Creating the Future

CMK CORPORATION

2005 Annual Report
Year ended March 31, 2005

CMK CORPORATION
43F Shinjuku I-LAND TOWER Bldg.
6-5-1, Nishishinjuku, Shinjuku-ku, Tokyo 163-1388, Japan
Tel: +81-3-5323-0231
http://www.cmk-corp.com

TM

This annual report is printed with soy ink on paper which is recycled.
Printed in Japan

3
1
2

Plant
Sales Office

Pr o f i l e
As a leading company in the printed wiring board (PWB) industry, CMK Corporation has developed
expertise and built up a firm business foundation. Currently, the PWB industry is showing promisedue to demand from IT related industries, but tough competition against foreign products is requiring
highly cost-effective and more sophisticated products.
In order to succeed amidst this fierce competition domestically, CMK is promoting cost reduction
and business reconstruction, restructuring and integrating to a self-contained business unit with a moreclearly defined structure of responsibility.
Overseas, on the other hand, CMK group in China are strengthening their production systems as
domestic demand is expected to expand. In Southeast Asia, we have successfully integrated singlesided PWB production functions into one location in conjunction with the closure of the production
facility in Europe, which was one of our unprofitable business operations.
CMK will continue to contribute to the world’s progress and advancement, and pursue our company motto of “Permanent Growth”

Contents

Cautionary Statement with Respect to
Forward-Looking Statements

1 Financial Highlights
2 Message from the Management
2 Management Issues
3 The Top Interview
4 Products Information
5 CMK Topics
6 Take a Virtual Tour of
CMK Electronics (WUXI)
8 Environmental Protection
9 Financial Section
23 Managements
23 Corporate Data
24 Group Companies

Statements made in this annual report with respect to
CMK’s plans, strategies and beliefs and other statements that are not historical facts are forward-looking statements about the future performance of
CMK, which are based on management’s assumptions and beliefs in light of the information currently
available to it, and involve risks and unpredictability.
Potential risks and unpredictability include, without
limitation, general economic conditions in CMK’s
markets; industrial market conditions, exchange rates
in which CMK makes significant sales or in which
CMK’s assets and liabilities are denominated; andCMK’s ability to continue to win acceptance of its
products and services, which are offered in highly
competitive markets characterized by the continual
introduction of new products, rapid developments intechnology, and changing customer requirements.

1 CMK Headquarters

2 CMK SE Center

3 CMK Niigata Satellite

4 CMKS (MALAYSIA) SDN. BHD.

5 CMKC (DONG GUANG) LTD.

6 CMK Electronics (WUXI) Co., Ltd.

5

6

4

Plant
Sales Office

CMK CORPORATION
2005 Annual Report25

Financial Highlights
CMK CORPORATION and Consolidated Subsidiaries

Years ended March 31, 2003, 2004 and 2005

Yen
(Millions)(except per share amounts)

For the year
Net sales
Income (loss) before income taxes
Net income (loss)
At year-end
Shareholders’ equity
Total assets
Per share
Net income (loss)— Basic— Diluted
Shareholders’ equity

U.S. Dollars(Thousands)(except per share amounts)

2003

2004

2005

2005

¥111,744(1,134)(1,057)¥115,366
5,613
4,612

¥116,031
6,809
5,319

$1,080,262
63,392
49,520¥ 46,205
154,271¥ 51,024
134,263¥ 59,701
130,514$ 555,823
1,215,101¥ (20.16)—
883.26¥ 87.1274.16
975.88¥ 99.63
89.60
1,077.70

$

0.92
0.83
10.03

Notes: 1. U.S. Dollars amounts have been translated from Yen, for convenience only, at the rate of ¥107.41 = $1, the Tokyo foreign exchange market rate as of March 31, 2005.
2. All Millions Yen and Thousands U.S. Dollars amounts are rounded to the nearest figure.

Net Sales

Income (Loss) before Income Taxes
and Net Income (Loss)

Yen (Millions)

Net Income (Loss) per Share ofCommon StockYen (Millions)
125,000

100,000

Yen

8,000

120

6,000

90

4,000

60

2,000

30

0

0

-2,000-30

75,00050,00025,000

0

2001

2002

2003

2004

2005

-4,000

2001

2002

2003

2004

-60

2005

2001

2002

2003

Yen (Millions)

Multi-Layerd PWBs
Double-Sided PWBs
Single-Sided PWBs
Others
17,098(14.7%)

52,877(45.8%)
17,580(15.2%)
19,577(17.0%)

25,330(22.0%)

2004

2005

55,453(47.8%)
26,417(22.8%)

17,062(14.7%)

2005
Basic
DilutedIncome (Loss) before Income Taxes
Net Income

Sales by Type of PWB

2004

Japan
Southeast Asia
China
EuropeSales by Region
Yen (Millions)

2,623(2.3%)

3,051(2.7%)

10,581(9.1%)

10,299(8.9%)
2004

2005

11,087(9.6%)

91,882(79.2%)
90,927(78.8%)

10,944(9.4%)CMK CORPORATION
2005 Annual Report1Message from the ManagementDuring the fiscal year under review, the Japanese economy showed signs of recovery in thefirst half due to an increase in export and active capital investment by the private sector
as well as a gradual rise in consumer spending. In the second half term, however, consumer spending became sluggish, generating a need for inventory adjustments and raising concerns over an economic slowdown. Although the global economy also exhibited instability due
to factors such as uneasiness about possible slowdowns in the U.S. and Chinese economies and a steep
rise in prices of crude oil and primary products, it remained fairly strong and had thus far avoided
a slump.
The PWB industry in which CMK Group operates was faced with many negative factors such asincreased material costs and declined demand due to inventory adjustments. Nevertheless, the business environment remained relatively favorable, thanks to strong sales bolstered by robust demand forautomobile equipment products, flat-screen TVs, and digital AV devices.
Under such circumstances, CMK Group strengthened its global marketing system, boosted its production capacity in China, and actively promoted order taking
activities for high-value-added products. At the same time, we
also focused efforts on business restructuring. As a result, ourconsolidated business performance for this fiscal year showed
increases in both revenue and profits.
Even though economic conditions remain unclear, we will
strive to achieve our management challenges and improve corporate value. We thank you all for your continuous support.
June 2005

Takahiro Nakayama
President and Chief Executive Officer

Management Issues

The electronics industry is expected to continue growing in the future, with digital products such as
mobile phone handsets, flat-screen TVs, and DVD recorders leading the way, and increased use ofelectronic equipment in automobiles is expected to bolster the development of related market segments. Products used for high-speed signal processing shall be required to be lighter and thinner, andto offer higher-density technologies and higher reliability. Price competition is expected to grow progressively more severe.
While carrying out strategic order taking activities on a continuing basis, CMK Group will strive
to restructure the business, cut-down fixed expenses, and achieve extensive cost reduction. Moreover,
we will enhance the level of technology in next-generation electronic equipment in an effort to further
expand the Group’s already-powerful global production and marketing systems.

