.45
50 50 50
1,000
1,000
1,000
20,000
20,000
20,000
0 0 0
0 0 0
­27.30
­27.30
­27.30
­50­50­50
­1,000
­1,000
­1,000
­905
­905
­905
0 0 0
2010
2010
2010
2011
2011
2011
2012
2012
2012
2013
2013
2013
2014
2014
(FY)
2014
(FY)
(FY)
2010
2010
2010
2011
2011
2011
2012
2012
2012
2013
2013
2013
2014
2014
(FY)
2014
(FY)
(FY)
2010
2010
2010
2011
2011
2011
2012
2012
2012
2013
2013
2013
2014
2014
(FY)
2014
(FY)
(FY)
Meitec Corporation Annual Report 2014
3
A Message from the President
Summary of the main components of Net Sales and Cost of Sales in the
Professional Staffing Business for Indefinite and Regular Employed Engineers.
Increase the number of engineers and sustain and improve the high "utilization ratio
and prices“ is the key to a growth.
When the utilization ratio
Un-controllable
Controllable by Company Effort
and rate are at high levels,
Engineer
as they are now, an increase
Sales
Recruitment
Client Instructions
Performance
in the number of engineers
UP
UP
UP
becomes our growth driver.
Working
Rate
To achieve an increase in
Number of
Utilization
Working
Days
Price/hour
the number of engineers, it is
Engineers
Ratio
Hours
[Market Value]
240
（person）
（%）
（yen/hr.）
（hr./day）
crucial to increase recruitment
（day/year）
while simultaneously reducing
Down
UP
UP
the number of retirees.
Education &
Matching
Turnover
Counseling
We note that the number
Net Sales
of working hours is a key
factor that impacts earnings.
Cost of Sales
But we are unable to control
this factor given that it is dependent on clients’requirements.
A new“Business Policy of the Meitec Group”
We have set a business policy that clearly states the values provided by the Group to
service users, through a review of our management concept and corporate slogan as
well as our“ideal state.”
This business policy clearly
states the value provided
by the Meitec Group to
engineers and clients, both
service users reconfirming
our management concept
and corporate slogan as well
as revising“ideal state.”
Engineer
Staffing
Market
Clients
Market of
Design and
Development Work
4
Meitec Corporation Annual Report 2014
Engineer
Recruiting
Market
Human Resources
Business Market
Become
BestPartner
人 と 技 術 で 次 代 を 拓 く
Create affluent
“Career Style
メイテックグ ル ープ
Competitive
Market
of Engineer”
Engineers
togetherEngineers
Labor Market
Summary of the Group's Mid-term Management Plan Launched in Fiscal
2014.
We will focus on the two businesses, Professional Staffing Business for Engineers (our
core business) and the Recruiting & Placement Business for Engineers.
We zoned the engineer staffing market to three zones: i) high-end; ii) volume; and iii)
new markets.
Provide wider selections of
optimum“services”and
“opportunities and placement”
at each zone.
Professional Staffing Business for Engineers
Indefinite Employment Staffing
Defined Employment Staffing
(Specified Worker Dispatching)
OUT Strategy
Follow Strategy
（register-style temporary staffing business）
IN Strategy
Strengthen
engineer
placement
Ⅰ.High-end Zone
Ⅱ.Volume Zone
3,500 yen/hr. average
A market zone which is
crowded by major
competitors
Ⅲ.New Market Zone
2,000 −3,000 yen /hr. average
Pursuing stable growth
at the top of the high-end zone
extensive growth toward
the top of the volume zone
Platform Strategy
5,000 yen/hr. average
A market zone which
Meitec had created
in over 40 years
Recruiting &
Placement
Business
for Engineers
Studying feasibility
A market zone which we have
not really touched yet.
Increase
global
options
Increase
options for
senior
engineers
Engineering Solutions Business
There are two key points. Focus on our core professional staffing business for engineers and on
the recruiting & placement business for engineers. The engineer staffing market is divided into
high-end, volume and new market zones. The left side of the slide illustrates these three zones
as they apply to the professional staffing business for engineers. The market we created over the
past 40 years is a high-end zone, and the market in which our major rivals are competing is the
volume zone, and the market which we have not really touched yet is in the new market zone.
Meitec takes pride in being the No. 1 company in the high-end zone and plans to continue to
achieve stable growth there. Although Meitec Fielders, a player in the volume zone, is not the
No. 1 company, we believe that it has ample potential to become No. 1. We plan to carry out
expansion and growth with the aim of becoming No. 1 in the future in the volume zone.
Meitec Corporation Annual Report 2014
5
Hone our“No. 1 position for overall satisfaction with career change support tailored to
engineers”in the recruiting & placement business focusing on engineers, and achieve
further expansion.
In the new Mid-term Management Plan, global business is considered in the recruiting
& placement business.
No.1 for three consecutive
years in overall satisfaction
with career change support
tailored to engineers
Supported by dedicated
consultants familiar
with technology
Strategy
for clients
Strategy
for engineers
2016 Targets
Strengthen engineer placement
(increase job offers
and job seekers)
Net sales
1.6 billion
yen
Increase global options
(personnel placement
and proposal on ways to work)
Number of
personnel
to be placed
1,300
Engineers
One of the largest
number of job offers
in the industry
(always more
than 6,000 offers)
Clients
Specializing in career
changes for engineers
in manufacturing
2016 Targets
Increase options for senior engineers
(personnel placement
and proposal on ways to work)
※Note: The above fiscal 2016 target includes targets of the placement business in Meitec Cast.
In the recruiting & placement business for engineers, we plan to hone our“No. 1 position for
overall satisfaction with career change support tailored to engineers.”
In the new mid-term management plan, we plan to examine the potential for global expansion in
the recruiting & placement business for engineers.
The recruiting & placement business for engineers is primarily handled by Meitec NEXT. In
the fiscal year ended March 31, 2014, the operating margin exceeded 30% and around 660
engineers were placed in jobs.
Regarding the placement of 660 engineers by Meitec NEXT, their performance had doubled
during the three years of previous mid-term management plan.
Taking this into account, our goal for fiscal 2016, the final year of the new plan, is to increase
the 660 engineers placed by Meitec NEXT alone by about 1.5 times or 1,000 placements. At
Meitec Cast, and the recruiting & placement business for engineers in Shanghai, China, we aim
to place 300 engineers at our two businesses. Overall, in the recruiting & placement business for
engineers, it is our goal to placing 1,300 engineers.
6
Meitec Corporation Annual Report 2014
Set one of the highest net sales targets in the past → the engineers staffing business
(our core business) is a key driver of sales.
The operating income target is set at a level higher than the current level (maintain
cost ratio, control increases in SG&A).
2016 Targets
Net Sales
（Results of FY 2013）
Operating Income
（Results of FY 2013）
Operating Income
Margin
（Results of FY 2013）
Net Income
（Results of FY 2013）
ROE
（Results of FY 2013）
Group
Consolidated
Meitec
Meitec Fielders
（Billion yen）
（Billion yen）
（Billion yen）
（74.9）
（58.8）
（10.5）
88.0
10.0
（6.9）
equal or more than
12％
（9.3％）
68.0
8.5
13.5
1.3
（5.7）
equal or more than
（0.8）
Approx
13％
9.5％
（9.8％）
（8.1％）
6.0
（3.9）
equal or more than
15％
（10.7％）
Recent cost rate of Meitec was 74% where minimum cost rate
in past was 70%. → Reason is increase of social insurance
premium and decrease of utilization ratio. →We will try to improve
the operating income margin by restraining increase of cost rate
by improvement of utilization ratio and properly controlling
the SG&A at same time.
These are our earnings targets for the final year of the plan, based on the strategies we have
discussed thus far. We set our target for consolidated net sales at ¥88.0 billion, which is an alltime high for us.
In the new mid-term management plan, the core professional staffing business for engineers
is the major driver for growth, which differs from our previous strategy of expanding business
domains.
In fiscal 2016, the final year of the plan, we expect to achieve consolidated operating income of
¥10.0 billion, and an operating margin of 12% or higher.
To achieve this operating margin, we will have to firmly keep our cost of sales at current levels
and curb an increase in our SG&A expenses.
We note that our cost of sales ratio recently rose to 74%, versus our historical low of around
70%. This reflects the impact of an increase in social insurance costs.
We do not anticipate a decrease in social insurance costs, therefore we aim to move forward
quickly with the prompt placement of engineers, and also measures to improve our utilization ratio,
and to curb an increase in our cost of sales ratio to keep it level.
Meitec Corporation Annual Report 2014
7
Target record-high net sales of 88 billion yen and a 10 billion yen-level in operating
income for the third year of the plan.
In fiscal 2016,
t he f inal ye a r
of the plan, we
target historical
high net sales
of ¥88.0 billion
and operating
income of
¥10.0 billion. If
achieved, we
will be posting
historical highs.
Comparison
of the target
to our past
per fo r mances
are as above.
Net Sales
(Group Consolidated)
(100 millions
of yen)
800
880
798
749
669
Operating Income
(Group Consolidated)
(100 millions
of yen)
100
790
11.6%
Operating Income Margin
92
8.1%
9.0% 9.3%
12.0%
100
9.7%
703
617
77
4.2%
69
537
63
50
Previous Mid-term
Manage Plan
54
New Mid-term
Management Plan
26
Previous Mid-term
Manage Plan
New Mid-term
Management Plan
▲9.2%
0
’
08
’
09
’
10
’
11
’
12
’
13
’
14
’
15
’
16
0
’
08
’
09
’
10
’
11
’
12
’
13
’
14
’
15
’
16
Pursuing stable growth at the top of the high-end zone, Extensive growth toward the
top of the volume zone.
We divided
high-end zone
volume zone
the professional
15% growth in 3 years
29% growth in 3 years
s t a f f i n g
(5% per year)
(9% per year)
business for
680
135
engineers
600
615
604
588
114
558
into zones.In
100 105
531
105
482
93
the high - end
85
413
81
70
zone we aim
for three -year
Previous Plan
New Plan
Previous Plan
New Plan
growth of 15%,
0
0
’
08
’
09
’
10
’
11
’
12
’
13
’
14
’
15
’
16
’
08
’
09
’
10
’
11
’
12
’
13
’
14
’
15
’
16
or an annualized
(Mar. 31st)
(Mar. 31st)
1,900
6,800
1,800
growth rate of
5%.
6,000
Our fiscal
5,946 5,984
1,400
1,457
5,932
1,414
1,360
2016 net sales
5,695
1,290
5,571
1,167
5,447
target for
1,201
Previous Plan
New Plan
Previous Plan
New Plan
1,000
5,000
Meitec is ¥68.0
’
08
’
09
’
10
’
11
’
12
’
13
’
14
’
15
’
16
’
08
’
09
’
10
’
11
’
12
’
13
’
14
’
15
’
16
billion.
Our target for
the number of engineers at the end of the term is 6,800.
Also, in the volume zone, where we are aiming for expansion, we target three-year growth of 29%,
or an annualized growth rate of 9%.
In fiscal 2016, our net sales target for Meitec Fielders is ¥13.5 billion.
Our target for the number of engineers at the end of the term is 1,900.
Number of Engineers
Net Sales
(100 millions of yen)
8
Meitec Corporation Annual Report 2014
(100 millions of yen)
Basic Policy Regarding Profit Distribution
Through the realization of sustained growth, we will aim at the maximization of
shareholder return on a medium to long-term basis.
The Company's basic concept concerning profit return is achievement return based on
performance.
Revised May 2011
Total Return Ratio
Basic Policy
Regarding
Profit distribution
Basically within 100%
Dividend related to
performances
Equal or more than 50% of consolidated net profit
Minimum Dividend
Equal or more than Dividend on Equity ratio
(DOE) 5％
Acquisition of
treasury stock
Consolidated cash position excess of 3 months net sales
to be planned for acquisition of the treasury stock
Dividend
Treasury
Stock
Acquisition
Retain
Maximum of 2 million shares
Retired
Excess above maxim to be retired
・Three Month Net Sales = Working capital*: Consolidated two month net sales + Fund for strengthening the financial base (a fund to
sustain the business operation in the event of a crisis equivalent to that of fiscal year ended March 2010): consolidated one month
net sales
・ To realize the flexible financial position, for the implementation of future growth strategies and response to the risk associated in
achieving the goals of the management plan, treasury shares will be held by the company.
The company's objective is to maximize the shareholders return in mid to long term through
realizing the sustainable growth of the company. The basic policy of the Company is to distribute
profit in accordance with operating results. In view of maximizing shareholder's return in mid to long
term, unless major investment demands are expected, total return ratio to be within 100% for the
total shareholders return by dividend and acquisition of treasury shares.
