CMK CORPORATION
2 0 0 4 A N N UA L R E P O RT
Year ended March 31, 2004

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

Profile

Creating the FutureManagements

Corporate Data

(As of June 29, 2004)(As of March 31, 2004)

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 promise due 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 more clearly
defined structure of responsibility.
Overseas, on the other hand, CMK group as a whole is deploying ourcorporate strategy with the world market as the target. In this process, thegroup is moving factories to China, making capital alliances that aim for
expansion of market-share in the European and the U.S. automotiverelated markets, wholeheartedly working together in development, production and sales to ensure the satisfaction of our customers.
CMK will continue to contribute to the world’s progress and advancement, and pursue our company motto of “Permanent Growth”

Directors
Noboru 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

Shigeyuki Seki

Director and Executive Managing Officer

Kunio Nishi

Director and Executive Officer

Tsutomu Yamaguchi

Auditors
Standing Auditor

Nobuo Akiyama

Auditor

Hideaki Takahashi

Auditor

Tatsunao Matsuta

Executive officers
Executive Vice President

Shigeo Araki

Executive officer

Shinji Kadono

Executive officer

Sadanobu Kondou

Executive officer

Takeo Takai

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)
Noboru Nakayama
Mizuho Corporate Bank Ltd.
The Foundation for Technology Promotion ofElectronic Circuit Board
The Dai-ichi Mutual Life Insurance Company
Matsushita Electric Works, Ltd.
The Master Trust Bank of Japan, Ltd. /Retirement Benefit for Hitachi Chemical Co., Ltd.
Sumitomo Mitsui Banking Corporation
Nakayama Kikaku

Percentage
(%)

8,839

17.1

3,793
2,652
2,576

7.3
5.1
4.9

2,500
2,345
1,860

4.8
4.5
3.6

1,822
1,613
1,600

3.5
3.1
3.1

Correspondent Banks(As of June 29, 2004)

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

CONTENTS
01 Financial Highlights
02 Message from the Management
02 Management Issues
03 The Top Interview
04 Products Information
05 CMK Topics
06 Take a Virtual Tour of
CMK Circuit Technology Center
08 Environmental Protection
09 Financial Section
24 Group Companies
25 Managements
25 Corporate Data

Chairman

Cautionary Statement with Respect to Forward-Looking Statements
Statements made in this annual report with respect to CMK’s plans, strategies and beliefs and otherstatements that are not historical facts are forward-looking statements about the future performanceof 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; and CMK’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 in technology, and changing customer requirements.

CMK CORPORATION
2004 Annual Report25

Financial Highlights
CMK CORPORATION and Consolidated Subsidiaries
Years ended March 31, 2004, 2003 and 2002

Yen
(Millions)(except per share amounts)

Operating Results:
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)

2002

2003

2004

2004

¥104,540(3,507)(2,871)¥111,744(1,134)(1,057)¥115,366
5,613
4,612

$1,092,170
53,13843,661¥ 49,715
149,476¥ 46,205
154,271¥ 51,024
134,263$ 483,044
1,271,068¥ (54.66)—
946.43¥ (20.16)—
883.26¥ 87.1274.16
975.88

$

0.82
0.70
9.23

Notes: 1. U.S. Dollars amounts have been translated from Yen, for convenience only, at the rate of ¥105.63 = $1, the Tokyo foreign exchange market rate as of March 31, 2004.
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)

Yen

8,000

150,000

90

6,000

120,000

60

4,000
30

90,0002,000
60,0000030,0000-30-2,000

2000

2001

2002

2003

2004

-4,000

2000

2001

2002

2003

-60

2004

2000

2001

2002

Yen (Millions)

Multi-Layerd PWBs
Double-Sided PWBs
Single-Sided PWBs
Others
17,580(15.2%)

45,689(40.9%)
17,169(15.3%)
24,317(21.8%)

24,569(22.0%)

2003

2004

52,877(45.8%)
25,330(22.0%)

19,577(17.0%)

2004
Basic
DilutedIncome (Loss) before Income Taxes
Net Income

Sales by Type of PWB

2003

Sales by Region

Japan
Southeast Asia
China
EuropeYen (Millions)

3,051(2.7%)

2,446(2.2%)

10,299(8.9%)

5,832(5.2%)
2003

2004

13,585(12.2%)
89,880(80.4%)

90,927(78.8%)
11,087(9.6%)CMK CORPORATION
2004 Annual Report1Message from
the Management

Despite concerns about the lingering impact of SARS
in the beginning of the fiscal year, situation surrounding the Middle East peace process, and the U.S. economic outlook, businesses saw signs of a Japanese
economic recovery this term. This was attributed tostronger exports, more capital investment, and an upward trend in the stock market. These conditions continued throughout the term, but what kept us fromseeing a full-scale recovery were challenges such as thesurging yen and a prolonged slump in employment andconsumer spending.
Overseas production of PWBs for mainstay electronics goods, including AV equipment, has intensified, and the domestic PWB industry has been affectedby an overall downward trend in sales prices. However,there has been a favorable upturn for PWBs used in highperformance devices, driven by units for mobile phonehandsets, digital cameras, and other digital products.
This sets the scene for our current activities. Undera new framework, we are pursuing strategic orders ofhighly value-added products. Meanwhile, our restructuring efforts have raised production efficiency
and reduced fixed costs through workforce streamlining and other programs. These efforts, along withcost-cutting measures across the board, have yielded a significantly greater net profit than that of theprevious term.
Though the economy has been and still remains inscrutable, we refuse to be satisfied with the results of the current term. Marking this as a starting point in our policy guidelines, we are aiming for amore fast-paced working style and tighter group unity to respond swiftly and flexibly to all thechanges in our business environment. As before, we will uphold an ongoing management policy thatputs customer trust first.
We thank you all for your continuous support.
June 2004
Takahiro Nakayama
President and Chief Executive Officer