2

CMK CORPORATION
2005 Annual ReportT h e To p I n t e r v i e w

Please describe the business results in the fiscal term under review and prospects
for the subsequent term.
Nakayama: In the fiscal year under review, CMK Group strengthened its global marketing system, boosted
production capacity in China, conducted aggressive order taking activities for high-value-added products, restructured the business, cut-down fixed expenses, and promoted extensive cost reduction efforts. As a result, sales,
current income, and net income exceeded those of the previous fiscal year, and we achieved our highest-ever fiscal year-end profit. As part of our business restructuring, we dissolved our single-sided PWB production business
in Europe, which was one of our unprofitable business operations, and decided on early adoption of accounting of
impairment of fixed assets. As such, we focused on improving the financial strength of CMK Group. Althoughthese activities reflected an increased loss in this fiscal year, we believe that they have strengthened our profitability structure.
In the subsequent fiscal term, we anticipate risk factors such as high material costs and sluggishness in the
U.S. and Chinese economies will remain, making the business environment uncertain. However, we expect demand to grow due to the progress of inventory adjustments for digital AV devices and terminal devices such as
flat-screen TVs and mobile phone handsets as well as for automobile-related electronic equipment.
While conducting strategic order taking activities on a continuing basis, CMK Group will work hard to further restructure the business, cut-down fixed expenses, and reduce costs, and additionally to improve technological levels for next-generation equipment. We will also enhance our acclaimed global production and marketingsystems.

Please describe the ongoing strategy for group companies overseas.
Nakayama: Our group companies in China are strengthening their production systems as domestic demand is
expected to expand, mainly for double-sided PWBs, multilayer through-hole PWBs, and build-up multilayer
PWBs. Through these efforts, we will strive to further solidify the trust of customers. In Southeast Asia, we havesuccessfully integrated single-sided PWB production functions into one location in conjunction with the closureof the production facility in Europe, thus promoting rationalization of production and expansion of import andsales of Chinese-made products. In both of these regions, we will aggressively carry out strategies based on a
medium-term vision with the aim of boosting the profitability of CMK Group as we head into the future.

Please illustrate your medium- and long-term management visions.
Nakayama: Based on selection and concentration, we are investing our management resources mainly in highvalue-added products and promoting the development and mass-production of next-generation PWBs in Japan. At
the same time, we are establishing a system capable of promptly and flexibly meeting the diverse needs of customers. Through these efforts, we are striving to gain the capability to respond quickly to the needs of markets offering great potential for future growth. Meanwhile, in order to emerge as winner in international competition in
the globalizing marketplace, we are aggressively expanding our overseas businesses. By becoming a global company that customers trust, we aim to become a leading company in the electronic components industry.

Please tell us what’s happening in product development.
Nakayama: For digital equipment, particularly information and communication products, we are hard at work
developing higher-precision technology in order to realize higher integration density. Specifically, we have developed and begun mass production of build-up multilayer PWBs adaptable to 0.4-mm-pitch CSP. To respond to therising need for thinner product dimensions, we continue to develop and implement PWBs that can make packages
and modules much thinner. As part of efforts for achieving dramatically higher density, faster speed, and moreadvanced functions, we are developing embedded PWBs with built-in resistors, capacitors, and other components. We have also been collaborating with Casio Computer Co., Ltd. in the development of an EWLP withbuilt-in LSIs (active devices) which is now ready for mass production. For core automotive parts with advanced
electronic control functions, we are working hard in the development of PWBs with high heat radiation and resistance, commercializing newly developed technologies in rapid succession.
CMK CORPORATION
2005 Annual Report3

Products Information

Package Substrate•Rigid Substrate
Rigid substrate is a package substrate, and the advanced technology to fulfill the requirement of miniaturization and thin substrateas the same as semiconductor devices.

E-Spec•E-Spec
The “E-spec”, the CMK original environment PWB specifications,has fulfilled the ecological requirements in the market. CMK continuously minimizes hazardous chemicals to our neighbors and eliminates negative impact to our children.
*“E-Spec” is a registered trademark of CMK CORPORATION.
“E-Spec” markRigid-Flex Series•Rigid-Flex Series
The combination of flexible and rigid structure. The Rigid-Flex is
3 dimensionally bendable and twistable.
Applications: Digital Still Cameras, Mobile Phones

Heat Sink PWB Exclusively for Automobiles•MB/MC Series
Newly developed for excellent heat sink, high pressure resistance,
and assembled high density circuitry under the severe automotive
conditions.

Sales by Different Applications

In terms of application, sales of PWBs for automotive equipment(car electronics) and digital AV devices such as LCD TVs andplasma displays increased steadily. In particular, sales of PWBs forautomotive equipment rose 19% from the previous year in terms ofsales amount. We will conduct strategic business activities, withpriority markets centering around the automotive, AV, and communications fields.

4

CMK CORPORATION
2005 Annual Report

Others32.8%

Carelectronics
26.4%
AV
equipment
17.2%

Information
devices
7.4%

Mobilecommunications
16.2%

CMK Topics

Expanding production facility forbuild-up multilayer PWBs (PPBU)
To respond to the growing needs of customers for PWBs offering higher density, smaller size,
and thinner dimension, CMK Multi Corporation in Japan initiated a 1.2-billion-yen facility improvement plan in August 2004, as part of our “PPBU Business Strategy”.
Together with the installation of new equipment, CMK Multi Corporation actively introduced new technologies for achieving finer pitches and higher density of electronic circuits.
While ensuring improvements in quality and productivity and a reduction in lead times, thecompany is focusing companywide efforts on the promotion of the “PPBU Business Strategy”
with the aim of further raising added-value in products.

PPBU
Niigata Satellite Plant
where CMK Multi is headquartered

Development of metal composite wiring board (CMK-COMP)
with superb heat radiation performanceused in automobiles from 2004.
CMK has been placing special focus on the development of automotive PWBs in recent years
in order to respond to expanding demand resulting from advanced application of electronics inautomobiles. These efforts have led to the development of a metal composite wiring board(CMK-COMP) offering superb heat radiation performance. CMK-COMP allows installation of
an increased number of electronic devices in the engine compartment, thus allowing for a more
spacious, comfortable cabin area. CMK-COMP is a copper-core substrate with a thick copper
sheet inside the PWB for efficient heat dissipation. It is suitable for the bi-wiring technology
required for creating large-current circuits and control circuits on the same board. CMKCOMP also offers high reliability and excellent durability over a long period of time–qualities
that are essential in all automobile devices. CMK-COMP is mounted in vehicles introduced inand after 2004.

CMKCOMP
Cross-section view of
the thick copper-core substrate

CMK CORPORATION
2005 Annual Report5Take a Virtual Tour of

CMK Electronics (WUXI)CMK Electronics (WUXI) Co., Ltd. was established in May 2001 in Wuxi, Jiangsu, China jointly by
CMK, Marubeni Corporation, and Suzhou Matsushita Electric Works. It is CMK Group’s third production base in China. The site area measures approximately 50,000 m2, and some 500 employees
work for the company. It is the only plant of the CMK Group’s overseas production bases that manufactures build-up multilayer PWBs. When the plant began operation in October 2002, its monthly production capacity was about 5,000 m2. As orders continued to grow, the monthly production capacity
was increased to about 7,000 m2 in 2003. Then, the company further boosted capacity to about 10,000
m2 in 2004. The following article introduces CMK Electronics (WUXI), which is located in a rapidly
growing area of eastern China.

CMK’s first overseas build-up multilayer PWB plant
During the period from 2000 to 2001, Japanese companies actively transferred production functions
overseas. Many companies launched businesses in China due to low labor costs and promising market
value. Against this backdrop, in October 2000, CMK Group acquired the management rights of
CMKC (DONG GUANG) LTD., a manufacturer of double-sided and through-hole multilayer PWBs
located in Dongguan, Guangdong Province. In March 2001, the Group established CMKS CHINA
FACTORY in Dongguan, Guangdong Province for the production of single-sided and silver throughhole PWBs. As such, CMK Group has been energetically expanding its business in China. In May
2001, CMK Electronics (WUXI) was established as a third production base in China, for the produc-

CMK Electronics (WUXI) Co., Ltd.

