2010 Business Report
Year Ended March 31, 2010

Creating the future
CMK CORPORATION
Securities Code No.: 6958

Interview with the President
To Our Shareholders
I am pleased to present our 50th business report for the fiscal year from April 1, 2009 to March 31,
2010. I would like to take this opportunity to express our gratitude to our shareholders for yoursupport, and respectfully ask for your continued support and understanding in the future.

June 2010

Takahiro Nakayama

Representative Director and President"With aggressive business development, we will establish ahighly profitable operating structure."Q

Please summarize the results for fiscal 2009.

Through business restructuring and comprehensive cost
cutting, the CMK Group achieved profitable operations inthe second half of the fiscal year.

During fiscal 2009, the Japanese economy staged a gradualimprovement, reflecting the effects of fiscal stimulus introduced
by governments around the world, and the strong growth of
emerging countries, such as China. However, given theappreciation of the yen and the progress of deflation, as well as
sluggish capital spending and an anemic employment
environment, the actual recovery remained weak. In theelectronic parts industry, in which the CMK Group operates,
despite a recovery in demand from sectors related to digital homeelectrical appliances and hybrid cars, the overall industry
continued to face challenging conditions.
Responding to these conditions, the CMK Group continued tofocus on strengthening its global production and sales.
Consequently, sales improved every quarter. However, with thesevere operating environment both in Japan and overseas in thefirst half of the fiscal year under review, and a delay in the fullrecovery of demand from the auto and digital home electricalappliances industries, in addition to escalating price competition
with competitors, our consolidated net sales declined 16.3% fromthe previous fiscal year, to 90,070 million yen.
Turning to profits, we carried out business restructuring, including
the closure of some production bases, and Group-wide

1

comprehensive cost cutting, including a reduction in labor costs.
As a consequence of these efforts, the Group recorded ordinary
income in the second half of the fiscal year under review.
However, this turnaround could not offset significant losses
recorded in the first half. As a result, the Group was forced to postan operating loss of 395 million yen (compared with an operating
loss of 2,633 million yen for the previous fiscal year) on aconsolidated basis, an ordinary loss of 777 million yen (comparedwith an ordinary loss of 3,587 million yen for the previous fiscal
year), and a net loss 2,340 million yen (compared with a net lossof 8,378 million yen for the previous fiscal year).

Q

Please explain the outlook for fiscal 2010.

Through business restructuring and a focus on
strengthening sales of high-value added products, we will
aim to achieve profitable operations on a full-year basis.

In fiscal 2010, I believe that the global economy will continue its
recovery, benefiting from the strong growth in emerging countries,
such as China and India. However, given concerns over thesurging prices of raw materials and the fiscal problems in theeuro zone, which could potentially have a significant impact on
the global economy, considerable economic uncertainty remains.
The Japanese economy, meanwhile, is likely to remain unable tomanage an independent recovery, as it will still rely heavily on arecovery in the global economy, and concerns over theappreciation of the yen and the persistent deflation are likely tobecome apparent. The electronic parts industry is also expected
to face difficult operating conditions, given a fall in sales prices in
the face of increasing global competition and higher raw material
prices.
In this very challenging management environment, the CMKGroup is committed to achieving a steady recovery in earnings
through the business restructuring initiatives it has carried out.
We will also strive to expand our operations by stepping up salesof high-value added products, such as build-up PWBs andpackage substrates, and by responding promptly to rapidly
growing demand for new products.
Through these initiatives, we expect to record net sales of 105
billion yen on a consolidated basis, up 16.6% from the previous
fiscal year, operating income of 2.3 billion yen, compared with anoperating loss of 395 million yen, ordinary income of 2 billion yen,
compared with an ordinary loss of 777 million yen, and net
income of 1 billion yen, compared with a net loss of 2,340 million
yen.

Q

What specific business development will you
particularly focus on during fiscal 2010?

We will make capital investments of 2.5 billion yen in the
cutting-edge production lines of highly complex products,
while also investing 500 million yen in products related to
LEDs.

