Invisible, buteverywhere.
CMK CORPORATION
2003 Annual Report
Year ended March 31, 2003

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

P
ProfileAs 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 our corporate strategy withthe world market as the target. In this process, the group is moving factories to China, making capital alliances that aim for expansion of market-share in the European and US automotive-related
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 ourcompany motto of “Permanent Growth”

CMK—Invisible, but everywhere.

M C
Managements

Corporate Data

(As of June 27, 2003)(As of March 31, 2003)

Directors
ChairmanNoboru Nakayama

Vice Chairman

Eiji Watanabe

President and Chief Executive Officer

Takahiro Nakayama

Director and Executive Vice Chairman

Kameharu Seki

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

Mikihiko Hattori

Director

Ichiyo Kotani

Auditors

AV equipment



Mobile communications

OthersStanding Auditor

Norimasa Sato

Auditor

Hideaki Takahashi

Auditor

Tatsunao Matsuta

Executive officers

Car electronics



Information devices

Executive Vice President

Shigeo Araki

Executive officer

Shinji Kadono

Executive officer

Sadanobu Kondou

Executive officer

Takeo Takai

Executive officer

Tsutomu Yamaguchi

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

Number ofshares held(Thousands)

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

Percentage
(%)

5,162
2,651
2,591
2,504

9.9
5.1
5.0
4.8

2,500
2,345
1,860

4.8
4.5
3.5

1,822
1,613
1,557

3.5
3.1
3.0

Correspondent Banks(As of June 27, 2003)

Mizuho Corporate Bank, Ltd.
Mizuho Bank, Ltd.
Sumitomo Mitsui Banking Corporation
The Tokyo Tomin Bank, Ltd.
Resona Bank, Limited.
Principal Customers
Matsushita Electric Industrial Co., Ltd.
Sharp Corporation
Denso Corporation
Sanyo Electric Co., Ltd.
Sony 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 KANBARA ELECTRONIC
08 Environmental Protection
09 Financial Section
24 Group Companies
25 Management
25 Corporate Data

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 performance of
CMK, which are based on management’s assumptions and beliefs in light of the information currently
available to it, and involve risks and unpredictability. Potential risks and unpredictability include, without limitation, general economic conditions in CMK’s markets; industrial market conditions, exchange
rates in which CMK makes significant sales or in which CMK’s assets and liabilities are denominated;
and CMK’s ability to continue to win acceptance of its products and services, which are offered inhighly competitive markets characterized by the continual introduction of new products, rapid developments in technology, and changing customer requirements.
CMK CORPORATION
2003 Annual Report25

F
Financial
Highlights

CMK CORPORATION and Consolidated Subsidiaries
Years ended March 31, 2003, 2002 and 2001

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)

2001

2002

2003

2003

¥ 122,293
7,220
4,182

¥104,540(3,507)(2,871)¥111,745(1,134)(1,058)$ 929,659(9,434)(8,802)¥ 52,822
144,749¥ 49,716
149,477¥ 46,206
154,271$ 384,410
1,283,453¥¥ (54.66)—
946.43¥ (20.16)—
883.26

$

80.36
69.75
1,005.62(0.17)—
7.35

Notes: 1. U.S. Dollars amounts have been translated from Yen, for convenience only, at the rate of ¥120.20 = $1, the Tokyo foreign exchange market rate as of March 31, 2003.
2. All Millions Yen and thousands U.S. Dollars amounts are rounded to the nearest figure.

Net Sales

Income (loss) before Income Taxes andNet Income (loss)

Yen (Millions)

Net Income (loss) per Share ofCommon StockYen (Millions)
150,000

Yen
90

8,000
6,000

120,000

60

4,000
30

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

1999

2000

2001

2002

2003

-4,000

1999

2000

2001

2003

2002

-60

1999

2000

2001

Yen (Millions)

Multi-Layerd PWBs
Double-Sided PWBs
Single-Sided PWBs
Others17,169(15.3%)

39,484(37.8%)
18,335(17.5%)
25,322(24.2%)

21,398(20.5%)

2002

2003

45,689(40.9%)
24,569(22.0%)Japan
Asia
EuropeSales by Region
Yen (Millions)

2,446(2.2%)

1,705(1.6%)
16,511(15.8%)
86,323(82.6%)

2003
Basic
DilutedIncome before income taxes
Net Income

Sales by Type of PWB

2002

19,417(17.4%)
2002

2003
89,880(80.4%)