CMKC (DONG GUANG) LTD.
CMKS CHINA FACTORY6CMK CORPORATION
2005 Annual Reporttion of build-up multilayer PWBs, following the two mentioned above. The company began production operations in October 2002 with a monthly capacity of approximately 5,000 m2. With the commencement of operation of this production facility, CMK Group has constructed a system in China
capable of manufacturing and supplying PWBs of all types.
CMK Electronics’ products are used mainly in information terminals such as mobile phone handsets and digital products such as digital still cameras. The volume of orders has been growing steadily
since the company began operation. The company expanded the production facility in 2003 to increase monthly capacity to approximately 7,000 m2. In 2004, it invested management resources to establish a production capacity of 10,000 m 2. For profitability improvement, CMK Electronics isworking to curtail raw material procurement costs, improve operational efficiency through reviews of
production processes, and reduce manufacturing costs by enhancing employees’ skills.

Details of production
CMK Electronics’ mainstay products are build-up multilayer PWBs (PPBUs: stronger and more versatile than the build-up PWBs offered by other companies) for mobile phone handsets and digital stillcameras. Its customers are mostly Japanese device makers. The breakdown of sales by applicationshows 35% for digital still cameras, 35% for mobile phone handsets, 15% for DVD recorders, and
15% for others. All products manufactured by CMK Electronics are equivalent to high-value-added
products produced in Japan, while offering high profit margins.
CMK Electronics has obtained ISO/TS 16949: 2002, and acquired ISO 14000 certification on
November 2004. These international certifications are testimony to the advanced technologies andhigh quality offered by CMK Electronics.

Future topics
Thanks to its advanced technological prowess and robust demand in the
CMK Electronics’ Sales
RMB (Thousands)
marketplace, CMK Electronics’ sales have been growing steadily since
the start of operations. However, the business environment is expected
250,000
to become more challenging due to the launches of competitors and anincrease in the product mix of high difficulty products. Nevertheless,
200,000
demand for build-up multilayer PWBs is anticipated to continue to
150,000
grow in the future. In response to this, CMK Electronics has obtained a
46,000-m2 site adjacent to the
100,000
current plant premises to pre50,000
pare for future plant expansion
and production capacity in0
2002
2003
2004
creases. CMK Electronics plans
to focus on expansion of production of mainly PPBUs with thin but high-rigidity laser-via
formation boards featuring prepreg in all insulation layers.
Build-up multilayer PWB (PPBU)CMK CORPORATION
2005 Annual Report

7

Environmental Protection

We practice environmental preservation activities such as acquisition of ISO14001 Certificate andsales of “E-Spec” (environmental-friendly PWBs) production.
Recently, we accomplished to develop the industrial waste recycled procedure during the PWB
manufacturing processes.

Acquisition of ISO14001
We consider the environment management systems as the foundation of the environmental activities.
Therefore, we aim to acquire the ISO14001 Certificate for all the CMK production site.

Environmental Policy
Based on one of our management policies, “fulfillment of the Company’s social responsibility as agood corporate citizen”, CMK CORPORATION makes the best efforts to all the business operation inorder to protect the global environment.

General Environmental Policy
As a member of society, CMK believes that we are also responsible for harmony with the global environment.
Our policies are as follows:
1. To develop how to deal with environmental problems, establish an environmental promotion system of
the CMK Group.
2. To abide by environmental laws and regulations, customers’ requirements, and strictly control corporate
activities.
3. To encourage energy- saving, recycling and the reduction of industrial waste with an aim to conserving
limited resources.
4. To perform environmental assessment as part of corporate activities to reduce the load on the environment and promote the use of substitutes for toxic substances.
5. To perform environmental inspections to confirm and continuously improve environmental control activities.
6. To make every effort to protect natural areas and scenic sites, and coexist with the global environment.
7. To elevate awareness through environmental education and open to publicity measures.
History of ISO14001
Plants and Offices

KIBAN Center Plant
NIIGATA SATELLITE PLANT
JSIC CORPORATIONCMK EUROPE N. V.
G-Station Plant
JT CMK CORPORATIONCMK Global Brands Manufacture, Ltd.
CMK SINGAPORE (PTE.) LTD.
WAKOH ELECTRONICS CORPORATION
P. T. CMKS INDONESIACMKS (MALAYSIA) SDN. BHD.
CMK KANBARA ELECTRONICCORPORATION JAPANCMKC (DONG GUAN) LTD.
CMK MECHANICS CORPORATION
Technical Center Plant
CMK ELECTRONICS (WUXI) Co., Ltd.

8CMK CORPORATION
2005 Annual Report

Acquired Date

Sep. 1998
Aug. 1999
Dec. 1999
Oct. 2000
Oct. 2000
Dec. 2000
Feb. 2001
Aug. 2001
Oct. 2001
Dec. 2001
Dec. 2001
Dec. 2002
Dec. 2003
Sep. 2004
Oct. 2004
Nov. 2004

Environmental report
2005

Financial Section

10
12
13
14
15
22

CONTENTS
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Shareholders’ Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Independent Auditors’ Report

F i v e - Ye a r S u m m a r y
CMK CORPORATION and Consolidated Subsidiaries
Years ended March 31, 2005, 2004, 2003, 2002 and 2001

Yen
(Millions)

U.S. Dollars(Thousands)

2005

2004

2003

2002

2001

2005

For the year
Net sales
Operating income (loss)
Net income (loss)¥116,031
10,442
5,319¥115,366
9,212
4,612

¥111,744
703(1,057)¥104,540(1,138)(2,871)¥122,292
9,284
4,182

$1,080,262
97,21649,520At year end
Shareholders’ equity
Total assets

59,701
130,51451,024
134,263

46,205
154,271

49,715
149,476

52,822
144,749555,823
1,215,101Yen

Per Share
Net income—Basic—Diluted
Price at Tokyo Stock Exchange
High
Low
Cash dividends, applicable to period

U.S. Dollars¥99.6389.60¥87.12
74.16¥(20.16)–¥(54.66)–¥80.36
69.75

$0.92
0.83

1,759
1,271
10.00

1,710
454
10.00

1,219
460
8.00

1,480
735
10.00

2,390
1,130
12.00

16.37
11.83
0.09

%

RatiosEquity Ratio
Return on Equity
Price Earnings Ratio (Times)

45.74
9.6
17.4

38.0
9.5
19.3

29.95
–
–

33.26
–
–

36.49
8.15
16.80

Number of employees (Person)

6,639

6,646

7,122

6,780

6,180

Notes: 1. U.S. Dollars amounts have been translated from Yen, for convenience only, at the rate of ¥107.41= $1, the Tokyo foreign exchange market rate as of March 31, 2005.
2. All Millions Yen and Thousands U.S. Dollars amounts are rounded to the nearest figure.

CMK CORPORATION
2005 Annual Report9Consolidated Balance Sheets
CMK CORPORATION and Consolidated Subsidiaries
March 31, 2005 and 2004

Yen
(Millions)

U.S.Dollars(Thousands)

March 31ASSETS
Current assets:
Cash and time deposits (Note 5)
Marketable securities (Note 3)
Trade receivables:
Accounts and notes
Allowance for doubtful accounts
Inventories (Note 4)
Deferred income taxes (Note 9)
Other current assets
Total current assets

Property, plant and equipment (Notes 7, 10 & 12):Land
Buildings
Machinery, equipment and others
Construction in progress
Less accumulated depreciation

Investments and other assets:
Investments in securities (Notes 3 & 6)
Long-term loans
Deferred income taxes (Note 9)
OthersAllowance for doubtful accounts

The accompanying notes are an integral part of these statements.

