Smart Technology for an Eco-friendly Life
Transcript of Smart Technology for an Eco-friendly Life
Smart Technology for an Eco-friendly Life
MegaChips Corporation
Annual Report2012
Year Ended March 31, 2012
Customers(Equipment manufacturers)
Contractmanufacturers
Offering servicesas a development
partner
Specializes inresearch,
developmentand design
Outsourcemanufacturing
Newproducts
Camera manufacturers
Securities companies
Industrial equipmentmanufacturers
Domesticmanufacturers
Core technology•Image processing
technology•Audio processing
technology•Communication
technology
•Developing and offering specialty technologies in an effective manner
•Product concept•Comprehensive
design•Development of
specialty technologies
•System LSI•Modules &
boards•System
devices
Game devicemanufacturers
Domesticmanufacturers
Overseasmanufacturers
Overseasmanufacturers
Development of newproducts through
the cooperation in the areaof specialty technologies
Offering State-of-the-Art Technologiesfor the Future of People and SocietyMegaChips Corporation has developed original LSIs and system products and provided them to customers in the image, audio, and communications fields, based on a mission of helping people achieve safety, security and fulfilling lives, while protecting the global environment, based on sophisticated technological capabilities.
The emergency of the digital equipment environment in recent years has brought to Japan the advanced information society, in which product functionality improves rapidly and product types are diversifying. With these changes, manufacturing customers are asking MegaChips to provide increasingly sophisticated and diverse products.
MegaChips aspires to play a role in creating an affluent and highly fulfilling society, by supplying to its manufacturing customers a broad range of original solutions that large corporations find difficult to provide. The Company aims to offer these solutions by accurately identifying ongoing social changes, taking advantage of its characteristics as an R&D-oriented fabless manufacturer, and creating new value that has never existed before, applying its sophisticated technological capabilities.
A History of Development
LSIs for game consoles
Real-time automatic power measurement system
Image systems for security and monitoring areas
Wii, Nintendo 3DS and Nintendo DS are the registered trademarks or trademarks of Nintendo Co., Ltd
“One-Seg” modulesImage-processing LSIs for digital cameras
Profile
Business Models
1 MegaChips Corporation
MegaChips Corporation and Consolidated SubsidiariesFor the five years ended March 31
Profile ···············································1Financial Highlight ····························2Message from the President on Business Results and Strategies ·········3Close Up: Introducing new products ···8R&D and Intellectual Property Strategy ······························9
CSR Activities ··································10Corporate Governance····················11Directors and Auditors ····················13Financial Section ·····························14Corporate Data/ Stock Information ···························44
C O N T E N T S Note:This annual report includes forward-looking statements, with the exception of historical data that is noted as such. These statements are based on management’s assumptions and projections in light of information currently available to the Company. These assumptions involve risks and uncertainties that may cause actual results, performance or achievements to be materially different from those expressed or implied in the forward-looking statements.
88.1988.19
3,0343,03435,36635,36636,25936,25938,49538,495
52,77152,77150,67150,671
3,0333,0333,0553,055
4,8124,812
3,4443,444 2,1272,1272,2882,2882,1402,140
2,6722,6722,6122,612
29,24729,24729,20329,20326,61226,612
33,11533,11535,32935,329 24,97724,97725,45325,453
24,43924,439
20,56420,56421,43621,436 88.8088.80
94.6494.64
110.21110.21105.60105.60
88.1988.19
3,0343,03435,36635,36636,25936,25938,49538,495
52,77152,77150,67250,672
3,0333,0333,0553,055
4,8124,812
3,4453,445 2,1272,1272,2882,288
2,1402,140
2,6722,6722,6122,612
29,24729,24729,20329,203
26,61226,612
33,11533,11535,32935,329 24,97724,977
25,45325,45324,43924,439
20,56420,56421,43721,437 88.8088.80
94.6494.64
110.21110.21105.60105.60
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Financial Highlight
Millions of yen except for per share information, and number of shares issued at year end
Thousands ofU.S. dollars
2008 2009 2010 2011 2012 2012For the Year:
Net sales ¥ 50,672 ¥ 52,771 ¥ 38,495 ¥ 36,259 ¥ 35,366 $ 430,304Cost of sales 42,833 43,671 31,833 29,731 28,687 349,039 Operating income 3,445 4,812 3,034 3,055 3,033 36,913Net income 2,612 2,672 2,140 2,288 2,127 25,887
At Year-End:Total assets 35,329 33,115 26,612 29,203 29,247 355,855Net assets 21,437 20,564 24,439 25,453 24,977 303,895
Yen U.S.dollars
Per Share Information:Net income 105.60 110.21 88.19 94.64 88.80 1.08Net assets 876.66 849.02 1,006.08 1,060.19 1,042.70 12.68
Shares Shares
Number of Shares Issued at Year End 24,904,517 24,667,317 24,353,900 24,038,400 24,038,400 24,038,400Note: The U.S. dollar amounts are provided solely for the convenience of the readers at the rate of ¥82.19 US$1, the rate prevailing on March 31, 2012.
2Annual Report 2012
Aiming at the Global Market as a Comprehensive Semiconductor-Producing Company by Providing a Range of Solutions
Message from the President on Business Results and Strategies
During the fiscal year ended March 31, 2012, the economic environment remained very challenging, given the effects of the Great East Japan Earthquake, the flooding in Thailand, the financial crisis in Europe, and the sharp appreciation of the yen. In this economic environment, with lower demand for electronic components, such as semiconductors and consumer electronic equipment, the overall market for the electronics showed a year-on-year decline.
Despite these conditions, given the rapid progress in enhancing and diversifying digital equipment performance, the number of business opportunities that enable us to take advantage of our technologies have increased. Accordingly, we were able to develop and engage in sales activities for a wide range of products, including high-performance application-specific memory, system LSIs, and system products that contain our own system LSIs.
Although both sales and income declined year on year, net sales, operating income, and net income exceeded the plan, reflecting the strong sales of digital image monitoring systems in the security business, and aggressive sales activities, responding to the recovery in demand for mainstay LSIs for storing game software (custom memories) in the second half of the year. The
What were the operating results for the fiscal year ended March 31, 2012?
Amid the challenging business environment, we faced a fall in sales and profits, but developed business by harnessing the strengths of our unique technologies.
Q
A
Akira TakataPresident and Representative Director
3 MegaChips Corporation
Game area
Digital camera area
Eco-energyarea
Industrialapplication
area
Security area
ゲーム分野
デジタル家電分野
エコエネルギー分野
産業用途分野
セキュリティ分野
(Billions of yen)
2012/3 2011/3 YoYchange
Net sales 35.3 36.2 -2.5%
Operating income 3.03 3.05 -0.7%
Net income 2.12 2.28 -7.0%
Results for the fiscal year ended March 31, 2012
In the Medium-Term Growth Strategy that was
established in May 2012, we have determined a clear
corporate direction to achieve recognition as a firm that
MegaChips aims to become an internationally regarded company that
provides service solutions around the world.
A
What is the medium-to long-term outlook?
Q
fiscal year under review is regarded as a year of steady progress in research and development, including the development of the image-processing technologies used in digital cameras, and the development of LSI products, which will enhance the our growth in the future.
provides service solutions worldwide, in addition to an
existing policy of building an appropriate business
portfolio. Specifically, the Medium-Term Growth Strategy
stipulates the two basic policies described below.
The first growth strategy is to establish an
appropriate business portfolio that is not concentrated in
certain businesses, by developing an eco-energy area and
an industrial application area along with our current
“customer-oriented business in the consumer area.”
In the customer-oriented business area that
MegaChips specializes in, we will continue to strive to
strengthen our business foundation by improving the
technological and developmental capabilities to respond
to a range of businesses centered in the consumer area.
Moreover, we will focus on new growth fields of eco-
energy and industrial applications providing our own
technologies and products to more customers. For
example, in the fiscal year ended March 31, 2012, in the
eco-energy area, we have commercialized automatic
electric power measurement system that can contribute
to an energy-saving society, and LSI BlueChip, which
enhance the quality of communications by using radio
communications and electric power line communications
in a mutually complementary manner. (These products
are presented on page 8.) As these products can be used
in stores, offices, and factories, in addition to smart
houses that optimize energy consumption, they will
Styles of technology provision Approach Market
Expanding Business Based on Medium-to Long-Term Strategies
Combining the ideas of LSIs and
systems
Core technologies
from a medium-tolong-term
perspective
Design Development
IP
LSIs
Modules & Boards
System products
Customer-orientedbusiness
Development and provisionof customer-specific solutions that support the needs of customers.
•�Acquire�competitive�core�technologies.
•�Bolster�strength�through�global collaboration. Strengthen technologies, marketing, production and services.
Diversesolutions
Medium-tolong-term
Current
4Annual Report 2012
As part of the initiative to strengthen our ability to
provide total solutions and establish a structure for
entering the global market—the second item of the
Medium-Term Growth Strategy—in July 2012 we plan
to purchase all shares of Kawasaki Microelectronics, Inc.
(“KME”), the wholly owned subsidiary of JFE Holdings,
Inc., to make it a subsidiary of MegaChips.
The key to our decision to make KME a subsidiary
was that the characteristics and strengths of the two
companies are highly complementary. We judged that
we would be able to create a new growth axis and
trade in the global market by integrating their business
resources and superior technologies.
By using a fabless LSI manufacturing system
(without owning a factory) in the same manner as
MegaChips, KME offers comprehensive services from
designing, fabrication, assembly, and testing to quality
assurance to major customers both in Japan and
overseas in the areas of communications, images,
information, and office automation. KME is growing
and strengthening its business through its subsidiary in
the United States (which serves as an R&D center for
the development of essential future technologies), its
branch in India (which serves as a development center),
and its Taiwan branch (which serves as a support base
for Taiwanese and Chinese customers).
In the meantime, we are targeting leading
companies in Japanese industries. As an R&D-oriented
fabless manufacturer of LSI products and system
products with own LSIs, MegaChips’ defining
characteristic has been the ability to provide technologies
and products by understanding and forecasting market
trends based on an extensive knowledge of customers’
products and services. We particularly excel in the area
of upstream development, focusing on images, audio,
and communications technologies. Through our
unique technologies, we have been offering system
LSIs, software related to system LSIs, and system
products that contain self-developed LSIs.
However, amid the recent rapid technological
innovation in the electronics sector, manufacturers are
required to demonstrate an extensive range of
capabilities to respond to customers’ various demands
and needs in both Japan and overseas for planning,
development, manufacturing, and even quality
guarantees. In response, while targeting medical
equipment and industrial applications of growth areas,
we will work on strengthening our total solutions
capabilities in order to steadily provide support in a
Message from the President on Business Results and Strategies
likely become our key products in the future that
position the eco-energy area as a strategic business.
In this way, while we struggle to strengthen our
customer-oriented business that is the foundation of our
business, we will aim to establish an appropriate business
portfolio by developing businesses in the eco-energy area
and the industrial application area, the key business areas
for our medium-to long-term growth.
The second growth strategy is to strengthen
ability to provide total solutions and to establish a
structure for entering the global market.
To achieve further growth in the medium-to long-
term and to respond to increasingly sophisticated and
diversified customer requirements, we believe it is
essential for us not only to provide solutions that focus
mainly on our existing superior technology development,
but also to provide the optimal solutions for customer
requirements in a broad context, from planning and
development to production and support services. It is also
necessary for us to enter the global market so that we
can continue to grow in the future, unaffected by the
severe business environment in Japan. We will strive to
establish a structure in which we can offer support
related to production and quality, and strengthen our
ability to provide total solutions, from planning and
development to production and support services.
Moreover, we will aim to strengthen our worldwide
marketing capabilities by developing overseas operating
bases, expanding our customer base for future growth.
What is the objective of makingKawasaki Microelectronics, Inc. a subsidiary?
By integrating the strength of the two companies, MegaChips aims to become a
globally competitive comprehensive semiconductor-producing company.
Q
A
5 MegaChips Corporation
comprehensive manner from planning and development
to manufacturing, assembling, and testing. Moreover, in
the future, Japanese electronic machinery and
equipment manufacturers, our target companies, are
likely to accelerate local development, local production,
and local procurement through their overseas operating
bases. To respond to this development and ensure our
sustainable growth, we have established a global
development and production structure and expanded
our overseas customer base as important strategies.
As measures to develop this overseas operational
structure, we will strive to aggressively utilize global
alliances and acquire global human resources, while
also focusing on developing overseas operating bases
for marketing and dealing with overseas customers to
establish an international customer foundation.
Considering this environment, KME, which has
been quick to establish an overseas development and
production structure and has an extensive overseas
network, is considered to be in the best position for us
to efficiently acquire the functions and resources we will
need in the future. By adding this new subsidiary, we
believe that we will be able to become a comprehensive
semiconductor-producing fabless manufacturer capable
of providing total solutions to our customers.