Targeting the automotive, digital home electrical appliances andmobile phone markets as growth markets, the CMK Group has
been strengthening its global production and sales systems. In
the automotive market, in particular, the Group’s products havebeen steadily adopted for hybrid and electric cars as the Group’s
high quality manufacturing technologies and their reliability arehighly evaluated by manufacturing customers. Because thecontrol systems of automobiles are expected to become
increasingly computerized, products provided by the Group are
believed to become more important for the development and theprogress of automobiles in the future. The Group will strengthen
its global production and sales systems, and is resolved todevelop operations that will be unmatched by competitors bytaking its product quality and reliability to new levels.
In the digital home electrical appliances market, the CMK Groupwill actively develop its operations in the LED market, given a risein the use of LEDs for LCD televisions and lighting. To reduce theheat emitted from LEDs, metallic substrates based on aluminumand copper are used for LCDs. In response, the Group has
invested approximately 500 million yen in its plant in Malaysia,
and has established production lines that specialize in
manufacturing metallic substrates, harnessing the Group’s know-

how in the production of metallic substrates. The plant in
Malaysia has been managed as a plant specializing in the
manufacture of single-side substrates. However, considering a
recent rise in demand for LEDs, in its effort to bolster earnings,
the Group has decided to transform the plant in Malaysia into one
that specializes in manufacturing metallic substrates. The Groupaims to increase the plant’s monthly production capacity from thecurrent 20,000m2 to 100,000m2 in the future.
In the mobile phone market, demand for high-function information
terminals, such as smart phones, is expected to grow in the
future. While these terminals have been steadily miniaturized,
their functions have improved significantly. Consequently,
requirements for printed wiring boards have been rising
dramatically. The CMK Group has been rapidly expanding its
operations associated with these high-function information
terminals. In particular, it has invested approximately 2.5 billion
yen in production lines for high-value added products, such as
package substrates and component embedded substrates, tomake these products an earnings mainstay in the future.
The CMK Group is resolved to strengthen its competitiveness bybolstering its product quality, reliability and superior technologies.
By actively developing its operations to capture growing demand
for new products, the Group aims to improve its performance.

Q

Finally, what message do you have forshareholders?

By actively making the investments that are essential for the
expansion of its operations, the CMK Group seeks tobolster its corporate value.
The basic policy of the CMK Group with respect to the return ofprofits to its shareholders is to pay steady dividends while
maintaining a sound level of internal reserves, to be usedeffectively to expand operations and maintain and strengthen
competitiveness. Because the Group recorded substantial losses
during the fiscal year under review, it regrets to report that it did
not pay interim dividends. However, in the second half of the
fiscal year, with the impact of its business restructuring initiatives,
the Group recorded profits on a consolidated basis. Although theeconomic outlook remains uncertain, in accordance of the above
basic policy of paying steady dividends wherever possible, it hasdetermined to pay a year-end dividend of 2 yen per share for the
fiscal year under review.
The CMK Group is determined to achieve its management
objectives, and will make concerted efforts to bolster its corporate
value in the future. As we pursue this course, we hope that we
can continue to count on the support and understanding from ourshareholders.

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

Yen (Millions)

FY 2008

FY 2009

FY 2010

FY 2010

April 1, 2007 - March 31, 2008

April 1, 2008 - March 31, 2009

April 1, 2009 - March 31, 2010

April 1, 2009 - March 31, 2010

¥138,502¥107,583¥90,070$968,078

Operating income (loss)

4,779(2,633)(395)(4,245)

Ordinary income (loss)

5,105(3,587)(777)(8,351)

221(8,378)(2,340)(25,150)

Net assets¥84,046¥68,985¥65,986$709,221

Total assets

150,060

129,044

124,140

1,334,264¥3.62¥(138.94)¥(39.84)$(0.42)

1,314.00

1,123.42

1,069.80

11.49

Net sales

Net income (loss)

Net income (loss) per share
Net assets per share

Notes: 1. U.S. Dollars amounts have been translated from Yen, for convenience only, at the rate of ¥93.04 = $1,
		 the Tokyo foreign exchange market rate as of March 31, 2010.
2. All Millions Yen and Thousands U.S. Dollars amounts are rounded to the nearest figure.