Payout ratio for the dividend to be equal or more than 50%, and interim dividend and year-end dividend
are to be paid. Minimum level of payout ratio is to be consolidated Dividend on Equity ratio (DOE) 5%.
The amount of working capital required to continue our business has been set at the equivalent
of three (3) months of consolidated net sales in our group cash management plan. Therefore
acquisition of treasury shares will be executed with consideration of our total return ratio if the
consolidated cash position at the end of previous fiscal year exceeds the three (3) month net sales
and there are no major investment demands expected.
Treasury shares will be continued to be held by the company up to two million (2,000,000) shares.
Treasury share in excess of two million (2,000,000) shares will be retired by the end of the fiscal year.
Note:
Total Return Ratio = Total shareholders return for the year / Consolidated net profit
Total Shareholders Return for Year = Total dividend paid (interim and year end) + Amount used to acquire the
treasury shares during the fiscal year
Payout Ratio = Total dividend paid (interim and year end) / Consolidated net profit
Dividend on Equity Ratio (DOE) = Dividend / consolidated shareholder’s equity
Three Month Net Sales = Working capital*: Consolidated two month net sales + Fund for strengthening the financial base (a fund to sustain the
business operation in the event of a crisis equivalent to that of fiscal year ended March 2010): consolidated one month net sales
* Working capital is determined according to such factors as account receivables.
To realize the flexible financial position, for the implementation of future growth strategies and response to the risk associated in achieving the
goals of the management plan, treasury shares will be held by the company.
Meitec Corporation Annual Report 2014
9
Corporate Governance
Basic Policy on Company Management
The MEI T EC Group has adopted as its management concept, “Mutual grow th and　prosperity.”The underlying concept for this principle is to“develop together with　industry by
making business resources (people and information) publicly available　through the engineering
outsourcing business of the MEITEC Group.”
The MEITEC Group set its“Ideal State”based on the management policy as above. Our
importance is in conducting clear and healthy management without violating social ethics.
Our basic policy toward the corporate governance is to check to see if our decision making by
the management is carried out according to above, and reinforce management system to make
correction if necessary.
The Meitec Goup has established effective corporate governance, based on an Audit &
Supervisory Board system, to enhance corporate value by adopting an executive officer system
for prompt and appropriate decision making and strengthening supervisory and audit functions
through the election of independent outside directors and audit & supervisory board members.
Description of Corporate Governance System
1. Directors and the Board of Directors
The Company's Board of Directors consists of nine directors (of which, two are outside directors).
The board meeting is basically held once a month. Its function is to make importance business
decisions regarding the corporate group and oversight the execution of directors. Also with the
neutral and objective view of outside directors and outside audit & supervisory board members, the
Company is strengthening the appropriate management decision making and oversight. Also by
adopting the executive officer system, the company appoints one COO (Chief Operating Officer) and
twelve executive officer (of which eleven are male and one female), and they strive for prompt and
appropriate decision making according to the authorities granted by the board of directors.
2. Audit & supervisory board members and the Audit & Supervisory Board
The Company's audit & supervisory board consisting of three outside audit & supervisory board
members (of which one is standing outside audit & supervisory board member). The meeting is
basically held once a month. Its function is to decide auditing plan, report result of audit by each
audit & supervisory board member, discusses matters which need opinion and recommendations.
Also, each audit & supervisory board member are, according to the auditing rules for the Audit &
supervisory board and auditing plan, through attending the board of director's meeting and observing
the business operation and status of assets, oversight the business execution by the directors.
3. Corporate Governance Committee
This committee comprises all directors, and is chaired by an outside director. It conducts selfchecks to strengthen the corporate governance and CSR of the corporate group. The committee
meets once each half fiscal year.
10
Meitec Corporation Annual Report 2014
4. The CEO Nominating Committee
This committee comprises all directors and is chaired by an outside director. Its purpose is to
objectively debate and select the ideal candidate for CEO of the MEITEC Group.
The committee meets in December of the year basically prior to the fiscal year in which directors
are elected. But it is set that special committee meeting can also be held as necessary. The
candidate for CEO of the MEITEC Group may propose other candidates for nomination to director.
Remuneration for Directors
Method deciding the policy
The company's policy on executive remuneration is determined by the board of directors
meeting. Remuneration to individual executives was approved at the 37th Annual General
Meeting of Shareholders held on June 24, 2010.
Overview of the policy
The Company's policy on executive remuneration is as follows.
a. The process of determining executive remuneration will be clarified and disclosed in order to
enhance management transparency, and strengthen corporate governance.
b. The independence of audit & supervisory board members will be enhanced in order to
strengthen corporate governance.
c. The proportion of performance-linked executive remuneration will be increased in order to clarify
management responsibility, and to enhance the incentive to executives to increase corporate value.
● Remuneration Amounts to Individual Directors
CEO
Monthly payment 3,000,000 yen or less
COO
Monthly payment 2,500,000 yen or less
Director
Monthly payment 2,000,000 yen or less
Outside Director
Monthly payment
Standing Audit & supervisory board member
Monthly payment 2,000,000 yen or less
Audit & supervisory board member
Monthly payment
500,000 yen or less
500,000 yen or less
● Performance-Linked Directors' Remuneration
An amount equal to 2% of consolidated net income (not including performance-linked directors'
remuneration), with fractions of 1 million yen and less discarded, and shall be the total amount
of performance-linked directors' remuneration. This amount shall be distributed among directors
based on the individual performance of each director (provided, however, that the maximum
amount that can be allocated to an outside director shall be limited to 6 million yen).
The retirement bonus system for directors and audit & supervisory board members was
abolished in the fiscal year ended March 31, 2002.
Remuneration to directors from subsidiaries in which a director holds a concurrent post is
waived in principle.
Audit & supervisory board members are not given performance-linked remuneration in order
to preserve audit & supervisory board member independence.
Meitec Corporation Annual Report 2014
11
Internal Control System
Basic Stance on Internal Control Framework and Status of Implementation
MEITEC's Board of Directors determines the basic policy regarding the development and maintenance
of internal control system in accordance with the Companies Act. MEITEC's Basic Policy Regarding the
Development and Maintenance of Internal Control System and its implementation status are as follows.
Basic Policy Regarding the Development and Maintenance of Internal Control System
(1) Framework to ensure compliance by directors and employees with laws, regulations and the
Company's articles of incorporation in the course of the execution of their duties
In its interaction with the rest of society, the Company shall comply with all laws and
regulations and its articles of incorporation. The Company shall maintain high ethical
standards and management that is sound and highly transparent. To enhance its corporate
value, the Company shall build effective governance and monitoring systems that are
appropriate to the particular characteristics of the business and size of the Meitec Group.
The Company shall formulate the Management Concept, the Charter of Employee Behavior, the
Employee Code of Conduct, behavior charter and other related documents. The Company shall
undertake effective efforts to thoroughly inform directors and employees on compliance issues.
Directors and employees shall carry out their duties in compliance with all laws and regulations, the
Company's articles of incorporation and internal Company rules in a fair and reasonable manner.
Through the establishment of an internal helpline–based on a system that provides full protection
to whistleblowers–and programs to inform employees about this helpline, the Company shall
endeavor to quickly detect and take appropriate action against any malfeasance that may occur.
The Company shall interdict any and all relationship with antisocial forces and groups which
threaten the order and safety of the civil society. And against such antisocial forces, the
entire Meitec Group, from the CEO down, shall respond in uncompromising manner.
(2) Framework for storing and managing information relating to the directors' execution of duties
In accordance with the stipulations of all laws and regulations, the Company's articles of
incorporation and internal rules, information regarding the execution of duties by directors
shall be recorded, stored and managed in an appropriate and timely manner. From time to
time, internal rules shall be proactively reviewed and revised as necessary.
(3) Framework for risk management
The Company, its subsidiaries and affiliates (the Meitec Group) shall work to comprehensively and
systematically gather information on and analyze risks faced by the Group. Risk trends shall be monitored
appropriately, and timely measures shall be taken in response to risks, commensurate with the severity of
the risk. The Company shall continually strive to maintain and enhance the soundness of its management.
(4) Framework to ensure the efficient execution of duties by directors and employees
The directors shall appropriately divide up their duties and supervisory responsibilities, and shall
delegate authority in accordance with internal rules to speed up decision making. In addition, the
directors shall formulate a business plan stipulating clear targets and goals, and undertake appropriate
management of operations and progress based on this plan. Targets and goals shall be revised as
necessary. This framework aims to ensure that the directors' duties are carried out efficiently.
(5) Framework for employees to be assigned to assist audit & supervisory board members carry out
their duties and to ensure that these employees retain their independence from the directors
Audit & supervisory board members are supported by the Office of Audit & supervisory
board which is consisted of employee who is separated from the execution of business to
12
Meitec Corporation Annual Report 2014
improve the effectiveness of audit.
Regarding the evaluation and re-assignments of such employee, in order to reflect the
opinion from audit & supervisory board member as much as possible, it is carried out with
consent of audit & supervisory board members.
(6) Framework for reporting by directors and employees to the audit & supervisory board
members and framework to ensure other auditing activities by the audit & supervisory
board members are carried out effectively
The Company has rule for report to the audit & supervisory board members, to insure proper
report to be made by directors and employees to the audit & supervisory board members.
The audit & supervisory board members shall be given the authority to attend meetings of the Board
of Directors and all other internal meetings. Furthermore, the audit & supervisory board members shall
have access to all important information relating to decision making and the execution of business
operations. Based on these principles, the Company shall build a management system that is
effectively audited. In particular, auditing shall ensure that the execution of duties complies with laws
and regulations, and that the development and operation of internal control systems is adequate.
The Company's representative director and its departments responsible for internal auditing shall
regularly and as necessary exchange opinions with the audit & supervisory board members. The
Company shall develop a system whereby the internal audit departments, audit & supervisory board
members and independent accounting auditor are able to maintain effective communication channels
and linkages. The Company shall endeavor to continually enhance the effectiveness of audit functions
carried out by the audit & supervisory board members. This shall include cooperation with requests from
the audit & supervisory board members to directors and employees regarding inspections and hearings.
(7) Framework to ensure sound business operations within the Company and the Meitec Group
The Company shall respect the right of each group company to develop its business operations in an
autonomous manner. In order for the Meitec Group as a whole to maintain sound business operations,
each group company shall strictly comply with the basic policies stipulated in items 1-6 above.
Directors and Audit & Supervisory Board Members
Number of persons
Of which, outside directors
Number of directors and audit
Of which, independent
and outside audit &
& supervisory board members
executives
supervisory board members
in article of incorporation
Directors
9
2
2
22
Audit & supervisory board members
3
3
3
4
Total
12
5
5
26
Takeover Defense
The Company has not introduced the measure for the defense from hostile TOB, poison pill.
The Company group sees that by maximizing five values with“Value to Engineers”as a starting
point based on the management concept of“Mutual Growth & Prosperity”it will realize the
defense for the hostile TOB.
Meitec Corporation Annual Report 2014
13
Five-Year Summary
MEITEC CORPORATION and Subsidiaries
For the Years Ended March 31
Millions of Yen
For the Year
2014
2013
2012
2011
2010
Net sales
¥74,906
¥70,331
¥66,955
¥61,791
¥53,776
Cost of sales
55,371
51,639
49,875
48,833
46,765
Gross profit on sales
19,535
18,692
17,080
12,958
7,011
Selling, general and administrative expenses
12,556
12,338
11,630
10,338
11,939
Operating income
6,979
6,354
5,450
2,620
(4,928)
Net income (loss)
3,974
5,993
2,827
3,690
(905)
At Year-end
¥61,446
¥58,002
¥57,559
¥55,714
¥47,625
Current assets
44,999
41,802
40,644
37,661
28,444
Net property and equipment
10,555
10,909
11,257
11,689
12,069
Liabilities
25,257
19,580
20,350
18,620
14,182
Total equity
36,189
38,423
37,209
37,094
33,443
¥128.30
¥186.08
¥85.45
¥111.33
(¥27.30)
72.00
99.00
58.50
27.50
24.50
1,182.84
1,229.63
1,135.10
1,112.69
1,002.58
Total assets
Per share
Basic net income (loss)
Cash dividends
Total equity
Ratios
Gross profit margin
Operating income margin
26.0%
26.5%
25.5%
21.0%
13.0%
9.3
9.0
8.1
4.2
(9.2)
(1.7)
5.3
8.5
4.2
6.0
10.7
15.9
7.6
10.5
(2.6)
357.4
431.7
364.0
376.0
444.9
Equity ratio
58.9
66.1
64.5
66.2
69.8
Dividend payout ratio
56.1
53.2
68.5
24.7
—
Price-earnings ratio
22.8
12.6
19.5
14.9
—
Net income margin
Return on average equity
Current ratio
Major operating data
32,500,000
33,000,000
34,700,000
35,100,000
35,100,000
Share price (yen)
2,930
2,343
1,669
1,664
1,831
Number of shareholders
5,586
7,160
6,003
6,724
7,059
Number of employees (non-consolidated)
6,341
6,114
5,822
6,065
6,345
Number of employees (consolidated)
8,270
7,872
7,445
7,722
8,368
Number of shares issued
14
Meitec Corporation Annual Report 2014
Management’s Discussion and Analysis
MEITEC CORPORATION and Subsidiaries
For the Years Ended March 31
Overview of the Economy
Operating Income
The Japanese economy for the consolidated fiscal year ended
As a result, consolidated operating income jumped ¥625
March 31, 2014 (April 1, 2013 to March 31, 2014) witnessed
million, or 9.8%, from a year earlier to ¥6,979 million.
uncertain perspectives of the world economy with decelerated
growth in emerging markets, etc. However, on the back of the
Net Income
favorable effects of the government’s economic measures and
Consolidated net income suffered a year-on-year decline of
financial policies, rising stock prices and the improvement in
¥2,019 million, or 33.7%, to ¥3,974 million, as tax expenses
corporate revenues contributed to a moderate upward trend
that had decreased due to temporary factors in the previous
in the country’s economy.
fiscal year returned to their original level.