24,317(21.8%)CMK CORPORATION
2003 Annual Report1M

Message from
the Management

Takahiro Nakayama
President andChief Executive Officer

M
Management
IssuesThe Japanese economy was showing signs of apartial recovery this term, largely due to anincrease in exports following the economic
upturn overseas and the parallel bottomingout of capital investment. However, for thelatter half, there was concern over the directionof the world economy and the impact of sluggish share prices, as well as uneasiness about
international situation in Iraq and the Middle
East. No improvement was likely in overall
employment and income figures, and consumer spending continued to decline.
In the printed wiring board industry
served by CMK, many were expecting an
upswing in consumer spending during thefirst half of the year. However, overseas production focusing on China had expanded
even more, while prices continue to drop as aresult of the global IT slump persisting fromthe last term, making the business environment quite severe indeed.

Under these circumstances, we were committed to aggressive business expansion emphasizing our high-value-added products. We
remained keenly aware of the overseas expansion of our corporate clients. Even as we
strengthened our foreign production network,
we are moving ahead to thoroughly streamline
domestic operations, restructure Japanese production sites, and cut costs. As we look toenhance our business capacity throughout the
CMK Group, we are making a concerted effort
to achieve our management objectives. We
would like to take this opportunity to thank ourshareholders for their continuous support.

Looking ahead in the electronics industry, we
anticipate market expansion to be driven bytrends in advanced IT and more sophisticatedautomotive electronics. This will encourage
demand for smaller, lighter, and more precise
electronics. At the same time, pricing competition is expected to intensify.
Our new working framework has
strengthened group integrity to allow us to respond more swiftly to changes in different
business environments. We will, nevertheless, continue to uphold a management policythat places customer trust first.
The midterm CMK management plancurrently underway presents the following
commitments.

2. Review the domestic production
system and promote manufacturing abroad

1. Emphasize group management
Maintain strategic, agile, and responsive
management aimed at enhancing the performance of all CMK group companies.

2

CMK CORPORATION
2003 Annual Report

June 2003

Takahiro Nakayama
President and Chief Executive Officer

For comprehensive streamlining, press forfurther restructuring of the Japanese production network while expanding global production facilities.

3. Strengthen our line of high valueadded products
Promote the development in Japan of ourhigh value-added products and preserve ourhigh quality.

4. Uphold global environmental
policies and information
disclosure
Play an active role in reducing our environmental load by practicing green procurement, cutting CO2 output, and promoting zero
emissions programs. Information disclosure
practices will continue through ongoing environmental reports.

T
The TopInterview

Can you tell us your aspirations foryour new role as president?
Nakayama: I feel a tremendous sense of re-sponsibility in assuming such a prominentrole in these times of intense business competition. In particular, it is deeply regrettable forall our shareholders that business performance had been poor over the past two years.
Despite this, CMK has the energy and ability
to make a comeback. I consider this a prime
opportunity to take the lead in the PWB industry, and a good time to enhance the valueof the CMK brand, to be the sole company
that customers turn to. I am fully committed
to implementing the policies needed to makethis happen under our new working framework, and I am looking forward to evengreater support from our investors.

Tell us about business performancein the current term.
Nakayama: Looking at the results for the

CMK Group this term, we do see increased
income, but conditions since last year havebeen very severe. On the other hand, we areenjoying sustained sales of high-end products
such as build-up PWBs, compared to the previous term, with orders now steady. From
April 2003, and throughout the year, we expect to see benefits from the domestic restructuring implemented this term. If weconsider overseas operations, however, CMK
is still feeling the aftereffects of an ongoing
decline in per-unit sales prices and operating
losses associated with the startup of the Wuxi
plant for build-up PWBs in Jiangsu, China.
But we’re pleased to report a favorable shift
in performance, led by our plants in China.

How would you forecast sales trends
for different application from thisterm to the next?
Nakayama: In particular, we predict a

steady increase in demand for CMK build-up
PWBs caused by the surge in camera-phones
and other mobile IT devices and related

digital cameras. Prospects are also bright forthe domestic and overseas markets for AV
equipment, including plasma television displays and DVD players. For automotive
PWBs, we also predict the steady upward
shift to continue.