CORPORATION
10 CMK
2005 Annual Report

March 31

2005

2004

2005

¥ 18,142
113¥ 13,276103$ 168,904
1,052

31,527
(52)
8,518
743
3,380
62,37432,522
(20)
9,555
773
1,830
58,042

293,520(484)
79,303
6,917
31,468580,709

12,13656,34789,049511
158,044
105,037
53,006

13,69058,05891,227
654
163,629
104,368
59,260112,987
524,597
829,056
4,757
1,471,408
977,907493,492

10,341
102
1,523
4,847
16,814(1,681)
15,133¥130,514

9,451
2,236
1,271
5,087
18,045(1,087)
16,959¥134,263

96,275949
14,17945,126
156,540(15,650)
140,890$1,215,101

Yen(Millions)

U.S.Dollars(Thousands)

March 31

LIABILITIES AND SHAREHOLDERS’ EQUITYCurrent liabilities:
Short-term borrowings (Note 7)
Current portion of long-term debt (Note 7)
Trade payables:
Accounts and notes
Income taxes payables (Note 9)
Other current liabilities (Note 9)
Total current liabilities

2005
¥

5,196
15,093

March 31

2004
¥

2005

5,666
5,298

$

48,375140,517

11,466
1,324
10,37143,454

13,2701,476
10,70936,422

106,749
12,32696,555404,561Long-term liabilities:
Long-term debt (Note 7)
Accrued pension and severance costs (Note 12)
Retirement and severance benefits
Others (Note 9)
Total long-term liabilities

20,725290
560
801
22,37740,544
204
621
636
42,007

192,952
2,699
5,213
7,457
208,332

Minority interests in subsidiaries

4,980

4,809

46,364———

18,332—
18,08927,737
1,149(3,532)—
16,167
15,92422,889852(3,202)

170,673—
168,410258,234
10,697(32,883)(2,075)—59,701¥130,514—(1,607)51,024¥134,263(19,318)—
555,823$1,215,101

Contingent liabilities
Shareholders’ equity (Note 8):
Common stock
Authorized: 199,871,000 Shares
Issued:March 31, 2005: 56,732,174 Shares
March 31, 2004: 53,284,741 Shares
Additional paid-in capital
Retained earnings
Unrealized gains on securities
Foreign currency translation adjustments
Treasury stock, at cost
March 31, 2005: 1,411,864 Shares
March 31, 2004: 1,066,883 Shares
Total shareholders’ equity

CMK CORPORATION
2005 Annual Report11Consolidated Statements of Income
CMK CORPORATION and Consolidated Subsidiaries
Years ended March 31, 2005, 2004 and 2003

Yen
(Millions)

U.S.Dollars(Thousands)

Year ended March 31

Net sales (Note 13)
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income (Note 13)
Other income (expenses):
Interest and dividend income
Interest expenses
Impairment loss (Note 12)
Others, net
Income (loss) before income taxes
Income taxes (Note 9)
Income (loss) before minority interests
Minority interests in subsidiaries
Net income (loss)

Year ended March 31

2005

2004

2003

2005

¥116,031
94,99821,032
10,59010,442¥115,366
95,491
19,874
10,661
9,212¥111,744
99,767
11,977
11,273703$1,080,262
884,442
195,810
98,594
97,216125(652)(2,970)
(135)
6,809
1,601
5,208
(110)
¥ 5,31989(955)(1,707)(1,026)
5,613
1,679
3,934
(678)
¥ 4,612267(1,182)—(922)(1,134)707(1,841)(784)¥ (1,057)

1,163(6,070)(27,651)(1,256)
63,392
14,90548,487(1,024)$ 49,520

Yen

Per share of common stock:
Net income (loss) — Basic— Diluted
Cash dividends, applicable to period
The accompanying notes are an integral part of these statements.

CORPORATION
12 CMK
2005 Annual Report

¥

99.63
89.60
10.00

¥

87.12
74.16
10.00

U.S.Dollars¥ (20.16)
—
8.00

$

0.92
0.83
0.09

Consolidated Statements of Shareholders’ Equity
CMK CORPORATION and Consolidated Subsidiaries
Years ended March 31, 2005, 2004 and 2003

Yen
(Millions)

Balance at March 31, 2002
Net loss
Cash dividends
Effect arising from changes of subsidiaries
for consolidation
Bonuses to directors and statutory auditors
Unrealized holding loss arising during the period
Translation adjustment
Purchase of treasury stock
Reissuance of treasury stock
Balance at March 31, 2003
Net income
Cash dividends
Shares issued upon conversion of convertible bond
Increase due to inclusion of consolidated subsidiaries
Bonuses to directors and statutory auditors
Unrealized holding gain arising during the period
Translation adjustment
Purchase of treasury stock
Balance at March 31, 2004
Net income
Cash dividends
Shares issued upon conversion of convertible bond
Increase due to evaluation of fixed assets
in overseas subsidiaries
Bonuses to directors and statutory auditors
Unrealized holding gain arising during the period
Translation adjustment
Purchase of treasury stock
Balance at March 31, 2005

Foreigncurrencytranslation
adjustment

Treasurystock, at cost31——¥(1,352)——¥(1,353)
—
—

(751)
(5)
—
—
—
—
¥18,059
4,612
(417)
—
639
(2)
—
—
—
¥22,889
5,319
(524)
—

—
—
(291)
—
—
—
¥ (260)
—
—
—
—
—
1,112
—
—
¥ 852
—
—
—

—
—
(735)
—
—
¥(2,087)
—
—
—
—
—
—
(1,115)—¥(3,202)
—
—
—

—
—
—
—
(338)
194
¥(1,497)
—
—
—
—
—
—
—
(110)
¥(1,607)
—
—
—

117
(65)
—
—
—
¥27,737——297——¥1,149

—
—
—
(330)
—
¥(3,532)

—
—
—
—
(468)
¥(2,075)

Unrealized
gains onsecurities

Commonstock

Additional
paid-in capital

Retainedearnings¥16,117——¥15,874——¥20,398(1,057)
(525)

¥

—
—
—
—
—
—
¥16,117
—
—
49
—
—
—
—
—
¥16,167
—
—
2,164

—
—
—
—
—
—
¥15,874
—
—
49
—
—
—
—
—
¥15,924
—
—
2,164

—
—
—
—
—
¥18,332—————¥18,089

U.S.Dollars(Thousands)

Balance at March 31, 2004
Net income
Cash dividends
Shares issued upon conversion of convertible bond
Increase due to evaluation of fixed assets
in overseas subsidiaries
Bonuses to directors and statutory auditors
Unrealized holding loss arising during the period
Translation adjustment
Purchase of treasury stock
Sale of treasury stock
Balance at March 31, 2005

Commonstock

Additional
paid-in capital

Retainedearnings

Unrealized
gains(losses) on
securities

Foreigncurrencytranslation
adjustment

Treasurystock, at cost$150,516——
20,147$148,254——
20,147$213,099
49,520(4,878)—$ 7,932———$(29,811)———$(14,961)
—
—
—

—
—
—
—
—
—
$170,673

—
—
—
—
—
—
$168,410

1,089
(605)
—
—
—
—
$258,234

—
—
2,765
—
—
—
$10,697———(3,072)——$(32,883)————(4,357)—$(19,318)

The accompanying notes are an integral part of these statements.