Management
Issues2

CMK CORPORATION
2004 Annual Report

We anticipate market growth in the electronics industry will be driven by digital products such as mobile phone handsets, flat-screen TVs, DVD recorders, and digital cameras, as well as greater use ofelectronics in automobiles. Growth is expected to be focused in these and related markets. This will
fuel the demand for smaller, lighter, and more precise electronics, and price competition seems likely
to intensify.
While seeking strategic orders of highly value-added products this term, we continued restructuring efforts directed toward improving productivity and lowering fixed costs, through workforce
streamlining and other programs. Such activities, along with careful cost-cutting and prudence inmaintaining or severing ties with affiliates, have yielded excellent results. But we are not content torest on this success. Working faster, with stronger group solidarity during restructuring, to enable
greater responsiveness and flexibility in the face of the different changes around us – this is the starting point of our management policy. We will continue striving to be, first and foremost, a company
that customers rely on.

The

Top

Interview

Please share your impressions from your first year as president.
Nakayama: This term was quite a challenging time to start, with the global IT slump and low con-sumer spending. CMK did enjoy a synergetic effect from increased demand for information and communication devices and digital home appliances coupled with the restructuring we have been taking
on. This yielded much larger profit than the previous term. But the challenges we must overcome aremounting. We are promoting further reform aimed at improving future profitability. We believe wehave started down a path to real growth. As a management guideline at this juncture, we stand committed to putting our motto into practice: “progress and endurance.”

Update us on how things are going in the current term.
Nakayama: Domestically, we are pushing to gear up for production of highly value-added products

such as build-up PWBs in a move for strategic orders. Meanwhile, restructuring efforts have helped us
streamline operations by reducing the workforce to a more manageable level, among other methods of
reducing fixed costs. Meticulous cost-cutting measures helped us achieve a significantly greater net
profit.
Abroad, we continue to monitor fluctuations in demand with the overseas expansion of our corporate users. We are working to strengthen our foreign business network and round out our production
infrastructure as appropriate. Chinese plants in particular are among sites where we have secured considerable profitability.

Describe the ongoing strategy for group companies overseas.
Nakayama: We now have fully established the framework abroad to produce and supply a range ofcomponents, from single-sided to build-up PWBs. For single-sided PWBs, we are keeping a close eyeon fluctuations in demand. As we look to expand into Southeast Asia, we are also eyeing ways to improve profitability. For double-sided, multilayer, and build-up PWBs, we anticipate a huge increase indemand. We are putting in place the optimal supply infrastructure and strengthening our sales network
to respond swiftly and flexibly to customer needs. Especially in build-up PWBs, we are asserting ourtechnical leadership in China. Solid orders have enabled us to plan for increased production at ourplant in Wuxi, Jiangsu. (For details, see CMK Topics.)

Tell us what's happening in product development.
Nakayama: In information and communication applications we’re seeing remarkable technical inno-

vations in the creation of smaller, lighter, faster, and more energy-efficient digital appliances andother electronics. PWBs, their key components, must in turn be more highly integrated, better at dissipating and withstanding heat, and more reliable. What’s more, they must support higher frequencies
and faster transmission rates while conforming to stricter regulations for environmental protection. To
meet these needs, we are promoting new product development through the advancement of core technologies for finer circuit formation and more highly integrated, faster semiconductor packages. These
new products will include next-generation build-up PWBs, compound substrates of diverse materials,
integrated substrates, and substrates for semiconductor packages. We are also actively engaged injoint R&D with firms and organizations that possess outstanding technology, working hard to be thefirst to market new, distinctive products.

Can you illustrate your mid- and long-term management vision?
Nakayama: We will practice a “choose and focus” policy, focusing our investment of business re-sources in highly value-added products. We are promoting development and volume production of
next-generation PWBs in Japan. This is how we are establishing the framework to meet customer
needs swiftly and flexibly. To prevail against international competition as markets become global inscope, we will support further development of business overseas. We aim to be the top company in theelectronic components industry as a global firm that has earned the trust of our customers.

CMK CORPORATION
2004 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 substrate as thesame 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 toour 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 byDifferent Applications
Car electronics
Mobile communications
AV equipment
Information devices
Others

22%
34%

18%
10%

4

CMK CORPORATION
2004 Annual Report

16%

Examining sales for different applications,
we see strong sales in camera-phones andother mobile IT devices, as well as automotive electronics.
Digital AV devices, such as digicams,
plasma television displays and LCD televisions, sales are also strong, and we aim theseas the target markets from now on.

CMKTopicsC

MK Electronics (Wuxi) Co., Ltd. Expands
Monthly Production to 10,000 m2

CMK Electronics (Wuxi) Co., Ltd. in Wuxi, China produces and supplies build-up PWBs for
digital devices such as PDAs and other mobile information devices. Since their founding four
years ago, they have been making steady gains. The plant was initially set up for a monthly
production capacity of 5,000 m2, but, as orders poured in, last year they boosted monthly capacity to 7,000 m2.
With companies from around the world already established in China, demand for advanced
products here continues to increase. CMK Electronics Wuxi was the first plant to produce hightechnology PWBs in China. With orders steadily increasing, CMK has invested additional
business resources in the plant, leading to a decision to boost monthly output to 10,000 m2 by
July 2004. They have sought to cut manufacturing costsby trimming raw material costs, reviewing production
processes with an eye toward greater efficiency, and encouraging skill improvement among employees – actions
we trust will be rewarded with an even better profit ratio.
CMK Electronics (Wuxi) Co., Ltd.