MegaChips is currently ranked 23rd among the top
global fabless semiconductor manufacturers, and is the
only Japanese company in this global ranking. We will
aim to achieve a higher position and make MegaChips
grow from a domestic company into a global one.
2011 Top 25 Fabless IC Suppliers
Rank Headquarters Company
1 U.S. Qualcomm
2 U.S. Broadcom
3 U.S. AMD
4 U.S. Nvidia
5 U.S. Marvell
6 Taiwan MediaTek
7 U.S. Xilinx
8 U.S. Altera
9 U.S. LSI Corp.
10 Singapore Avago
11 Taiwan MStar
12 Taiwan Novatek
13 Europe CSR
14 Europe ST-Ericsson
15 Taiwan Realtek
16 China HiSilicon
17 China Spreadtrum
18 U.S. PMC-Sierra
19 Taiwan Himax
20 Europe Lantiq
21 Europe Dialog
22 U.S. Silicon Labs
23 Japan MegaChips
24 U.S. Semtech
25 U.S. SMSC
Source: Company reports, IC insights' Strategic Reviews Database
MegaChips aims to become an internationally regarded company that provides service solutions around the world.”“
6Annual Report 2012
President and Representative Director
In the fiscal year ending March 31, 2013, both Japanese
and global economies are likely to continue to face
uncertain conditions, and the market environment for
the electronic machinery and equipment industry is also
expected to remain challenging. However, demand for
certain electronic components is likely to grow,
reflecting the increasing use in automobiles and
expanding demand for smartphones and tablets.
Moreover, communications and broadcasting are
digitizing and diversifying at a rapid pace, indicating a
move toward an even more advanced information
society. Based on our concept of integrating LSIs and
systems knowledge, we will continue to strive to
aggressively develop businesses by maximizing the use
of our unique technologies.
In the fiscal year ending March 31, 2013, we will
start mass production of new products, including
system LSIs for game consoles and LSIs for digital
cameras. As a result, we expect to gain momentum in
improving our earnings capabilities, and to record
significantly higher sales and income. I am convinced
that the current fiscal year will be a turning point for
future growth.
The specific impact on performance from the
purchase of KME shares and related figures are currently
under review. As a result, they are not reflected in the
current plan for the fiscal year ending March 2013. The
consolidated forecast for the fiscal year ending March
2013, taking the impact of these share purchases into
account, is expected to be announced when results for
the first quarter of the current fiscal year are announced
(in late July 2012).
MegaChips regards the distribution of profits to the
shareholders as an important management issue, and is
working to distribute profits in line with earnings. We
have adopted a policy in which dividends are determined
and paid once a year based on either a dividend payout
ratio of about 30% or a consolidated dividend on equity
(DOE) of about 2%, whichever is greater, taking into
consideration such factors as our consolidated operating
results, financial circumstances, and investment plans. In
accordance with this policy, we paid an annual dividend
of ¥27 per share as an ordinary dividend for the fiscal
year ended March 31, 2012 (compared with ¥29 for the
previous fiscal year).
We hope that we will be able to continue to count on
the support and understanding of our shareholders.
June 2012
Dividends Payout Ratio
0
10
30
20
08/3 09/3 10/3 11/3 12/3
32 33
2729
27
30.3 29.9 30.6 30.6 30.4
40(¥)
0
20
60
40
80(%)
Dividends & Payout Ratio
What is the outlook for full-year results for the current fiscal year?
I am convinced that the current fiscal year will be a turning point for future growth.
Q
A
How do you view shareholder return?
We consider shareholder return to be an important management issue, and will try
to improve our stock value.
Q
A
Message from the President on Business Results and Strategies
7 MegaChips Corporation7
For more information, please see our web site.
HOME>Product Solutions>New Network Technologies
http://www.megachips.co.jp/english/product/technology/new01.html
Close UpIntroducing new products
Developing communication LSIs of the world’s first technology to contribute to an energy-saving society
BlueChip
Energy saving starts with “visualization”
Despite a recent rise in awareness of saving electricity
and the increasing use of energy-saving home electronics,
the problem remains that consumers cannot accurately
assess how electricity consumption is affected by the way
home electric appliances are used at different times of
the day. By responding to this problem and achieving the
visualization of electric power consumption in detail, we
can start implementing highly accurate energy-saving
initiatives that represent actual conditions.
Realizing a full-scale energy saving society with BlueChip
Applying BlueChip to smart meters, solar power
systems, storage batteries and other home electronics
will enable us to achieve the visualization of electric
power and create an environment for equipment
control, to a certain degree, via smartphones and tablet
terminals. For example, we will be able to control
power supply while away from home and automatically
control air conditioners and lightings for energy-saving.
Moreover, by concentrating the power
consumption information of each equipment on cloud
computing, for example, we are likely to be able to
manage electric power consumption at a number of
places by remote control for power saving, thereby
significantly contributing to the expansion of the use of
new systems that realize effective energy saving.
Image of service that integrates BlueChip and the internet
Lighting apparatus
Solar power systems
Internet
Air conditioner
Storage battery
Gateway
Users can monitor power consumption and control power supply for each device via smartphones and tablet terminals
Air conditioner
Stora
“BlueChip” that realizes hybrid telecommunications based on wireless and power line communications
In the fall of 2011, MegaChips announced the
development of BlueChip, large-scale integrated circuits
(LSIs) that achieves more reliable telecommunications,
and is currently engaged in the development of
BlueChip. Two functions that BlueChip possesses
—wireless and power line communications—can
counter each other’s deficiencies and prevent
discontinuity when wireless communications or power
line communications is used separately, achieving a
steadier communication environment.
8Annual Report 2012
Europe
Asia
Total number of ownerships:
8 4
442628
624
168
104
269
JapanU.S.A
RegistrationsApplications
872Total number of registrations:
403
Others 2
R&D Policy:Provide the system LSI and the system products, as well as the service solutions using
the applicable system products in the fields of images, audio, and communications.
MegaChips protects its rights to technologies and
other knowledge that it derives from its R&D activities.
These intellectual assets make us even more
competitive and underpin our distinctive products and
services in the image, audio and communication fields,
where technological progress is rapid.
Since we are a fabless technology company
focused on R&D, our ideas at the R&D stage, know-
how and other intellectual property centered on core
and basic technologies constitute the foundation of
our competitive advantage. We therefore define
efforts to secure rights for intellectual property as a
Major Patent Applications (the Fiscal Year Ended March 31, 2012)
Patent Applications and Registrations by Region 1
source of competitiveness and pursue a strategy of
obtaining intellectual property in line with the
strategies of individual business segments.
In the fiscal year ended March 31, 2012,
MegaChips filed patent applications for its original
hybrid communication technology as well as electric
power measuring system technology. It also applied
for patents for new businesses involving image
processing circuit technology for digital camera, image
recognition technology for in-vehicle cameras and
sensor-related technology.
Development of LSI products
Development of other productsDevelopment of algorithms and architectures relating to image compression and decompression, image processing and communications
•LSIs for game consoles and other entertainment equipment •LSIs for audio and visual equipment
•LSIs for processing digital camera and other images
• IP for modules using the LSIs described above and LSIs for image processing systems
LSI products
•�Technologies to enhance the reliability of semiconductor memory
•�Image processing and circuit technologies for digital cameras
•�Human and object detection algorithms
•�Technologies for video image compression and decompression (Low delay and high quality picture)
•�Technologies related to sensors
Other products
•�Technologies related to surveillance cameras
•�Hybrid communications technologies
•�Technologies related to electric power measuring systems
•�Lighting control technologies
•Digital image recording systems •Digital image transmission servers •Security monitoring cameras
•Security systems •Automatic power measurement system
Major R&D themes
R&D Policy and Development Themes
R&D and Intellectual Property Strategy Pursuing and Harnessing Technical Innovation
Intellectual Property Strategy
Basic technology
R&D
1 The number of cases shown are the cumulative total as of the end of March 2012.
2 “Others” denotes the number of applications for patents that are valid under international patent treaties in multiple countries where MegaChips may begin operations in the future.
9 MegaChips Corporation
Awards ceremony at the 13th Campus Venture Grand Prix Osaka
• Reduce volume of materials (direct materials) for the products
• Reduce volume of materials (indirect materials) during manufacture
• Reduce energy consumed for manufacturing
• Reduce energy consumed during transportation
• Reduce energy consumed when using products
• Reduce volume of waste materials
•�Lowering power consumption
•�Downsizing
•�Reducing the number of components
•�Enhancing the efficiency of development and design
Development and design of
eco products
Major reduction in environmental burden with the development of eco products
Production (Outsourcing) Transportation Use Waste materials
Reducing the environmental burden over the product lifecycle
MegaChips understands the importance of protecting
the planet for future generations. Based on this
understanding, we are committed to achieving
symbiosis between our business and the environment,
contributing to a greener and cleaner Earth. To achieve
this, we have developed an environmental
management system complying with ISO14001.
We are working on protecting the environment
by manufacturing eco-friendly and recyclable products
by developing lower-power-consuming and downsized
products, reducing chemical substances that impact
on the environment, and conducting green
procurement by adopting our unique Green
Procurement Guidelines, promoting eco-office
activities that focus on conserving energy and
resources in our offices, and conforming to laws,
regulations, and other environmental policies from a
compliance perspective.
Environmental Activities
CSR Activities As a Responsible Member of Society
MegaChips is developing a technology platform-
oriented business based on its unique technology and
a fabless system in which production is outsourced.It
has constructed a quality management system that is
ISO9001-compliant to improve the quality of all
operations from the stage of planning, research and
development through production, shipping and other
services, to ensure that it provides the best products
and services that satisfy customer demands.
MegaChips has set up a system to provide
high-quality products and services by undertaking a
project to improve customer satisfaction.
Quality guarantee structure
Supporting Entrepreneurial Education for StudentsStudents at universities in the Kansai area are invited
each year to take part in a new business idea contest
called the Campus Venture Grand Prix Osaka. Based
on our belief that young entrepreneurs are vital to
the growth of Japan’s economy, we have been
supporting this contest from our inception. The
director of MegaChips was on the jury at the new
technology category of the 13th Campus Venture
Grand Prix Osaka.
We intend to continue to support the contest in
future years.
Major social activities in the fiscal year ended March 31, 2012
10Annual Report 2012
Corporate Governance
We define our corporate social responsibilities as
encompassing maintaining compliance, committing to
the timely disclosure of important information,
developing and supplying high-quality products that
take full advantage of our own technologies, practicing
comprehensive quality control and protecting the
environment. In our view, consistently fulfilling these
responsibilities is essential if we are to increase
corporate value and if our directors and employees are
to continually recognize that only by faithfully meeting
the expectations of society with sophisticated and
unique technologies and earning public trust will the
Company achieve sustained growth.
Based on this attitude, we seek to continuously
improve our corporate governance to ensure that we
make appropriate decisions, that our management is
transparent and efficient, and that we convincingly
demonstrate accountability.
( )( )
Internal AuditSection
Business execution and internal control organizations
Internal controlorganization
Acco
un
ting
Au
dito
rs
Co
rpo
ration
Lawyers
General Meeting of Shareholders
Business executionorganization
Risk ManagementCommittee
Directors, Executive Officers and
Auditors of the Company
ManagementCommittee
Administrative divisionRespective divisions
RepresentativeDirector
Decisions on appointments, dismissals and
remuneration (ceilings)
Decisions on appointments, dismissals and
remuneration (ceilings)
Appointments and dismissals
Audits and reports
Internalaudits
Appointments and dismissals Proposition and reports
Accounting audits
SupervisionReports
Cooperation
Reports
Reports Cooperation
Board of Directors10 Directors
Including 2 OutsideDirectors( )
Board of Auditors4 Corporate AuditorsIncluding 3 Outside
Auditors( )
Responsible forinternal control audits
Responsible foroperational audits
Corporate Governance Structure
Our Basic View
11 MegaChips Corporation
Raising Corporate Value and Practicing Sound Corporate Management
Governance Structure
The Board of Directors, which consists of ten Directors
appointed at General Meetings of Shareholders,
discusses strategies, makes decisions, and provides
overall supervision of the operations of the Company.
The Board of Directors, which meets once each month,
has established a scheme that permits the ten Directors
to examine management from diverse perspectives and
to make the necessary decisions as the Company’s
ultimate business decision-making body, with a small
number of directors enabling fast action.
Among the Directors, two Outside Directors act
to ensure management objectivity and transparency by
asking questions, stating opinions and offering advice
as may be necessary from external viewpoints.
The Company has established a Board of Auditors.
Three of the Company’s four Auditors appointed at
General Meetings of Shareholders are Outside
Auditors. The Company emphasizes the independence
of its Auditors from Directors.