During the fiscal year under review, many leading
manufacturers, which are the major clients of the Company,
Overview of Results by Business Segment
continued steady investments in technological development
Temporary Staffing Business
looking to the next generation despite the business conditions.
Net sales in the Temporary Staffing Business segment for the
Under these circumstances, the utilization ratio rose steadily
fiscal year under review increased ¥4,305 million, or 6.4%,
due to an increase in the number of engineers resulting
from a year earlier to ¥71,587 million. The reason for this
from aggressive recruiting activities as well as a strong order
increase was an increase in the number of engineers assigned
environment.
to clients in the Temporary Staffing Business, which accounts
for more than 90% of consolidated net sales, particularly
Net Sales
in temporary engineer staffing, the core business of this
Primarily for this reason, consolidated net sales increased
segment. Operating income increased ¥543 million, or 8.8%,
¥4,575 million, or 6.5%, from a year earlier to ¥74,906
from a year earlier to ¥6,687 million.
Due to aggressive recruiting activities, etc., the number of
million.
engineers assigned to clients increased, reflecting the growth
Cost of Sales
in the number of engineers, whereas the Company’s non-
Consolidated cost of sales advanced ¥3,731 million, or 7.2%,
consolidated average utilization ratio (overall) fell marginally
from a year earlier to ¥55,371 million, chiefly because of
to 94.7% (95.4% in the previous fiscal year). Also, working
increased labor costs due to an increase in the number of
hours were steady at 8.93 hours/day (8.88 hours/day for the
engineers.
previous fiscal year).
Selling, General and Administrative Expenses
Consolidated selling, general and administrative expenses rose
¥218 million, or 1.8%, from a year earlier to ¥12,556 million.
Net Sales (Millions of Yen)
Cost of Sales Ratio (%)
Operating Income (Loss) (Millions of Yen)
Operating Income (Loss) Margin (%)
Net Income (Loss) (Millions of Yen)
Net Income (Loss) Margin (%)
ROA (%)
ROE (%)
5,993
87.0
53,776
61,791
79.0
66,955
74.5
70,331
74,906
5,450
73.4
4.2
73.9
8.1
6,354
9.0
8.5
6,979
3,690
9.3
6.0
2,827
15.9
3,974
10.5
5.3
11.7
10.7
8.9
2,620
7.6
4.2
­0.5
­4,928
­905
­9.2
2010 2011 2012 2013 2014 (FY)
11.1
9.8
2010 2011 2012 2013 2014 (FY)
­1.7
2010 2011 2012 2013 2014 (FY)
­2.6
2010
2011
2012
2013
2014 (FY)
Meitec Corporation Annual Report 2014
15
Engineering Solutions Business
Recruiting & Placement Business
In the Engineering Solutions Business, the Company provides
The Recruiting & Placement Business involves the job
engineering services related to analytical technologies,
placement and an information portal site business intended
prototype production, casting/metal mold production and
for engineers.
Net sales in the Recruiting & Placement Business advanced
technology support for printed-circuit boards.
¥188 million, or 25.5%, from a year earlier to ¥927 million,
Net sales in the Engineering Solutions Business for the
fiscal year under review increased ¥129 million, or 4.9%,
and operating income increased ¥107 million, or 60.9%, to
from a year earlier to ¥2,790 million, and operating income
¥284 million.
increased ¥6 million, or 7.3%, from the previous fiscal year to
Meitec Next achieved sales and profit growth due to an
increasing number of job placements.
¥94 million.
Sales increased at Meitec CAE from a year earlier, but
profits decreased due to deterioration in cost of sales ratio.
While the Apollo Giken Group recorded net sales almost
Forecasts for the Fiscal Year Ending March 31, 2015
unchanged and operating loss as in the previous fiscal year,
Summary of Consolidated Forecasts for the fiscal year ending
its loss shrank. Apollo Giken plans to liquidate its subsidiary in
March 31, 2015
China by the end of this year.
(Millions of Yen)
Net Sales
Operating
Income
Ordinary
Income
Net
Income
38,200
3,300
3,300
2,050
The Global Business engages in job placement and vocational
Forecast for the six months
ending Sept. 30 2014
Comparison to the six months
ended Sept. 30 2013
+2,445
+392
+368
+343
training for students to supply human resources for Japanese
Forecast for fiscal year ending Mar. 31 2015
79,000
7,700
7,700
4,900
+4,093
+720
+721
+926
review increased ¥15 million, or 21.8%, from a year earlier to
Comparison to fiscal year
ended Mar. 31 2014
Result for the six months ended
Sept. 30 2013
35,754
2,907
2,931
1,706
¥84 million, and an operating loss of ¥100 million was posted
Result for fiscal year ended Mar. 31 2014
74,906
6,979
6,978
3,974
Global Business
manufacturers that operate in the coastal areas of China.
Net sales in the Global Business for the fiscal year under
compared with a loss of ¥59 million a year earlier.
In light of such circumstances, as part of a review of the
On the premise that the economy will continue to recover
Group’s business strategy, we plans to close and liquidate
moderately, we expect that the number of engineers will
our vocational training business (Xian, Chengdu) on June
increase due to aggressive recruiting activities, and that
30, 2014 upon completion of the required procedures. The
coordinated sales activities will expand. We have announced
job placement business (Shanghai) will be continued, and
the performance forecast for the consolidated fiscal year
reclassified into the Recruiting & Placement Business domain
ending March 31, 2015, based on the aforementioned
from the first quarter of the fiscal year ending March 31, 2015.
prerequisites shown in Figure 8.
As for forecasts for the consolidated fiscal year ending
Temporary Staffing Business
Engineering Solutions Business
Global Business
Recruiting & Placement Business
(Millions of Yen)
(Millions of Yen)
(Millions of Yen)
(Millions of Yen)
Net sales
Operating income
63,827
67,282
Net sales
Operating income
71,587
Net sales
Operating income
84
Net sales
Operating income
927
69
3,005
739
2,790
2,660
27
599
284
5,225
6,144
6,687
141
87
94
­70
148
­59
176
­100
2012
16
2013
2014 (FY)
Meitec Corporation Annual Report 2014
2012
2013
2014 (FY)
2012
2013
2014 (FY)
2012
2013
2014 (FY)
March 31, 2015, we anticipate ¥79,000 million in consolidated
2013, to ¥36,189 million. This result was chiefly due to a
net sales (a year-on-year increase of 5.5%), ¥7,700 million
decrease in remeasurements of defined benefit plans.
in consolidated operating income (a year-on-year increase
of 10.3%), ¥7,700 million in consolidated ordinary income
Cash Flows
(a year-on-year increase of 10.3%), and ¥4,900 million in
Consolidated cash and cash equivalents (hereafter, Cash) had
consolidated net income (a year-on-year increase of 23.3%).
increased by ¥3,511 million compared to the previous fiscal
year end to ¥30,104 million.
Financial Position
Status and factors of the cash flow of the fiscal year under
• Assets
review for are as following:
Total consolidated assets at the end of this fiscal year (March
31, 2014) increased ¥3,444 million from March 31, 2013, to
• Cash Flow from Operating Activities
¥61,446 million. This is primarily attributable to a year-on-year
Cash gained from the operating activities increased by ¥3,688
increase of ¥3,197 million in current assets.
million compared to the previous fiscal year to ¥8,893 million.
Major portion of the gain was ¥6,832 million from income
The main reason for the increase in current asset is
before income taxes and minority interests. Incidentally,
increase in cash and deposit.
income tax for the fiscal year was largely reduced due to
• Liabilities
liquidation of a subsidiary.
Total consolidated liabilities at the end of this fiscal year (March
31, 2014) increased ¥5,677 million from March 31, 2013, to
• Cash Flow from Investing Activities
¥25,257 million. This mainly reflects a year-on-year increase
Cash used in the investing activities decreased by ¥67 million
of ¥2,905 million in current liabilities and increase of ¥2,772
compared to the previous fiscal year to ¥398 million.
Major portion was the ¥219 million used for purchase of
million in noncurrent liabilities.
The main reason for the increase in current liabilities is an
intangible assets.
increase in income tax payable, and increase in noncurrent
• Cash Flow from Financing Activities
liabilities is the increase in net defined benefit liability.
Cash used in the financing activities increased by ¥154 million
• Net Assets
compared to the previous fiscal year to ¥4,992 million.
Major portion was ¥1,803 million from purchase of
Total consolidated net assets at the end of this fiscal year
(March 31, 2014) decreased ¥2,234 million from March 31,
treasury stock and ¥3,131 million from cash dividends paid.
Total Assets (Millions of Yen)
Total Equity (Millions of Yen)
Cash Flow from Operating Activities (Millions of Yen)
Cash Flow from Investing Activities (Millions of Yen)
Cash Flow from Financing Activities (Millions of Yen)
Cash and Cash Equivalents (Millions of Yen)
55,714
57,559 58,002
Equity Ratio (%)
23,999
61,446
26,592
9,291
8,893
14,532
47,625
33,443
26,686
30,104
38,423
37,094 37,209
36,189
69.8
5,753
66.2
64.5
5,205
66.1
58.9
287
­20
­104
­1,545
­1,835
­292
­465
­4,837
2010 2011 2012 2013 2014 (FY)
2010 2011 2012 2013 2014 (FY)
2010
­398
­2,769
2011
2012
2013
­4,992
2014 (FY)
Meitec Corporation Annual Report 2014
17
Consolidated Balance Sheets
MEITEC CORPORATION and Subsidiaries
March 31, 2014
Thousands of
U.S. Dollars (Note 1)
Millions of Yen
ASSETS
2014
2013
2014
¥30,104
¥26,593
$292,274
11,297
10,888
109,683
CURRENT ASSETS:
Cash and cash equivalents (Note 4)
Notes and accounts receivable (Note 4):
Trade notes and accounts
Allowance for doubtful accounts
Inventories (Note 5)
Deferred tax assets (Note 10)
Prepaid expenses and other (Note 4)
Total current assets
(6)
(11)
(63)
243
286
2,360
2,405
2,490
23,351
956
1,556
9,276
44,999
41,802
436,881
3,583
3,585
34,782
19,250
19,231
186,893
2,211
2,359
21,469
PROPERTY AND EQUIPMENT:
Land
Buildings and structures (Note 7)
Furniture and fixtures (Note 7)
Construction in progress
Other
117
206
449
2,006
25,250
25,741
245,150
(14,695)
(14,832)
(142,670)
10,555
10,909
102,480
Investment securities (Notes 3 and 4)
134
137
1,304
Software
602
687
5,846
Total
Accumulated depreciation
Net property and equipment
INVESTMENTS AND OTHER ASSETS:
Software in progress
Leasehold deposits
Deferred tax assets (Note 10)
Other
Total investments and other assets
TOTAL
See notes to consolidated financial statements.