Net income (loss) per share
Net assets per share

Operating income (loss)
Ordinary income (loss)
Net income (loss)

Net sales(Millions Yen)

(Millions Yen)

(Yen)

150,000

8,000

1,500

6,000
1,200

120,000

4,000
900

2,000
90,0000600-2,00060,000300-4,000-6,00030,0000-8,0000

3

FY 2008

FY 2009

FY 2010-10,000

FY 2008

FY 2009

FY 2010-300

FY 2008

FY 2009

FY 2010

Sales Information (Consolidated)

l Sales by application

l Sales by type of PWB

FY 2010

Build-up PWBs and Package Substrates
27,530 yen (millions) (30.6%)
Multilayered PWBs
28,239 yen (millions) (31.3%)

Car electronics

42.3%

Double-sided PWBs
17,751 yen (millions) (19.7%)

OthersOthers16,548 yen (millions) (18.4%)

27.9%

Build-up PWBs and Package Substrates
29,521 yen (millions) (27.4%)

FY 2009

Multilayered PWBs
31,325 yen (millions) (29.1%)
Double-sided PWBs
22,860 yen (millions) (21.3%)
Others23,876 yen (millions) (22.2%)

AV equipment
Information devices

l Sales by region

13.5%

Japan
65,587 yen (millions) (72.8%)

3.4%

Mobilecommunications

FY 2010

12.9%

China
15,482 yen (millions) (17.2%)
Southeast Asia
6,845 yen (millions) (7.6%)
Europe and the United States
2,155 yen (millions) (2.4%)

Japan
71,551 yen (millions) (66.5%)

FY 2009China
22,647 yen (millions) (21.0%)
Southeast Asia
10,315 yen (millions) (9.6%)
Europe and the United States
3,069 yen (millions) (2.9%)4

Consolidated Financial Statementsl Consolidated Balance Sheet
FY 2010(Unit: Thousands of U.S. Dollars/Millions of yen)
U.S. Dollars
Yen (Millions)(Thousands)

U.S. Dollars(Thousands)

Yen (Millions)

FY 2009

FY 2010

As of
As of
As of
March 31, 2010 March 31, 2009 March 31, 2010

(Assets)
Current assets¥65,267¥62,335 $701,493

23,65531,056254,245

Notes and accounts receivable

30,894

21,763332,050

47

43

505

FY 2010

Current liabilities
Notes and accounts payable¥32,849¥29,576 $353,063

15,005

10,050161,274

Short-term borrowings

8,756

9,232

94,110Trade payables

6,305

4,370

67,766Merchandise and finished goods

3,948

3,726

42,433

Income taxes payable

384

109

4,127

Work in process

3,931

2,122

42,250Allowance for employee bonuses

722

717

7,760

Raw materials and supplies

1,733

2,080

18,626

Provision for loss on order received

247

154

2,654

222

400

2,386

Allowance for restructuring

414

2,836

4,449

Other current assets

847

1,169

9,103

Allowance for doubtful accounts

(14)

(26)

(150)

58,846

66,675

632,480

Bonds

5,500

5,500

59,11450,932

57,180547,420

Long-term debt

19,006

23,669204,277

Deferred income taxes

Fixed assets
Tangible fixed assets

Other current liabilities
Fixed liabilities

1,012

2,104

10,87725,30430,483271,969

Buildings and structures

20,46723,158219,980

Deferred tax liabilities

146

94

1,569

Machinery, equipment, and others

19,223

22,117

206,610

Allowance for employee retirement benefits

366

721

3,933

Land

10,328

10,561

111,006

Allowance for executive retirement benefits

163

226

1,751

111

424

1,193

Other

121

271

1,300

58,15360,059625,032

Construction in process
Other tangible fixed assets
Intangible fixed assets

800

918

8,598

Total liabilities

1,131

1,348

12,156(Net assets)
Shareholders' equity

Goodwill

716

707

7,695

Other intangible fixed assets

414

641

4,449

Capital63,81868,039685,920

22,30622,306

239,746

Investments and other assets

6,782

8,146

72,893

Additional paid-in capital

22,06322,063

237,134

Investments in securities

3,602

5,035

38,714Retained earnings

22,95027,171

246,668

Treasury stock(3,502)(3,501)(37,639)(971)(2,041)(10,436)