Each of the Auditors conducts audits to
determine whether or not the Board of Directors is
making decisions on basic management policies and
important matters for the Company, and is executing
operations appropriately.
The Board of Auditors monitors the compliance of
executed tasks with laws, the Articles of Incorporation
and internal regulations and determines their legality.
No Outside Directors or Outside Auditors have been employed by the Company prior to their current appointments. The Company has no personnel, financial, technical, trade or any other relationship with any company for which any of its Outside Directors or Outside Auditors, or any of their close relatives serves as an officer or an employee over the last ten years, with the exception of an advisory contract with a law firm to which one of the Outside Auditors belongs.
To achieve the objective of (1) increasing management
effectiveness and efficiency, (2) ensuring the reliability
of financial reports, (3) ensuring full compliance and (4)
protecting assets, as required by law, the Board of
Directors of the Company has established a basic policy
covering internal control that reflects the provisions of
the Company Law. Based on this policy, the Company
strives to build and operate an internal control system
in compliance with the rules set out in the Company
Law and the Financial Instruments and Exchange Law.
The Company’s Representative Director is
responsible for establishing, executing and supervising
internal control in accordance with the basic policy on
internal control. The Representative Director supplies the
Company’s stakeholders with financial reports that are
highly reliable and transparent, as required by law. In
addition, the Representative Director puts mechanisms
in place and makes arrangements to ensure that
important internal tasks associated with financial
reporting comply with laws and regulations and that
those tasks are efficiently performed by “establishing”
an internal control system and monitoring and
evaluating the appropriate “application” of the system.
Specifically, the Internal Audit Section, which
reports directly to the Representative Director,
performs internal audits in cooperation with Auditors
and examines whether or not the internal check
system is functioning properly among the Company’s
divisions on a day-to-day basis.
The Internal Audit Section reports its audit findings to
the Representative Director. The Section issues
improvement orders based on the Representative Director’s
instructions and checks the state of improvement when
there are items in need of improvement.
In addition, the Internal Audit Section undertakes
internal control audits in accordance with the Financial
Instruments and Exchange Law. The Section submits
reports to the Representative Director after evaluating
the status of establishment and application with
respect to internal control. The Internal Audit Section
also makes recommendations concerning
improvements to managers as it sees fit.
Using the procedures described above, the Company
examines and evaluates its internal control system.
No “serious flaw” or “inadequacy” was identified
in the internal control report for the fiscal year ended
March 31, 2012. The Company has also received from
its Accounting Auditors an internal control audit report
with an unqualified opinion for the same fiscal year.
(As of June 26, 2012)
Board of Directors
Auditors and the Board of Auditors
Internal Control System
12Annual Report 2012
Akira TakataPresident and Representative Director
Tetsuo FuruichiDirector
Tadashi SumiStanding Statutory Auditor
Yoshimasa HayashiExecutive Vice President
Tetsuo HikawaDirector
Hisakazu NakanishiOutside Auditor
Shigeki MatsuokaExecutive Vice President
Gen SasakiDirector
Nozomu OharaOutside Auditor
Masayuki FujiiSenior Managing Director
Hiroyuki MizunoOutside Director
Keiichi KitanoOutside Auditor
Yukio YamauchiSenior Managing Director
Kunihiro YamadaOutside Director
Directors
Directors and Auditors
Auditors
13 MegaChips Corporation
Financial Section
Five-Year Summary 15Analysis of Sales and Financial Standing
Analysis of Business Results 16High Liquidity and Outstanding Reserves 18Financial Position 19Research and Development, Patents and Other Intellectual Property Rights 20Business and Other Risks 21
Consolidated Financial Statements 23Notes to the Consolidated Financial Statements 28
CONTENTS
14Annual Report 2012
Five-Year Summary
MegaChips Corporation and Consolidated Subsidiaries For the five years ended March 31
Millions of yenexcept for employees
Thousands of U.S. dollars 1
2008 2009 2010 2011 2012 2012
For the YearOperating Results:Net sales ¥ 50,672 ¥ 52,771 ¥ 38,495 ¥ 36,259 ¥ 35,366 $ 430,304Operating income 3,445 4,812 3,034 3,055 3,033 36,913Net income 2,612 2,672 2,140 2,288 2,127 25,887R&D expenses 1,361 1,606 1,374 1,217 1,452 17,677Segment Information:Net sales
LSI Business ¥ 48,062 ¥ 48,569 ¥ 36,124 ¥ 33,080 ¥ — $ —Systems Business 2,610 4,201 2,371 3,178 — —
Operating incomeLSI Business ¥ 4,245 ¥ 4,791 ¥ 4,212 ¥ 3,728 ¥ — $ —Systems Business (738) 22 (1,141) (574) — —
At Year-EndFinancial Position:Total assets ¥ 35,329 ¥ 33,115 ¥ 26,612 ¥ 29,203 ¥ 29,247 $ 355,855Net assets 21,437 20,564 24,439 25,453 24,977 303,895Other Information:Employees 235 253 259 269 277 277
Yenexcept for PER and market capitalization
U.S. dollars 1
Per Share InformationNet income ¥ 105.60 ¥ 110.21 ¥ 88.19 ¥ 94.64 ¥ 88.80 $ 1.08Net assets 876.66 849.02 1,006.08 1,060.19 1,042.70 12.68Cash dividends 32 33 27 29 27 0.32
Stock Information (March 31)Stock price ¥ 1,258 ¥ 1,563 ¥ 1,400 ¥ 1,484 ¥ 1,638 $ 19.92PER (Times) 11.91 14.18 15.87 15.68 18.45 18.45Market capitalization (Millions of yen, Thousands of U.S. dollars)
¥ 31,330 ¥ 38,555 ¥ 34,095 ¥ 35,672 ¥ 39,374 $ 479,071
RatioOperating income to sales (%) 6.8 9.1 7.9 8.4 8.6ROE (%) 12.7 2 12.7 9.5 9.2 8.4ROA (%) 7.7 2 7.8 7.2 8.2 7.3Shareholders’ equity ratio (%) 60.7 62.1 91.8 87.2 85.4Sales to total assets ratio (Times) 1.50 1.54 1.29 1.30 1.21
Operating income per employee(Millions of yen) ¥ 15 ¥ 20 ¥ 12 ¥ 12 ¥ 11
1 The U.S. dollar amounts are provided solely for the convenience of the readers at the rate of ¥82.19 US$1, the rate prevailing on March 31, 2012.
2 Income for the fiscal year ended Mach 31, 2008 was increased approximately 770 million by the tax effects of a loss carried forward, which resulted from the absorption of a consolidated subsidiary on April 1, 2007.
3 The Company reviewed the reported segments of the LSI Business and the Systems Business, and has determined to treat such businesses as one business segment starting from the fiscal year ended March 31, 2012.
3
3
3
3
15 MegaChips Corporation
Analysis of Sales and Financial Standing
MegaChips Corporation and its Consolidated Subsidiaries
The MegaChips Group (“MegaChips”) recorded net
sales of ¥35,366 million, nearly the same level as the
previous year (down 2.5% year on year), with steady
demand for customer-specific digital image monitoring
systems for security and monitoring applications, in
addition to demand for its core product, LSIs for
storing game software (custom memories).
The consolidated cost of sales for the fiscal year was
¥28,687 million. The consolidated cost of sales ratio
improved 0.9 percentage points from the previous
fiscal year, to 81.1%. As a result, the consolidated
gross profit rose 2.3% from the previous fiscal year, to
¥6,679 million.
Consolidated selling, general and administrative
(SG&A) expenses increased by ¥172 million from the
previous fiscal year, to ¥3,645 million, reflecting
initiatives taken to strengthen human resources and
R&D to ensure MegaChips’s growth. SG&A expenses
consisted mainly of personnel expenses of ¥1,211
million (down 2.5% from the previous fiscal year),
including salaries, allowances for bonuses and other
items, and R&D expenses of ¥1,452 million (up 19.3%
from the previous fiscal year). As a fabless
manufacturer dedicated to research and development,
MegaChips is proactive in its R&D activities.
Analysis of Business ResultsAs a result of the developments described above,
consolidated operating income for the fiscal year
under review fell 0.7% from the previous fiscal year,
to ¥3,033 million.
The difference between non-operating income and
non-operating expenses for the consolidated fiscal
year under review stood at income of ¥228 million,
mainly reflecting the recording of ¥248 million in
dividend income as non-operating income. The
difference between extraordinary income and
extraordinary losses was income of ¥197 million,
mainly reflecting the recording of a gain on sales of
investment securities of ¥199 million as extraordinary
income. As a result, net income before taxes was
¥3,460 million (down 0.8% from the previous fiscal
year).
Consolidated net income fell 7.0% from the previous
fiscal year, to ¥2,127 million, the result of income,
inhabitant and enterprise taxes totaling ¥1,288 million
(a rise of 1.7% from the previous fiscal year) and
adjustments for income taxes amounting to positive
¥44 million (compared with negative ¥65 million
posted in the previous fiscal year).
Net Sales
Cost of Sales, SG&A Expenses and Operating Income
Income Before Income Taxes and Minority Interests
50,67250,67252,77152,771
38,49538,49536,25936,259 35,36635,366
3,4453,445
4,8124,812
3,0343,034 3,0553,055 3,0333,033
(¥ Millions) (¥ Millions)
Net Sales Operating Income to SalesOperating Income
0
20,000
40,000
60,000
08/3 09/3 10/3 11/311/3 12/312/3 08/3 09/3 10/3 11/311/3 12/312/3 08/3 09/3 10/3 11/311/30
1,000
2,000
3,000
4,000
5,000(%)
0
2
4
6
8
10
6.86.8
9.19.1
7.97.98.48.4
12/312/3
8.68.6
Net Income
16Annual Report 2012
Analysis of Sales and Financial Standing
MegaChips Corporation and its Consolidated Subsidiaries
2,1272,127 88.8088.802727
2,2882,288 94.6494.642929
32 33105.60
110.21110.21
88.1927
2,140
2,612 2,672
(¥ Millions)
Net Income
0
1,000
2,000
3,000
08/3 09/3 10/3 11/3 12/312/3
(¥)
Net Income Per Share
0
40
80
120
08/3 09/3 10/3 11/3 12/312/3
(¥)
Dividends
08/3 09/3 10/3 11/3 12/312/30
40
30
20
10
Senior management of the Company regards the
appropriate distribution of profits to its shareholders as
an important management issue, and seeks to distribute
profits in line with earnings. The basic policy is as follows:
(1) To maintain the internal reserves required to
maintain a healthy financial position that can
withstand variations in the business environment
and to make investments for the medium- to
long-term growth of the Company (such as
investments in human resources, investments to
accelerate the achievement of a suitable business
portfolio, and investments to develop original
products and undertake the basic research for
creating innovative new technology as a fabless
company dedicated to research and development),
aiming to continuously improve our corporate value.
(2) The distribution of retained earnings shall be
determined by taking into consideration such factors
as consolidated operating results, financial
circumstances, and investment plans, but in principle
the amount to be distributed shall be either a
dividend payout ratio of about 30%, or about 2%
of the consolidated dividend on equity (DOE),
whichever is greater. (However, this amount may,
following due consideration, be increased or
decreased when there are special factors affecting
the financial results.) Specifically, the annual dividend
to be distributed per share shall be determined as
either (a) or (b) below, whichever is greater.
a. Calculate the aggregate amount of dividends
as an amount equivalent to about 30% of
the consolidated net income, and divide this
amount by the number of shares that have
been issued at the end of the period, minus
the number of shares held by the Company
at the end of the period.
b. Calculate the aggregate amount of dividends
as an amount equivalent to about 2% of the
consolidated dividend on equity (DOE), and
divide this amount by the number of shares
that have been issued at the end of the
period, minus the number of shares held by
the Company at the end of the period.
(3) The Company shall endeavor to return profits to
shareholders by acquiring its own shares
expeditiously, taking into consideration such as
market conditions, movements of stock prices, and
the Company’s financial circumstances in order to
improve the efficiency of capital.
In accordance with the above policy, with respect
to distributing retained earnings for the fiscal year
under review, the Company decided to pay an annual
dividend of ¥27 per share as an ordinary dividend (¥29
for the previous period) to shareholders as of March
31, 2012.
Dividends
17 MegaChips Corporation
2,1422,142
–72
781
9,877
601601
(¥ Millions)
Free Cash Flow
–2,000
4,000
2,000
0
10,000
6,000
8,000
08/3 09/3 10/3 11/3 12/312/3
High Liquidity and Outstanding Reserves
Cash and cash equivalents (“net cash”) at the end of
the fiscal year ended March 31, 2012 came to ¥7,228
million on a consolidated basis, down ¥275 million
from the end of the year ended March 31, 2011 (up
¥1,017 million in the year ended March 31, 2011).