CMK CORPORATION
2005 Annual Report13Consolidated Statements of Cash Flows
CMK CORPORATION and Consolidated Subsidiaries
Years ended March 31, 2005, 2004 and 2003

Yen
(Millions)

U.S.Dollars(Thousands)

Year ended March 31

Cash flows from operating activities:
Income (loss) before income taxes and minority interest
Depreciation and amortization
Increase (decrease) in allowance for bad debts
Interest and dividend income
Interest expense
Equity in net earnings of affiliates
Loss on disposal of property, plant and equipment
Impairment loss
Restructuring cost
(Increase) decrease in notes and accounts receivable, trade
Decrease in inventories
Increase (decrease) in notes and accounts payable, trade
Others, net
SubtotalInterest and dividend income, received
Interest expense, paid
Income taxes, paid
Net cash provided by operating activities
Cash flows from investing activities:
Payments for acquisition of property, plant and equipment
Proceeds from sales of property, plant and equipment
Payments for acquisition of intangible fixed assets
Payments for purchases of investment securities
Proceeds from sales of investment securities
Payments for loan receivables
Collections of loan receivables
Acquisitions of subsidiaries, net of cash acquired
Others, net
Net cash used in investing activities
Cash flows from financing activities:
Proceeds from short-term borrowings
Repayment of short-term borrowings
Repayment of bonds
Proceeds from long-term debt
Repayment of long-term debt
Others, net
Net cash provided by (used in) financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Increase in cash and cash equivalents from addition or
exclusion of consolidated company
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year (Note 5)
The accompanying notes are an integral part of these statements.

CORPORATION
14 CMK
2005 Annual Report

Year ended March 31

2005

2004

2003

2005

¥ 6,809
6,735
626
(125)
652
(686)
445
2,970
0
811
1,003
(1,807)168
17,602335(620)(2,125)
15,192¥ 5,613
8,150
1,009
(90)
955
(1,006)505
955
751(5,979)
212
2,034
451
13,563
91
(998)
(461)
12,194¥ (1,134)
9,458
(50)
(268)
1,182
(2)
317
0
0
(631)
208
200
1,068
10,351132(1,174)311
9,620$ 63,392
62,703
5,828(1,163)
6,070(6,386)
4,143
27,651
0
7,550
9,338
(16,823)
1,564
163,876
3,118(5,772)(19,784)
141,439(4,339)
1,147
(27)
(98)
97
0
59
0
207
(2,951)(3,453)
1,029
(319)
(30)
1,142
(254)
318
(51)
808
(810)

(9,863)781(332)(1,209)1,498(2,848)
593
(584)
257
(11,705)(40,396)
10,678
(251)
(912)
903
0
549
0
1,927
(27,474)

13,389(13,824)00(5,688)(1,110)(7,234)(13)
4,992

46,262(47,578)(20,000)
3,142(6,671)(1,407)(26,254)(194)(15,064)

57,723(56,700)
0
9,664(6,787)
5,145
9,045
(136)
6,823

124,653(128,703)00(52,955)(10,334)(67,349)(121)
46,476

0
12,959¥17,95145
27,977¥12,959

3,431
17,722¥27,977

0120,649$167,125

Notes to Consolidated Financial Statements
CMK CORPORATION and Consolidated Subsidiaries

1. Basis of presenting financial statement
The accompanying consolidated financial statements havebeen prepared from accounting records maintained by CMKCORPORATION (the “Company”) and consolidated subsidiaries in accordance with the provisions set forth in theJapanese Commercial Cord and the Securities and Exchange
low and in conformity with accounting principles and practices
generally accepted in Japan, which may differ in some material
respects from accounting principles and practices generally
accepted in countries and jurisdictions other than Japan.
In order to facilitate the understanding of readers outside
Japan, certain reclassifications are made to the consolidated
financial statements prepared for domestic reporting purposes.
In addition, the notes to the consolidated financial statements
include information that is not required under accounting prin-ciples generally accepted in Japan but is presented herein as
additional information.
The yen amounts are rounded off in millions. Therefore,
total or subtotal amounts do not correspond with the aggregation of such account balance.
U.S. dollar amounts presented in the financial statements
are included solely for convenience. The rate of ¥107.41 to
US$1.00, prevailing on March 31, 2005, has been used fortranslation into U.S. dollar amounts in the financial statements.
The U.S. dollar amounts are then rounded off in thousands.
The inclusion of such amounts should not be construed as arepresentation that Japanese yen amounts have been or couldin the future be converted into U.S. dollar at that rate.

2. Summary of significant accounting policies(a) Principle of consolidation
The Company had 23 and 25 subsidiaries as of March 31, 2005
and 2004 respectively. The consolidated financial statements
included the accounts of the Company and its 20 and 22 significant subsidiaries as of March 31, 2005 and 2004, respectively.
Intercompany accounts and significant intercompany transactions have been eliminated on consolidation.
The investments in (20% to 50% owned) affiliates, except
some of them, are accounted for by the equity method.
Non-consolidated subsidiaries and a part of investments inaffiliates are stated at cost because of their immateriality.
Earnings of these companies are recorded in the Company’sbooks only to the extent that cash dividends are received.
The difference between the cost of investments in consolidated
subsidiaries and the equity in their net assets at dates of acquisition is amortized, on a straight-line basis, over five years.
(b) Cash and cash equivalents
The cash and cash equivalents include certificates of deposit,
bank deposit with a maturity of three months or less which can
be withdrawn without any restriction, and highly liquid debt
instruments purchased with maturity of three months or less.
(c) Marketable securities and investment securities
Debt and equity securities are classified in one of three
categories: available-for-sale, trading, or held-to-maturity.
Debt securities are classified as “held-to-maturity” securities
and reported at amortized cost. Debt and equity securities thatare classified as “trading” securities are reported at fair value,with unrealized gains and losses included in earnings. Other
debt and equity securities are classified as “available-for-sale”
securities and are reported at fair value at the closing date, withunrealized gains or losses net of deferred taxes, included inunrealized gains (losses) on securities in the stockholders’equity section of the consolidated balance sheet. Realized
gains and losses which are determined on the moving average
cost method are reflected in income.
(d) Inventories
Merchandise, raw materials, finished goods and work inprocess are stated at cost determined by the average method,
except for foreign subsidiary is valued at lower of cost or

market. Subsidiaries’ inventories are determined by themoving average method.
Molds are stated at cost determined by the specific identification method.
(e) Property, plant and equipment
Property, plant and equipment are stated at cost. Depreciationis computed by the declining-balance method at rates based on
estimated useful lives of the respective assets according to
general class, type of construction and use, except for thestraight-line method for the foreign subsidiaries. Significant
renewals and additions are capitalized at cost. Maintenanceand repairs and minor renewals and betterments are charged toincome as incurred.
(f) Accounting for leases
Finance leases other than those which are deemed to transfer
the ownership of the leased assets to lessees, are accounted forby the method similar to that applicable to ordinary operatingleases.
(g) Income taxes
The assets and liability approach is used to recognize deferred
tax assets and liabilities.
(h) Retirement and pension plans
The Company and its subsidiaries in Japan have various
defined benefit pension plans and severance indemnity plans.
The Company provided for retirement allowance to directors
and statutory auditors determined based on their pertinent rulesthat calculate the estimated amount to be paid if all directors
and statutory auditors retired at the balance sheet date.
(i) Research and development costs
Research and development costs are charged to income as
incurred.
(j) Foreign currency translation
All asset, liability, income and expense accounts of foreignsubsidiaries and affiliates are translated into Japanese Yen at
appropriate year-end current rates, and the shareholders’ equity
accounts except for retained earnings are translated at historicalrates. The resulting translation adjustments are presented as“foreign currency translation adjustments” in the accompanying
consolidated financial statements.
CMK CORPORATION
2005 Annual Report