I

mproving Thin Build-Up PWBs for
Mobile Phone Handsets and Digital Cameras

3G mobile phones are becoming more popular, and digital cameras offer ever-higher resolutions and more advanced functionality – signs of our increasingly sophisticated, informationoriented societies. This is triggering demand for the smaller, thinner, and more highly
integrated PWBs these devices rely on.
We answer the needs of customers who manufacture such products. Besides conventionalbuild-up technology, CMK has also established technology for simultaneous production of
filled via and through-hole plating and made possible a filled via structure for all layers. To
meet needs for thinner PWBs, we have studied techniques to make the core and build-up layers
thinner, leading to the development of a thin build-up PWB that offers a 1-4-1 substrate at athinness of 0.4 mm. We are currently gearing up to start volume production of components thattake advantage of these technologies in October of this year. Looking ahead, we plan to extend
use of these technologies to the production of high-performance modules and highly integrated
semiconductor packages for high-frequency wireless devices, digital cameras, and otherproducts.
1-4-1 build-up PWB

1.0mm

0.4mm
CMK CORPORATION
2004 Annual Report5Take a Virtual Tour of

CMK Circuit
Te c h n o l o g y C e n t e r

CMK Circuit Technology Center
Corporation in Saitama

CMK Circuit Technology Center was spun off from the CMK Circuit Design Department inApril 1994. They operate a network of seven sites in Japan: Saitama, Gunma, Matsumoto,Toyota, Nagoya, Osaka, and Gotanda. About 90 designers (80 of whom have passed a PWB-design engineering examination) take advantage of over 100 CAD stations to meet customer needs.
Their advanced technical expertise enables prompt design support. Here we would like to introduce the CMK Circuit Technology Center, a core member of the CMK Group.

The Technical Expertise Behind CMK’s Rapid Advances
Creating products unparalleled in quality and precision – that was our objective when we deployed
our own CAD system in 1975, the first in the industry. The system provided a platform for building up
a range of applications and technical expertise and for constructing our proprietary production system,
which helped CMK grow into the industry leader. In April 1994, the circuit design department boasting these sophisticated engineering capabilities was spun off into an independent company called
CMK Circuit Technology Center Corporation. The center conducts a vigorous training program fordesigners, making the most of its specialized knowledge. By leveraging CMK’s collective, wide-ranging technical expertise as a PWB manufacturer, the center offers sophisticated design solutions thattake manufacturing costs into account.
Maintaining a high profit ratio since its establishment, the center became ISO 9001-certified inJune 1999, a testament to its extraordinary level of quality management.

Advantages of “Design-In”
CMK Circuit Technology Center applies customer concepts as the main guidelines in product development, upholding its commitment to customers as its primary responsibility. They incorporate wideranging expertise in PWB manufacturing to provide “design-in” (collaborative design) solutions witha focus on high performance, a high level of integration, a favorable cost-performance ratio, fast delivery, conformity with environmental regulations, and other such considerations. They also take a bal-

Circuit designers in Saitama

6

CMK CORPORATION
2004 Annual ReportFaster Delivery - A Benefit of Collaborative Design
Production Workflow in a Typical Design Process

Production Workflow With CMK Circuit Design
Place all orders:pattern design and PWB production and mounting

Order the pattern design
Design the pattern

Revise designs
to matchproduction
specifications

Deliver design data
Order PWB production
NG

Design the pattern, incorporating
the newest production specs and most advanced expertise
After the pattern is designed, immediatelytransfer the data to the Production Division
Produce PWBs

Verify design data
OK

Produce PWBs

Perform mounting

Deliver PWBs

Deliver mounted PWBs

Order mounting boards

The advantage:
shorter delivery periods

Perform mounting
Deliver mounted products

anced approach to design support, seeking better ways to reduce the electromagnetic interference that
produces different kinds of “noise” by considering the electrical characteristics involved. The center
practices the latest design techniques for solutions proven through electromagnetic field analysis.

Facing Tomorrow’s Challenges
The center stands at a great divide in the electronics industry in Japan from the standpoints of businessand technology. Pressure to keep prices for general-use products low has caused a continuing hollowing-out of industry in Japan as the pace accelerates in shifting production overseas. An indispensablefactor for keeping production in Japan is the development of ever-more sophisticated value-added
products. To prevail in this harsh business environment, CMK Circuit Technology Center has established a design system for advanced multilayer build-up PWBs (highly value-added products) and introduced the use of a 3D viewer, among other strategies. These systems offer 3D display in real-time,
simulations of component mounting, and more, enabling sophisticated and flexible design support.
Advances in PWBs have kept pace with those in other electronic components and semiconductors.
Changes in semiconductors, in particular, force changes in PWBs. To keep pace with these changes,
the center has started taking on LSI design in recent years. As CMK Circuit Technology Center continues to seek out the most advanced circuit design technology, we appreciate the support of our business partners
and shareholders.

A component mounting simulation during PWB design

A three-dimensional circuit diagram shown on the 3D viewer

CMK CORPORATION
2004 Annual Report

7

Environmental
Protection

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

Schedule of Acquisition of
ISO14001

History of ISO14001

We consider the environment management systems
as the foundation of the environmental activities.
Therefore, we aim to acquire the ISO14001
Certificate in FY2004 for all the CMK production
site.

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.