The status of cash flows at the end of the year ended
March 31, 2012 was as follows:
Net cash provided by operating activities was
¥1,032 million (compared with net cash provided of
¥1,761 million in the year ended March 31, 2011),
mainly reflecting net income before taxes of ¥3,460
million (down 0.8% year on year), as well as income
tax paid of ¥1,474 million and an increase in
inventories of ¥1,058 million.
Net cash used in investment activities was ¥430
million (compared with net cash provided of ¥381
million in the year ended March 31, 2011), primarily
reflecting the purchase of long-term prepaid expenses
of ¥566 million and proceeds from sales of investment
securities of ¥313 million. As a result, free cash flow,
which is the sum of the net cash provided by operating
activities and the net cash used in investment activities,
resulted in cash provided of ¥601 million (compared
with ¥2,142 million of net cash provided in the year
ended March 31, 2011).
Net cash used in financing activities was ¥760
million (compared with net cash used of ¥1,080
Cash Flow million in the year ended March 31, 2011). This was
mainly due to cash dividends paid of ¥692 million.
We borrow funds from financial institutions to raise
working capital, when necessary. Borrowings from
financial institutions during the consolidated fiscal year
under review were \4 billion, and there was no
outstanding balance of borrowings from financial
institutions as of the end of the consolidated fiscal
year under review.
We believe we can raise the funds we need for
growth as required by selling accounts receivable on
hand, borrowing from banks, or increasing capital,
given our sound asset composition, financial
position, and ability to generate cash flows through
operating activities.
Financial Policy
18Annual Report 2012
Total assets at the end of the fiscal year amounted to
¥29,247 million (an increase of ¥44 million from the
end of the previous fiscal year). By asset item, current
assets, centered on cash and cash equivalents, trade
notes and accounts receivable, and inventories, rose
¥1,688 million from the previous fiscal year, to
¥25,434 million. The main contributing factors behind
this change included increases in inventories of \1,058
million and trade notes and trade accounts receivable
of ¥476 million from the previous consolidated fiscal
year. High liquidity characterizes the MegaChips
balance sheet, as shown in the asset breakdown.
Current assets accounted for 87.0% of total assets.
The current ratio was 601.1%.
Quick assets, obtained by deducting an inventory
of ¥1,696 million from these current assets, were
¥23,738 million. They accounted for 81.2% of
consolidated total assets. This asset structure is a result
of MegaChips operating as a fabless manufacturer,
which does not have assets, such as production
facilities, in which the Company makes long-term
Analysis of Sales and Financial Standing
MegaChips Corporation and its Consolidated Subsidiaries
24,97724,977
29,24729,247
25,45325,453
29,20329,203
35,32933,115
21,43720,564
24,439
26,612
(¥ Millions)
Net Assets
0
10,000
20,000
30,000
08/3 09/3 10/3 11/3 12/312/3
(¥ Millions)
Total Assets
08/3 09/3 10/3 11/3 12/312/30
40,000
30,000
20,000
10,000
Shareholders’ Equity Ratio
08/3 09/3 10/3 11/311/3
(%)
0
20
40
60
80
100
60.760.7 62.162.1
91.891.887.287.2
12/312/3
85.485.4
Financial Positioncapital investments. We will continue striving to
maintain a sound and highly liquid asset structure in
the future.
Total liabilities at the end of the fiscal year under
review amounted to ¥4,270 million (a rise of ¥520
million year on year). The main contributing factors for
this change were increases in notes and accounts
payable-trade of ¥265 million and provision for loss on
construction contracts of ¥338 million from the
previous fiscal year. Liabilities consisted mainly of trade
payables of ¥2,252 million, which were primarily
outstanding payments to companies that manufacture
LSIs for MegaChips as its contractors.
Net assets amounted to ¥24,977 million, down
¥476 million year on year. The main contributing
factors for this change were a 7.0% year-on-year
decrease in consolidated net income, to ¥2,127
million, and a fall in valuation difference on available-
for-sale securities of ¥1,618 million from the previous
fiscal year. The resulting shareholders’ equity ratio for
the end of the fiscal year under review was 85.4%.
19 MegaChips Corporation
MegaChips invested a consolidated total of ¥1,452
million in R&D expenses for the fiscal year under review.
The Company is allocating its resources to
research and development in the fields of images,
audio and communications, targeting a wide array of
products, including entertainment equipment, such as
game consoles, digital TV-related equipment, and
digital cameras. It is developing LSI products, including
system LSIs that resolve issues identified in the
equipment, module and boards that use the system
LSIs, and intellectual property for the system LSIs, by
integrating its systems expertise with its LSI knowledge.
In addition to product development as described
ROE
08/3 09/3 10/3 11/3 12/312/3
(%)
0
15
10
5
ROA
08/3 09/3 10/3 11/3 12/312/3
(%)
0
9
6
3
7.7* 7.812.7* 12.7
9.5
7.2
8.28.2
9.29.2
7.37.3
8.48.4
Research and Development, Patents and Other Intellectual Property Rightsabove, the Company is developing technologies and
products principally in the security monitoring and
eco-energy-related fields, based on its basic LSI
technologies in the fields of images, audio and
communications.
The Company also emphasizes the protection of
intellectual property rights in the form of patents and
other industrial property rights as part of its
management strategies. As of the end of the fiscal
year under review, the details of the industrial property
rights the Company holds, and the details of patents
out of the industrial property rights the Company
holds by country, are as follows:
Industrial Property Rights (As of March 31, 2012)
Patents TrademarksIC Design
RightsTotal
Acquired 403 49 2 454Applied for 469 5 — 474
Total 872 54 2 928
Patents by Country (As of March 31, 2012)
Japan USA TaiwanChina(including
Hong Kong)
Korea EU Other Total
Acquired 269 104 9 10 7 4 — 403Applied for 355 64 3 10 5 4 28 469
Total 624 168 12 20 12 8 28 872
Income for the fiscal year ended Mach 31, 2008 was increased approximately 770 million by the tax effects of a loss carried forward, which resulted from the absorption of a consolidated subsidiary on April 1, 2007.
20Annual Report 2012
MegaChips has identified the following risks pertaining to its operations and other matters that may seriously affect investors’ judgment.
Forward-looking statements in this section represent the judgment of MegaChips as of June 26, 2012.
(1) PurchasersMegaChips principally sells LSIs for storing game software (custom memories) for use in game consoles; LSIs for game consoles and their peripherals; LSIs for digital cameras image processing; and digital video monitoring systems for security and monitoring applications. The proportion of net sales that involves providing LSIs for game software (custom memories) to Nintendo Co., Ltd. (“Nintendo”) is particularly high.
Accordingly, our operating results may be impacted by market trends for game software and the game consoles that use these products, and may also be influenced by the extent to which Nintendo adopts our products, among other factors.
Net sales to Nintendo amounted to ¥28,483 million in the fiscal year under review. They accounted for 80.5% of consolidated net sales.
(2) Contract Manufacturers (Suppliers)Since its foundation, MegaChips has adopted a business model in which it operates as an R&D-oriented fabless enterprise, concentrating its management resources on research and development. Consequently, MegaChips contracts the manufacturing of products to third parties, enabling it to develop products that best meet customer needs based on its unique technological capabilities and expand its business without the need to invest in plant and equipment that require substantial investments. We work with a number of different manufacturers in Japan and overseas, although a very significant percentage of purchases are made from Macronix International Co., Ltd. (“Macronix”), which manufactures for us LSIs for storing game software (custom memories) supplied to our major customer Nintendo and LSIs for game consoles and their peripherals.
Hence, should Macronix cease manufacturing, our operating results may be impacted.
We have entered into manufacturing agreement contracts with Nintendo and Macronix, respectively. We intend to build solid and close ties with these companies to ensure a constant supply of products.
Analysis of Sales and Financial Standing
MegaChips Corporation and its Consolidated Subsidiaries
Business and Other Risks
Dependence on Specific Customers
(1) Risks Associated with LSI ProductsMegaChips has adopted a fabless model in which it owns neither a manufacturing plant nor an equipment of its own, and instead outsources manufacturing to third parties. It outsources the manufacturing of LSI products to major semiconductor manufacturers both in Japan and overseas.
Hence, demand and supply in the semiconductor market may affect the quantities and prices of products that we procure, and we may not be able to procure products in the quantities and at the prices that we have anticipated.
Our LSIs are used in state-of-the-art digital devices, and the pace of technological innovation in this field is quite rapid, so there is no guarantee that these products will continue to be used. Moreover, as equipment mounted with our LSIs is exposed to intense competition and demand volatilities, demand for our LSIs may fluctuate.
(2) Risks in Other ProductsIn addition to LSI products, we offer application products including electronics devices and system devices based on our LSI technologies in the field of images, audio and communications.
For these products, we have sought to maintain our technological edge in areas such as digital image processing and network technologies, and our competitive edge by supplying unique, optimized solutions for customer services. However, technological change in this area is rapid and technological trends and developments in the services of other companies may affect demand for our products.
Moreover, in the event that a totally new market is created, the market may not grow as we foresee and our operating results may be affected.
(3) Risks in Strategic InvestmentIn the event that we engage in strategic tie-ups, including equity participation, to accelerate the growth of our businesses, there is a possibility that the benefits that we anticipate, such as the creation of business synergies or increased earnings, may not materialize.
(4) Research and DevelopmentUnder the philosophy of expanding our business through “Innovation,” remaining coexistent with customers through
Business
21 MegaChips Corporation
“Credibility,” and continuing to contribute to society through “Creation,” we have operated based on our technological development capabilities. Our competitiveness derives from “Specialization” in products for specific customers and for specific areas of application in the growing image, audio, and communication-related markets, a “Concentration” of our resources on research and development activities to provide the most advanced technologies and products to our customers, and the showing of our “Uniqueness”.
We believe that we can continue to develop and introduce to the market innovative and attractive products. However, our industry is exposed to constant technological change, and new technologies, new services, or other changes may quickly emerge. There is no assurance that we can always respond quickly to these changes and we may be required to invest a large sum in research and development. This could in turn affect our operating results.
(5) Recruitment MegaChips operates based on its technological development capabilities in the areas of images, audio, and communication, each of which demands excellent engineers. We have take steps to establish a personnel management policy necessary for that purpose and have maintained excellent technological development capabilities in our business. However, if many excellent engineers were to leave MegaChips or new engineers can not be recruited in the future, we could become less competitive.
(1) Defending against AcquisitionsMegaChips believes that defending against acquisitions that are not in the best interests of its shareholders is an important management issue although it has not set out a basic policy on control of the company. For this reason, we have been collecting information on recent acquisitions.
(2) Accounting AuditorsFor any reason attributable to us or in the event that the accounting auditors violate or contravene laws or ordinances or we believe that the accounting auditors have offended public order or morals, the Board of Auditors shall deliberate on the dismissal or non-reappointment of the accounting auditors. In the event that we consider it appropriate to dismiss or not reappoint the accounting auditors, we shall request the Board of Directors to submit the “dismissal or non-reappointment of the account
auditors” as a proposition to our General Meeting of Shareholders, and the Board of Directors shall deliberate.
(3) Risk Concerning the Establishment of Internal Control Systems
MegaChips has recognized the emphasis on legal compliance and the establishment of a corporate governance system as important managerial issues. We have consequently taken steps to strengthen and enhance risk management.
We also instituted fundamental policies at the meeting of the Board of Directors on internal control pursuant to the provisions of the Company Law. Based on these policies, we have been improving our internal control systems, including those associated with financial statements, pursuant to the Financial Instruments and Exchange Law, carrying out our operations in accordance with the rules, and evaluating the results. In this way, we ensure that we manage our businesses properly and lawfully.
However, if any extraordinary event not assumed under the internal control systems that we have established were to occur, the credibility and comprehensiveness of financial reporting and information disclosure by us may not be assured. In this case, we may lose the trust of our stakeholders and we may experience a material adverse effect on our financial position and operating results.
Note, however, that no such events have occurred thus far.
(4) Intellectual Property RightsAs an R&D-oriented fabless enterprise, MegaChips recognizes that the protection of its intellectual property rights is material to its business development.
In addition, we have concentrated on building an internal system for intellectual property rights and strengthening cooperation with patent law offices to actively file applications to register patents and trademarks and protect the products and services we offer. We simultaneously investigate the rights of other companies thoroughly, to prevent any infringements.
However, there exists no assurance that all patents or trademarks for which we file applications will be registered. Additionally, as it is impossible to fully investigate the technologies and rights of other companies prior to publication thereof, we may infringe on the intellectual property rights of other companies and litigation may be filed against us. In this case, our operating results may be affected.
As of June 26, 2012, no litigation had been filed against us in respect to any intellectual property right.