Explain CMK’s objectives in startinga fourth plant in China and update
us on the other three plants.
Nakayama: In Dong-guan, Guang-dong, wehave established CMK Global Brands
Manufacture, Ltd., a new joint-venture plantwith the Taiwanese Pou Chen Group.
Production here will focus on through-hole
PWBs. Our objective in establishing thisplant was to strengthen supply capacity tomeet brisk demand from expanding Chinese
markets and to better serve western markets.
Meanwhile, our other nearby Chineseplants—CMKC (DONG GUAN) LTD., andthe CMKS CHINA FACTORY, which specializes in single-sided PWBs—have shiftedto full capacity, because more corporate users
are now active in China, and sales of AV
equipment are strong. CMK ELECTRONICS(WUXI) CO., LTD. for build-up PWBs is on
track to move into the black after operating ata loss this term.

Please share some insights on present and future developments at the
newly established CMK PACKAGETECH CORPORATION.
Nakayama: We founded this subsidiary to

specialize in businesses related to semiconductor packaging, a field we expect to continue expanding. To provide optimal productsthat fulfill the needs of our corporate users,
we are strengthening production and sales ofadvanced products. We are aggressively
seeking to enhance profitability in our commitment to make CMK PACKAGE TECH acore subsidiary of the CMK Group.
(For a closer look at developments at CMK,
see CMK Topics.)
CMK CORPORATION
2003 Annual Report3

P

Products
Information

Package Substrate

E-SpecRigid Substrate

E-SpecRigid substrate is a package substrate, and theadvanced technology to fulfill the requirement of miniaturization and thin substrateas the same as semiconductor
devices.

The “E-spec”, the CMK original environmentPWB specifications, has fulfilled the ecological requirements in the market. CMK
continuously minimizes hazardous chemicals
to our neighbors and eliminates negative impact to our children.
*“E-Spec” is a registered trademark of
CMK CORPORATION.
“E-Spec” markTape Substrate
Tape substrate is a flex-type
package substrate, and thefeatures are thin and superfine conductors.
Applications:
Mobile Phones, TV
games, and PCs

Rigid-Flex Series

Heat Sink PWB exclusively for Automobiles

Rigid-Flex Series

MB • MC Series

The combination offlexible andrigid structure.
The Rigid-Flex
is 3 dimensionallybendable and twistable.
Applications: Digital Still Cameras, Mobile
Phones

Newly developed for excellent heat sink, highpressure resistance, andassembled highdensity circuitry
under the severe
automotive
conditions.

Sales by Different Applications

20%
35%
19%
10%

16%

AV equipment
Car electronics
Mobile communications
Information devices
Others4

CMK CORPORATION
2003 Annual Report

Examining sales for different applications, we see a favorable upturn from last term in camera-phones and other mobile IT devices, as well as digicams and other cameras.
These products are expected to continue to be the driving
force for sales in the IT field, and we forecast a steady increase in demand.
Automotive electronics sales are also strong. On theother hand, sales declined from last term for electronicentertainment systems and digital AV devices such asplasma television displays and digital video units.

C
CMK
TopicsJoint Development of
Next-Generation PWBs

Expanding Production in China for
Automotive PWBs

In December 2002, we announced our collaboration with Casio Computer Co., Ltd. on the development of advanced packaging technology
for embedding semiconductor components in
PWB substrates. Because embedding components in the substrate offers more effective useof space, it can contribute to the overall miniaturization of electronic devices and boost performance. Casio plans to use the new substrates
in forthcoming products such as handsets,
PDAs, and digital still cameras.
This innovation fuses Casio’s wafer-leveltechnology (CSP, or Chip Scale Package) withtechnology for high-density packaging substrates developed by our subsidiary, CMK
PACKAGE TECH, which manufactures andsells semiconductor packages. It can be appliedin the increasingly sophisticated component
packaging of electronic devices. This ideal
combination of technologies offers the promiseof application in a wide array of electronic
products.

CMK Global Brands Manufacture, Ltd. wasestablished in Dong-guan, China, this January
2003 with the Taiwanese Pou Chen Group.
We have strengthened the production system
to handle products from double-sided boards
to multi-layered PWBs up to the 10-layerclass. The plant now has a monthly capacityof 100,000 m2, which is slated to expand by
60% before 2004. Production emphasizes thefields currently in demand: the four Cs(Computers, Consumer goods, Communication
devices, and Car electronics), one M (Mobile
devices), and one L (LCDs). The shipment
ratio is currently 70:30 for domestic and export markets, with future prospects for supplying CMK Group sales networks being
developed in North America and Europe afterstrengthening automotive PWB and LCD
production in particular this year.

CMK PACKAGE TECH headquarters inTechnical Center Plant

CMK Global Brands Manufacture, Ltd.

