2016 Business Report
Year Ended March 31, 2016

Creating the future

CMK CORPORATION
Securities Cord No : 6958

Message from the President
On behalf of the Company, I would like to take this opportunity to express mygratitude to our shareholders for their support.
It is my pleasure to deliver this report on the Company’s operating results forthe 56th Term (from April 1, 2015 to March 31, 2016).
I humbly ask for the continued understanding and support of all ourshareholders in the period ahead.
June 2016

Takeo Takai

President and CEO

Results for fiscal 2015
During fiscal 2015, business expansion continued in the
United States, supported by improved employment
conditions and personal consumption growth. Business
continued to recover slowly in Europe as well, driven by thedepreciation of the euro and decline in crude oil prices. In themeantime, the business slowdown in China became more
apparent, and economic growth slowed in Southeast Asia.
The Japanese economy continued to recover modestly,backed by factors such as improved corporate earnings andemployment conditions. However, a sense of uncertainty
remained in certain sectors, such as personal consumptionthat remained stagnant.
In this economic environment, sales for CMK Corporationand its consolidated subsidiaries (hereinafter the “CMKGroup”) increased from the previous fiscal year in the key
Group markets of automobile-related products, supported by
the strong sales of new car models in North America and the
popularization of advanced driver assistance systems(ADAS) such as automatic brakes. In the meantime, sales of
products for consumer appliances decreased because of theadverse effects of the decline in demand for game consoles
and digital cameras. As a result, consolidated net sales fell
632 million yen, or 0.9%, from the previous fiscal year, to
73,098 million yen in the fiscal year under review.
On the profit front, the Group posted a consolidated
operating loss in the first half of the fiscal year under review
due to smaller revenues in Japan and China. The Group
consolidated production bases and accepted applications forearly resignation from employees in Japan. It also worked
harder to make production systems more affordable
1 CMK CORPORATION

overseas (implemented measures to streamline businessadministration) in the second half. With these steps, theGroup secured consolidated operating income of 381 million
yen (down 40.5% from the previous fiscal year). The Group,
however, posted a consolidated ordinary loss of 628 million
yen (compared with a consolidated ordinary income of 1,513
million yen posted for the previous fiscal year), reflecting thestrong impact of foreign exchange losses that resulted fromexchange rate fluctuations.
The Group posted a consolidated net loss attributable to theowners of the parent company of 8,122 million yen(compared with a consolidated net income attributable to theowners of the parent company of 1,178 million yen posted forthe previous fiscal year). This loss was caused by factors
such as an impairment loss on fixed assets and businessrestructuring expenses posted under extraordinary losses
that accompanied the implementation of the aforementioned
measures to streamline business administration.

Measures to streamline business administration
Domestic demand for printed wiring boards, the staple
products for the Group, is falling year after year due tocustomers shifting production overseas production, eventhough factors such as the installation of electronic
components on automobiles are causing demand to expand
outside Japan. Price competition with overseas rivals is also
intensifying. Management conditions remain difficult in spiteof the depreciation of the yen up to this point. The conditions
are predicted to remain severe in the period ahead.
Face with these management conditions, CMK Corporation(hereinafter the “Company”) consolidated its production instages and reduced of its workforce in line with the decline inInterview with the President

domestic demand. It also moved forward with initiatives to
cut fixed costs. However, the inability to make the domesticorganization leaner caused the Company to post an
operating loss in the first half of the fiscal year under review.
Based on this result, the Company decided that it needs tofurther slim down the domestic organization ahead of theschedule set in its medium-term management plan. To
achieve this goal, it has decided to implement the following
measures to streamline business administration.
(1)Consolidate production bases in JapanThe Company will stop production at the G Station Factory
and the KIBAN Center Factory in Gunma Prefecture andconsolidate its production bases in Japan, with the target
date being September 30, 2016. The Company is currently
transferring products from these two factories to other Groupfactories.
(2)Invitation for early resignation
The Company succeeded in persuading 247 employees toresign early. The primary date for resignation was December
31, 2015.
As a result of these measures to streamline businessadministration, the Company’s profitability in Japan improved
dramatically in the second half of the fiscal year underreview, enabling it to secure a consolidated operating income
on a full-year basis. The Company will continue making
every possible effort to boost productivity and reduce costs
thoroughly to improve results and regain trust.