Management
22Annual Report 2012
Consolidated Balance Sheets
MegaChips Corporation and its Consolidated SubsidiariesMarch 31, 2011 and 2012
ASSETS Thousands of yenThousands of
U.S. dollars (Note 1)2012 2011 2012
Current assets:
Cash and cash equivalents (Note 5 and 6) ¥ 7,228,018 ¥ 7,503,256 $ 87,942
Receivables
Trade (Note 6)
Notes 32,192 19,155 391
Accounts 15,604,485 15,140,665 189,858
Others — — —
Allowance for doubtful receivables (1,094) (1,061) (13)
Inventories (Note 10 and 11) 1,696,135 637,726 20,636
Deferred income taxes (Note 15) 381,961 273,434 4,647
Other current assets 492,898 172,545 5,997
Total current assets 25,434,598 23,745,723 309,460
Property and equipment:
Buildings 227,437 215,065 2,767
Tools, furnitures and fixtures 410,059 382,975 4,989
637,497 598,040 7,756
Less accumulated depreciation (553,666) (489,590) (6,736)
Total property and equipment 83,830 108,449 1,019
Intangible assets (Note 12): 57,825 63,639 703
Investments and other assets:
Investment securities (Note 6 and 7) 2,270,232 4,187,223 27,621
Long-term prepaid expenses 976,627 665,808 11,882
Deferred income taxes (Note 15) 97,647 186,008 1,188
Other investments 327,030 249,082 3,978
Allowance for doubtful receivables — (2,675) —
Total investments and other assets 3,671,538 5,285,446 44,671
Total assets ¥ 29,247,792 ¥ 29,203,259 $ 355,855
The accompanying Notes to the Consolidated Financial Statements are an integral part of these statements.
23 MegaChips Corporation
LIABILITIES AND NET ASSETS Thousands of yenThousands of
U.S. dollars (Note 1)2012 2011 2012
Current Iiabilities:Payables:
Trade (Note 6) ¥ 2,140,100 ¥ 1,922,329 $ 26,038 Others 548,339 426,480 6,671
Accrued expenses 419,017 395,795 5,098 Income taxes payable 699,230 889,591 8,507 Provision for loss on construction contracts (Note 11) 388,193 49,251 4,723 Other current liabilities 36,754 22,130 447
Total current liabilities 4,231,635 3,705,579 51,486
Long-term liabilities:Deferred income taxes (Note 15) — — —Other long-term liabilities 39,025 44,346 474
Total long-term liabilities 39,025 44,346 474 Total liabilities 4,270,660 3,749,926 51,960
Net Assets (Note 17):Shareholders' equity
Common stockAuthorized — 100,000,000 sharesIssued24,038,400 shares in 201124,038,400 shares in 2012 4,840,313 4,840,313 58,891
Capital surplus 6,181,300 6,181,300 75,207 Retained earnings 13,967,586 12,536,142 169,942 Treasury stock, at cost
30,020 shares in 201184,020 shares in 2012 (112,777) (45,385) (1,372)Total shareholders’ equity 24,876,422 23,512,370 302,669
Accumulated other comprehensive incomeNet unrealized gains on securities 708,021 2,326,955 8,614 Foreign currency translation adjustments (607,313) (385,993) (7,389)
Total accumulated other comprehensive income 100,708 1,940,962 1,225 Total net assets 24,977,131 25,453,332 303,895 Total liabilities and net assets ¥ 29,247,792 ¥ 29,203,259 $ 355,855
The accompanying Notes to the Consolidated Financial Statements are an integral part of these statements.
24Annual Report 2012
Consolidated Statements of Income and Comprehensive Income
MegaChips Corporation and its Consolidated SubsidiariesFor the years ended March 31, 2011 and 2012
Thousands of yenThousands of
U.S. dollars (Note 1)2012 2011 2012
Net sales ¥ 35,366,733 ¥ 36,259,447 $ 430,304 Cost of sales (Note 10 and 11) 28,687,521 29,731,376 349,039
Gross profit 6,679,211 6,528,071 81,265
Selling, general and administrative expenses (Note 9 and 14) 3,645,267 3,472,933 44,351
Operating income 3,033,943 3,055,137 36,913
Other income (expenses):Interest and dividend income 254,141 281,855 3,092 Interest expense (1,358) — (16)Gain on sales of investment securities 199,292 371,050 2,424 Loss on liquidation of business (Note 10 and 19) — (193,253) —Others, net (Note 19) (25,439) (25,276) (309)
426,635 434,375 5,190
Income before income taxes and minority interests 3,460,579 3,489,513 42,104
Income taxes (Note 15):Refund of income taxes for prior periods — — — Current 1,288,561 1,266,954 15,677 Deferred 44,330 (65,879) 539
Total income taxes 1,332,892 1,201,075 16,217
Income before minority interests 2,127,687 2,288,438 25,887
Net income ¥ 2,127,687 ¥ 2,288,438 $ 25,887
Income before minority interests 2,127,687 2,288,438 25,887 Other comprehensive income
Net unrealized gain (loss) on investment securities (1,618,933) (124,770) (19,697)Foreign currency translation adjustments (221,319) (63,398) (2,692)
Total other comprehensive income (1,840,253) (188,169) (22,390)
Comprehensive income ¥ 287,433 ¥ 2,100,269 $ 3,497
(Yen) U.S. dollars (Note 1)
Amounts per shareNet income — basic ¥ 88.80 ¥ 94.64 $ 1.08Net income — diluted — — — Cash dividends 27.00 29.00 0.32
The accompanying Notes to the Consolidated Financial Statements are an integral part of these statements.
25 MegaChips Corporation
Consolidated Statements of Changes in Net Assets
MegaChips Corporation and its Consolidated SubsidiariesFor the years ended March 31, 2011 and 2012
Number of shares of
common stock issued
Thousands of yen
Commonstock
Capitalsurplus
Retained earnings
Treasury stock, at cost
Net unrealized gains on securities
Foreign currency translation
adjustmentsTotal
Balance at March 31, 2010 24,353,900 ¥ 4,840,313 ¥ 6,181,300 ¥ 11,380,544 ¥ (91,585) ¥ 2,451,726 ¥ (322,594) ¥ 24,439,703 Cash dividends paid — ¥27.00 per share (655,883) (655,883)Net income 2,288,438 2,288,438 Acquisition of treasury stock (430,757) (430,757)Retirement of treasury stock (315,500) (476,957) 476,957 —Net increase in unrealized gains on securities (124,770) (124,770)Foreign currency translation adjustments (63,398) (63,398)
Balance at March 31, 2011 24,038,400 4,840,313 6,181,300 12,536,142 (45,385) 2,326,955 (385,993) 25,453,332 Cash dividends paid — ¥29.00 per share (696,243) (696,243)Net income 2,127,687 2,127,687 Acquisition of treasury stock (67,392) (67,392)Retirement of treasury stock —Net increase in unrealized gains on securities (1,618,933) (1,618,933)Foreign currency translation adjustments (221,319) (221,319)
Balance at March 31, 2012 24,038,400 ¥ 4,840,313 ¥ 6,181,300 ¥ 13,967,586 ¥ (112,777) ¥ 708,021 ¥ (607,313) ¥ 24,977,131
Thousands of U.S. dollars (Note 1)
Commonstock
Capitalsurplus
Retained earnings
Treasury stock, at cost
Net unrealized gains on securities
Foreign currency translation
adjustmentsTotal
Balance at March 31, 2011 $ 58,891 $ 75,207 $ 152,526 $ (552) $ 28,311 $ (4,696) $ 309,688 Cash dividends paid — $ 0.32 per share (8,471) (8,471)Net income 25,887 25,887 Acquisition of treasury stock (819) (819)Retirement of treasury stock —Net increase in unrealized gains on securities (19,697) (19,697)Foreign currency translation adjustments (2,692) (2,692)
Balance at March 31, 2012 $ 58,891 $ 75,207 $ 169,942 $ (1,372) $ 8,614 $ (7,389) $ 303,895
The accompanying Notes to the Consolidated Financial Statements are an integral part of these statements.
26Annual Report 2012
Consolidated Statements of Cash Flows
MegaChips Corporation and its Consolidated SubsidiariesFor the years ended March 31, 2011 and 2012
Thousands of yenThousands of
U.S. dollars (Note 1)2012 2011 2012
Cash flows from operating activities:Income before income taxes and minority interests ¥ 3,460,579 ¥ 3,489,513 $ 42,104 Adjustments for:
Depreciation and amortization 469,587 1,030,567 5,713 Increase (decrease) in accrued employee bonuses 18,330 50,501 223 Increase in provision for loss on construction contracts 338,942 24,005 4,123 Interest and dividend income (254,141) (281,855) (3,092)Interest expense 1,358 — 16 Gain on sales of investment securities (199,292) (371,050) (2,424)Loss on liquidation of business — 167,699 —
Change in assets and liabilities: Decrease (increase) in:
Receivables (trade) (474,181) (3,284,240) (5,769)Inventories (1,058,408) 308,504 (12,877)Other current assets (292,724) (140,459) (3,561)
Increase (decrease) in:Payables (trade) 217,770 486,535 2,649 Other current liabilities 27,682 133,254 336
Other, net (1,770) 51,693 (21)2,253,733 1,664,668 27,421
Interest and dividends received 254,087 281,682 3,091 Interest paid (1,358) — (16)Income taxes paid (1,474,290) (185,212) (17,937)
Net cash provided by operating activities 1,032,171 1,761,138 12,558
Cash flows from investing activities:Proceeds from withdrawal of time deposits — 100,000 — Purchases of property and equipment (25,254) (33,388) (307)Purchases of intangible assets (73,545) (70,178) (894)Payments for investment securities — (125,145) —Proceeds from sales of investment securities 313,869 620,546 3,818 Payments for long-term prepaid expenses (566,985) (177,389) (6,898)Other, net (78,958) 67,066 (960)
Net cash used in investing activities (430,875) 381,510 (5,242)
Cash flows from financing activities:Net decrease in short-term debt — — —Repayment of long-term loans payable — — — Purchases of treasury stock (67,392) (430,757) (819)Proceeds from disposal of treasury stock — — —Cash dividends paid (692,661) (649,480) (8,427)
Net cash provided by (used in) financing activities (760,053) (1,080,238) (9,247)
Effect of exchange rate changes on cash and cash equivalents (116,480) (44,798) (1,417)
Net increase in cash and cash equivalents (275,237) 1,017,612 (3,348)Cash and cash equivalents at beginning of year 7,503,256 6,485,643 91,291 Cash and cash equivalents at end of year (Note 5) ¥ 7,228,018 ¥ 7,503,256 $ 87,942
Important noncash transactions: Retirement of treasury stock ¥476,957 thousand in 2011 ¥— ($—) in 2012
The accompanying Notes to the Consolidated Financial Statements are an integral part of these statements.
27 MegaChips Corporation
Notes to the Consolidated Financial Statements
MegaChips Corporation and its Consolidated Subsidiaries
The accompanying consolidated financial statements
of MegaChips Corporation (“the Company”) and its
consolidated subsidiaries have been prepared in
accordance with the provisions set forth in the
Japanese Financial Instruments and Exchange Act and
its related accounting regulations and in conformity
with accounting principles generally accepted in Japan
(“Japanese GAAP”), which are different in certain
respects as to application and disclosure requirements
from International Financial Reporting Standards.
The significant portions of the accounts of the
Company’s overseas subsidiaries are based on their
accounting records maintained in conformity with
accounting principles generally accepted in Japan.
The accompanying consolidated financial
statements have been restructured and translated into
English from the consolidated financial statements of the
Company prepared in accordance with Japanese GAAP
and filed with the appropriate Local Finance Bureau of
the Ministry of Finance as required by the Financial
Instruments and Exchange Act. Certain supplementary
1. Basis of presenting consolidated financial statementsinformation included in the statutory Japanese
consolidated financial statements is not presented in
the accompanying consolidated financial statements.
The translation of the Japanese yen amounts into
U.S. dollar amounts is included solely for the
convenience of readers outside Japan, using the
prevailing exchange rate at March 31, 2012, which
was ¥82.19 to US$1.00. The translations should not
be construed as representations that the Japanese yen
amounts have been, could have been or could in the
future be converted into U.S. dollars at this or any
other rate of exchange.
Certain 2011 consolidated financial statement
items have been reclassified to conform to the
presentation for 2012.
As permitted, amounts of less than 1,000 yen are
omitted in the presentations for 2011 and 2012. As a
result, the totals shown in the accompanying
consolidated financial statements, both in yen and in
U.S. dollars, do not necessarily agree with the sum of
the individual amounts.