18
Meitec Corporation Annual Report 2014
260
569
602
5,524
4,502
3,511
43,705
85
94
821
5,892
5,291
57,200
¥61,446
¥58,002
$596,561
Thousands of
U.S. Dollars (Note 1)
Millions of Yen
LIABILITIES AND EQUITY
2014
2014
2013
CURRENT LIABILITIES:
Trade accounts payable (Note 4)
¥98
¥104
$948
Income taxes payable (Note 4)
2,679
297
26,012
Accrued expenses
7,990
7,398
77,569
Deferred tax liabilities (Note 10)
Provision for loss on liquidation of subsidiaries and associates
Other (Note 4)
Total current liabilities
2
11
71
688
1,750
1,885
17,002
12,590
9,684
122,230
12,620
9,843
122,523
37
37
363
LONG-TERM LIABILITIES:
Liability for retirement benefits (Note 8)
Deferred tax liabilities for land revaluation (Notes 2.j and 10)
10
15
100
12,667
9,895
122,986
16,826
16,826
163,358
8,054
9,300
78,196
Retained earnings
18,264
17,426
177,323
Treasury stock—at cost, 1,944 thousand shares in 2014 and 1,803 thousand shares in 2013
(4,844)
(4,287)
(47,034)
Other
Total long-term liabilities
EQUITY (Note 9):
Common stock—authorized, 142,854 thousand shares in 2014 and 2013; issued, 32,500
thousand shares in 2014 and 33,000 thousand shares in 2013
Capital surplus
Accumulated other comprehensive income:
Unrealized gain on available-for-sale securities
Land revaluation difference (Note 2.j)
Foreign currency translation adjustments
3
6
(878)
(878)
(7)
(32)
30
(8,527)
(67)
Defined retirement benefit plans
(1,275)
Total
36,143
38,361
350,898
46
62
447
36,189
38,423
351,345
¥61,446
¥58,002
$596,561
Minority interests
Total equity
TOTAL
(12,381)
Meitec Corporation Annual Report 2014
19
Consolidated Statements of Income
MEITEC CORPORATION and Subsidiaries
Years Ended March 31, 2014
Thousands of
U.S. Dollars (Note 1)
Millions of Yen
2014
2013
¥74,906
¥70,331
$727,243
COST OF SALES
55,371
51,639
537,580
Gross profit
19,535
18,692
189,663
12,556
12,338
121,904
6,979
6,354
67,759
8
12
77
9
10
NET SALES
SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES
Operating income
2014
OTHER (EXPENSES) INCOME :
Interest and dividend income
Rent income
88
18
Interest on refund
178
1
11
4
Loss on investments in partnerships
(1)
(9)
(11)
Foreign exchange loss
(6)
Gain on sales of investment securities
(54)
Settlement received
48
Loss on disposals of property and equipment
(22)
(10)
(214)
Impairment loss (Note 7)
(53)
(202)
(519)
Provision for loss on liquidation of subsidiaries and associates
(71)
Other—net
(30)
57
(288)
(147)
(83)
(1,427)
Other (expenses) income—net
INCOME BEFORE INCOME TAXES AND MINORITY INTERESTS
6,832
(688)
6,271
66,332
914
29,902
INCOME TAXES (Note 10):
Current
Deferred
Total income taxes
NET INCOME BEFORE MINORITY INTERESTS
3,080
(205)
(633)
(1,985)
2,875
281
27,917
3,957
5,990
38,415
(17)
MINORITY INTERESTS IN NET (LOSS)
NET INCOME
¥3,974
(3)
¥5,993
(166)
$38,581
U.S. Dollars
(Note 1)
Yen
2014
2013
2014
¥128.30
¥186.08
$1.25
72.00
99.00
0.70
PER SHARE OF COMMON STOCK (Notes 2.t and 12):
Basic net income
Cash dividends applicable to the year
See notes to consolidated financial statements.
20
Meitec Corporation Annual Report 2014
Consolidated Statements of Comprehensive Income
MEITEC CORPORATION and Subsidiaries
Years Ended March 31, 2014
Thousands of
U.S. Dollars (Note 1)
Millions of Yen
2014
NET INCOME BEFORE MINORITY INTERESTS
2014
2013
¥3,957
¥5,990
$38,415
OTHER COMPREHENSIVE INCOME (LOSS) (Note 13):
Unrealized loss on available-for-sale securities
(3)
(7)
(33)
Foreign currency translation adjustments
26
1
252
Total other comprehensive income (loss)
23
(6)
219
¥3,980
¥5,984
$38,634
¥3,995
¥5,986
$38,786
Comprehensive income
TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO:
Owners of the parent
Minority interests
(15)
(2)
(152)
See notes to consolidated financial statements.
Meitec Corporation Annual Report 2014
21
Consolidated Statements of Changes in Equity
Thousands
MEITEC CORPORATION and Subsidiaries
Years Ended March 31, 2014
Millions of Yen
Accumulated Other Comprehensive
Income
Number of
Shares of
Common
Stock
Outstanding
BALANCE, APRIL 1, 2012
Common
Stock
Capital
Surplus
Retained
Earnings
Unrealized
Gain on
Available-forSale Securities
Treasury
Stock
32,703 ¥16,826 ¥13,343 ¥13,378
¥(5,530)
¥13
Land
Revaluation
Difference
¥(878)
Foreign
Currency
Translation
Adjustments
Defined
Retirement
Benefit Plans
¥(31)
Minority
Interests
Total
¥37,121
¥88
Total
Equity
¥37,209
Net income
5,993
5,993
5,993
Cash dividends, ¥59.5 per share
(1,945)
(1,945)
(1,945)
(2,800)
(2,800)
Purchase of treasury stock
(1,506)
(2,800)
Retirement of treasury stock
(4,043)
4,043
Net change in the year
BALANCE, MARCH 31, 2013
(7)
31,197 ¥16,826
¥9,300 ¥17,426
Net income
¥(4,287)
¥6
(1)
(8)
(26)
(34)
¥(32)
¥38,361
¥62
¥38,423
3,974
Cash dividends, ¥100.5 per share
(3,136)
Purchase of treasury stock
(141)
Retirement of treasury stock
(500)
(1,803)
(1,246)
(3)
30,556 ¥16,826
3,974
3,974
(3,136)
(3,136)
(1,803)
(1,803)
1,246
Net change in the year
BALANCE, MARCH 31, 2014
¥(878)
¥8,054 ¥18,264 ¥(4,844)
¥3
25 ¥ (1,275)
¥(878)
(1,253)
(16)
(1,269)
¥(7) ¥(1,275) ¥36,143
¥46
¥36,189
Thousands of U.S. Dollars (Note 1)
Accumulated Other Comprehensive Income
Common
Stock
BALANCE, MARCH 31, 2013
$163,358
Capital
Surplus
Retained
Earnings
Treasury
Stock
$90,290 $169,183 $(41,624)
$62
Land
Revaluation
Difference
$(8,527)
Foreign
Defined
Currency
Retirement
Translation
Benefit Plans
Adjustments
$(305)
Total
$372,437
Minority
Interests
Total
Equity
$598 $373,035
Net income
38,581
38,581
38,581
Cash dividends, $0.98 per share
(30,441)
(30,441)
(30,441)
(17,504)
(17,504)
Purchase of treasury stock
(17,504)
Retirement of treasury stock
(12,094)
12,094
Net change in the year
BALANCE, MARCH 31, 2014
(32)
$163,358
See notes to consolidated financial statements.
22
Unrealized
Gain on
Availablefor-Sale
Securities
Meitec Corporation Annual Report 2014
$78,196 $177,323 $(47,034)
$30
238 $(12,381)
$(8,527)
(12,175)
$(67) $(12,381) $350,898
(151)
(12,326)
$447 $351,345
Consolidated Statements of Cash Flows
MEITEC CORPORATION and Subsidiaries
Years Ended March 31, 2014
Thousands of
U.S. Dollars (Note 1)
Millions of Yen
2014
2014
2013
OPERATING ACTIVITIES:
Income before income taxes and minority interests
¥6,832
¥6,271
$66,332
Adjustments for:
Income taxes—paid
(803)
Income taxes—refunded
753
Interest on refund
(18)
Depreciation and amortization
1,004
Amortization of goodwill
(3,027)
7,309
(178)
1,287
(1)
(11)
Loss on disposals of property and equipment
22
8
Impairment loss
9,750
4
Gain on sales of investment securities
Loss on investments in partnerships
(7,795)
(4)
214
1
9
11
53
202
519
Changes in assets and liabilities:
(411)
(212)
Decrease (increase) in inventories
43
(10)
Decrease in trade payables
(7)
(47)
Increase in trade receivables
(3,993)
418
(64)
692
106
Increase in liability for retirement benefits
800
764
(Increase) decrease in other current assets
(43)
46
(422)
(124)
(112)
(1,202)
Increase in accrued expenses
Decrease in allowance for doubtful accounts
Decrease in other current liabilities
Increase in provision for loss on liquidation of subsidiaries and associates
Other—net
6,720
(73)
7,762
71
688
29
279
Total adjustments
2,061
(1,066)
20,012
Net cash provided by operating activities
8,893
5,205
86,344
INVESTING ACTIVITIES:
Proceeds from sales of investment securities
1
153
6
Purchases of property and equipment
(189)
(330)
(1,832)
Purchases of other investments and assets
(197)
(310)
(1,912)
Payments for disposals of property and equipment
(13)
Other—net
(128)
22
(398)
(465)
(3,866)
Acquisition of treasury stock
(1,803)
(2,800)
(17,504)
Dividends paid
(3,131)
(1,945)
(30,396)
Net cash used in investing activities
FINANCING ACTIVITIES:
Repayments to minority shareholders
Other—net
Net cash used in financing activities
FOREIGN CURRENCY TRANSLATION ADJUSTMENTS ON CASH AND CASH EQUIVALENTS
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
CASH AND CASH EQUIVALENTS, END OF YEAR
(34)
(58)
(59)
(563)
(4,992)
(4,838)
(48,463)
8
4
75
3,511
(94)
34,090
26,593
26,687
258,184
¥30,104
¥26,593
$292,274
See notes to consolidated financial statements.
Meitec Corporation Annual Report 2014
23
Notes to Consolidated Financial Statements
1. BASIS OF PRESENTING CONSOLIDATED FINANCIAL
STATEMENTS
MEITEC CORPORATION and Subsidiaries
Years Ended March 31, 2014
b. Unification of Accounting Policies Applied to Foreign
Subsidiaries for the Consolidated Financial
Statements— In May 2006, the Accounting Standards Board
The accompanying consolidated financial statements have been
of Japan ("ASBJ") issued ASBJ Practical Issues Task Force
prepared in accordance with the provisions set forth in the
(PITF) No. 18, "Practical Solution on Unification of Accounting
Japanese Financial Instruments and Exchange Act and its related
Policies Applied to Foreign Subsidiaries for the Consolidated
accounting regulations, and in conformity with accounting
Financial Statements."
principles generally accepted in Japan ("Japanese GAAP"), which
PITF No. 18 prescribes that (1) the accounting policies and
are different in certain respects as to application and disclosure
procedures applied to a parent company and its subsidiaries
requirements of International Financial Reporting Standards.
for similar transactions and events under similar circumstances
In preparing these consolidated financial statements, certain
should in principle be unified for the preparation of the
reclassifications and rearrangements have been made to the
consolidated financial statements; (2) financial statements
consolidated financial statements issued domestically in order to
prepared by foreign subsidiaries in accordance with either
present them in a form that is more familiar to readers outside
International Financial Reporting Standards or the accounting
Japan. In addition, certain reclassifications have been made in the
principles generally accepted in the United States of America
2013 consolidated financial statements to conform them to the
tentatively may be used for the consolidation process; (3)
classifications used in 2014.
however, the following items should be adjusted in the
The consolidated financial statements are stated in Japanese
yen, the currency of the country in which MEITEC CORPORATION
consolidation process so that net income is accounted for in
accordance with Japanese GAAP, unless they are not material:
(the "Company") is incorporated and operates. The translations
(a) amortization of goodwill;
of Japanese yen amounts into U.S. dollar amounts are included
(b) scheduled amortization of actuarial gain or loss of
solely for the convenience of readers outside Japan and have
pensions that has been directly recorded in equity;
been made at the rate of ¥103 to $1, the approximate rate of
(c)expensing capitalized development costs of R&D;
exchange at March 31, 2014. Such translations should not be
(d)cancellation of the fair value model accounting for
construed as representations that the Japanese yen amounts
property, plant, and equipment and investment
could be converted into U.S. dollars at that or any other rate.
properties and incorporation of the cost model
accounting; and
(e) exclusion of minority interests from net income, if
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Consolidation — The consolidated financial statements as of
contained in net income.
c. Business Combinations — In October 2003, the Business
March 31, 2014, include the accounts of the Company and its
Accounting Council issued a Statement of Opinion,
12 (11 in 2013) subsidiaries (together, the "Group"). In fiscal
"Accounting for Business Combinations," and in December
2014, one subsidiary was newly established and consolidated.