370

26

3,976

0

(0)

4

(1,342)(2,068)(14,423)

3,139

2,987

33,738709,221

Deferred income taxes
Other
Allowance for doubtful accounts
Deferred assets
Bond issue costs

80

281

859

3,163

2,866

33,996

(63)

(36)

(677)

Unrealized gains on available-for-sale securities

25

34

268

Deferred hedge gains and losses

25

34

268

Unrealized gains, translation gains, etc.

Foreign currency translation adjustment
Minority interests in subsidiaries

Total assets

5

FY 2009(Liabilities)

Cash and deposits

Marketable securities

FY 2010

As of
As of
As of
March 31, 2010 March 31, 2009 March 31, 2010

124,140

129,044 1,334,264

Total net assets

65,986

68,985

Total liabilities and net assets

124,140

129,044 1,334,264

l Consolidated Statement of Operationsl Consolidated Statement of Cash Flows(Unit: Thousands of U.S. Dollars/Millions of yen)
Yen (Millions)

FY 2010(Unit: Thousands of U.S. Dollars/Millions of yen)

U.S. Dollars(Thousands)

FY 2009

FY 2010

Net sales¥90,070 ¥107,583$968,078

Cost of sales

81,949100,098

880,793

Gross profit

8,120

7,485

87,274

Yen (Millions)

FY 2010

FY 2009

Cash flows from operating activities¥(1,067)¥17,495 $(11,468)

Cash flows from investing activities(1,798)(8,896)(19,325)

Cash flows from financing activities(4,623)

7,343(49,688)

Effect of exchange-rate changes on cash and cash equivalents

88(1,160)945

Net increase (decrease) in cash and cash equivalents(7,400)14,782(79,535)

Cash and cash equivalents at beginning of year

31,03816,255333,598

Cash and cash equivalents at end of year

23,63731,038254,052

For the year ended For the year ended For the year ended
March 31, 2010
March 31, 2009
March 31, 2010

Selling, general, and administrative expenses

8,516

10,11891,530Operating income (loss)(395)(2,633)(4,245)Non-operating income

1,079

1,133

11,597

Non-operating expenses

1,461

2,087

15,702

Ordinary income (loss)(777)(3,587)(8,351)

Extraordinary income

182

27

1,956

Extraordinary losses

749

3,655

8,050

Net income (loss) before taxes and other adjustments(1,344)(7,215)(14,445)

Corporate, residence, and enterprise taxes

619

589

6,653

Corporate taxes and other adjustments

197

536

2,117

Gains on minority Interests in subsidiaries
Net income (loss)

177

36

1,902

(2,340)(8,378)(25,150)

U.S. Dollars(Thousands)

FY 2010For the year ended For the year ended For the year ended
March 31, 2010
March 31, 2009
March 31, 20106

Consolidated Financial Statementsl Consolidated Statement of Shareholders' Equity (FY 2010: April 1, 2009 - March 31, 2010) (Unit: Thousands of U.S. Dollars/Millions of yen)
Shareholders' equity
Common stock
Balance as of March 31, 2009

$239,746¥22,306

Additional paid-in
capitalRetained earnings$237,134$292,035¥27,171(25,150)(2,340)¥22,063

Total shareholders'equityTreasury stock$(37,628)¥(3,501)$731,287¥68,039(8)(0)(25,150)(2,340)

(8)

1

0

0

(0)
0

(20,206)(1,880)Change during this consolidated fiscal year
Net loss
Purchase of treasury stock