The accompanying consolidated financial statements
include the accounts of the Company and Shun Yin
Investment Ltd. a significant subsidiary over which the
Company has power of control through substantial
ownership or existence of certain conditions
evidencing control by the Company (together, referred
to as the “Companies”).
There are no equity method affiliates or non-equity
method affiliates. The Company holds more than one
fifth but less than one half of the voting rights of
Mobile Television Inc. The Company has excluded
Mobile Television Inc. as an affiliate after determining
that the Company was unable to have a significant
impact on the decision-making of Mobile Television Inc.
for its financing, sales or operational policies.
In the elimination of investments in subsidiaries,
the assets and liabilities of the subsidiaries, including
the portion attributable to minority shareholders, are
evaluated using the fair value at the time the Company
2. Significant accounting policiesacquired control of the respective subsidiary.
All significant intercompany transactions and
accounts have been eliminated.
(2) Cash and cash equivalents
Cash on hand, readily-available deposits and short-
term highly liquid investments with maturities not
exceeding three months at the time of purchase and
that present insignificant risk of change in value are
considered to be cash and cash equivalents.
(3) Allowance for doubtful receivables
The allowance for doubtful receivables is stated at an
amount based principally on the actual ratio of bad debts
in the past plus the estimated uncollectible amounts of
certain individual receivables.
(4) Inventories
Work-in-process is stated at cost determined by the
specific identification method. Other inventories are
(1) Consolidation
28Annual Report 2012
stated mainly at cost determined by the average
method. The amounts shown on the balance sheet are
based on the method used for reducing book values
due to a decline in profitability.
(5) Securities and investments
Available-for-sale securities with available fair market
values are stated at fair market value, and unrealized
gains and unrealized losses on these securities are
reported, net of applicable income taxes, as a separate
component of net assets. The cost of sales of such
securities is computed using moving average cost.
Available-for-sale securities with no available fair
market value are stated at moving average cost.
Investments in business partnerships are increased
by earnings and decreased by losses and distributions
form the business partnerships, and included in
investment securities.
If the market value of equity securities or
available-for-sales securities including investments in
business partnerships, declines significantly and is not
expected to recover, such securities are stated at fair
market value and the difference between fair market
value and the carrying amount is recognized as a loss
in the period of the decline.
If the fair market value of equity securities or
available-for-sales securities is not readily available,
such securities should be written down to net asset
value with a corresponding charge in the income
statement in the event net asset value declines
significantly and is not expected to recover. In these
cases, such fair market value or the net asset value will
be the carrying amount of the securities at the
beginning of the year.
(6) Property and equipment
Property and equipment are stated at cost. Depreciation
is computed principally on the declining balance
method based on the estimated useful life of the
asset. Depreciation of property and equipment
acquired before March 31, 2007 is based on a previous
fixed percentage of diminishing value method.
The principle estimated useful lives are as follows:2012 2011
Buildings 3~18 years 3~18 yearsOthers 2~15 years 2~15 years
(7) Intangible assets
Capitalized costs of internal use software are amortized
by the straight-line method over the estimated useful
life of mainly 5 years.
Capitalized costs of producing product masters to
be sold are amortized on the straight-line method over
the estimated period of future sales of mainly 3 years.
Amortization of other intangible assets is computed
on the straight-line method.
(8) Long-term prepaid expenses
Long-term prepaid expenses are amortized on the
straight-line method.
Certain post-development stage expenses related
to the initial mass production of new products, except
for costs of producing product masters to be sold, are
amortized on the straight-line method over the
estimated period of future sales of 3 years.
(9) Bonuses
Accrued liabilities for employee bonuses as of the
balance sheet date are based on the estimated
amounts to be paid in the future.
(10) Provision for loss on construction contracts
When total cost of construction is likely to exceed total
revenue and the amount can be reasonably estimated,
the Companies record any amount estimated to
exceed the total construction revenue as provision for
loss on construction contracts.
(11) Basis for recording revenue on engineering contracts
The percentage-of-completion method is applied to
engineering contracts for which the outcome of the
construction activity by the end of the fiscal year under
review is deemed certain. The percentage of
construction completed is estimated using the ratio of
the actual cost incurred to the total estimated cost.
The completed contract method is applied to
other construction contracts.
(12) Income taxes
Income taxes comprise corporation tax, prefectural
and municipal inhabitants taxes and enterprise tax.
The asset and liability approach is used to
Notes to the Consolidated Financial Statements
MegaChips Corporation and its Consolidated Subsidiaries
29 MegaChips Corporation
recognize deferred tax assets and liabilities for the
expected future tax consequences of temporary
differences between the carrying amounts of assets
and liabilities for financial reporting purposes and the
amounts used for income tax purposes.
(13) Translation of foreign currencies
All receivables and payables denominated in foreign
currencies are translated into Japanese yen at the
year-end rates.
Assets, liabilities and income and expenses of a
foreign subsidiary are translated into Japanese yen at
the year-end rates. Net assets of a foreign subsidiary
are translated into Japanese yen at historical rates. The
translation differences arising from the use of different
rates are recognized as foreign currency translation
adjustments in the consolidated balance sheets.
(14) Per share amounts of net income and cash dividends
The computation of net income per share shown in
the consolidated statements of income is based upon
the weighted average number of issued shares
outstanding during each period.
Cash dividends per share shown in the consolidated
statements of income represent actual amounts applicable
to earnings in the respective fiscal year, including
dividends to be paid after the end of the period.
Effective from the consolidated fiscal year under review, the Company has started applying the “Accounting
Standard for Asset Retirement Obligations” (the Accounting Standards Board of Japan (ASBJ) Statement No. 18,
issued on March 31, 2008) and the “Guidance on the Accounting Standard for Asset Retirement Obligations” (ASBJ
Implementation Guidance No. 21, issued on March 31, 2008) to its consolidated financial statements. This adoption
had a minor effect on profits and losses for the consolidated fiscal year under review. Changes in asset retirement
obligations as a result of the application of the accounting standard and the guidance amounted to ¥1,284
thousand ($15 thousand). The effects of this change on segment information were insignificant.
3. Changes in significant accounting policiesAccounting standards regarding asset retirement obligations
The Company has adopted the “Accounting Standard for Accounting Changes and Error Corrections” (Accounting
Standards Board of Japan (“ASBJ”) Statement No. 24, issued on December 4, 2009) and “Guidance on Accounting
Standard for Accounting Changes and Error Corrections” (ASBJ Guidance No. 24, issued on December 4, 2009) for
accounting changes and error corrections that are made from the beginning of the fiscal year under review.
4. Additional informationApplication of Accounting Standards for Accounting Changes and Error Corrections, etc.
The relationship between the closing balance of cash and cash equivalents on the consolidated statements of cash
flows and the amount of cash and deposits on the consolidated balance sheet were as follows:
Thousands of yenThousands ofU.S. dollars
2012 2011 2012
Cash and cash equivalents — balance sheets ¥ 7,228,018 ¥ 7,503,256 $ 87,942Time deposits with more than 3 months to maturity — — —Cash and cash equivalents — statements of cash flows ¥ 7,228,018 ¥ 7,503,256 $ 87,942
5. Cash and cash equivalents
30Annual Report 2012
(i) Policies for the handling of financial instrumentsTo improve the efficiency with which funds are used
while applying appropriate risk control, the
Companies have adopted the basic policies of
concentrating the use of funds on its main business
activities, refraining from speculative fund
management, investing in financial instruments only
after the details of the products and risks involved are
clearly understood, and making investments only after
fully evaluating the historical performance and any
potential investment impact.
The products in which the Companies invest are
limited to bank deposits and public and corporate
bond investment trusts, in which the principal is
appropriately protected and for which the liquidity is
high, and instruments in which credit and market risks
are low. The Companies do not invest in financial
instruments such as derivatives that carry significant
investment risks. To minimize risks associated with
fund management, the Companies manage funds in
accordance with internal rules that stipulate strict
investment rules (including those for maximum
investment amounts, restrictions on investment
periods, and rating standards).
Furthermore, to reduce risks of fluctuations in
foreign exchange rates involved in certain receivables
and payables denominated in foreign currencies,
which occur as a result of sales transactions, the
Company uses foreign exchange forward contracts in
accordance with internal rules that stipulate the risk
management structure and policies.
Moreover, while the Companies maintain
sufficient funds to make payments on obligations
arising from unexpected developments, they also
maintain an appropriate level of funds for working
capital. To meet their needs for working capital, the
Companies raise funds, when necessary, but within
establish limits for borrowings from financial
institutions and limits for the sale of their accounts
receivable. The Companies adapt their policies each
fiscal year by taking into account factors such as their
business performance, their funding requirements and
the efficiency of different methods of funding.
6. Financial Instruments(ii) Details and risks of financial instruments
Cash and deposits are mainly deposited in the
current accounts at the Companies’ banks, primarily
for use as working capital. These banks present almost
no credit or liquidity risks as their credibility is very high
and they do not demand collateral.
Notes and accounts receivable and trade
receivables are exposed to the credit risk of customers.
In the year under review, 88.8% of the operating
receivables at the end of the consolidated fiscal year
(92.9% as at the end of the previous consolidated
fiscal year) were attributable to major customers.
Considering their operating results and credit status,
the credit risk associated with these receivables is
believed to be very minimal.
Investment securities are categorized as available-
for-sale securities and consist mainly of stocks held for
investment and investment securities associated with
investment partnerships. All of these investments have
been made to collect information on present and
future business partners about investments and future
business development with the aim of achieving
synergies and improving corporate value.
Consequently, if the business policies of the
Companies or those of the issuing companies change,
there is a risk that the initial plans may not be realized.
In addition, among shares held by the Companies,
listed equity securities are exposed to market risk, while
unlisted equity securities may become subject to
accounting for impairment loss if the actual value of
the issuing companies falls because of poor business
performance or a deteriorating financial situation. Of
all investment securities held as of the end of the
consolidated fiscal year under review, shares held by
subsidiaries accounted for 78.1% (84.4% as at the end
of the previous consolidated fiscal year).
All trade payable are due in one year or less.
Trade receivables and trade payables denominated
in foreign currencies that occur as a result of sales
transactions are exposed to the risks of fluctuations in
foreign exchange rates. The Company seeks to reduce
these risks using foreign exchange forward contracts
when necessary for the amount after balancing out
accounts receivable trade and accounts payable trade
denominated in the same foreign currency.
(1) Status of financial instruments
Notes to the Consolidated Financial Statements
MegaChips Corporation and its Consolidated Subsidiaries
31 MegaChips Corporation
(iii) Risk management systema. Credit risk
Credit risk is the risk of the Companies incurring loss as
a result of a decline in or loss of value of their assets
due to credit events (reasons) such as dishonored
checks or bankruptcy as a result of a deterioration in
the financial conditions of business partners or issuing
companies. To maintain sound assets, the Accounting
Department, the Finance Department and the
Operating Department of the Companies control the
due dates associated with and the outstanding balance
of individual customers. The Companies have also
developed a system in which credit screening, credit
control and asset control are consistently carried out in
accordance with the relevant accounting and sales
management rules. In addition, the Companies evaluate
their assets in accordance with the accounting standards
and other related rules and adopt impairment
accounting and post allowances when necessary.
b. Market riskMarket risk is the risk of the Companies incurring loss
due to changes in the fair market value of financial
instruments as a result of fluctuations in interest rates,
foreign exchange rates, and stock prices. It is a general
term for risks associated with the assets or liabilities of
the Companies associated with the interest rate
fluctuation risk, exchange rate fluctuation risk and
stock price fluctuation risk.
In accordance with its accounting rules and cash
management rules, the Finance Department regularly
monitors the fair market value and the financial
condition of issuing companies. It also regularly
reviews its investment policies by obtaining
information about business plans and other relevant
matters. The Finance Department also monitors trends
in interest rates, foreign exchange rates and stocks in
an effort to reduce the market risks associated with
the Companies’ assets and liabilities.
In general, the Company does not make
investments as part of fund management in financial
products that involve risks related to fluctuations in
stock prices or foreign exchange rates. However, in
accordance with foreign exchange risk management
rules, the Company is engaged in managing risks of
fluctuations in foreign exchange rates related to
certain receivables and payables denominated in
foreign currencies that occur as a result of sales
transactions. It also uses foreign exchange forward
contracts and other derivatives products when
necessary in an effort to reduce risks of fluctuations in
foreign exchange rates.
c. Liquidity riskLiquidity risk is the risk of the Companies incurring loss
due to a shortage of available cash as a result of the
Companies’ inability to raise funds because of a
deterioration in their financial situation or other reason
or incurring loss because they are forced to accept
significantly worse than usual funding conditions. By
constantly monitoring the management of funds and
regularly preparing and updating funding plans, the
Finance Department ensures that the Companies
maintain an appropriate level of funds, including funds
sufficient to meet obligations that arise from
unexpected developments. As a measure to respond
to liquidity risk, the Companies have also established
credit lines overdraft agreements with their banks. No
financial covenants are attached to the these overdraft
agreements.