15

The monetary assets and liabilities in foreign currencies aretranslated into Japanese Yen at applicable current year-end
rates, and other assets and liabilities are translated at historicalrates, and differences due to translation are credited or charged
to income as incurred.
(k) Impairment of assets accounting
The company and its domestic subsidiaries adopted the new
accounting standard for impairment of fixed assets from theyear ended March 31, 2005. The Group reviews its long-lived
assets for impairment whenever events or changes in circumstance indicate the carrying amount of an asset or asset group
may not be recoverable. An impairment loss would be recognized if the carrying amount of an asset or asset group exceeds
the sum of the undiscounted future cash flows expected toresult from the continued use and eventual disposition of theasset or asset group. The impairment loss would be measured
as the amount by which the carrying amount of the asset
exceeds its recoverable amount, which is the higher of the discounted cash flows from the continued use and eventual
disposition of the asset or the net selling price at disposition.
The effect of adoption of the new accounting standard for
impairment of fixed assets was to decrease income before

income taxes for the year ended March 31, 2005 by ¥2,221
million ($20,677 thousand).
Besides, in the previous year, some overseas subsidiaries
adopted this criterion which is based on the respective local
accounting principles and practices.
The impairment loss on fixed assets has been deducted
directly from the carrying amounts of the respective assets inthe consolidated balance sheet.
(l) Net income and dividends per share
Basic net income per share is computed based on the weighted
average number of shares outstanding during each period, anddiluted net income per share assumes the dilution that could
occur if convertible bonds or similar securities were converted
into common stock or exercised to result in the issuance ofcommon stock.
Cash dividends per share reflect cash dividends applicableto the respective periods.
(m) Reclassifications
Certain reclassifications of the financial statements and related
footnote amounts in the years ended March 31, 2004 and 2003
have been made to conform to the presentation in the year
ended March 31, 2005.

3. Marketable securities and investments
The cost and fair value of marketable securities and investments as of March 31, 2005 are shown below:
Yen(Millions)

Debt and equity securities – available-for-sale:
Cost
Gross unrealized gains
Gross unrealized losses
Amount in balance sheet
Non-marketable securities are not included in the above cost and fair value.

U.S. Dollars(Thousands)

2005

2004

2005

¥2,381
1,968
37¥4,312¥2,343
1,499
30¥3,812$22,167
18,322
344$40,145

4. Inventories
Inventories at March 31, 2005 and 2004 comprise the following:
Yen(Millions)

Merchandise
Finished goods
Work in process
Raw materials and supplies
Total

2005
¥1,142
2,618
2,995
1,763
¥8,518

U.S. Dollars(Thousands)

2004
¥ 926
3,006
3,774
1,849
¥9,555

2005$10,632
24,373
27,883
16,413$79,303

5. Cash and cash equivalents
Cash and cash equivalents included in the consolidated statement of cash flows comprise the following balance sheet amounts at
March 31, 2005 and 2004:
Yen(Millions)

Cash and time deposits
Deposits with a maturity of three months or more
Cash and cash equivalents
CORPORATION
16 CMK
2005 Annual Report

2005¥18,142(190)¥17,951

2004¥13,276(317)¥12,959

U.S. Dollars(Thousands)

2005$168,904(1,768)$167,125

6. Investment in affiliates
Investment in the non-consolidated subsidiaries and affiliates are shown below:
Yen(Millions)

Investment in the non-consolidated
subsidiaries and affiliates

U.S. Dollars(Thousands)

2005

2004

2005

¥4,349¥3,998$40,489

7. Bonds payable and borrowings
Bonds payable as of March 31, 2005 and 2004 consisted of the following:
Yen(Millions)

U.S. Dollars(Thousands)

Item
2005
2004
2005
Due 2005 Unsecured Convertible Bonds*¥ 7,978¥12,308$ 74,276
Due 2006 Unsecured Straight Bonds
100
100
931
Due 2008 Unsecured Straight Bonds
2,500
2,500
23,275Due 2008 Unsecured Straight Bonds
3,000
3,000
27,930
Total¥13,578¥17,908$126,412*The conversion period of the Unsecured Convertible Bonds is from October 1, 1996 to September 29, 2005 and the conversion
price was ¥1,256 ($11.69) per share as of March 31, 2005.
Borrowings as of March 31, 2005and 2004 consisted of the following:
Yen(Millions)

Item
Short-term Borrowings
Current Portion of Long-term Debt
Long-term Debt
Total
As of March 31, 2005 and 2004, long-term debt is secured byproperty, plant and equipment with a net value of ¥10,254
million ($ 95,465 thousand) and ¥11,686 million, respectively.
As is customary in Japan, short-term and long-term bank2005
¥ 5,196
7,015
15,225¥27,4372004¥ 5,666
5,298
22,636¥33,601

U.S. Dollars(Thousands)

2005$ 48,375
65,310141,746$255,441

loans are made under general agreements, which provide that
security, and guarantees for future and present indebtedness
will be given upon request of the bank.

The aggregate annual maturities of long-term debt are as follows:Year ending March 31

2006
2007
2008
2009
2010 and thereafter
Total

Yen
(Millions)

U.S. Dollars(Thousands)¥15,093
12,395
7,894
143
292
¥35,818$140,517
115,398
73,494
1,331
2,718$333,469

CMK CORPORATION
2005 Annual Report178. Shareholders’ equity
Under the Japanese Commercial Code, the entire amount of theissue price of shares is required to be accounted for as capital,
although a company may, by resolution of its board of directors,
account for an amount not exceeding one-half of the issue priceof the new shares as capital surplus.
The Japanese Commercial Code provides that an amountequal to at least 10% of cash dividends and other cash appropriations shall be appropriated and set aside as a legal reserve until

the total amount of legal reserve and capital surplus equals
25% of common stock. The legal reserve is not available fordividends unless the total amount of legal reserve and capitalsurplus exceeds 25% of common stock. The legal reserve may
be used to eliminate or reduce a deficit by resolution of thestockholders or may be capitalized by resolution of the Boardof Directors. Legal reserve is included in retained earnings.

9. Income taxes
The Company and its domestic subsidiaries are subject to anumber of taxes based on income, which in the aggregate

resulted in normal tax rates of approximately 42% for the year
ended March 31, 2005 and 2004.

Income tax expense comprises the following:
Yen(Millions)

Income taxes:
Current
Deferred

U.S. Dollars(Thousands)

2005

2004

2005

¥2,006(405)¥1,601¥1,64336¥1,679$18,676(3,770)$14,905

The significant components of deferred tax assets and liabilities are as follows:
Yen(Millions)Deferred tax assets:
Accrued employee’s bonuses
Retirement and severance benefit
Depreciation
Fix assets – intercompany profits
Provision for enterprises tax
Securities evaluation loss
Impairment loss
OthersGross deferred tax assets
Deferred tax liabilities:
Allowance for doubtful receivables – intercompany losses
OthersGross deferred tax liabilities

U.S. Dollars(Thousands)

2005

2004

2005

¥ 286
213
264
87
93
826
251
242
¥2,267

¥ 258
253
279
109
131
842
—
169
¥2,045$ 2,662
1,983
2,457
809
865
7,690
2,336
2,253
$21,106

16
38
55¥2,21117
56
74¥1,971

148353
512$20,584

2005
40.2%

2004
42.0%

(7.5%)(4.1%)(4.7%)(0.4%)
23.5%(3.2%)(7.5%)—(1.4%)
29.9%

Reconciliation of the differences between the statutory tax rate and the effective tax rate is as follows:

Statutory tax rate
Increase (reduction) in taxes resulting from :Unrealized effects of tax loss
Effect of equity earnings of affiliates
Effect of difference in normal tax rate of overseas subsidiaries
Others
Effective income tax rate

CORPORATION
18 CMK
2005 Annual ReportNet deferred tax assets are included in the consolidated balance sheets as follows:
Yen(Millions)

Current assets – deferred income taxes
Investments and other assets — deferred income taxes
Current liabilities – other current liabilities
Long-term liabilities — other
Net deferred tax assets

2005
¥ 743
1,523
(2)
(52)
¥2,211

U.S. Dollars(Thousands)

2004
¥ 773
1,271
—
(74)
¥1,971

2005$ 6,917
14,17918484$20,584

10. Leased assets
Under Japanese accounting standards for leases, finance leases
that do not transfer ownership of the leased assets to thelessees are permitted to be accounted for as rental transactions
if certain “as if capitalized” information is disclosed in notes tolessee’s financial statements. For the years ended March 31,
2005, 2004 and 2003, the Company and its domestic subsidiaries
made payments of ¥462 million ($ 4,301 thousand), ¥620 millionand ¥581 million, respectively, on these finance leases.
Yen(Millions)

2005

U.S. Dollars(Thousands)

2004

2005

Class of property (inclusive of interest)
Machinery and equipment
Other
Accumulated depreciation¥1,521¥2,032777884(1,168)(1,661)¥1,130¥1,255
Depreciation charges are computed using straight-line method over lease terms assuming no residual value.