(0)

(0)

(20,206)(1,880)

Sale of treasury stock
Change of scope equity method( Net) change during this consolidated
fiscal year in accounts other thanshareholders' equity
Total change during this consolidated
fiscal year
Balance as of March 31, 2010

―

―

―

―

(45,356)(4,220)(7)(0)(45,367)(4,221)

239,746

22,306

237,134

22,063

246,668

22,950(37,639)(3,502)685,920

63,818

Unrealized gains (losses)
Unrealized gains(losses) on availablefor-sale securities
Balance as of March 31, 2009

$279

¥26

Foreigncurrency translation
adjustment

Deferred hedge
gains and losses$(0)¥(0) $(22,226)

Total unrealized
gains (losses)¥(2,068) $(21,936)

Minorityshareholders'interests¥(2,041) $32,104

Total net assets¥2,987 $741,455¥68,985(25,150)(2,340)(8)(0)

Change during this consolidated fiscal year
Net loss
Purchase of treasury stock
Sale of treasury stock
Change of scope of equity method( Net) change during this consolidated
fiscal year in accounts other thanshareholders' equity

7

0

0

(20,206)(1,880)

3,697

344

4

0

7,792

725

11,500

1,070

1,622

151

13,123

1,221

Total change during this consolidated
fiscal year

3,697

344

4

0

7,792

725

11,500

1,070

1,622

151

(32,233)(2,999)Balance as of March 31, 2010

3,976

370

4

0

(14,423)(1,342)(10,436)(971)

33,7383,139

709,22165,986CMK TOPICS
Activities to protect the environment

Environmental Initiatives of the CMK GroupThe activities the CMK Group undertakes to protect the environment are reported anddisclosed in the CSR Report and in the environmental data that supplement thereport. Here we describe measures being taken to combat global warming andachieve zero emissions, areas that have attracted growing attention recently.

Measures to co mb at g lob al w a r m in g
To reduce CO2 emissions that cause global warming, our Group has taken
steps to conserve energy in all of its business activities, irrespective ofwhether they taken place in production facilities or offices.

► Energy conversion has been achieved (from Bunker A to city gas)
► S teps have been taken to reduce compressed air leakage and theoperation loss of air compressors► Inverters have been adopted with air compressors and production line
pumps
► T he number of fluorescent lamps has been reduced and high-efficiency
lamps and human sensors have been adopted► P roduction lines have been terminated or integrated in a planned manner,and their layout has been changed► Cool Biz and Warm Biz measures are being implemented► The CO2 Reduction Working Group is active as an expert subcommittee
The above activities have resulted in a reduction in annual CO2 emissions of
8,260 tons by domestic Group companies and 22,680 tons by overseas
Group companies.

Change in annual CO emissions
2

Domestic CMK Group companies
200

178.08150

Starting in fiscal 2009, an environmental account book has been introduced in
the homes of employees of domestic Group companies. By converting theelectricity and gas consumed at households into CO2 emissions, we can see
how much CO2 is being generated. The account book helps enhance ourawareness on household CO2 emissions and energy conservation.

153.72131.64139.54121.65

0

2004

2005

resources
The above activities enabled all production premises of the domestic Group
companies to attain zero emissions, according to quick updates in fiscal 2009.

131.282006

2007

2008 (Fiscal year)

Change in zero-emission ratio
Domestic CMK Group companies

Overseas CMK Group companies

(%)

98.9

100

93.3

99.9

87.8
85.9

85.2

80

70

99.7

94.6

90

► Recycling is being encouraged by sorting the waste collected► The volume of waste has been reduced► A cid and plastic waste, as well as metal scrap, are being sold as valuable

161.88153.15143.0250

Measures to ac hie ve ze r o- e mi s s io n
Active measures are being pursued to reduce the amount of waste generated
and recycle waste into resources.