Plants and Offices

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 operationin order to protect the global environment.

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

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.

The Composition ofEnvironment Management

The Factors of the Practice Plan
Customers
Community

Continuous improvement
as the corporation’s liability.
Exploit the environmental tool
Environmental Partnership

Environmentconscious
products andservices

Environmental report
2004

CMK aims to develop QCDE
idea without losing balance.
We will make a sustainable
contribution to society bycoexisting with our customers
and communities.

Plan
Action

E: Environment

h

cy

oli
lP

C: Cost

nta

me

on

e

Th

CMK CORPORATION
2004 Annual Report

ir
nv
eE

vir
En

•T

t
en

m

on

Check

Q: Quality

te

no

Do

D: Delivery

8

Continuous
Improvement
based on ISO 14001
CertificateyKeFinancial Section
10
12
13
14
15
23

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’ ReportFive-Year Summary
CMK CORPORATION and Consolidated Subsidiaries
Years ended March 31, 2004, 2003, 2002, 2001 and 2000

Yen
(Millions)

U.S. Dollars(Thousands)

2004

2003

2002

2001

2000

2004

For the year
Net sales
Operating income (loss)
Net income (loss)¥115,366
9,212
4,612

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

¥121,245
4,944
1,146

$1,092,170
87,21043,661

At year end
Shareholders’ equity
Total assets

51,024
134,263

46,205
154,271

49,715
149,476

52,822
144,749

49,820
153,500

483,044
1,271,068

Yen

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

U.S. Dollars¥87.12
74.16¥(20.16)–¥(54.66)–¥80.3669.75¥22.21
19.74

$0.82
0.70

1,710
454
10.00

1,219
460
8.00

1,480
735
10.00

2,390
1,130
12.00

1,600
1,005
10.00

16.19
4.30
0.09

%

RatiosEquity Ratio
Return on Equity
Price Earnings Ratio

38.0
9.5
19.3

29.95
–
–

33.26
–
–

36.49
8.15
16.80

32.46
2.34
54.89

Number of employees (Person)

6,646

7,122

6,780

6,180

6,103

Notes: 1. U.S. Dollars amounts have been translated from Yen, for convenience only, at the rate of ¥105.63= $1, the Tokyo foreign exchange market rate as of March 31, 2004.
2. All Millions Yen and thousands U.S. Dollars amounts are rounded to the nearest figure.

CMK CORPORATION
2004 Annual Report9Consolidated Balance Sheets
CMK CORPORATION and Consolidated Subsidiaries
March 31, 2004, and 2003

Yen
(Millions)

U.S.Dollars(Thousands)

March 31ASSETS
Current assets :Cash and time deposits (Note 5)
Marketable securities (Note 3 & 5)
Trade receivables :Accounts and notes (Note 13)
Allowance for doubtful accounts
Inventories (Note 4)
Deferred income taxes (Note 9)
Other current assets
Total current assets

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

Investments and other assets :Investments in securities (Note 3 & 6)
Long-term loans
Deferred income taxes (Note 9)
Others

The accompanying notes are an integral part of these statements.

CORPORATION
10 CMK
2004 Annual Report

March 31

2004

2003

2004

¥ 13,276103¥ 28,523
150$ 125,683
975

32,522
(20)
9,555
773
1,830
58,042

27,200
(44)
9,942
661
1,590
68,024

307,886(189)
90,457
7,317
17,324549,484

13,69058,05891,227
654
163,629
104,368
59,26013,46258,261
100,591
1,149
173,464
106,144
67,320129,603549,635
863,646
6,191
1,549,076
988,052
561,014

9,451
1,149
1,271
5,087
16,959¥134,263

7,969
2,869
2,166
5,922
18,926¥154,271

89,472
10,877
12,032
48,158160,550$1,271,068

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

2004
¥

5,666
5,298

March 31

2003
¥

2004

7,447
26,366$53,64050,156

13,2701,476
10,70936,422

11,112329
11,08056,339125,627
13,973
101,382
344,807

Long-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

40,544
204
621
636
42,007

43,238
245
629
1,671
45,786

383,830
1,931
5,879
6,021
397,680

Minority interests in subsidiaries

4,809

5,939

45,526

Contingent liabilities (Note 13) :

—

—

—

16,167—
15,92422,889852(3,202)—
16,117
15,87418,059(260)(2,087)

153,053—
150,752
216,690
8,065(30,313)(1,607)—51,024¥134,263—(1,497)
46,205¥154,271(15,213)—
483,044$1,271,068

Shareholders' equity (Note 8) :Common stock
Authorized : 199,871,000 Shares
Issued:March 31, 2004: 53,284,741 Shares
March 31, 2003: 53,205,124 Shares
Additional paid-in capital
Retained earnings
Unrealized gains on securities
Foreign currency translation adjustments
Treasury stock, at cost
March 31, 2004: 1,066,883 Shares
March 31, 2003: 892,084 Shares
Total shareholders’ equity

CMK CORPORATION
2004 Annual Report11Consolidated Statements of Income
CMK CORPORATION and Consolidated Subsidiaries
Years ended March 31, 2004, 2003 and 2002

Yen
(Millions)

U.S.Dollars(Thousands)

Year ended March 31

Net sales (Note 14)
Cost of sales
Gross profit
Selling, general and administrative
expenses
Operating income (loss) (Note 14)
Other income (expenses) :Interest and dividend income
Interest expenses
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

2004

2003

2002

2004

¥115,366
95,491
19,874¥111,744
99,767
11,977¥104,540
94,625
9,915$1,092,170
904,014
188,147