2005, the ASBJ issued ASBJ Statement No. 7, "Accounting
Under the control or influence concept, those companies in
Standard for Business Divestitures" and ASBJ Guidance No. 10,
which the Company, directly or indirectly, is able to exercise
"Guidance for Accounting Standard for Business Combinations
control over operations are fully consolidated, and those
and Business Divestitures."
companies over which the Group has the ability to exercise
The accounting standard for business combinations allows
significant influence are accounted for utilizing the equity
companies to apply the pooling-of-interests method of
method.
accounting only when certain specific criteria are met such that
The excess of the cost of an acquisition over the fair value
of the net assets of an acquired subsidiary at the date of
acquisition is being amortized over a period of 20 years.
the business combination is essentially regarded as a uniting of
interests.
For business combinations that do not meet the uniting of
All significant intercompany balances and transactions have
interests criteria, the business combination is considered to
been eliminated in consolidation. All material unrealized profit
be an acquisition and the purchase method of accounting
included in assets resulting from transactions within the Group
is required. This standard also prescribes the accounting for
is also eliminated.
combinations of entities under common control and for joint
ventures.
In December 2008, the ASBJ issued a revised accounting
standard for business combinations, ASBJ Statement No. 21,
24
Meitec Corporation Annual Report 2014
"Accounting Standard for Business Combinations." Major
securities are reduced to net realizable value by a charge to
accounting changes under the revised accounting standard are
income.
as follows:
(1)The revised standard requires accounting for business
g.Property and Equipment — Property and equipment other
combinations only by the purchase method. As a result,
than lease assets are stated at cost. Depreciation is principally
the pooling-of-interests method of accounting is no
computed utilizing the declining-balance method based on
longer allowed.
the estimated useful lives of the assets, while the straight line
(2)The previous accounting standard required research and
method is applied to certain buildings. The range of useful lives
development costs to be charged to income as incurred.
is principally from 7 to 50 years for buildings and structures,
Under the revised standard, in-process research and
and from 2 to 15 years for furniture and fixtures.
development costs (IPR&D) acquired in the business
combination are capitalized as an intangible asset.
h. Long-lived Assets — The Group reviews its long lived assets
(3)The previous accounting standard provided for a bargain
for impairment whenever events or changes in circumstances
purchase gain (negative goodwill) to be systematically
indicate the carrying amount of an asset or asset group may
amortized over a period not exceeding 20 years. Under
not be recoverable. An impairment loss would be recognized
the revised standard, the acquirer recognizes the bargain
if the carrying amount of an asset or asset group exceeds the
purchase gain in profit or loss immediately on the
sum of the undiscounted future cash flows expected to result
acquisition date after reassessing and confirming that all
from the continued use and eventual disposition of the asset
of the assets acquired and all of the liabilities assumed
or asset group. The impairment loss would be measured as the
have been identified after a review of the procedures
amount by which the carrying amount of the asset exceeds
used in the purchase allocation. The revised Standard
its recoverable amount, which is the higher of the discounted
was applicable to Business Combinations undertaken on
cash flows from the continued use and eventual disposition of
or after April 1, 2010.
the asset or the net selling price at disposition.
d. Cash Equivalents — Cash equivalents are short term
i. Leases — Lease assets under finance lease transactions that are
investments that are readily convertible into cash and that are
not deemed to transfer ownership of the leased property to the
exposed to insignificant risk of changes in value.
lessee are capitalized and depreciated utilizing the straight-line
Cash equivalents include time deposits, all of which mature
method over their respective lease term with zero residual value.
within three months from the date of acquisition.
j. Land Revaluation — Under the "Law of Land Revaluation,"
e. Inventories — Inventories are measured at cost determined
the Company elected a one-time revaluation of its own use
by the specific identification method and stated at the lower of
land to a value based on real estate appraisal information as
cost or net selling value.
of March 31, 2000. The resulting land revaluation difference
represents an unrealized devaluation of land and is stated
f. Investment Securities — Investment securities are classified
net of income taxes as a component of equity. Continuous
and accounted for, depending on management's intent, as
readjustment is not permitted, unless the land value
follows: (1) trading securities, which are held for the purpose of
subsequently declines significantly such that the amount of the
earning capital gains in the near term, are reported at fair value
decline in value should be removed from the land revaluation
and the related unrealized gains and losses are included in
difference account.
earnings; (2) held-to-maturity debt securities, for which there is
As of March 31, 2014 and 2013, the carrying amount of the
the positive intent and ability to hold to maturity, are reported
land after the one time revaluation exceeded the market value
at amortized cost; and (3) available-for-sale securities, which
by ¥1,589 million ($15,422 thousand) and ¥1,604 million,
are not classified as either of the aforementioned securities, are
respectively.
reported at fair value, with unrealized gains and losses, net of
applicable taxes, reported in a separate component of equity.
k. Retirement and Pension Plan — The straight-line basis is
Cost of available-for-sale securities sold is determined by the
used as a method of attributing expected benefit to periods of
moving average method.
service in calculating projected benefit obligation. Past service
Nonmarketable available for sale securities are stated at cost
determined by the moving average method.
For other-than-temporary declines in fair value, investment
costs are amortized on a straight-line basis over a certain period
within the average remaining years of service of the eligible
employees (10 years). Actuarial gains and losses are amortized
Meitec Corporation Annual Report 2014
25
on a straight-line basis over a certain period within the average
benefits of ¥12,620 million ($122,523 thousand) was recorded
remaining years of service of the eligible employees (10 years)
as of March 31, 2014, and accumulated other comprehensive
from the following year of its recognition.
income for the year ended March 31, 2014, decreased by
In May 2012, the ASBJ issued ASBJ Statement No. 26,
"Accounting Standard for Retirement Benefits" and ASBJ
¥1,275 million ($12,381 thousand). Net assets per share
decreased by ¥41.73 ($0.41) as of March 31, 2014.
Guidance No. 25, "Guidance on Accounting Standard for
Retirement Benefits," which replaced the accounting standard
l. Asset Retirement Obligations — In March 2008, the ASBJ
for retirement benefits that had been issued by the Business
published ASBJ Statement No. 18 "Accounting Standard for
Accounting Council in 1998 with an effective date of April 1,
Asset Retirement Obligations" and ASBJ Guidance No. 21
2000, and the other related practical guidance, and were
"Guidance on Accounting Standard for Asset Retirement
followed by partial amendments from time to time through
Obligations." Under this accounting standard, an asset
2009.
retirement obligation is defined as a legal obligation imposed
(a) Under the revised accounting standard, actuarial gains
either by law or contract that results from the acquisition,
and losses and past service costs that are yet to be
construction, development, and the normal operation of a
recognized in profit or loss are recognized within equity
tangible fixed asset and is associated with the retirement of
(accumulated other comprehensive income), after
such tangible fixed asset.
adjusting for tax effects, and any resulting deficit or
The asset retirement obligation is recognized as the
surplus is recognized as a liability (liability for retirement
sum of the discounted cash flows required for the future
benefits) or asset (asset for retirement benefits).
asset retirement and is recorded in the period in which the
(b) The revised accounting standard does not change how
obligation is incurred if a reasonable estimate can be made.
to recognize actuarial gains and losses and past service
If a reasonable estimate of the asset retirement obligation
costs in profit or loss. Those amounts are recognized
cannot be made in the period the asset retirement obligation is
in profit or loss over a certain period no longer than
incurred, the liability should be recognized when a reasonable
the expected average remaining service period of the
estimate of asset retirement obligation can be made.
employees. However, actuarial gains and losses and past
Upon initial recognition of a liability for an asset retirement
service costs that arose in the current period and have
obligation, an asset retirement cost is capitalized by increasing
not yet been recognized in profit or loss are included in
the carrying amount of the related fixed asset by the amount
other comprehensive income and actuarial gains and
of the liability. The asset retirement cost is subsequently
losses and past service costs that were recognized in
allocated to expense through depreciation over the remaining
other comprehensive income in prior periods and then
useful life of the asset. Over time, the liability is accreted to
recognized in profit or loss in the current period shall be
its present value each period. Any subsequent revisions to the
treated as reclassification adjustments.
timing or the amount of the original estimate of undiscounted
(c) The revised accounting standard also made certain
cash flows are reflected as an increase or a decrease in the
amendments relating to the method of attributing
carrying amount of the liability and the capitalized amount of
expected benefit to periods and relating to the discount
the related asset retirement cost.
rate and expected future salary increases.
This accounting standard and the guidance for (a) and (b)
m. Bonuses to Employees — To prepare for the payment
above are effective for the end of annual periods beginning
of employees’ bonuses, a provision is made based on the
on or after April 1, 2013, and for (c) above are effective for
estimated amounts.
the beginning of annual periods beginning on or after April
1, 2014, or for the beginning of annual periods beginning on
n. Bonuses to Directors and Audit & Supervisory Board
or after April 1, 2015, subject to certain disclosure in March
Members — To prepare for the payment of directors’ and
2015, both with earlier application being permitted from the
audit & supervisory board members’ bonuses, a provision
beginning of annual periods beginning on or after April 1,
is made based on the estimated amounts considering the
2013. However, no retrospective application of this accounting
operating results at the end of fiscal year.
standard to consolidated financial statements in prior periods is
required.
The Company adopted the revised accounting standard
26
o. Provision for Loss on Liquidation of Subsidiaries and
Associates — To prepare for the loss on liquidation of
and guidance for retirement benefits for (a) and (b) above,
subsidiaries and associates, a provision is made based on the
effective March 31, 2014. As a result, liability for retirement
estimated amounts.
Meitec Corporation Annual Report 2014
p.Income Taxes — The provision for current income taxes
is computed based on the pretax income included in the
ASBJ Guidance No. 24 "Guidance on Accounting Standard
for Accounting Changes and Error Corrections." Accounting
consolidated statements of income. The asset and liability
treatments under this standard and guidance are as follows:
approach is used to recognize deferred tax assets and liabilities
(1)Changes in Accounting Policies:
for the expected future tax consequences of temporary
When a new accounting policy is applied with revision of
differences between the carrying amounts and the tax basis of
accounting standards, a new policy is applied retrospectively
assets and liabilities. Deferred taxes are measured by applying
unless the revised accounting standards include specific
currently enacted tax laws to the temporary differences.
transitional provisions. When the revised accounting
standards include specific transitional provisions, an entity
q.Foreign Currency Transactions — All short- and long-term
monetary receivables and payables denominated in foreign
shall comply with the specific transitional provisions.
(2)Changes in Presentations
currencies are translated into Japanese yen at the current
When the presentation of consolidated financial statements
exchange rates at the consolidated balance sheet date.
is changed, prior-period consolidated financial statements
The foreign exchange gains and losses from translation are
recognized in the consolidated statements of income to the
are reclassified in accordance with the new presentation.
(3)Changes in Accounting Estimates
extent that they are not hedged by foreign exchange forward
A change in an accounting estimate is accounted for in the
contracts.
period of the change if the change affects that period only
and is accounted for prospectively if the change affects both
r. Foreign Currency Financial Statements — The balance
sheet accounts of the consolidated foreign subsidiaries are
the period of the change and future periods.
(4)Corrections of Prior-Period Errors
translated into Japanese yen at the current exchange rate as of
When an error in prior-period consolidated financial
the consolidated balance sheet date, except for equity, which
statements is discovered, those statements are restated.
is translated at the historical rate. Differences arising from
such translation are shown as "foreign currency translation
u.Accounting Standard Issued But Not Yet Adopted —
adjustments" under accumulated other comprehensive income
In May 2012, the ASBJ issued ASBJ Statement No. 26,
in a separate component of equity.
"Accounting Standard for Retirement Benefits" and ASBJ
Revenue and expense accounts of consolidated foreign
subsidiaries are translated into yen at the average exchange rate.
Guidance No. 25, "Guidance on Accounting Standard for
Retirement Benefits," which replaced the Accounting Standard
for Retirement Benefits that had been issued by the Business
s. Per Share Information — Basic net income per share is
Accounting Council in 1998 with an effective date of April 1,
computed by dividing net income available to common
2000 and the other related practical guidance, and were followed
shareholders by the weighted average number of common
by partial amendments from time to time through 2009.
shares outstanding for the period, retroactively adjusted for
stock splits.
Diluted net income per share reflects the potential dilution
Major changes are as follows:
Amendments relating to the method of attributing expected
benefit to periods and relating to the discount rate and expected
that could occur if securities were exercised or converted into
future salary increases
common stock. Diluted net income per share of common
The revised accounting standard also made certain
stock assumes full conversion of the outstanding convertible
amendments relating to the method of attributing expected
notes and bonds at the beginning of the year (or at the time
benefit to periods and relating to the discount rate and
of issuance, if later) with an applicable adjustment for related
expected future salary increases.
interest expense, net of tax, and full exercise of outstanding
warrants.