Outlook and priorities
The adoption of electric equipment systems, such asenvironment-friendly systems and systems installed withsafety devices, is expected to make further progress in the
Company’s key market for in-vehicle boards. The sales ofsmartphones and wearable equipment are also expected to
expand in the information and telecommunications markets,
too. It is believed that these changes will ensure that thesustained growth of demand for printed wiring boards.
However, operating conditions for the Company remain
uncertain because competition in the area of pricing is
expected to become more intense, while demand for higher
quality will likely strengthen.
In this operating environment, the Company will work torealize a stable earnings structure, placing greater priority on
the in-vehicle board and telecommunications device markets.
The Company will also work to aggressively tackle address
the following business challenges in line with its businessstrategy of expanding overseas sales.

[Improve the production capacity]
The Company will work to improve the production capacity at
its facilities, focusing primarily on factories overseas in orderto keep up with the expanding demand in overseas markets.
The Company will seek to improve production efficiency bybolstering the production capacity of one factory in Thailand
and reviewing production units. It will also seek to boost its
production capacity on a global scale.
[Improve the capacity to meet cost requirements]
The Company consolidated production bases and asked forsome employees to voluntarily resign early in an attempt tointensify its management resources during the fiscal year
under review. The Company will improve profitability throughthese kinds of business restructuring measures, and build up
its capacity to meet cost requirements by bolstering intensive
purchasing efforts worldwide and exhaustively cutting backon waste.
[Improve the capacity to meet quality requirements]
The Company will take steps towards achieving the samelevel of quality at all factories, such as further automation of
manufacturing processes and operating production systems
developed in Japan in more overseas markets. At the sametime, the Company will seek to increase its capacity to meet
quality requirements by strengthening its integrated quality
management system for manufacturing, technological, andsales operations in order to satisfy market and customer
demands.

Message to shareholders
The basic policy of the CMK Group with respect to returning
profits to shareholders is to distribute stable dividends while
seeking to expand its operations and improve retained
earnings to maintain and strengthen competitiveness.
In the fiscal year under review, the Company posted a hugeconsolidated net loss attributable to a number of factors,
such as the measures implemented to streamline businessadministration and improve operation results. For thisreason, the Company felt it was best not to pay year-end
dividends in the fiscal year under review. The Company
offers its deepest apologies to its shareholders for thisdecision.
The Group is determined to resume the payment ofdividends as soon as possible. It will address the businesschallenges outlined above, and work to bolster its earning
power and secure the revenue sources needed to realize
stable dividends. The Group asks for the continued supportand understanding of its shareholders as it works toward
these goals.
CMK CORPORATION

2

Financial Highlights (Consolidated)Thousands of U.S. Dollars

Millions of Yen
FY 2014

FY 2015

FY 2016

FY 2016

April 1, 2013 - March 31, 2014

April 1, 2014 - March 31, 2015

April 1, 2015 - March 31, 2016

April 1, 2015 - March 31, 2016

Net sales

71,03173,73073,098$648,664

Operating income(loss)(1,109)

641

381

3,380

Ordinary income(loss)(1,843)

1,513

(628)

(5,572)

Profit(loss) attributable to owners of parent(4,955)

1,178(8,122)(72,073)

Net assets

56,96659,65150,090$444,493

Total assets

97,15099,17590,504803,123

Yen

U.S. Dollars

Net income(loss) per share(84.36)19.99(137.21)($1,217)

Net assets per share

907.40944.76786.33

6,977

Operating income (loss)
Ordinary income (loss)
Profit (loss) attributable to owners of parent