10,661
9,212

11,273703

11,054(1,138)100,927
87,21089(955)(2,733)
5,613
1,679
3,934
678
¥ 4,612267(1,182)(922)(1,134)707(1,841)784¥ (1,057)

143(1,239)(1,273)(3,507)(380)(3,127)255¥ (2,871)

842(9,040)(25,873)
53,13815,89537,243
6,418$ 43,661

Yen

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

CORPORATION
12 CMK
2004 Annual Report

¥

87.12
74.16
10.00

¥ (20.16)—
8.00

U.S.Dollars¥ (54.66)
—
10.00

$

0.82
0.70
0.09

Consolidated Statements of Shareholders’ Equity
CMK CORPORATION and Consolidated Subsidiaries
Years ended March 31, 2004, 2003 and 2002

Yen
(Millions)

Balance at March 31, 2001
Net income
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
Sale of treasury stock
Balance at March 31, 2002
Net income
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 (loss)
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
Sale of treasury stock
Balance at March 31, 2004

Unrealized
gains onsecurities

Foreigncurrencytranslation
adjustment

Treasurystock, at cost

¥24,037(2,871)
(630)

¥222
—
—

¥(2,059)——¥(1,370)
—
—

—
—
—
—
—
—
¥15,874
—
—

(67)
(70)
—
—
—
—
¥20,398(1,057)
(525)

—
—
(191)
—
—
—
¥31
—
—

—
—
—
707
—
—
¥(1,352)
—
—

—
—
—
—
(22)
39
¥(1,353)
—
—

—
—
—
—
—
—
¥16,117
—
—

—
—
—
—
—
—
¥15,874
—
—

(751)
(5)
—
—
—
—
¥18,059
4,612
(417)

—
—
(291)
—
—
—
¥(260)
—
—

—
—
—
(735)
—
—
¥(2,087)
—
—

—
—
—
—
(338)
194
¥(1,497)
—
—

49

49

—

—

—

—

—
—
—
—
—
—
¥16,167

—
—
—
—
—
—
¥15,924

639
(2)
—
—
—
—
¥22,889

—
—
1,112
—
—
—
¥852

—
—
—
(1,115)——¥(3,202)

—
—
—
—
(310)
200
¥(1,607)

Commonstock

Additional
paid-in capital

Retainedearnings¥16,117——¥15,874
—
—

—
—
—
—
—
—
¥16,117——

U.S.Dollars(Thousands)

Balance at March 31, 2003
Net income (loss)
Cash dividends
Shares issued upon conversion of
convertible bond
Increase due to inclusion of
consolidated 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, 2004

Commonstock

Additional
paid-in capital

Retainedearnings

Unrealized
gains(losses) on
securities

Foreigncurrencytranslation
adjustment

Treasurystock, at cost$152,579——$150,279——$170,964
43,661(3,947)$(2,461)——$(19,757)——$(14,172)
—
—

463

463

—

—

—

—

—
—
—
—
—
—
$153,053

—
—
—
—
—
—
$150,752

6,049
(18)
—
—
—
—
$216,690——
10,527———$8,065———(10,555)——$(30,313)————(2,934)
1,893$(15,213)

The accompanying notes are an integral part of these statements.
CMK CORPORATION
2004 Annual Report13Consolidated Statements of Cash Flows
CMK CORPORATION and Consolidated Subsidiaries
Years ended March 31, 2004, 2003 and 2002

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) losses of affiliates
Loss on write-down of investment securities
Loss on disposal of property, plant and equipment
Impairment loss
Restructuring cost
(Increase) decrease in notes and accounts receivable, trade(Increase) decrease in inventories
Increase (decrease) in notes and accounts payable, trade
Others, net
Sub totalInterest 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
Proceeds from issuance of bonds
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 the 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
2004 Annual Report

Year ended March 31

2004

2003

2002

2004

¥ 5,613
8,150
1,009
(90)
955
(1,006)
0
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)
392
317
0
0
(631)
208
200
676
10,351132(1,174)311
9,620¥ (3,507)
10,061
(56)
(143)
1,239
(22)
966
327
0
0
7,215
63
(116)
(1,126)
14,901162(1,191)(3,115)
10,755$ 53,138
77,156
9,552
(852)
9,040
(9,523)
0
4,780
9,040
7,109
(56,603)
2,007
19,255
4,269
128,401
861(9,448)(4,364)
115,440(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)(11,446)
547
(689)
(271)
500
(37)
104
(3,977)(430)(15,699)(32,689)
9,741(3,019)(284)
10,811(2,404)
3,010
(482)
7,649
(7,668)46,262(47,578)0(20,000)
3,142(6,671)(1,407)(26,254)(194)(15,064)

57,723(56,700)
5,540
0
9,664
(6,787)
(395)
9,045
(136)
6,823

41,687(45,496)0021,300(9,366)
336
8,458
7
3,522

437,962(450,421)
0(189,340)
29,745(63,154)(13,320)(248,546)(1,836)(142,611)