$14,160
7,233(10,874)$10,520

Future minimum lease payments, inclusive of interest, as of March 31, 2005 and 2004 are:
Yen
(Millions)Year ending March 31

Payments due within one year
Payments due after one year
Total future minimum lease payment

2005
¥ 349
781
¥1,130U.S. Dollars(Thousands)

2004
¥ 458
796
¥1,2552005$ 3,249
7,271$10,520

11. Pension and severance plans
Yen(Millions)
Accrued pension and severance costs at March 31, 2005

Projected benefit obligation
Fair value of plan assets
Funded status
Unrecognized actuarial loss
Net amount recognizedPrepaid benefit costAccrued pension and severance costs

2005¥(3,913)
3,217
(696)
612
(83)
206
¥ (290)U.S. Dollars(Thousands)

2004¥(3,742)
3,093
(648)
796
147
352
¥ (204)2005$(36,430)
29,950(6,479)
5,697
(772)
1,917
¥ (2,699)

The Company partially shifted to a defined contribution pension system in January 2004, while still retaining a partial balance fromthe former tax-qualified pension plan system.

CMK CORPORATION
2005 Annual Report

19

Yen
(Millions)

2005
¥309
85
(73)
83
¥405
120
¥525

Service cost
Interest cost
Expected return on plan assets
Amortization of actuarial loss
Periodic benefit cost
OthersTotal

U.S. Dollars(Thousands)

2004
¥348
96
(77)
101
¥469
(291)
¥178

2005
$2,876
791
(679)
772
$3,770
1,117$4,887

Basis for calculation of retirement benefit obligation, etc

Periodic allocation method for projected benefits
Discount rate
Expected rate of return
Years over which prior service cost is amortizedYears over which net actuarial gains and losses are amortized

Straight-line standard
Primarily 2.5%
Primarily 2.5%
10 years
10 years

12. Impairment loss
The Company recognized impairment losses on certain premises unused as of March 31, 2005 consisted of the following:

Asset type

Location

Usage

Land
Land
Land
Land and Buildings
Buildings
Buildings and Machinery*

Saitama pref.
Fukui pref.
Miyagi pref.
Tokyo
Kanagawa pref.
Europe (Belgium)

Idle
Idle
Idle
Idle
Idle
Circuit board
production facilities

Yen(Millions)

U.S. Dollars(Thousands)

2005¥1,012
56
149
704
298

2005
$09,421
521
1,387
6,554
2,774

748
6,963
Total
¥2,970$27,651*Subsidiary in Europe closed its factory, therefore the carrying amount of the relevant buildings and machinery was written down
to the recoverable amount.
13. Segment information
The following segment information has been prepared according
to a Ministerial Ordinance under the Securities and Exchange
Law of Japan.

CORPORATION
20 CMK
2005 Annual Report

The printed circuit board sector, for each of the years in thethree-year period ended March 31, 2005, is more than 90%.

Geographic areas:

Sales and operating revenue:
Japan
Customers
Intersegment
Total
China
Customers
Intersegment
Total
South East Asia
Customers
Intersegment
Total
EuropeCustomers
Intersegment
Total
Elimination
Consolidated
Operating income:
Japan
China
South East Asia
EuropeCorporate and elimination
Consolidated
Identifiable assets:
Japan
China
South East Asia
EuropeCorporate and elimination
ConsolidatedExport sales:
To China
To South East Asia
To Europe
To Other
Total

Yen(Millions)

U.S.Dollars(Thousands)

Year ended March 31

Year ended March 31

2005

2004

2003

2005

¥ 91,882
2,345
94,227¥ 90,927
2,722
93,649¥ 89,880
4,117
93,997$ 855,432
21,832877,264¥ 10,944
7,009
17,953¥ 10,299
5,102
15,401¥$ 101,889
65,254
167,144¥ 10,581
1,945
12,527¥ 11,087
1,926
13,014¥ 13,585
2,247
15,833

$

¥

2,623
16
2,640
(11,317)¥116,031

¥

3,051
13
3,065
(9,765)¥115,366

¥

2,446
8
2,455
(10,147)¥111,744$¥ 10,015
1,301
79
(131)
(823)
¥ 10,442

¥

¥

3,094
(643)
(389)
(144)
(1,212)
¥
703

$

¥

9,519
1,133
(571)
(14)
(854)
9,212

$

¥ 97,422
13,885
5,640
3,918
9,646
¥130,514¥105,924
12,830
6,216
2,340
6,952
¥134,263¥111,159
12,363
9,849
2,302
18,596¥154,271$ 907,010
129,271
52,50936,47789,805$1,215,101¥ 11,819
11,1482,729
1,385¥ 27,082¥¥$ 110,036
103,789
25,407
12,894$ 252,136

9,603
11,676
3,213
1,995¥ 26,489

5,832
3,774
9,606

6,749
12,8962,517
1,849¥ 24,013

98,51018,108116,627

24,420148
24,578(105,362)$1,080,262
93,24012,112735(1,219)(7,662)
97,216

14. Subsequent events
On June 29, 2005, the following appropriations of retained earnings were approved at an annual general meeting of shareholders of
the Company:

Cash dividends
Bonuses to directors and corporate auditors

Yen(Millions)

U.S. Dollars(Thousands)

2005
¥276
80

2005
$2,569744

CMK CORPORATION
2005 Annual Report21Independent Auditors’ Report
CMK CORPORATION and Consolidated Subsidiaries

To the shareholders and the Board of Directors of
CMK CORPORATION

We have audited the accompanying consolidated balance sheets of CMK CORPORATION and subsidiaries
as of March 31, 2005 and 2004, and the related consolidated statements of income, shareholders’ equity andcash flows for each of the years in the three-year period ended March 31, 2005, all expressed in Yen. These
consolidated financial statements are the responsibility of the Company’s management. Our responsibility is
to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards in Japan. Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit also includes assessing theaccounting principles used and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects,
the financial position of CMK CORPORATION and subsidiaries as of March 31, 2005 and 2004, and theresults of their operations and their cash flows for each of the years in the three-year period ended March 31,
2005, in conformity with accounting principles generally accepted in Japan.
The amounts expressed in U.S. Dollars, provided solely for the convenience of readers, have been translatedon the basis set forth in Note 1 to consolidated financial statements.
Tokyo, Japan
June 29 , 2005

CORPORATION
22 CMK
2005 Annual ReportManagements

Corporate Data

(As of June 29, 2005)(As of March 31, 2005)