Net sales

Net income (loss) per share
Net assets per share(Millions Yen)

(Millions Yen)

(Yen)

80,000

5,000

1,000
800

60,0000600

40,000400-5,000200

20,0000
0

FY 2014

FY 2015

3 CMK CORPORATION

FY 2016-10,000

FY 2014

FY 2015

FY 2016-200

FY 2014

FY 2015

FY 2016

Sales Information (Consolidated)
Sales by application

FY 2016

FY 2015
OthersAV equipment

2.0%

Others19.6%

AmusementAVequipment
Car electronics

4.6%

65.9%

Digital still camera

20.2%

1.3%
Amusement

68.4%

3.0%

3.7%

Mobilecommunications

Car electronics

Digitalstill camera

4.2%

3.3%

Mobilecommunications

3.8%
Sales by type of PWB(Millions Yen)
80,00071,031
19,608

Sales by region

Build-up PWBs
Multilayered PWBs
Double-sided PWBs
Others(Millions Yen)
80,00073,73073,09822,032

20,47660,00027,02373,09844,573

43,62815,227

14,241

29,47340,000044,00273,73060,00027,31620,00071,031Japan
ChinaSoutheast Asia
EU & USA40,00015,987

15,371

13,661

8,120

9,304

9,488

FY 2014

FY 2015

FY 2016

14,25320,000

8,772
0

9,007

9,637

4,003

4,921

5,590

FY 2014

FY 2015

FY 2016

CMK CORPORATION

4Consolidated Financial Statements
Consolidated Balance Sheet
Thousands of
U.S. Dollars

Millions of Yen

FY 2016

FY 2015

FY 2016

FY 2016

As of
As of
As of
March 31, 2016 March 31, 2015 March 31, 2016

FY 2015

FY 2016

As of
As of
As of
March 31, 2016 March 31, 2015 March 31, 2016

Liabilities

AssetsCurrent assets

Thousands of
U.S. Dollars

Millions of Yen

51,41950,201 $456,287

Current liabilities

22,70432,463 $201,473

Notes and accounts payable-trade

10,08812,441

89,519

Short-term loans payable

5,476

8,673

48,593Current portion of bonds

500

4,500

4,436

Accounts payable-other

4,345

3,293

38,557

Cash and deposits

21,582

14,564

191,516

Notes and accounts receivable-trade

20,376

21,552

180,814

38

2,647

337

Merchandise and finished goods

3,904

4,441

34,643

Lease obligations

294

2,430

2,608

Work in process

3,046

3,148

27,029

Income taxes payable

103

74

914

Raw materials and supplies

1,534

1,659

13,612

Deferred tax liabilities

0

―

0

Provision for bonuses

165

262

1,464

1,110

207

9,850

Securities

Deferred tax assets

22

21

195

Other

948

2,337

8,412

Allowance for doubtful accounts

(34)

(170)

(301)