(iv) Supplementary explanation concerning the fair market value, etc. of financial instruments
In addition to values based on market prices, the fair
market values of financial instruments include the
values that are reasonably computed when there are
no market prices available. When making such
computations various factors are taken into account
and different conditions may be adopted. For these
reasons, fair market values may vary.
Information about figures for financial instruments presented in the consolidated balance sheets, related fair values,
and their differences as of March 31, 2011 and March 31, 2012 are set forth in the tables below. Items whose fair
market values are considered to be very difficult to determine are not presented in the tables.
(2) Matters concerning the fair market values of financial instruments
32Annual Report 2012
(Trade receivables)Because trade receivables are highly liquid, the fair market value is similar to the book value. Consequently, the fair
market value of trade receivables is based on book value. Allowance for doubtful receivables associated with trade
receivables has been deducted.
Thousands of yenThousands ofU.S. dollars
2012 2011 2012
Figures presented in the consolidated balance sheets ¥ 15,635,583 ¥ 15,158,759 $ 190,237Fair value 15,635,583 15,158,759 190,237Difference ¥ — ¥ — $ —
Due in one year or less ¥ 15,635,583 ¥ 15,158,759 $ 190,237
(Investment securities)The fair values of shares, etc. are based on prices established on security exchanges.
Thousands of yenThousands ofU.S. dollars
2012 2011 2012
Figures presented in the consolidated balance sheets ¥ 2,007,635 ¥ 4,020,169 $ 24,426Fair value 2,007,635 4,020,169 24,426Difference ¥ — ¥ — $ —
(Note) The above table includes securities which are included in investments in business partnerships.
Financial instruments whose fair value is considered to be very difficult to obtain are shown below. These financial
instruments do not have a fair market value, and it is considered to be very difficult to obtain one because future
cash flows cannot be estimated. As a result, these financial instruments are not included among investment
securities above.
Thousands of yenThousands ofU.S. dollars
2012 2011 2012
Available-for-sale securities
Non-listed equity securities ¥ 219,431 ¥ 123,053 $ 2,669Non-listed bonds 2,111 4,026 25Others 41,053 39,972 499
(Note) The above table includes securities which are included in investments in business partnerships.
(Cash and cash equivalents)Because cash and cash equivalents are highly liquid, the fair market value is similar to the book value. Consequently,
the fair market value of cash and cash equivalents is based on book value.
Thousands of yenThousands ofU.S. dollars
2012 2011 2012
Figures presented in the consolidated balance sheets ¥ 7,228,018 ¥ 7,503,256 $ 87,942Fair value 7,228,018 7,503,256 87,942Difference ¥ — ¥ — $ —
Due in one year or less ¥ 7,228,018 ¥ 7,503,256 $ 87,942
Notes to the Consolidated Financial Statements
MegaChips Corporation and its Consolidated Subsidiaries
33 MegaChips Corporation
(Trade payables)Because trade payables are highly liquid, the fair value is similar to the book value. Consequently, the fair value of
trade payables is based on book value.
Thousands of yenThousands ofU.S. dollars
2012 2011 2012
Figures presented in the consolidated balance sheets ¥ 2,252,925 ¥ 1,987,687 $ 27,411Fair value 2,252,925 1,987,687 27,411Difference ¥ — ¥ — $ —
7. Securities
(ii) Securities with unrealized lossesThere were no equity securities classified as available-for-sale securities for which fair values were available with
unrealized losses.
(1) The following tables summarize the costs and carrying amounts (the fair values) of and the unrealized gains and
losses on equity securities classified as available-for-sale securities for which fair values were available at March
31, 2011 and March 31, 2012:
(i) Securities with unrealized gains(Equity securities)
Thousands of yenThousands ofU.S. dollars
2012 2011 2012
Cost ¥ 1,221,765 ¥ 1,506,845 $ 14,865Carrying amount 2,007,635 4,020,169 24,426Unrealized gains ¥ 785,870 ¥ 2,513,324 $ 9,561
(Note) The above table includes securities which are included in investments in business partnerships.
(2) Total sales of available-for-sale securities for the years ended March 31, 2011 and March 31, 2012 were as follows:
Thousands of yenThousands ofU.S. dollars
2012 2010 2012
Amount of sales ¥ 309,869 ¥ 620,546 $ 3,770Total gain on sales 199,292 371,050 2,424Total loss on sales — — —
The details of derivatives transactions have been omitted because they are not significant in the business management
of the corporate group.
8. Derivative transactions
34Annual Report 2012
10. Inventories(1) Inventories at March 31, 2011 and March 31, 2012 consisted of the following:
Thousands of yenThousands ofU.S. dollars
2012 2011 2012
Finished products ¥ 402,195 ¥ 282,662 $ 4,893Raw materials 374,137 104,227 4,552Work-in-process 919,501 250,519 11,187Supplies 300 317 3
Total ¥ 1,696,135 ¥ 637,726 $ 20,636
(2) Reduction of book value due to a decline in the profitability of inventories held for the purpose of ordinary sale
for the years ended March 31, 2011 and March 31, 2012 was as follows:
Thousands of yenThousands ofU.S. dollars
2012 2011 2012
Cost of sales ¥ 38,852 ¥ 52,927 $ 472Loss on liquidation of business — 25,553 —
The Companies have adopted the prepaid retirement benefit system and the defined contribution plan system.
Retirement benefit expenses associated with the above systems for the years ended March 31, 2011 and March 31,
2012 were as follows:
Thousands of yenThousands ofU.S. dollars
2012 2011 2012
Retirement benefit expenses ¥ 79,339 ¥ 77,225 $ 965
9. Retirement benefits
Notes to the Consolidated Financial Statements
MegaChips Corporation and its Consolidated Subsidiaries
(2) The provision for loss on construction contracts included in the cost of sales for the consolidated fiscal year
ended March 31,2011 and March 31,2012 was as follows:
Thousands of yenThousands ofU.S. dollars
2012 2011 2012
Cost of sales ¥ 346,250 ¥ 49,251 $ 4,212
11. Provision for loss on construction contracts(1) Inventories and the provision for loss on construction contracts related to construction contracts that are likely to
incur losses are presented as is and are not offset. The amount equivalent to the provision for loss on construction
contracts included in inventories related to construction contracts that are likely to incur losses was as follows:
Thousands of yenThousands ofU.S. dollars
2012 2011 2012
Inventories ¥ 386,291 ¥ 41,943 $ 4,699
35 MegaChips Corporation
(1) In order to achieve more efficient financing, the Companies have entered into overdraft agreements with certain
financial institutions. The status of these agreements at March 31, 2011 and March 31, 2012 were as follows:
Thousands of yenThousands ofU.S. dollars
2012 2011 2012
Maximum overdraft amount ¥ 15,000,000 ¥ 23,500,000 $ 182,503Credit used — — —
Available credit ¥ 15,000,000 ¥ 23,500,000 $ 182,503
Intangible assets at March 31, 2011 and March 31, 2012 consisted of the following:
Thousands of yenThousands ofU.S. dollars
2012 2011 2012
Computer software ¥ 55,049 ¥ 60,864 $ 669Others 2,775 2,775 33
Total ¥ 57,825 ¥ 63,639 $ 703
Research and development expenses are charged to income when incurred. Research and development expenses
for the years ended March 31, 2011 and March 31, 2012 were as follows:
Thousands of yenThousands ofU.S. dollars
2012 2011 2012
Research and development expenses ¥ 1,452,931 ¥ 1,217,416 $ 17,677
12. Intangible assets
14. Research and development expenses
13. Short-term debt
Japan’s statutory tax rate related to income was 40.6%
for the fiscal years ended March 31, 2011. New tax
rates will be applicable from the fiscal year ended
March 31, 2012 as follows:
Starting from the consolidated fiscal years
beginning on or after April 1, 2012, corporate tax
rates will be lowered and special reconstruction
corporate taxes will be applied, following the issuance
on December 2, 2011 of a partial amendment to the
corporate tax law to develop a tax system that
responds to changes in the structure of the economic
society (Statute no. 114 of 2011) and a reconstruction
funding law in the aftermath of the Great East Japan
Earthquake (Statute no. 117 of 2011).
15. Income taxesAs a result, the statutory tax rate that was 40.6%
for the calculation of deferred tax assets and deferred
tax liabilities will be 38.0% for the temporary
differences that are expected to be eliminated in the
consolidated fiscal years starting between April 1,
2012 and April 1, 2014, and 35.6% for those that are
expected to be eliminated from the consolidated fiscal
years starting on April 1, 2015.
Due to these changes in the tax rates, deferred
tax assets (the amount after the deduction of deferred
tax liabilities) of the end of the consolidated fiscal year
under review declined ¥31,910 thousand, and income
taxes-deferred rose ¥41,787 thousand.
36Annual Report 2012
(2) The following table summarizes the significant differences between the statutory tax rate and the Companies’
effective tax rate for the year ended March 31, 2011 and March 31, 2012, after tax effect accounting was applied.
%
2012 2011
Statutory tax rate 40.6 40.6(Adjustment)
Expenses permanently non-deductible 2.6 2.5Dividends income permanently non-deductible (1.7) —Tax credit for experiment and research expenses (3.3) (2.4)Inhabitants per capita taxes 0.2 0.2Increase (decrease) in valuation allowance — (0.3)Others (1.2) (6.2)Reduction in term-end deferred tax assets after adjustments due to tax rate changes
1.3 —
Effective tax rate 38.5 34.4
Notes to the Consolidated Financial Statements
MegaChips Corporation and its Consolidated Subsidiaries
(1) Significant components of the Companies’ deferred tax assets and liabilities as of March 31, 2011 and March
31, 2012 were as follows:
Thousands of yenThousands ofU.S. dollars
2012 2011 2012
Deferred tax assets:Accrued bonuses ¥ 114,315 ¥ 114,908 $ 1,390Provision for loss on construction contracts 147,358 20,010 1,792Enterprise taxes 52,223 69,892 635Accrued legal welfare expenses 16,605 16,974 202Valuation loss on inventory 40,766 40,389 495Excess software costs 82,173 88,014 999Excess long-term prepaid expenses costs 35,235 170,446 428Directors’ and corporate auditors’ severance benefits 11,641 15,452 141Loss on write-down of investment securities 31,811 40,600 387Others 17,222 16,994 209
Deferred tax assets 549,353 593,684 6,683
Deferred tax liabilities:Net unrealized gains on securities (69,744) (134,242) (848)
Total deferred tax liabilities (69,744) (134,242) (848)
Net deferred tax assets ¥ 479,609 ¥ 459,442 $ 5,835
37 MegaChips Corporation
Reclassification adjustments and taxes related to other comprehensive income are as follows:
Thousands of yenThousands ofU.S. dollars
2012 2012
Net unrealized gains on securities
Increasing (decreasing) during the year ¥ (1,484,139) $ (18,057)Reclassification adjustments (199,292) (2,424)
Sub-total, before tax (1,683,432) (20,482)Tax or benefit 64,498 784Net unrealized gains on securities (1,618,933) (19,697)
Foreign currency translation adjustments
Increasing (decreasing) during the year (221,319) (2,692)Sub-total, before tax (221,319) (2,692)Foreign currency translation adjustments (221,319) (2,692)
Total other comprehensive income (1,840,253) (22,390)
16. Other comprehensive income
Under the Japanese Corporate Law (“the Law”), the
entire amount paid for new shares is required to be
designated as common stock. However, a company
may, by a resolution of the Board of Directors,
designate an amount not exceeding one half of the
price of the new shares as additional paid-in capital,
which is included in capital surplus.
Under the Law, in cases where a dividend
distribution of surplus is made, the smaller of an
amount equal to 10% of the dividend or the excess, if
any, of 25% of common stock over the total of
additional paid-in capital and legal earnings reserve
must be set aside as additional paid-in capital or legal
earnings reserve. Legal earnings reserve is included in
retained earnings in the accompanying consolidated
balance sheets.
Under the Law, legal earnings reserve and
17. Net assetsadditional paid-in capital could be used to eliminate or
reduce a deficit or could be capitalized by a resolution
of the shareholders’ meeting.
The Law also provides for companies to purchase
treasury stock and dispose of such treasury stock by
resolution of the Board of Directors. The amount of
treasury stock purchased cannot exceed the amount
available for distribution to the shareholders, which is
determined by specific formula.
Under the Law, all additional paid-in capital and
all legal earnings reserve may be transferred to other
capital surplus and retained earnings, respectively,
which are potentially available for dividends.
The maximum amount that the Company can
distribute as dividends is calculated based on the
non-consolidated financial statements of the Company
in accordance with Japanese laws and regulations.