45
27,977¥12,959

3,431
17,722¥27,977

65
14,134¥17,722426
264,858$122,682

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 ¥105.63 to
US$1.00, prevailing on March 31, 2004, 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 25 and 26 subsidiaries as of March 31, 2004
and 2003 respectively. The consolidated financial statements
included the accounts of the Company and its 22 and 21 significant subsidiaries as of March 31, 2004 and 2003, 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 ofacquisition 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 except for molds, raw materials, finished goods
and work in process are stated at cost determined by the aver-age method. Molds are stated at cost determined by the specific identification method. Subsidiary outside of Japan,
inventories are valued at lower of cost or market, which are
determined by the moving-average method.
(e) Property, plant and equipment
Property, plant and equipment are stated at cost. In the company and subsidiaries inside Japan, depreciation is 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. For subsidiaries outside Japan,
depreciation is computed by straight-line method. Significant
renewals and additions are capitalized at cost. Maintenance,
repairs, minor renewals and betterments are charged to income
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 provision for income taxes is computed based on the pretax income included in the consolidated statements of income.
The assets and liability approach is used to recognize deferred
tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying
amounts and the tax bases of 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 and liability accounts of foreign subsidiaries andaffiliates are translated into Japanese Yen at appropriate yearCMK CORPORATION
2004 Annual Report15

end current rates, and the shareholders’ equity accounts except
for retained earnings are translated at historical rates. All
income and expense accounts of foreign subsidiaries and affiliates are translated into Japanese Yen at the average rate during
the fiscal year. The resulting translation adjustments are presented as “foreign currency translation adjustments” in theaccompanying consolidated financial statements.
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
Accounting for impairment of assets (real property, long-lived
assets) is not required under generally accepted accounting
principles and practices in Japan, which differ from IAS
No.36.

Some overseas subsidiaries apply accounting for impairment of assets in accordance with the local accounting
principles and practices.
(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, 2003 and 2002
have been made to conform to the presentation in the year
ended March 31, 2004.

3. Marketable securities and investments
The cost and fair value of marketable securities and investments as of March 31, 2004 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)

2004

2003

2004

¥2,343
1,499
30¥3,812¥2,41094
543¥1,961$22,181
14,191
284$36,088

4. Inventories
Inventories at March 31, 2004 and 2003 comprise the following:
Yen(Millions)

Merchandise
Finished goods
Work in process
Raw materials and supplies

2004
¥ 926
3,006
3,774
1,849
¥9,555

U.S. Dollars(Thousands)

2003¥1,503
2,648
3,436
2,355
¥9,942

2004$ 8,766
28,45735,72817,504$90,457

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, 2004 and 2003:
Yen(Millions)

Cash and time deposits
Marketable securities
Deposits with a maturity of three months or more
Cash and cash equivalents

CORPORATION
16 CMK
2004 Annual Report

2004¥13,276—(317)¥12,959

2003¥28,523150(696)¥27,977

U.S. Dollars(Thousands)

2004$125,683—(3,001)$122,682

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)

2004

2003

2004

¥3,998¥3,372$37,849

7. Bonds Payable and Borrowings
Bonds payable as of March 31, 2004 and 2003 consisted of the following:
Yen(Millions)

U.S. Dollars(Thousands)

Item
2004
2003
2004
Due 2005 Unsecured Convertible Bonds*¥12,308¥12,408$116,519
Due 2003 Unsecured Straight Bonds—
20,000—Due 2006 Unsecured Straight Bonds
100
100
946
Due 2008 Unsecured Straight Bonds
2,500
2,500
23,667
Due 2008 Unsecured Straight Bonds
3,000
3,000
28,401
Total¥17,908¥38,008$169,535*The conversion period of the Unsecured Convertible Bonds is from October 1, 1996 to September 29, 2005 and the conversion
price was ¥1,256 ($11.89) per share as of March 31, 2004.
Borrowings as of March 31, 2004 and 2003 consisted of the following:
Yen(Millions)

Item
Short-term Borrowings
Current Portion of Long-term Debt
Long-term Debt
Total
As of March 31, 2004 and 2003, long-term debt is secured byproperty, plant and equipment with a net value of ¥11,686
million ($ 110,631 thousand) and ¥13,291 million, respectively.
As is customary in Japan, short-term and long-term bank2004
¥ 5,666
5,298
22,636¥33,601

U.S. Dollars(Thousands)

2003¥ 7,447
6,366
25,230¥39,0452004$ 53,640
50,156214,295$318,100loans 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

2005
2006
2007
2008
2009

Yen
(Millions)

U.S. Dollars(Thousands)¥ 5,298
19,832
12,378
7,897
435¥45,842$ 50,156
187,749
117,182
74,7604,118$433,986

CMK CORPORATION
2004 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
price of 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
for dividends unless the total amount of legal reserve andcapital surplus exceeds 25% of common stock. The legal
reserve may be used to eliminate or reduce a deficit byresolution of the stockholders or may be capitalized byresolution of the Board of 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, 2004 and 2003.

Income tax expense comprises the following:
Yen(Millions)

Income taxes:
Current
Deferred

U.S. Dollars(Thousands)

2004

2003

2004

¥1,64336¥1,679

¥549
158
¥707

$15,554340$15,895

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
Tax loss
OthersGross deferred tax assets
Deferred tax liabilities:
Allowance for doubtful receivables — intercompany losses
OthersGross deferred tax liabilities

U.S. Dollars(Thousands)

2004

2003

2004

¥ 258
253
279
109
131
842
—
169
¥2,045

¥ 240
256
296
115
25
842
212
837
¥2,828$ 2,442
2,395
2,641
1,031
1,240
7,971
—
1,599
$19,360

17
56
74¥1,97121
36
59¥2,769160
530
700$18,659

2004
42.0%

2003
42.0%

(3.2%)—(7.5%)
0.6%(2.0%)
29.9%—(78.8%)—(13.7%)(11.9%)(62.4%)

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
Tax loss carry forward
Effect of equity earnings of affiliates
Effect of changes in tax rate applied
Others
Effective income tax rate
CORPORATION
18 CMK
2004 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