38,953

48,959345,665

Property, plant and equipment

33,306

41,096295,554

Buildings and structures, net

10,97014,501

97,346

Machinery, equipment and vehicles, net

11,597

14,985Tools, furniture and fixtures, net

1,153

1,125

Non-current assets

Land
Construction in progress

Allowance for restructuring

617

579

5,475

Non-current liabilities

17,7097,060

157,147

Bonds payable

7,250

―

64,335Long-term loans payable

9,179

5,527

81,453

Lease obligations

475

428

4,215

102,910Deferred tax liabilities

564

872

5,004

10,231

Net defined benefit liability

44

44

390

Asset retirement obligations

162

160

1,437

9,063

9,972

80,424

520

511

4,614

Other

Other

33

27

292

40,41339,523358,620

Shareholder's equity

43,422

51,841

385,322

Capital stock

22,30622,306

197,941

Capital surplus

22,06322,063

195,784

Total liabilities

Intangible assets

587

748

5,208

Goodwill

265

301

2,351

Other

321

446

2,848

Investments and other assets

5,059

7,115

44,893

Investment securities

2,661

3,380

23,613Retained earnings

2,185

10,603

19,389

183

495

1,623

Treasury shares(3,132)(3,132)(27,793)080Accumulated other comprehensive income

3,127

4,088

27,748Valuation difference on available-for-sale securities

359

887

3,185

Deferred gains or losses on hedges

0

0

0

Foreign currency translation adjustment

2,939

2,915

26,080Net defined benefit asset
Deferred tax assets
Other
Allowance for doubtful accounts
Deferred assets
Bond issuance cost

Total assets

5 CMK CORPORATION

2,260

3,278

20,055

(46)

(48)

(408)

131

13

1,162

131

13

1,162

90,504

99,175803,123

Net assets

(170)

286

(1,508)Non-controlling interests

Remeasurements of defined benefit plans

3,540

3,721

31,413

Total net assets

50,09059,651

444,493

Total liabilities and net assets

90,504

99,175803,123

Consolidated Statement of Income

Consolidated Statement of Cash Flows
Thousands of
U.S. Dollars

Millions of Yen

FY 2016

FY 2015

Millions of Yen

FY 2016

FY 2016

FY 2015

FY 2016

Cash flows from operating activities

5,210

1,937

$46,233

Cash flows from investing activities(1,579)(2,789)(14,011)

Cash flows from financing activities

1,300(1,438)

11,536

Effect of exchange rate change on cash and cash equivalents(512)(1,465)(4,543)

Net increase (decrease) in cash and cash equivalents

4,418(3,754)

39,204

Cash and cash equivalents at beginning of period

17,164

20,919152,311

Cash and cash equivalents at end of period

21,582

17,164

191,516

For the year
For the year
For the year
ended
ended
ended
March 31, 2016 March 31, 2015 March 31, 2016

Net sales

73,09873,730 $648,664

Cost of sales

64,91265,403576,022

Gross profit

8,186

8,326

72,641

Selling, general and administrative expenses

7,804

7,685

69,251

Operating income

381

641

3,380

Non-operating income

585

1,698

5,191

Non-operating expenses

1,595

826

14,153

Ordinary income(loss)

(628)

1,513

(5,572)Extraordinary income

171

1,111

1,517

Extraordinary losses

7,422

775

65,862

Profit (loss) before income taxes(7,879)1,849(69,917)

Income taxes - current

169

362

1,499

Income taxes - deferred

28

175

248

(8,077)

1,310(71,674)

Profit attributable to non-controlling interests

Profit (loss)

44

131

390

Profit (loss) attributable to owners of parent(8,122)

1,178(72,073)

Thousands of
U.S. Dollars

For the year
For the year
For the year
ended
ended
ended
March 31, 2016 March 31, 2015 March 31, 2016

CMK CORPORATION

6

Consolidated Financial Statements
Consolidated Statement of changes in Equity(FY 2015: April 1, 2015 - March 31, 2016) (Unit: Thousands of U.S. Dollars/Millions of Yen)

Shareholder's equity
Capital stock

Capital surplus

197,941

195,784

22,063

Total shareholder'sequityTreasury shares

94,08910,603

Dividends of surplus(2,626)

Profit (loss) attributable to ownersof parent(72,073)

Balance at beginning of period

22,306

Retained earnings(27,793)(3,132)460,031

51,841(296)(2,626)(296)(8,122)(72,073)(8,122)

Change of item during period

Purchase of treasury shares
Disposal of treasury shares

(0)

(0)

(0)

(0)

(0)

(0)

0

0

0

0

Net Charges of items other thanshareholder’s equity
Total change of item during period
Balance at end of period

―

―

―

―

(74,700)(8,418)(0)(0)(74,700)(8,418)

197,941

22,306

195,784

22,063

19,3892,185(27,793)(3,132)