Cash dividends per share presented in the accompanying
This accounting standard and the guidance are effective for
the beginning of annual periods beginning on or after April 1,
2014, or for the beginning of annual periods beginning on or
consolidated statements of income are dividends applicable to
after April 1, 2015, subject to certain disclosure in March 2015,
the respective years, including dividends to be paid after the
with earlier application being permitted from the beginning of
end of the year.
annual periods beginning on or after April 1, 2013. However,
no retrospective application of this accounting standard to
t. Accounting Changes and Error Corrections — In December
2009, the ASBJ issued ASBJ Statement No. 24 "Accounting
Standard for Accounting Changes and Error Corrections" and
consolidated financial statements in prior periods is required.
As a result of revisions to the calculation methods for
retirement benefit obligations and service cost and change
Meitec Corporation Annual Report 2014
27
in the attribution method of projected benefit obligations
However, the Company has changed its method of presentation
from straight-line method to benefit formula method from
to state separately “Loss on disposals of property and equipment”
the year beginning on April 1, 2014, retained earnings on
as it is material from the year ended March 31, 2014. As a result
the consolidated balance sheet as of the beginning of the
of this change, ¥8 million of “Other—net” is reclassified into
year beginning on April 1, 2014 is expected to increase by
¥8 million of “Loss on disposals of property and equipment” in
¥1,379 million ($13,389 thousand). The effect of change in
the consolidated statement of cash flows for the year ended
the calculation method of service cost on the consolidated
March 31, 2013.
statement of income is expected to be immaterial.
v. Certain Reclassifications — As discussed in Note 1, certain
3. INVESTMENT SECURITIES
reclassifications have been made in the 2013 consolidated
financial statements to conform them to the classifications used
Investment securities as of March 31, 2014 and 2013, consisted
in 2014.
of the following:
(Consolidated balance sheets)
Previously, “Income taxes receivable” in current assets of
consolidated balance sheet was stated separately as of March
31, 2013. However, the Company has changed its method
of presentation to include in “Prepaid expenses and other” in
current assets as it is immaterial from the year ended March 31,
2014. As a result of this change, ¥664 million of “Income taxes
receivable” is reclassified into “Prepaid expenses and other” in
the consolidated balance sheet as of March 31, 2013.
Thousands of
U.S. Dollars
Millions of Yen
2014
Investment securities:
Equity securities
Other
Total
¥116
18
¥134
2014
2013
$1,128
176
$1,304
¥118
19
¥137
The costs and aggregate fair values of investment securities as of
March 31, 2014 and 2013, were as follows:
(Consolidated statements of income)
Previously, “Reversal of allowance for doubtful accounts” in other
income (expenses) of consolidated statement of income were
stated separately for the year ended March 31, 2013. However,
the Company has changed its method of presentation to include
in “Other—net” in other income (expenses) as it is immaterial
from the year ended March 31, 2014. As a result of this change,
¥51 million of “Reversal of allowance for doubtful accounts” is
March 31, 2014
Available for sale:
Equity securities
Cost
¥48
Millions of Yen
Unrealized
Unrealized
Gains
Losses
¥7
Fair Value
¥(3)
¥52
reclassified into “Other—net” in the consolidated statement of
income for the year ended March 31, 2013.
March 31, 2013
Previously, “Loss on disposals of property and equipment”
was included in “Other—net” in other income (expenses) of
Available for sale:
Equity securities
Cost
¥48
Millions of Yen
Unrealized
Unrealized
Gains
Losses
Fair Value
¥6
¥54
consolidated statement of income for the year ended March
31, 2013. However, the Company has changed its method of
presentation to state separately “Loss on disposals of property
and equipment” as it is material from the year ended March 31,
March 31, 2014
2014. As a result of this change, ¥13 million of “Other—net” is
Available for sale:
Equity securities
reclassified into ¥10 million of “Loss on disposals of property and
equipment” and ¥3 million of “Other—net” in the consolidated
statement of income for the year ended March 31, 2013.
(Consolidated statements of cash flows)
Previously, “Loss on disposals of property and equipment” was
included in “Other—net” in operating activities of consolidated
statement of cash flows for the year ended March 31, 2013.
28
Meitec Corporation Annual Report 2014
Cost
$461
Thousands of U.S. Dollars
Unrealized
Unrealized
Gains
Losses
$68
Fair Value
$(19)
$510
Available for sale securities whose fair value is not readily
determinable as of March 31, 2014 and 2013, were as follows:
Liquidity risk (risk of default in payment at the due
Carrying Amount
Thousands of
U.S. Dollars
Millions of Yen
2014
Equity securities
Other
Total
¥64
18
¥82
2013
2014
¥64
19
¥83
$618
176
$794
Proceeds from sales of available for sale securities for the years
ended March 31, 2014 and 2013 were ¥1 million ($6 thousand) and
¥153 million, respectively. Gross realized gains and losses on these
sales, computed on the moving average cost basis, were ¥1 million
($4 thousand) and nil, and ¥11 million and nil, respectively, for
the years ended March 31, 2014 and 2013.
There was no impairment loss recorded on available-for-sale
dates) management
The Group prepares and updates its cash management plans
appropriately based on the reports from each department
and manages its liquidity risk by maintaining adequate
levels of funds on hand required to continue the business
equivalent to three months’ consolidated sales volume
considering investment proposals.
(4) Fair values of financial instruments
Fair values of financial instruments are based on quoted prices
in active markets.
Fair value of financial instruments:
equity securities for the years ended March 31, 2014 and 2013.
4. FINANCIAL INSTRUMENTS AND RELATED DISCLOSURES
(1) Group policy for financial instruments
The Group is fully self-financed. Temporary excess funds are
invested in low-risk financial instruments, such as short-term
Millions of Yen
March 31, 2014
Carrying
amount
Fair value
Cash and cash equivalents
Notes and accounts receivable
¥30,104
11,297
¥30,104
11,297
Investment securities:
Available-for-sale equity
securities
Total assets
52
¥41,453
52
¥41,453
¥98
2,679
¥98
2,679
750
¥3,527
750
¥3,527
Unrealized
gain/loss
bank deposits.
(2) Nature and extent of risks arising from financial instruments
Receivables, such as trade notes and accounts, are exposed
to customer credit risk. Investment securities mainly consist
Trade accounts payable
Income taxes payable
Accrued consumption taxes
(Current liabilities—other)
Total liabilities
of securities of companies with which a business relationship
has been established or a business and capital tie-up has been
formed. These are exposed to market fluctuation risk. Payables,
such as trade accounts, are mostly due within one year.
(3) Risk management for financial instruments
Credit risk (risk of default by the counterparties)
management
The Group manages its credit risk from receivables
following sales management rules, which include examining
customers’ credit conditions. The respective departments
monitor the customers’ credit conditions periodically and
manage the due date and balance per customer to identify
and mitigate the default risk of customers at an early stage.
The maximum credit risk exposure of financial assets is
limited to their carrying amounts as of March 31, 2014.
Market risk (risk of foreign currency fluctuations and
interest rate) management
Millions of Yen
March 31, 2013
Carrying
amount
Fair value
Cash and cash equivalents
Notes and accounts receivable
Income taxes receivable
(Prepaid expenses and other)
¥26,593
10,888
¥26,593
10,888
664
664
54
¥38,199
54
¥38,199
¥104
297
¥104
297
649
¥1,050
649
¥1,050
Investment securities:
Available-for-sale equity
securities
Total assets
Trade accounts payable
Income taxes payable
Accrued consumption taxes
(Current liabilities—other)
Total liabilities
Unrealized
gain/loss
For investment securities, the Group regularly reviews the
fair value and issuers’ financial condition and adjusts the
Group’s portfolio on an ongoing basis considering the
business relationship with counterparties.
Meitec Corporation Annual Report 2014
29
March 31, 2014
Cash and cash equivalents
Notes and accounts receivable
Investment securities:
Available-for-sale equity
securities
Total assets
Trade accounts payable
Income taxes payable
Accrued consumption taxes
(Current liabilities—other)
Total liabilities
Thousands of U.S. Dollars
Carrying
Unrealized
Fair value
amount
gain/loss
$292,274 $292,274
109,683 109,683
510
510
$402,467 $402,467
$948
26,012
7,285
$34,245
Due in one
year or less
March 31, 2014
Cash and cash
equivalents
Notes and accounts
receivable
Total
¥30,104
11,297
¥41,401
$948
26,012
7,285
$34,245
Unlisted securities and others whose fair values cannot be reliably
determined amounted to ¥82 million ($794 thousand) and ¥83
million as of March 31, 2014 and 2013, respectively, and were
not included in the above tables.
Millions of Yen
Due after one Due after five Due after ten
year through years through
years
five years
ten years
Due in one
year or less
March 31, 2013
Cash and cash
equivalents
Notes and accounts
receivable
Income taxes
receivable
(Prepaid expenses
and other)
Total
Millions of Yen
Due after one Due after five Due after ten
year through years through
years
five years
ten years
¥26,593
10,888
664
¥38,145
Valuation methods for fair value of financial instruments and
information on securities were as follows:
(i) Cash and cash equivalents, and (ii) Notes and accounts
receivable
The carrying values of cash and cash equivalents and notes
and accounts receivable approximate fair value because of
their short maturities.
Due in one
year or less
March 31, 2014
Cash and cash
equivalents
Notes and accounts
receivable
Total
Thousands of U.S. Dollars
Due after one Due after five Due after ten
year through years through
years
five years
ten years
$292,274
109,683
$401,957
(iii) Investment securities
The fair values of investment securities are measured at the
quoted market price of the stock exchange for the equity
5. INVENTORIES
instruments. Information on the fair value of investment
securities by classification is included in Note 3.
(iv) Trade accounts payable, (v) Income taxes payable,
Inventories at March 31, 2014 and 2013, consisted mainly of
work in process related to engineering solutions.
and (vi) Accrued consumption taxes (Current liabilities—
other)
The carrying values of trade accounts payable, income
6. LONG-TERM DEBT
taxes payable, and accrued consumption taxes approximate
fair value because of their short maturities.
The Company had loan commitments from five banks and one
insurance company in an aggregate amount of ¥3,000 million
Maturity analysis for financial assets with contractual maturities
($29,126 thousand) as of March 31, 2014 and 2013. There were
subsequent to March 31, 2014 and 2013, was as follows:
no loans utilized and outstanding under these arrangements as of
March 31, 2014 and 2013.
7. LONG-LIVED ASSETS
For the years ended March 31, 2014 and 2013, the Group
recognized an impairment loss of ¥53 million ($519 thousand)
and ¥202 million, respectively, due to a write-down of the assets
to be disposed of to their recoverable amount. The recoverable
30
Meitec Corporation Annual Report 2014
amount of the related assets was measured by its net selling
Reconciliation between the liability recorded in the consolidated
value, which was determined to be zero.
balance sheet and the balances of defined benefit obligation and
plan assets as of March 31, 2014 is as follows:
8. RETIREMENT AND PENSION PLANS
Millions of Yen
Funded defined benefit obligation
Plan assets
Year ended March 31, 2014
The Company and certain subsidiaries have severance payment
plans for employees, which include a contributory funded
defined benefit pension plan for the Company. Under most
circumstances, employees terminating their employment are
entitled to retirement benefits determined based on the rate
of pay at the time of termination, years of service, and certain
other factors. Such retirement benefits are made in the form of a
Unfunded defined benefit obligation
Net liability for defined benefit
obligation
Liability for retirement benefits
Net liability for defined benefit
obligation
¥129
(122)
7
12,613
Thousands of
U.S. Dollars
$1,256
(1,185)
71
122,452
¥12,620
$122,523
¥12,620
$122,523
¥12,620
$122,523
lump-sum severance payment from the Company or from certain
consolidated subsidiaries and annuity payments from a trustee.
The components of net periodic retirement benefit costs for the
Employees are entitled to larger payments if the termination is
year ended March 31, 2014 were as follows:
involuntary, by retirement at the mandatory retirement age, by
death, or by voluntary retirement at certain specific ages prior to
the mandatory retirement age.
Certain consolidated subsidiaries apply the simplified method in
computing liability for retirement benefits and retirement benefit
expenses for their defined benefit pension plans.