38Annual Report 2012
The reportable segments of the Company are
those units for which separate financial statements
can be obtained among the constituent units of the
Company and which are regularly examined by the
Board of Directors for decisions on the allocation of
management resources and for assessing business
performance.
The Company conducts its business activities by
establishing multiple business divisions depending on
the types of products. Therefore, the Company creates
segments by product based on business divisions.
These segments are consolidated into segments with
similar product characteristics, manufacturing
processes, targeted markets and marketing methods.
The Company has two reportable segments: the LSI
business and the Systems business.
In the LSI business, the Company develops,
manufactures, and sells products including customer
specific system LSI used for certain devices in the
digital home appliance field and electronic devices
mounted with its system LSI. The Company employs a
build-to-order system as its selling method and
manufacturing is outsourced.
In the Systems business, the Company develops,
manufactures, and sells products including customer
specific video surveillance systems used in the field of
security. The Company employs a build-to-order
system as its selling method and manufacturing is
outsourced.
(2) Methods for calculating net sales, profit and loss, the value of assets and amounts for other items by reportable segment
The accounting treatment for reportable segments in
the consolidated fiscal year ended March 31, 2011 is
basically the same as the treatment for important
matters fundamental to the preparation of the
consolidated financial statements. Segment profits and
losses are adjusted with operating income in the
consolidated financial statements.
Since the consolidated fiscal year ended March 31,
2012, the Company has changed its reportable
segments as described below
The Company has traditionally treated the LSI and
systems businesses as reportable segments as part of
its practice to establish reportable segments by
consolidating business segments, which were
categorized by product based on business divisions in
accordance with similarities in the operations of each
business segment. However, as the Company has
developed its businesses by focusing on providing a
wide range of solutions to meet the increasingly
sophisticated and diversified requirements of
customers, the Company’s method of providing
products has diversified, and the activities of the
business divisions have shifted from focusing on types
of products to projects.
In this environment, given that the business
divisions are engaged in project based operations that
span various sections within the corporate structure
regardless of the type of product, since the beginning
of the consolidated fiscal year under review the
Company has changed the method of managing its
business divisions from a method based on product
type to one based on types of projects.
As a result, in conducting its business, the
Company has adopted a structure that analyzes sales
situations by project type and makes decisions on the
allocation of management resources and the
evaluation of operating results from the Company’s
overall perspective. Consequently, after reviewing the
existing reportable segments, the Company has
decided to treat the LSI and systems businesses,
traditionally categorized by products based on business
divisions, as one business segment starting from the
consolidated fiscal year under review.
The overview of the reportable segments before
this change (the consolidated fiscal year ended March
31, 2011) is as follows:
18. Segment information(1) Overview of reportable segments and changes
Notes to the Consolidated Financial Statements
MegaChips Corporation and its Consolidated Subsidiaries
39 MegaChips Corporation
(3) Because the Company has determined to make all its reportable segments one business segment from the
consolidated fiscal year under review, the details of segment information for the consolidated fiscal years ended
March 31, 2011 and March 31, 2012, which were prepared based on the revised categorization method, have
been omitted.
Information about net sales, profit and loss by the reportable segments of the Company for the year ended
March 31, 2011, which was prepared based on the categorization method before the revision, is as follows:
Thousands of yen2011
LSI System Adjustment Consolidated
Net sales:Customers ¥ 33,080,947 ¥ 3,178,499 ¥ — ¥ 36,259,447Intersegment — — — —
33,080,947 3,178,499 — 36,259,447Segment profit (loss) ¥ 3,728,640 ¥ (574,454) ¥ (99,048) ¥ 3,055,137
Corporate expenses included in the adjustment amount of segment profit but not allocated to each reportable
segment were ¥99,048 thousand ($1,191 thousand), and mainly consist of general, selling and administrative
expenses and research and development expenses that were not attributable to reportable segments.
Overall assets of the Company included in the adjustment for segment assets and undistributed to reportable
segments amounted to ¥12,628,117 thousand ($151,871 thousand). They consisted of surplus working funds (cash
and securities) at the Company and assets, etc., in connection with its administrative divisions.
The increase in property, plant and equipment and intangible assets includes capital investments, etc., in
connection with its administrative divisions. Depreciation and amortization in connection with equipment of its
administrative divisions are distributed to each reportable segment.
(4) Information about assets and amounts for other items by the reportable segments of the Company for the year
ended March 31, 2011, which was prepared based on the categorization method before the revision, is set forth
in the table below, in the table, depreciation and amortization include an amortized amount of long-term
prepaid expenses. The increase in property, plant and equipment and intangible assets includes an increased
amount of long-term prepaid expenses.
Thousands of yen2011
LSI System Adjustment Consolidated
Segment assets ¥ 15,275,561 ¥ 1,299,580 ¥ 12,628,117 ¥ 29,203,259Others
Depreciation and amortization 113,239 917,338 — 1,030,578Increase in property, plant and equipment, and intangible assets 75,378 251,137 105,200 431,716
40Annual Report 2012
19. Other income (expenses)
20. Related party transactions
21. Subsequent events
(1) Loss on liquidation of business for the years ended March 31, 2011 depends on the review of a systems business.
(2) Other income (expenses): others net in the consolidated statements of income comprised the following:
Thousands of yenThousands ofU.S. dollars
2012 2011 2012
Taxes and dues ¥ (35,519) ¥ (—) $ (432)Litigation expenses (30,000) (—) (365)Loss on investments in partnerships (7,437) (18,874) (90)Exchange losses (1,340) (39,583) (16)Others, net 48,857 33,182 594
Total ¥ (25,439) ¥ (25,276) $ (309)
Transactions with a corporate auditor, who is also the Company’s lawyer, for the years ended March 31, 2011 and
March 31, 2012 were as follows:
Thousands of yenThousands ofU.S. dollars
2012 2011 2012
Legal advisory fees ¥ 20,400 ¥ 17,400 $ 248
On May 9, 2012, the Company’s Board of Directors resolved a dividend distribution as follows:
Thousands of yenThousands ofU.S. dollars
Cash dividends — ¥27 ($0.32) per share ¥ 646,768 $ 7,869
(1) Dividend distribution of surplus
The Company resolved at a meeting of its Board of Directors held on April 20, 2012 that it would conclude a basic
agreement to purchase all the shares of Kawasaki Microelectronics, Inc., a wholly owned subsidiary of JFE Holdings,
Inc. (First Section of the Tokyo Stock Exchange), making Kawasaki Microelectronics, Inc. the Company’s subsidiary.
(2) Share Purchases
Notes to the Consolidated Financial Statements
MegaChips Corporation and its Consolidated Subsidiaries
(5) Net sales to major customers for the consolidated fiscal year ended March 31, 2011 and March 31, 2012 were
as follows:
Thousands of yenThousands ofU.S. dollars
2012 2011 2012
Nintendo Co., Ltd. ¥ 28,483,077 ¥ 30,608,408 $ 346,551Secom Co., Ltd ¥ 3,827,857 ¥ — $ 46,573
41 MegaChips Corporation
(i) Purpose of share purchasesThe Company was founded on April 4, 1990, as a
fabless manufacturer that focused on R&D based on
the concept of merging knowledge of LSI and systems.
Since then, it has concentrated its management
resources in the image, audio and communications
fields and has expanded its operations by developing
and promoting large-scale integrated circuits (LSIs) and
system products equipped with self-developed LSIs,
featuring algorithms, new concept architecture and
creative technologies.
Meanwhile, Kawasaki Microelectronics, Inc.,
currently a fabless manufacturer, is a leading LSI
vendor that offers a full range of services from design
to quality assurance, including wafer fabrication,
assembly, and testing, to top companies in both Japan
and overseas in the areas of communications, images,
information, and office automation. It is growing and
strengthening its overseas business through its
subsidiary in the United States, which serves as an
R&D center for the development of essential future
technologies, its branch in India, which serves as a
development center, and its Taiwan branch, which is a
support base for Taiwanese and Chinese customers.
MegaChips is determined to combine the two
companies’ capabilities to meet the future
requirements of the market and address the challenges
confronting domestic and international customers in
the field of electronics, where technical innovation is
rapid. The company also seeks to strengthen its
strategy and expand its business as a fabless company
by providing strong support and total solutions from
the algorithm and architecture development stage to
wafer fabrication, assembly and testing processes.
(ii) Basic agreement with JFE Holdings, Inc.MegaChips plans to conclude a stock purchase agreement with JFE and acquire 100% ownership of Kawasaki
Microelectronics, Inc.
(iii) Profile of the subsidiary to be acquireda. Name: Kawasaki Microelectronics, Inc.
b. Location: 1-3, Nakase, Mihama-ku, Chiba-city
c. Representative: President & CEO Yukio Yamauchi
d. Principal business: Semiconductor integrated-circuit design, manufacture, and sales
e. Capital: 5,046 million yen (61 million dollars)
f. Established: July 2, 2001
g. Major shareholders and equity ratio: JFE Holdings, Inc. 100%
h. The Company has no capital, personal, or transactional relationships with the subject company.
i. Company’s consolidated operating results and financial position for the last three years
Millions of yen2009 2010 2011
Net assets ¥ 9,583 ¥ 8,234 ¥ 9,241Total assets 20,862 21,281 19,364Gross revenues 27,849 24,692 24,176Group operating profit (or loss) (4,003) (317) 1,857Consolidated net income (or loss) (11,928) (1,423) 1,389
(Amounts per share)
Yen2009 2010 2011
Consolidated net assets and per share ¥ 637.22 ¥ 547.49 ¥ 614.48Consolidated net income (or loss) per share (793.12) (94.64) 92.35Dividend per share — — —
42Annual Report 2012
(v) Schedulea. Resolution of Board of Directors meeting
April 20, 2012
b. Agreement date of share purchases
End of June 2012
c. Date of share purchases
Beginning of July 2012
Notes to the Consolidated Financial Statements
MegaChips Corporation and its Consolidated Subsidiaries
(iv) Number of shares to be acquired, acquisition cost, and status of shares held before/after acquisitiona. Number of shares held before acquisition
— shares (Number of voting rights: —) (Shareholding: —%)
b. Number of shares to be acquired
15,039,600 shares (Number of voting rights: 150,396 shares) (Ratio to issued shares: 100%)
c. Acquisition cost (schedule)
8,500 million yen (103 million dollars)
d. Number of shares to be held after acquisition
15,039,600 shares (Number of voting rights: 150,396 shares) (Shareholding: 100%)
43 MegaChips Corporation
Company Name: MegaChips CorporationBusiness Activities:
Design, development and sales of systems LSIs, and electronic devices and systems products with LSIs manufactured by the Company
Head Office: 4-1-6, Miyahara, Yodogawa-ku, Osaka 532-0003, JapanPhone: +81-6-6399-2884 FAX: +81-6-6399-2886
Tokyo Sales Office: 17-6, Ichibancho, Chiyoda-ku, Tokyo 102-0082, JapanPhone: +81-3-3512-5080 FAX: +81-3-3262-3598
Representative:Akira Takata, President and Representative Director
Capital Stock: ¥4.84 billionTotal Assets: ¥29.24 billion (as of March 31, 2012 on a consolidated basis)Date of Settlement of Accounts: March 31 of each yearEstablished: April 4, 1990Consolidated Subsidiaries:
Shun Yin Investment Ltd.
Japanese othercompanies 10.85%
Individual & Others 48.38%
Foreign companies 10.58%
Japanese securitiescompanies 0.62%
Japanese financialinstitutions29.22%
Treasury stock0.35%
1,000-9,999 5.39%
10,000 and above 0.48%
500-999 5.06%
1-99 0.88%
100-499 88.19%
Shares of treasury stock are excluded from the scope of the graph.
Authorized Stock: 100,000,000Shares of Common Stock Outstanding: 24,038,400Listing of Stock:
Listed on the No.1 Section of the Tokyo Stock ExchangeSecurities Code Number: 6875Number of Shareholders: 26,778
Settlement Date: March 31General Shareholders’ Meeting: JuneShareholders’ List Closing Date: March 31Share Trading Unit: 100Shareholder registry administrator:
Mitsubishi UFJ Trust and Banking Corporation
Stock Price (¥)Stock Trading Volume (Millions)
20121 2 3 4 5 67 8 9 10 11 121 2 3 4 5 6 1 2 3 4 5 67 8 9 10 11 12 1 2 3 4 5 67 8 9 10 11 12
2009 2010 20110
6
12
18
24
0
600
1,200
1,800
2,400
Corporate Data (As of June 26, 2012)
Stock Information (As of March 31, 2012)
Shareholders Breakdown by Type
Stock Price Trend
Shareholders Breakdown by Number of Shares Held
Corporate Data/Stock Information
44Annual Report 2012