385,322

43,422

Accumulated other comprehensive income
Valuation difference on Deferred gains
Foreign
Total accumulated Non controlling Total net assets
Remeasurements ofinterests
available-for saleor losses on currency translation
other comprehendefined benefit planssecurities
hedgesadjustment
sive income
Balance at beginning of period

7,871

887

0

0

25,867

2,915

2,537

286

36,276

4,088

33,0193,721

529,337

59,651Dividends of surplus(2,626)(296)

Profit (loss) attributable to ownersof parent(72,073)(8,122)

Purchase of treasury shares

(0)

(0)

Disposal of treasury shares00(181) (10,133)(1,142)

Change of item during period

Net changes of items other thanshareholders’ equity(4,685)

(528)

(0)

(0)

Total change of item during period(4,685)

(528)

(0)

(0)

Balance at end of period

3,185

359

0

0

7 CMK CORPORATION

204

23

(4,055)(457)(8,527)(961)(1,606)204

23(4,055)(457)(8,527)(961)(1,606)(181) (84,843)(9,561)

26,0802,939(1,508)(170) 27,748

3,127

31,413

3,540

50,090444,493

Approaches to ADAS, Automatic Driving, and Wearable Device
The CMK Group proposes highly functional and reliable printed wiring boards to help spread the use of ADAS* and realize
automatic driving. The underlying concepts of these efforts are automation, electric operation, and connectivity.
The Group is fully applying its technologies to make wearable terminals, one of the trends in the information and communication
technology (ITC) industry, thinner, and higher in density. The Group will develop products that meet demands in a market that is
expected to grow large in the future.

*ADAS : Advanced Driver Assistance System

ADAS and Automatic Driving
Outside Sensor Applications

Supplementary Applications for Outside Sensors

CMK’s Applications

Millimeter wave radars

High-brightness headlamps

Super Fine and thin

●High-accuracy wiring boards forantennas/high-definition wiringboards for controls●High-heat radiation
wiring boards for LEDs
and lasers●PPBU (HDI)●Thin type modules (HDI)●High-reliability wiring boards forcamera modules

Applications for Operation Assistanceand Telecommunications Systems●Rigid-Flex●CARFT (semi-flexible)

Laser radar

Telecommunications devices

Sensing cameras●High-definition wiring boards forcontrols

Infrared sensors
and sonar●Modules forsensors●Ultra-thin wiring boards
for telecommunications
modules

Actuator Control Applications●Highly functional and High reliability wiring boards

3D structureHigh frequency●Wiring boards compatible
with millimeter waves

High heat radiation●CMK-COMPHigh reliability●IVH/ multilayer wiringboardsWearable Device
Wristband Models (with Telecommunications Functions)

Eyeglasses Models (Smartglasses)

CMK’s Applications

Healthcare/fitness devices equipped with telecommunications functions●Step count ●Amount of activity●Body temperature ●Heart rate
●Blood sugar level●Sleep measurements●Life logs, etc.

●Displays (emails, maps, andvarious types of information)●Hands-free telephone
conversations and photographing●Navigation functions, etc.

Small and thin●PPBU●Thin type modules

Wristwatch Models (Smartwatches)●Hands-free telephone
conversations●Email and otherincoming call
notification●Music players, etc.

Accessories and Other Models●Smart socks●Coin-shaped activity volume
sensors, etc.

Thin and bendable●Rigid-Flex●Thin multilayer FPCs

CMK CORPORATION

8

Corporate Data
(As of March 31, 2016)

Name of listed company
Date of establishment
CapitalAddress of head office
Number of employees

CMK CORPORATION(Securities code no.: 6958)
February 25, 1961
¥22,306,203,140
5-1 Nishishinjuku 6-chome,
Shinjuku-ku, Tokyo, Japan
1,271 (Group total 4,305)

Primary Consolidated SubsidiariesJapan
CMK Products Corporation
CMK Finance Corporation

Overseas

Executives (as of September 1, 2016)

CMK ASIA (PTE.) LTD.