2004
¥ 773
1,271
—
(74)
¥1,971

U.S. Dollars(Thousands)

2003
¥ 661
2,166
(6)
(53)
¥2,7692004$ 7,317
12,032—(700)$18,659

10. Leased assets
Under Japanese accounting standards for leases, finance leases
that do not transfer ownership of the leased assets to the lessees
are permitted to be accounted for as rental transactions if certain“as if capitalized” information is disclosed in notes to lessee’s

financial statements. For the years ended March 31, 2004,
2003 and 2002, the Company and its domestic subsidiaries
made payments of ¥620 million ($5,869 thousand), ¥581 millionand ¥633 million, respectively, on these finance leases.
Yen(Millions)

2004

U.S. Dollars(Thousands)

2003

2004

Class of property (inclusive of interest)
Machinery and equipment
Other
Accumulated depreciation¥2,032¥2,630884
965(1,661)(2,145)¥1,255¥1,450Depreciation charges are computed using straight-line method over lease terms assuming no residual value.

$19,2368,368(15,724)$11,881

Future minimum lease payments, inclusive of interest, as of March 31, 2004 and 2003 are:
Yen
(Millions)Year ending March 31

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

2004
¥ 458
796
¥1,255

U.S. Dollars(Thousands)

2003
¥ 566
884
¥1,4502004$ 4,335
7,535$11,881

11. Pension and severance plans
The Company and its domestic subsidiaries have various defined benefit pension plans and severance indemnity plans.

Accrued pension and severance costs at March 31, 2004

Benefit obligation
Plan assets
Funded status
Unrecognized actuarial loss
Net amount recognizedPrepaid benefit costAccrued pension and severance costs
The Company partially shifted to a defined contribution pension
system in January 2004, while still retaining a partial balancefrom the former tax-qualified pension plan system.

Yen(Millions)

U.S. Dollars(Thousands)

2004¥(3,742)
3,093
(648)
796
147
352
¥ (204)

2004$(35,425)
29,281(6,134)
7,535
1,391
3,332
$ (1,931)

The effects of the Company’s partial transition from a taxqualified pension system to a defined contribution pension
system were as follows:

CMK CORPORATION
2004 Annual Report

19

Yen
(Millions)

U.S. Dollars(Thousands)

2004
¥980
(211)
(450)
¥318

2004
$9,277(1,997)(4,260)$3,010

Yen(Millions)

U.S. Dollars(Thousands)

2004
¥348
96
(77)
101
¥469
(318)
27
¥178

2004
$3,294
908
(728)
956
$4,440(3,010)255$1,685Decrease in project benefit obligation
Unrecognized net actuarial gains and losses
Amount of the transferred assets to new pension system
Gain from transition to new pension system

Detail of net periodic benefit costService cost
Interest cost
Expected return on plan assets
Amortization of net transition obligation
Periodic benefit cost
Gain from transition to new pension system
Others
Total
Basis for calculation of retirement benefit obligation,etc
Periodic allocation method for projected benefits

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

Discount rate
Expected rate of return
Years over which prior service cost is amortizedYears over which net actuarial gains and losses are amortized
12. Impairment loss

Some overseas subsidiaries are accounting for impairment loss in accordance with the local accounting principles and practices.
Impairment losses as of March 31, 2004 consisted of the following:
Geographic area: South East Asia
Application:
Circuit board production facilities
Yen(Millions)

U.S. Dollars(Thousands)

2004
¥275
503
21
14
141
¥955

2004
$2,603
4,761
198
132
1,334
$9,040

Buildings and structure
Machinery and equipment
Construction in progress
Tangible fixed assets, other
Intangible fixed assets, otherTotal impairment loss
13. Contingent liabilities
Contingent liabilities at March 31, 2004 and 2003 are as follows:
Yen(Millions)

Notes receivable discounted with banks
Endorsed notes

CORPORATION
20 CMK
2004 Annual Report

2004
¥ 0
49
¥49

U.S. Dollars(Thousands)

2003
¥223
446
¥670

2004
$ 8
463
$471

14. Segment information
The following segment information has been prepared according
to a Ministerial Ordinance under the Securities and Exchange
Law of Japan.
The printed circuit board sector, for each of the years in thethree-year period ended March 31, 2004, is more than 90%.

The Company changed the segments of geographic areas.
Therefore China area has been growing its significance, theCompany broke Asia into 2 areas: China and South East Asia.
China: China (include Hongkong)South East Asia: Asia other than China

Geographic areas:
Yen(Millions)

U.S.Dollars(Thousands)

Year ended March 31

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

Year ended March 31

2004

2003

2002

2004

¥90,927
2,722
93,649¥89,880
4,117
93,997¥86,323
2,644
88,968$860,806
25,769886,575¥10,2995,102
15,401¥5,832
3,774
9,606

¥—
—
—

$97,500
48,300145,801¥11,087
1,926
13,014¥13,585
2,247
15,833¥———$104,960
18,233
123,203

¥—
—
—

¥—
—
—

¥16,5111,317
17,829$———¥3,051
13
3,065(9,765)¥115,366¥2,4468
2,455(10,147)¥111,744¥1,705—
1,705(3,962)¥104,540$28,883
123
29,016(92,445)$1,092,170¥9,519
1,133
(571)
—
(14)
(854)
¥9,212¥3,094
(643)
(389)
—
(144)
(1,212)
¥703