Directors
ChairmanNoboru Nakayama

President and Chief Executive Officer

Takahiro Nakayama

Director and Executive Managing Officer

Mikihiko Hattori

Director and Executive Managing Officer

Kuniaki Kanemoto

Director and Executive Managing Officer

Kunio Nishi

Director and Executive Officer

Tsutomu Yamaguchi

Auditors
Standing Auditor

Nobuo Akiyama

Auditor

Hideaki Takahashi

AuditorNoriyuki Takei

Executive officers
Executive officer

Shinji Kadono

Executive officer

Sadanobu Kondou

Executive officer

Takeo Takai

Executive officer

Hiromitsu Nakayama

Executive officer

Kazuhiro Ito

EstablishedFebruary 1961
Business Activities
Research and Development, production and sales of PWBs andelectronic devices
Major Shareholders
Shareholders

Number ofshares held(Thousands)

Japan Trustee Services Bank, Ltd. (Trustee account)
The Master Trust Bank of Japan, Ltd.
(Trustee account)
The Dai-ichi Mutual Life Insurance Company
Noboru Nakayama
Mizuho Corporate Bank Ltd.
The Foundation for Technology Promotion ofElectronic Circuit Board
Matsushita Electric Works, Ltd.
Trust & Custody Services Bank, Ltd.
as trustee for Hitachi Chemical Co., Ltd.
Retirement Benefit Trust Account re-entrusted
by Mizuho Trust and Banking Co., Ltd.
Trust & Custody Services Bank, Ltd.
as trustee for The Tokyo Tomin Bank, Ltd.
Retirement Benefit Trust Account re-entrusted
by Mizuho Trust and Banking Co., Ltd.
Sumitomo Mitsui Banking Corporation

Percentage
(%)

8,946

15.7

4,062

7.1

2,845
2,652
2,576

5.0
4.6
4.5

2,500

4.4

1,860

3.2

1,822

3.2

1,745

3.0

1,613

2.8

Correspondent Banks(As of June 29, 2005)

Mizuho Corporate Bank, Ltd.
Sumitomo Mitsui Banking Corporation
The Tokyo Tomin Bank, Ltd.
Resona Bank, Limited.
Principal Customers
Sharp Corporation
Matsushita Electric Industrial Co., Ltd.
Denso Corporation
Sanyo Electric Co., Ltd.
Toyota Tsusho Corporation

CMK CORPORATION
2005 Annual Report23

Group Companies(As of March 31, 2005)

Company Name

Equity heldby the Company (%)

Principal BusinessCountry

Subsidiaries
CMK MECHANICS CORPORATION

100.0

Manufacturing and sales of PWBs and molds

Japan

CMK MULTI CORPORATION

100.0

Manufacturing and sales of PWBsJapan

CMK CIRCUIT TECHNOLOGY CENTER CORPORATION

100.0

Designing circuit of PWBs

Japan

SE PRODUCTS CORPORATION

100.0

Manufacturing and sales of PWBsJapan

CMK NIIGATA CORPORATION

100.0

Manufacturing and sales of PWBsJapan

CMK FINANCE CORPORATION

100.0

Credit and loan to subsidiariesJapan

CMK PACKAGE TECH CORPORATION

100.0

Manufacturing and sales of PWBs

Japan

YAMANASHI SANKO CO., LTD.

90.0

Manufacturing and sales of PWBsJapan

CMK KANBARA ELECTRONIC CORPORATION JAPAN

75.5

Manufacturing and sales of PWBs

Japan

JT CMK CORPORATION

66.6

Manufacturing and sales of PWBsJapan

CMK ELECTRONICS (WUXI) CO., LTD.

65.0

Manufacturing and sales of PWBs

China

JSIC CORPORATION

50.2

Manufacturing and sales of PWBs

Japan

WAKOH ELECTRONICS CORPORATION

52.6

Manufacturing and sales of PWBsJapan

CMK SINGAPORE (PTE.) LTD.

51.0

Sales of PWBs

Singapore

CMKS (MALAYSIA) SDN. BHD.

64.1 (26.8)

Manufacturing and sales of PWBs

Malaysia

P. T. CMKS INDONESIA

100.0 (100.0)

Manufacturing and sales of PWBs

Indonesia

CMKS (HONG KONG) CO., LIMITED

100.0 (100.0)

Manufacturing and sales of PWBs

Hong Kong

CMKC (HONG KONG) LIMITED

100.0

Sales of PWBs

Hong Kong

CMK EUROPE N. V.

96.7 (96.7)

Manufacturing and sales of PWBs

Belgium

CMKC (DONG GUAN) LTD.

95.6 (95.6)

Manufacturing and sales of PWBs

China

SNC INDUSTRIAL LAMINATES SDN. BHD.

49.0

Manufacturing and sales of copper-clad laminates

Malaysia

CMK GLOBAL BRANDS MANUFACTURE, LTD.

49.0

Manufacturing and sales of PWBs

China

Affiliates

Note: Equity held by the Company equals the total of direct and indirect holdings. Figures in parentheses are indirect holdings.

CORPORATION
24 CMK
2005 Annual Report

3
1
2

Plant
Sales Office

Pr o f i l e
As a leading company in the printed wiring board (PWB) industry, CMK Corporation has developed
expertise and built up a firm business foundation. Currently, the PWB industry is showing promisedue to demand from IT related industries, but tough competition against foreign products is requiring
highly cost-effective and more sophisticated products.
In order to succeed amidst this fierce competition domestically, CMK is promoting cost reduction
and business reconstruction, restructuring and integrating to a self-contained business unit with a moreclearly defined structure of responsibility.
Overseas, on the other hand, CMK group in China are strengthening their production systems as
domestic demand is expected to expand. In Southeast Asia, we have successfully integrated singlesided PWB production functions into one location in conjunction with the closure of the production
facility in Europe, which was one of our unprofitable business operations.
CMK will continue to contribute to the world’s progress and advancement, and pursue our company motto of “Permanent Growth”

Contents

Cautionary Statement with Respect to
Forward-Looking Statements

1 Financial Highlights
2 Message from the Management
2 Management Issues
3 The Top Interview
4 Products Information
5 CMK Topics
6 Take a Virtual Tour of
CMK Electronics (WUXI)
8 Environmental Protection
9 Financial Section
23 Managements
23 Corporate Data
24 Group Companies

Statements made in this annual report with respect to
CMK’s plans, strategies and beliefs and other statements that are not historical facts are forward-looking statements about the future performance of
CMK, which are based on management’s assumptions and beliefs in light of the information currently
available to it, and involve risks and unpredictability.
Potential risks and unpredictability include, without
limitation, general economic conditions in CMK’s
markets; industrial market conditions, exchange rates
in which CMK makes significant sales or in which
CMK’s assets and liabilities are denominated; andCMK’s ability to continue to win acceptance of its
products and services, which are offered in highly
competitive markets characterized by the continual
introduction of new products, rapid developments intechnology, and changing customer requirements.

1 CMK Headquarters

2 CMK SE Center

3 CMK Niigata Satellite

4 CMKS (MALAYSIA) SDN. BHD.

5 CMKC (DONG GUANG) LTD.

6 CMK Electronics (WUXI) Co., Ltd.

5

6

4

Plant
Sales Office

CMK CORPORATION
2005 Annual Report25Creating the Future

CMK CORPORATION

2005 Annual Report
Year ended March 31, 2005

CMK CORPORATION
43F Shinjuku I-LAND TOWER Bldg.
6-5-1, Nishishinjuku, Shinjuku-ku, Tokyo 163-1388, Japan
Tel: +81-3-5323-0231
http://www.cmk-corp.com

TM

This annual report is printed with soy ink on paper which is recycled.
Printed in Japan