Board of Directors
President and Chief
Executive Officer

Takeo Takai

Director and Executive
Vice President

Takahiro Nakayama

Director and Executive
Managing Officer

Akira Kurosawa

CMKC (HK) LIMITED

Director and Executive
Managing Officer

Eizo Shibata

CMKC (SHENZHEN). LTD.

Director and Executive
Officer

Akiharu Nakayama

Director and Executive
Officer

Hiroshi Hanaoka

Director and Executive
Officer

Kenichi Urushiyama

CMK ELECTRONICS (WUXI) CO., LTD.

Director and Executive
Officer

Isao Osawa

CMK EUROPE N.V.

Director

Tsuyoshi Ukyo

Director

Yoshiaki Hasegawa

Board of Corporate Auditors
Standing Corporate
AuditorTakashi Ogasawara

Corporate Auditor

Shigeo Ichikawa

Corporate Auditor

Fumio Haraguchi

Executive Officer

Masanori Kawashima

Executive Officer

Satoru Takahashi

Executive Officers

9 CMK CORPORATIONCMK CORPORATION (THAILAND) CO.,LTD.

CMKC (DONG GUAN) LTD.

CMK AMERICA CORPORATION

Stock Information

Shareholders Memo

(As of March 31, 2016)

Total number of shares authorized
227,922,000
Total number of shares issued and outstanding 63,060,164
Number of shareholders
5,803
Share trading unit
100
Major shareholders (10 largest)
Shareholders

Investment in CMK
Number of shares held Percentage(thousands)(%)

Noboru Nakayama

5,609

8.9

Freesia Macross Corporation

3,738

5.9

Mizuho Bank, LTD.

2,576

4.1

The Foundation for Technology Promotion of Electronic Circuit Board

2,500

4.0

Japan Trustee Services Bank, Ltd. (Trust account)

2,488

3.9

The Master Trust Bank of Japan, Ltd. (Trust account)

2,376

3.8

The Bank of New York Mellon (International) Limited 131800

1,930

3.1

The Dai-ichi Life Insurance Company, Limited

1,895

3.0

Trust & Custody Services Bank, Ltd. as trustee for Tokyo
Tomin Bank, Ltd.; retirement benefit trust accountre-entrusted by Mizuho Trust and Banking Co., Ltd.

1,745

2.8

Sumitomo Mitsui Banking Corporation

1,613

2.6

Fiscal year:

April 1 through March 31of the following year

Regular general
meeting ofshareholders:

Held in June each year

Date of record for
end-of-year
dividends:

March 31

Date of record for
mid-yeardividends:

September 30

Notification
method:Electronic notification(company website at
http://www.cmk-corp.com).
If notification cannot be madeelectronically, it will be made using
the Nihon Keizai Shimbun.

Transfer agent:Mizuho Trust & Banking Co., Ltd.
1-2-1, Yaesu, Chuo-ku, Tokyo, Japan
Stock Transfer Agency Bussiness
Planning Department

Contact address:

Mizuho Trust & Banking Co., Ltd.
8-4 Izumi 2-chome, Suginami-ku,
Tokyo 168-8507
ふ 0120-288-324

Note: Although the Company holds 3,860 thousand shares of treasury stock, it is notincluded in the above list of major shareholders.

Shareholder Breakdown
Other firms

Individuals and others

15,924 thousand shares (25.2%)

Foreign companies and individuals

15,591 thousand shares (24.7%)

Total
63,060,164 shares

9,259 thousand shares (14.7%)
Securities firms

Financial institutions

490 thousand shares (0.8%)

21,793 thousand shares (34.6%)

CMK CORPORATION

10

43rd Floor, Shinjuku I-Land Tower Bldg., 6-5-1
Nishi-Shinjuku, Shinjuku-ku, Tokyo 163-1388, Japan
Tel.: +81-3-5323-0231 (main)

http://www.cmk-corp.com