¥438
—
—
(464)
(267)
(845)
¥(1,138)$90,116
10,726(5,405)—(132)(8,084)$87,210¥105,924
12,830
6,216
—
2,340
6,952
¥134,263¥111,159
12,363
9,849
—
2,302
18,596¥154,271¥107,057——
17,491
2,034
22,893¥149,476$1,002,783
121,461
58,846—22,15265,814$1,271,068¥9,603
11,676
—
3,213
1,995
¥26,489¥6,74912,896
—
2,517
1,849
¥24,013¥——
18,412
1,752
2,134¥22,300$90,911
110,536—
30,417
18,886$250,771
CMK CORPORATION
2004 Annual Report

21

General corporate expenses of ¥1,370 million ($ 12,969 thousand), ¥1,591 million and ¥1,221 million in 2004, 2003 and2002, respectively, are included in “Corporate and elimination”.
Corporate assets of ¥19,246 million ($ 182,202 thousand),¥31,842 million and ¥30,390 million in 2004, 2003 and 2002,
respectively, which mainly consists of investment securities andcorporate properties, are included in “Corporate and elimination”.

15. Subsequent events(a) On June 29, 2004, the following appropriations of retained earnings were approved at an annual general meeting of shareholdersof the Company:

Cash dividends
Bonuses to directors

Yen(Millions)

U.S. Dollars(Thousands)

2004
¥261
60

2004
$2,470568(b) Incorporation with CMK HI-TECHSOn June 1, 2004, the Company incorporated with CMK HI-TECHS, which was a consolidated subsidiary of the Company, andhad been acquired 100% shares by the Company.

Financial condition of CMK HI-TECHS

Total assets
Total liabilities
Shareholders’ equity

CORPORATION
22 CMK
2004 Annual Report

Yen(Millions)

U.S. Dollars(Thousands)

2004
¥678
611
¥66

2004
$6,4185,784$ 624

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, 2004 and 2003, and the related consolidated statements of income, shareholders’ equity andcash flows for each of the years in the three-year period ended March 31, 2004, 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, 2004 and 2003, and theresults of their operations and their cash flows for each of the years in the three-year period ended March 31,
2004, in conformity with accounting principles generally accepted in Japan.
As explained Note 12, some overseas subsidiaries adopted an accounting for impairment of assets inaccordance with the local accounting principles and practices.
As described Note 15, on June 1, 2004, CMK CORPORATION incorporated with CMK HI-TECHS, which
had been held 100% shares by CMK CORPORATION.
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 , 2004

CMK CORPORATION
2004 Annual Report23

Group Companies(As of March 31, 2004)

Company Name

Equity heldby the Company (%)

Principal BusinessCountry

Subsidiaries
CMK MECHANICS CORPORATION

100.0

Manufacturing and sales of PWBs and molds

Japan

CMK HI-TECHS CORPORATION

100.0

Manufacturing and sales of PWBsJapan

CMK DRILLING CORPORATION

100.0

Manufacturing and sales of PWBsJapan

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 EUROPE N. V.

80.0

Manufacturing and sales of PWBs

Belgium

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

Manufacturing and 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

CMKC (DONG GUAN) LTD.

95.3 (95.3)

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

Affiliate

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

CORPORATION
24 CMK
2004 Annual ReportProfile

Creating the FutureManagements

Corporate Data

(As of June 29, 2004)(As of March 31, 2004)

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 promise due 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 more clearly
defined structure of responsibility.
Overseas, on the other hand, CMK group as a whole is deploying ourcorporate strategy with the world market as the target. In this process, thegroup is moving factories to China, making capital alliances that aim for
expansion of market-share in the European and the U.S. automotiverelated markets, wholeheartedly working together in development, production and sales to ensure the satisfaction of our customers.
CMK will continue to contribute to the world’s progress and advancement, and pursue our company motto of “Permanent Growth”

Directors
Noboru 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

Shigeyuki Seki

Director and Executive Managing Officer

Kunio Nishi

Director and Executive Officer

Tsutomu Yamaguchi

Auditors
Standing Auditor

Nobuo Akiyama

Auditor

Hideaki Takahashi

Auditor

Tatsunao Matsuta

Executive officers
Executive Vice President

Shigeo Araki

Executive officer

Shinji Kadono

Executive officer

Sadanobu Kondou

Executive officer

Takeo Takai

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)
Noboru Nakayama
Mizuho Corporate Bank Ltd.
The Foundation for Technology Promotion ofElectronic Circuit Board
The Dai-ichi Mutual Life Insurance Company
Matsushita Electric Works, Ltd.
The Master Trust Bank of Japan, Ltd. /Retirement Benefit for Hitachi Chemical Co., Ltd.
Sumitomo Mitsui Banking Corporation
Nakayama Kikaku

Percentage
(%)

8,839

17.1

3,793
2,652
2,576

7.3
5.1
4.9

2,500
2,345
1,860

4.8
4.5
3.6

1,822
1,613
1,600

3.5
3.1
3.1

Correspondent Banks(As of June 29, 2004)

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

CONTENTS
01 Financial Highlights
02 Message from the Management
02 Management Issues
03 The Top Interview
04 Products Information
05 CMK Topics
06 Take a Virtual Tour of
CMK Circuit Technology Center
08 Environmental Protection
09 Financial Section
24 Group Companies
25 Managements
25 Corporate Data

Chairman

Cautionary Statement with Respect to Forward-Looking Statements
Statements made in this annual report with respect to CMK’s plans, strategies and beliefs and otherstatements that are not historical facts are forward-looking statements about the future performanceof 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; and CMK’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 in technology, and changing customer requirements.

CMK CORPORATION
2004 Annual Report25

CMK CORPORATION
2 0 0 4 A N N UA L R E P O RT
Year ended March 31, 2004

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