Defined benefit plans
Service cost
Interest cost
Recognized actuarial losses
Net periodic benefit costs to which
the simplified method was applied
Others
Net periodic benefit costs
Millions of Yen
Thousands of
U.S. Dollars
¥737
105
292
$7,159
1,016
2,838
6
61
3
¥1,143
24
$11,098
The changes in defined benefit obligation for the year ended
Accumulated other comprehensive income on defined retirement
March 31, 2014 were as follows:
benefit plans as of March 31, 2014 is as follows:
Millions of Yen
Balance at beginning of year
Service cost
Interest cost
Actuarial losses
Benefits paid
Balance at end of year
¥11,624
737
105
461
(330)
¥12,597
Thousands of
U.S. Dollars
$112,858
7,159
1,016
4,476
(3,205)
$122,304
The changes in liability for retirement benefits to which the
simplified method was applied for the year ended March 31,
2014 were as follows:
Millions of Yen
Unrecognized actuarial losses
Total
(¥1,977)
(¥1,977)
Thousands of
U.S. Dollars
($19,195)
($19,195)
Assumptions used for the year ended March 31, 2014, were set
forth as follows:
Discount rate
0.951%
Defined contribution plans
The required contribution amount to the defined contribution
plan by the Group was ¥831 million ($8,066 thousand) as of
March 31, 2014.
Millions of Yen
Balance at beginning of year
Net periodic retirement benefit costs
Benefits paid
Contribution from the employer
Balance at end of year
¥27
6
(1)
(9)
¥23
Thousands of
U.S. Dollars
$264
61
(11)
(95)
$219
Year ended March 31, 2013
The Company and certain subsidiaries had severance payment
plans for employees, which included a contributory funded
defined benefit pension plan for the Company. Under most
circumstances, employees terminating their employment were
entitled to retirement benefits determined based on the rate of
pay at the time of termination, years of service, and certain other
Meitec Corporation Annual Report 2014
31
factors. Such retirement benefits were made in the form of a
meet certain criteria such as, (1) having the board of directors,
lump-sum severance payment from the Company or from certain
(2) having independent auditors, (3) having the Audit &
consolidated subsidiaries and annuity payments from a trustee.
Supervisory Board and (4) the term of service of the directors is
Employees were entitled to larger payments if the termination is
prescribed as one year rather than two years of normal term by
involuntary, by retirement at the mandatory retirement age, by
its articles of incorporation, the board of directors may declare
death, or by voluntary retirement at certain specific ages prior to
dividends (except for dividends in kind) at any time during the
the mandatory retirement age.
fiscal year if the company has prescribed so in its articles of
incorporation. The Company does not meet all the above criteria.
The liability for employees’ retirement benefits as of March 31,
2013 consisted of the following:
The Companies Act permits companies to distribute dividends
in kind (non-cash assets) to shareholders subject to a certain
limitation and additional requirements.
Millions of Yen
Projected benefit obligation
Fair value of plan assets
Unrecognized actuarial loss
Net liability
¥11,762
(111)
(1,808)
¥9,843
Semiannual interim dividends may also be paid once a year,
upon resolution by the board of directors if the articles of
incorporation of the company so stipulate. The Companies Act
provides certain limitations on the amounts available for dividends
or the purchase of treasury stock. The limitation is defined as the
The components of net periodic retirement benefit costs for the
amount available for distribution to the shareholders, but the
year ended March 31, 2013 were as follows:
amount of net assets after dividends must be maintained at no
less than ¥3 million.
Millions of Yen
Service cost
Interest cost
Recognized actuarial loss
Contribution in defined contribution
pension plan
Net periodic benefit costs
¥622
192
254
b. Increases/Decreases and Transfer of Common Stock, Reserve,
795
dividends must be appropriated as a legal reserve (a component
¥1,863
and Surplus
The Companies Act requires that an amount equal to 10% of
of retained earnings) or as additional paid in capital (a component
of capital surplus) depending on the equity account charged
Assumptions used for the year ended March 31, 2013 were set
upon the payment of such dividends until the total of aggregate
forth as follows:
amount of legal reserve and additional paid in capital equals
25% of the common stock. Under the Companies Act, the total
Discount rate
Amortization period of prior service
cost
Recognition period of actuarial gain/
loss
0.9%
amount of additional paid-in capital and legal reserve may be
10 years
reversed without limitation. The Companies Act also provides
that common stock, legal reserve, additional paid-in capital, other
10 years
capital surplus, and retained earnings can be transferred among
the accounts under certain conditions upon resolution of the
shareholders.
9. EQUITY
c. Treasury Stock
Japanese companies are subject to the Companies Act of
The Companies Act also provides for companies to purchase
Japan (the "Companies Act"). The significant provisions in the
treasury stock and dispose of such treasury stock by resolution of
Companies Act that affect financial and accounting matters are
the board of directors. The amount of treasury stock purchased
summarized below:
cannot exceed the amount available for distribution to the
a. Dividends
shareholders, which is determined by a specific formula. The
Under the Companies Act, companies can pay dividends at any
Companies Act also provides that companies can purchase
time during the fiscal year in addition to the year-end dividend
treasury stock.
upon resolution at the shareholders' meeting. For companies that
32
Meitec Corporation Annual Report 2014
10. INCOME TAXES
The Company and its domestic subsidiaries are subject to Japanese
in a normal effective statutory tax rate of approximately 38% for
national and local income taxes, which, in the aggregate, resulted
the years ended March 31, 2014 and 2013.
The tax effects of significant temporary differences that resulted in deferred tax assets and liabilities as of March 31, 2014 and 2013,
were as follows:
Thousands of
U.S. Dollars
Millions of Yen
2014
2014
2013
Deferred tax assets:
Accrued bonuses
¥1,886
¥1,755
$18,309
266
244
2,583
4,480
3,494
43,496
195
23
1,891
247
Accrued social security on accrued bonuses
Retirement benefits
Enterprise taxes payable
Impairment loss
25
1
Write-down of investment securities
13
30
125
Land revaluation surplus
560
560
5,435
Tax loss carryforwards
185
682
1,798
Other
172
120
1,675
(873)
Valuation allowance
(880)
(8,477)
6,909
6,029
67,082
Enterprise taxes receivable
2
28
18
Unrealized gain on available-for-sale securities
2
Total
Deferred tax liabilities:
19
Land revaluation difference
37
37
363
Total
41
65
400
¥6,868
¥5,964
$66,682
Net deferred tax assets
A reconciliation between the normal effective statutory tax rate and the actual effective tax rate reflected in the accompanying
consolidated statements of income for the years ended March 31, 2014 and 2013, was as follows:
2014
2013
38.0%
38.0%
Expenses not deductible for income tax purposes
0.8
0.9
Per capita tax
0.6
0.4
Valuation allowance
0.9
(35.3)
Reduction of deferred tax assets due to income tax rates change
2.5
Normal effective statutory tax rate
Other—net
(0.8)
0.4
Actual effective tax rate
42.0%
4.4%
Meitec Corporation Annual Report 2014
33
The “Act on Partial Revision of the Income Tax Act” (Act No. 10
income taxes—deferred increased by the same amount as of and
of 2014) was promulgated on March 31, 2014 and the special
for the year ended March 31, 2014.
reconstruction surtax will no longer be imposed from fiscal years
beginning on or after April 1, 2014. Accordingly, the statutory tax
As of March 31, 2014, the Company and certain subsidiaries have
rate used to calculate deferred tax assets and liabilities is changed
tax loss carryforwards aggregating approximately ¥673 million
from 38.0% to 35.5% for temporary differences which are
($6,537 thousand), which are available to be offset against
expected to reverse in the fiscal year beginning on April 1, 2014.
taxable income of the Company and such subsidiaries in future
As a result of this change, deferred tax assets, net of deferred
years. These tax loss carryforwards, if not utilized, will expire as
tax liabilities, decreased by ¥170 million ($1,654 thousand) and
follows:
Year Ending March 31
Thousands of
U.S. Dollars
Millions of Yen
2015
¥121
$1,177
2016
84
814
2017
93
901
2018
127
1,237
2019
126
1,220
2020
2
19
2021
3
27
2022
46
451
2023
71
691
Total
¥673
$6,537
11. LEASES
The Group leases certain buildings and structures, furniture, and
fixtures.
Millions of Yen
¥188
Due within one year
Future lease payments for non-cancellable operating leases as a
Due after one year
lessee at March 31, 2014 were as follows:
Total
12. NET INCOME PER SHARE
Basic net income per share ("EPS") for the years ended March 31, 2014 and 2013, was as follows:
Year Ended March 31, 2014
Basic EPS — Net income available to
common shareholders
Year Ended March 31, 2013
Basic EPS — Net income available to
common shareholders
Millions of Yen
Thousands
of shares
Net income
Weighted-average
shares
¥3,974
30,972
Yen
EPS
¥128.30
Millions of Yen
Thousands
of shares
Yen
Net income
Weighted-average
shares
EPS
¥5,993
32,208
U.S. Dollars
$1.25
¥186.08
Diluted EPS is not disclosed, as there are no dilutive securities for the years ended March 31, 2014 and 2013.
34
Meitec Corporation Annual Report 2014
Thousands of
U.S. Dollars
$1,830
79
762
¥267
$2,592
13. COMPREHENSIVE INCOME
The components of other comprehensive income for the years ended March 31, 2014 and 2013 were as follows:
Thousands of
U.S. Dollars
Millions of Yen
2014
2014
2013
Unrealized loss on available-for-sale securities:
Losses arising during the year
¥(1)
Reclassification adjustments to profit or loss
¥(4)
$(14)
(11)
Amount before income tax effect
(1)
(15)
(14)
Income tax effects
(2)
8
(19)
¥(3)
¥(7)
$(33)
Total
Foreign currency translation adjustments:
Adjustments arising during the year
¥26
¥1
$252
Total
¥26
¥1
$252
Total other comprehensive income
¥23
¥(6)
$219
14. SEGMENT INFORMATION
Operating segments are components of an entity about which
separate financial information is available and such information is
of mold and technological support for printed-circuit boards.
"Global" engages in job placement and vocational training for
evaluated regularly by the chief operating decision maker in deciding
students to supply human resources for Japanese manufacturers
how to allocate resources and in assessing performance. Generally,
operating in the coastal areas of China.
segment information is required to be reported on the same basis as
"Recruiting & Placement" consists of the job placement
is used internally for evaluating operating segment performance and
business specializing in engineers and the information portal site
deciding how to allocate resources to operating segments.
business.
a. Description of reportable segments
b. Method of measurement for net sales, profit (loss), assets, and
Reportable segments are part of the Group whose financial data
other items for reportable segments
can be obtained separately. The board of directors reviews the
The accounting policies of each reportable segment are
financial data periodically to evaluate earnings and determine
consistent with those disclosed in Note 2, "Summary of
how to allocate business resources.
Significant Accounting Policies." Income by reportable segments
The Group primarily operates in the temporary engineers
staffing business as their core business. The Group, based on
is based on operating income. Intersegment transactions are
based on prevailing market prices.
the nature of the business and similarities of the market, consists
of four segments, "Outsourcing," "Engineering Solutions,"
"Global," and "Recruiting & Placement."
"Outsourcing" provides temporary staffing services mainly
focusing on the temporary engineers staffing business.