184.56

100*When actual CO2 emissions in FY2007 and FY2008 are compared

Introduction of environmental account bookOverseas CMK Group companies(1,000 tons of CO2)

83.8

77.4

2004

2005

2006

2007

2008 (Fiscal year)*CMK defines zero emissions as bringing the volume of waste treated by direct burial to zero.

8

Corporate Data (As of March 31, 2010)l Name of listed company

CMK CORPORATIONl Primary Consolidated Subsidiaries(Securities code no.: 6958)

l Date of establishmentl Capitall Address of head officel Number of employees

February 25, 1961

Japan

¥22,306,203,140l CMK Mechanics Corporation

5-1 Nishishinjuku 6-chome,l CMK Multi Corporation

Shinjuku-ku, Tokyo, Japanl CMK Niigata Corporation

1,065

l CMK Finance Corporationl CMK Products Corporationl Management (as of June 29, 2010)
Directors

Auditors

Executive Officers

Senior Counselor9l Yamanashi Sanko Co., Ltd.

President andChief Executive Officer

Takahiro Nakayama

Director and Executive
Senior Managing Officer

Mikihiko Hattori

Director and Executive
Managing Officer

Takeo Takai

Overseas

Director and Executive
Managing Officer

Tsutomu Yamaguchi

l CMKC (Hong Kong) Ltd.

Director and Executive
Officer

Kazuhiro Itol CMKC (Dong Guan) Ltd.

Director and Executive
Officer

Akiharu Nakayamal CMK Electronics (Wuxi) Co., Ltd.

Standing Auditor

Nobuo Akiyama

Auditor

Hiroo Wakabayashi

AuditorKimiaki Inagi

Executive Officer

Kenichi Urushiyama

Executive Officer

Nobuyuki Kageyama

Executive Officer

Toshimi Kuroki

Executive Officer

Masashi Koike

Executive Officer

Kazuma Shiobara

Executive Officer

Takahiro Shirai

Executive Officer

Hiroshi Hanaoka
Noboru Nakayamal CMK Kanbara Electronic Corporation Japanl CMK EUROPE N.V.
l CMK ASIA (PTE.) LTD.
l CMK CORPORATION (THAILAND) CO.,LTD.
l CMK AMERICA CORPORATION

Stock Information (As of March 31, 2010)

Stockholder's Memol Total number of shares authorizedl Total number of shares issued and outstanding
l Number of shareholders
l Share trading unitl Major shareholders (10 largest)
Shareholders

227,922,000

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.

Stock transfer
agent:

Japan Securities Agents, Ltd.
2-4 Kayabacho 1-chome,
Nihonbashi,
Chuo-ku, Tokyo, Japan

Contact address:

Japan Securities Agents, Ltd.,
Agent Division,
8-18 Shiohama 2-chome, Koto-ku,
Tokyo 137-8650
ふ 0120-707-843

63,060,164
7,022
100
Investment in CMK

Number of shares held Percentage(thousands)(%)

Japan Trustee Services Bank, Ltd. (Trust account)

8,651 13.7

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

2,992

4.7

Takahiro Nakayama

2,941

4.6

The Dai-ichi Mutual Life Insurance Company

2,845

4.5

Mizuho Corporate Bank, Ltd.

2,576

4.0

The Foundation for Technology Promotion of Electronic Circuit Board

2,500

3.9

Akiharu Nakayama

1,886

2.9

Panasonic Electric Works Co., Ltd.

1,860

2.9

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

1,822

2.8

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

2.7

Note: Although the Company holds 4,313 thousand shares oftreasury stock, it is not included in the above list of major
shareholders.
Note: The Dai-ichi Mutual Life Insurance Company was
renamed The Dai-ichi Life Insurance Company, Limited, as ofApril 1, 2010.

l Shareholder Breakdown
Other firms

Individuals and others

13,018 thousand shares (20.6%)
Foreign companies and individuals

3,585 thousand shares (5.7%)

Securities firms
1,703 thousand shares (2.7%)

14,161 thousand shares (22.5%)

Total

63,060,164 shares
Financial institutions
30,591 thousand shares (48.5%)10http://www.cmk-corp.com

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