"Engineering Solutions" consists of technology services,
including analytical technology, prototyping, and manufacturing
Meitec Corporation Annual Report 2014
35
c. Information on net sales, profit (loss), assets, and other items
Millions of Yen
Reportable segments
Outsourcing
Engineering
Solutions
Recruiting &
Placement
Global
Total
2014
Net sales:
Sales to external customers
Intersegment sales or transfers
Total net sales
Segment profit (loss)
Segment assets
¥71,517
¥2,510
¥66
¥813
71
280
18
115
¥74,906
484
¥71,588
¥2,790
¥84
¥928
¥75,390
¥6,687
¥94
¥(100)
¥284
¥6,965
¥59,759
¥966
¥143
¥699
¥61,567
¥945
¥54
¥5
¥1,004
318
8
21
347
Other items:
Depreciation and amortization
Increase in property, equipment, and intangible assets
Millions of Yen
Reportable segments
Outsourcing
Engineering
Solutions
Recruiting &
Placement
Global
Total
2013
Net sales:
Sales to external customers
Intersegment sales or transfers
Total net sales
Segment profit (loss)
Segment assets
¥67,222
¥2,359
¥56
¥694
¥70,331
60
302
13
45
420
¥67,282
¥2,661
¥69
¥739
¥70,751
¥6,144
¥88
¥(60)
¥177
¥6,349
¥56,617
¥964
¥191
¥447
¥58,219
¥1,222
¥63
¥2
¥1,287
688
15
7
710
Other items:
Depreciation and amortization
Increase in property, equipment, and intangible assets
Thousands of U.S. Dollars
Reportable segments
Outsourcing
Engineering
Solutions
Global
Recruiting &
Placement
Total
2014
Net sales:
Sales to external customers
Intersegment sales or transfers
Total net sales
Segment profit (loss)
Segment assets
$694,343
$24,366
$641
$7,893
683
2,723
178
1,112
$727,243
4,696
$695,026
$27,089
$819
$9,005
$731,939
$(974)
$2,757
$67,624
$6,789
$597,741
$64,927
$914
$580,183
$9,381
$9,177
$528
$45
$9,750
3,088
84
201
3,373
$1,388
Other items:
Depreciation and amortization
Increase in property, equipment, and intangible assets
36
Meitec Corporation Annual Report 2014
d. Differences between the total of each reportable segment amount and the amounts shown in the accompanying
consolidated financial statements
Net sales
Thousands of
U.S. Dollars
Millions of Yen
Total reportable segments
Intersegment eliminations
Net sales on consolidated statements of income
2014
2013
2014
¥75,390
¥70,751
$731,939
(484)
(4,696)
(420)
¥74,906
$727,243
¥70,331
Operating income
Thousands of
U.S. Dollars
Millions of Yen
2014
2013
Total reportable segments
¥6,965
¥6,349
$67,624
Intersegment eliminations
14
5
135
¥6,979
¥6,354
$67,759
Operating income on consolidated statements of income
2014
Total assets
Thousands of
U.S. Dollars
Millions of Yen
Total reportable segments
Intersegment eliminations
Total assets on consolidated balance sheets
2014
2013
¥61,567
¥58,219
(121)
2014
$597,741
(1,180)
(217)
¥61,446
$596,561
¥58,002
Other items
Millions of Yen
Total reportable
segment
Adjustments
Thousands of U.S. Dollars
Consolidated
Total reportable
segment
Adjustments
Consolidated
2014
Depreciation and amortization
Increase in property, equipment, and intangible assets
¥1,004
¥1,004
$9,750
$9,750
¥347
¥347
$3,373
$3,373
Other items
Millions of Yen
Total reportable
segment
Adjustments
Consolidated
2013
Depreciation and amortization
Increase in property, equipment, and intangible assets
¥1,287
¥1,287
¥710
¥710
e. Information about products and services
(2) Property and equipment
Information about products and services is not disclosed
Information about property and equipment by geographical areas
since the classification by products and services is the same as
is not disclosed since property and equipment in Japan make up
the reportable segments. Sales to external customers in the
more than 90% of property and equipment in the consolidated
"Outsourcing" segment make up more than 90% of net sales in
balance sheets.
the consolidated statements of income.
g. Information about major customers
f. Information by geographical areas
Information about major customers is not disclosed since there
(1) Net sales
are no external customers making up more than 10% of net sales
Information about net sales by geographical areas is not disclosed
in the consolidated statements of income.
since sales to external customers in Japan make up more than 90%
of net sales in the consolidated statements of income.
Meitec Corporation Annual Report 2014
37
h. Information about impairment loss by reportable segment
Millions of Yen
Reportable segment
Outsourcing
Engineering
Solutions
¥5
¥48
Global
Recruiting &
Placement
Corporate and
Eliminations
Total
2014
Impairment loss
¥53
Millions of Yen
Reportable segment
Outsourcing
Engineering
Solutions
Global
Recruiting &
Placement
Corporate and
Eliminations
Total
2013
Impairment loss
¥201
¥1
¥202
Thousands of U.S. Dollars
Reportable segment
Outsourcing
Engineering
Solutions
Global
Recruiting &
Placement
Corporate and
Eliminations
Total
2014
$50
Impairment loss
$469
$519
i. Information about amortization of goodwill by reportable segment
Millions of Yen
Reportable segment
Outsourcing
Engineering
Solutions
Global
Recruiting &
Placement
Corporate and
Eliminations
Total
2013
Amortization of goodwill
None are applicable for the year ended March 31, 2014.
38
Meitec Corporation Annual Report 2014
¥4
¥4
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Meitec Corporation Annual Report 2014
39
Supplemental Non-Consolidated Balance Sheets (Unaudited)
MEITEC CORPORATION
March 31, 2014
Thousands of
U.S. Dollars (Note1)
Millions of Yen
ASSETS
2014
2013
2014
¥28,931
¥25,281
$280,883
9,079
8,883
88,147
CURRENT ASSETS:
Cash and cash equivalents
Accounts receivable:
Trade accounts
Subsidiaries
Allowance for doubtful accounts
Inventories
4
3
36
(2)
(7)
(18)
188
223
1,922
2,112
932
906
9,041
41,054
38,095
398,579
Income taxes receivable
Deferred tax assets
664
Short-term loans to subsidiaries
Prepaid expenses and other
Total current assets
1,826
18,664
30
PROPERTY AND EQUIPMENT:
Land
Buildings and structures
Furniture and fixtures
3,583
3,583
34,782
19,231
19,211
186,706
2,110
2,259
20,482
Construction in progress
Other
Total
Accumulated depreciation
Net property and equipment
117
148
390
1,443
25,072
25,560
243,413
(14,538)
(14,682)
(141,144)
10,534
10,878
102,269
INVESTMENTS AND OTHER ASSETS:
Investment securities
Investments in and advances to subsidiaries
Software
134
137
1,304
1,777
1,842
17,248
556
585
5,394
Software in progress
259
Leasehold deposits
534
548
5,191
Deferred tax assets
3,793
3,505
36,824
69
69
672
6,863
6,945
66,633
¥58,451
¥55,918
$567,481
Other
Total investments and other assets
TOTAL
Note 1: The translations of Japanese yen amounts into U.S. dollar amounts have been made at the rate of ¥103 to $1, the approximate rate of exchange at March 31, 2014.
40
Meitec Corporation Annual Report 2014
Thousands of
U.S. Dollars (Note 1)
Millions of Yen
LIABILITIES AND EQUITY
2014
2014
2013
CURRENT LIABILITIES:
Income taxes payable
¥2,247
$21,814
Deposits from subsidiaries
2,653
¥1,884
25,760
Accrued expenses
6,298
5,973
61,148
1,512
1,644
14,677
12,710
9,501
123,399
10,620
9,816
103,110
Deferred tax liabilities for land revaluation
37
37
363
Provision for investment loss
84
46
815
8
11
70
10,749
9,910
104,358
16,826
16,826
163,358
4,210
4,210
40,874
Other
Total current liabilities
LONG-TERM LIABILITIES:
Liability for retirement benefits
Other
Total long-term liabilities
EQUITY:
Common stock—authorized, 142,854 thousand shares in 2014 and 2013; issued, 32,500 thousand shares in 2014 and 33,000 thousand shares in 2013
Capital surplus:
Additional paid-in capital
Other capital surplus
Retained earnings—unappropriated
Unrealized gain on available-for-sale securities
Land revaluation difference
3,844
5,090
37,322
15,831
15,540
153,701
3
(878)
6
(878)
30
(8,527)
Treasury stock—at cost, 1,944 thousand shares in 2014 and 1,803 thousand shares in 2013
(4,844)
(4,287)
(47,034)
Total equity
34,992
36,507
339,724
¥58,451
¥55,918
$567,481
TOTAL
Meitec Corporation Annual Report 2014
41
Supplemental Non-Consolidated Statements of Income (Unaudited)
MEITEC CORPORATION
Years Ended March 31, 2014
Thousands of
U.S. Dollars (Note 1)
Millions of Yen
2014
2013
¥58,877
¥55,823
$571,617
COST OF SALES
43,743
41,241
424,684
Gross profit
15,134
14,582
146,933
9,382
9,179
91,090
5,752
5,403
55,843
363
276
3,528
NET SALES
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Operating income
2014
OTHER INCOME (EXPENSES):
Interest and dividend income
Interest expense
(1)
Interest on refund
18
Loss on investments in partnerships
(1)
(9)
(5)
(201)
(50)
(39)
(20)
(377)
1
10
178
Gain on liquidation of subsidiaries
(11)
452
Impairment loss
Provision of allowance for investment loss
Gain on sales of investment securities
Loss on devaluation of investments in subsidiaries
(8)
(1)
(307)
4
(2,978)
Other—net
(4)
22
(42)
Other income—net
25
529
244
5,777
5,932
56,087
2,452
443
23,809
INCOME BEFORE INCOME TAXES
INCOME TAXES:
Current
Deferred
Total income taxes
NET INCOME
(101)
(567)
(980)
2,351
(124)
22,829
¥3,426
¥6,056
$33,258
U.S. Dollars
(Note 1)
Yen
2014
2013
2014
PER SHARE OF COMMON STOCK (Notes 2 and 3):
Basic net income
Cash dividends applicable to the year
¥110.60
¥188.04
$1.07
72.00
99.00
0.70
Notes: 1. The translations of Japanese yen amounts into U.S. dollar amounts have been made at the rate of ¥103 to $1, the approximate rate of exchange at March 31, 2014.
2. The computation of net income per share is based on the weighted average number of shares of common stock outstanding during each year. The weighted average number of
common shares used in the computation of basic net income was 30,972 thousand shares for 2014 and 32,208 thousand shares for 2013.
3. Diluted net income per share for 2014 and 2013 are not presented, since there were no potentially dilutive shares as of March 31, 2014 and 2013.
42
Meitec Corporation Annual Report 2014
Consolidated financial statements and notes to the statements in the Annual Securities Report were restated for readers overseas in English for
better understanding of Meitec Group’s business. Meitec takes responsibility for the contents.
Meitec Corporation Annual Report 2014
43
Corporate Data
MEITEC CORPORATION
Executives
As of March 31, 2014
As of June 30, 2014
Directors
Corporate Headquarters
8-5-26, Akasaka, Minato-ku, Tokyo 107-0052, Japan
Tel: +81-3-5413-2600
Registered Corporate Headquarters
2-20-1, Kousei-tori, Nishi-ku, Nagoya,
Aichi 451-0075, Japan
Tel: +81-52-532-1811
Establishment
July 17, 1974
Common Stock
Authorized: 142,854,400 shares
Issued: 32,500,000 shares
Shareholders
5,586
Employees (consolidated)
8,270
Lines of Business
Providing engineering services to major Japanese
manufacturing companies in the fields of hightechnology research and development
Consolidated Subsidiaries
Full-Line Temporary Staffing Business
Hideyo Kokubun
CEO, MEITEC Group
Representative Director
President and CEO, MEITEC CORPORATION
In charge of subsidiaries in China
COO, Executive officer for the Internal Audit Department,
the CSR Department
Kosuke Nishimoto
Chairman and Director
Hiroshi Yoneda
Director
In charge of MEITEC FIELDERS INC., MEITEC NEXT CORPORATION
Kiyomasa Nakajima
Director
In charge of the Career Support Division
In charge of all engineer.jp CORPORATION
Executive officer for the Recruiting Division
Masato Uemura
Director
In charge of the Personnel Division
Executive officer for the Management Information Department,
the Accounting Department
Hidenori Nagasaka
Director
In charge of MEITEC CAE CORPORATION, APOLLO GIKEN CO., LTD.
Executive officer for the Business Operations Management Division,
the Sales Planning Department
Akiyoshi Ogasawara
Director
In charge of MEITEC CAST INC., MEITEC EX CORPORATION
Executive officer for the Business Execution Division
Minao Shimizu
Outside Director (Independent)
Hiroyuki Kishi
Outside Director (Independent)
Meitec Fielders Inc.
Meitec Cast Inc.
Meitec Ex Corporation
Audit & Supervisory Board Members
Engineering Solutions Business
Masatoshi Saito
Outside Audit & Supervisory Board Member (Independent)
Apollo Giken Co., Ltd.
Shanghai Apomac Science & Technology
Meitec CAE Corporation
Global Business
Meitec Shanghai
Meitec XiAn TechnoCenter Co., Ltd.
Meitec Chengdu TechnoCenter Co., Ltd.
Meitec Shanghai Human Resources Co., Ltd.
Makoto Fukai
Standing Outside Audit & Supervisory Board Member (Independent)
Hiroshi Watanabe
Outside Audit & Supervisory Board Member (Independent)
Executive Officers
Kouichi Nakagawa
Executive officer for the Central Japan Area
Jun Samukawa
Executive officer for the Kanagawa and Shizuoka Japan Area
Tetsuya Yabe
Executive officer for the Western Japan Area
Career Support Business
Hiroshi Yamada
Executive officer for the Eastern Japan Area
Meitec Next Corporation
All engineer.jp CORPORATION
Keisuke Ito
Executive officer for the Personnel Department
Sonoe Shimizu
Executive officer for the Office of the President,
the Corporate Communication Department,
the Human Resources Development Department
Yuji Hachiya
Executive officer for the Career Support Divisions
44
Meitec Corporation Annual Report 2014
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Meitec Corporation has developed an Internet Web site to
disclose its most current corporate information, including
materials on such key management indicators as monthly
utilization ratios, as well as financial reports, quarterly
reports and performance-adjustment announcements.
MAIN CONTENTS
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and Meitec Fielders, and other information)
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Please see the URL below for details.
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