CMK CORPORATION
2003 Annual Report5

T

Take a Virtual Tourof CMK KANBARA
ELECTRONICCMK KANBARA
ELECTRONICCORPORATIONJAPAN

Established in May 1989 in Niigata prefecture, the CMK subsidiary CMK KANBARA ELECTRONIC CORPORATION JAPAN joined the CMK Group in 1990. From the start, production has
focused on high-precision double-sided automotive PWBs. Although the PWB industry as a whole
has slumped in recent years, sales of automotive PWBs have tended to be relatively bullish, withlevels increasing by about 400% over the last ten years for CMK KANBARA ELECTRONIC.
As part of the restructuring of domestic production sites undertaken in the midterm businessplan, equipment has been transferred within the CMK Group. CMK KANBARA ELECTRONIC
has been restructured for integrated production of automotive PWBs. The monthly production
volume there is currently 50,000 m2.
Because automotive PWBs are projected to remain one of our leading products in Japan,
CMK KANBARA ELECTRONIC will play an increasingly greater role within the CMK Group.
It is our pleasure to introduce this company, an enterprise that will fulfill the expectations of thegroup as a whole.

Company Spotlight

Sales Trends for Automotive PWBs of
CMK KANBARA ELECTRONIC
Yen (Millions)
10,000

9,297
8,164

8,000

6,415
6,000

4,997

4,000

2,387

2,903

3,127

1996

1997

2,000
0

6

CMK CORPORATION
2003 Annual Report

1995

1998

1999

2000

2001

Production of double-sided PWBs for vehicle engine control began at a monthly
output of 20,000 m2. In 1998, a newplant was built on site, boostingproduction to 70,000 m2. Along9,601
with double-sided PWBs, CMK
KANBARA ELECTRONIC
has recently started manufacturing multi-layered PWBs.
Sales have increased steadily—to the point of achieving the objective of 12 billion yen in the
2002
period ending March 2001. The(FY)
plant won ISO 14001 environmental
certification in December 2002, and it
continues to make gains in aggressive programs to deal with environmental issues.

Production Details

Future Challenges

Half of production output is for vehicle engine control applications, with the remainder
being chiefly products for car audio systems.
Currently, the overall sales ratio is divided
equally between double-sided and multi-layered PWBs, but the production ratio of multilayered PWBs has recently surged. The plant
is moving ahead in manufacturing highvalue-added products.

After reviewing the domestic production system according to the CMK Group midterm
business plan, we have designated CMK
KANBARA ELECTRONIC as an integrated
production site for automotive PWBs. To thisend, drilling and sheeting fabrication equipment was transferred from other group companies. This enabled in-house production forprocesses that were once entrusted to ourpartners, significantly reducing operating
costs, and boosting profitability. We will continue to efficiently manufacture high-quality
products, as we remain committed to expanding CMK Group profits.

PWB Sample Applications
Types of automotive PWBs
• Double-sided• Multi-layered• Interstitial via hole (IVH)• Vehicle proximity warning equipment• Vehicle proximity regulating systems• Vehicle proximity control systems• Warning systems based onroad markings*• Tracking systems based onroad markings*• Collision warning systems*• Systems to warn of dangerous objects
ahead on the road*• Emergency braking systems*• Blind-spot monitors• Clearance sonar• Impact velocity reduction systems*• Electronic
fuel injectors• Drowsy driver warning systems*• Wake-up systems*• Erratic driving detectors*• Audio navigation• VICS-compliant navigation• Communication-based navigation• GPS navigation• D-GPS• Equipment for reporting
emergency information• “May-day” systems• Automatic accident notification systems• Rear monitors• Side rear monitors• Clearance sonar• Back-up sonar• Hands-freemobile calling• Tire pressure warning
equipment• Tire pressure warning equipment• Active suspension• Hydraulic suspension withpreview control• Electronic all-wheel ABS• Electronic all-wheel ABS
with ground sensors• Slide control systems• Stability control systems• Electronically controlled AT• Traction control• Traction control withpreview functions• Shift control coordinatedwith navigation• Yaw control systems• Active suspension• Active preview hydraulic suspension• 4WS and active 4WS• Electronic rear-wheel steering systems• Braking assistance• Traction control• Electronic all-wheel ABS• Yaw control systems• Slide control systems• Stability control systems• Active steering*In development

CMK CORPORATION
2003 Annual Report7

E

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 theindustrial waste recycled procedure during
the PWB manufacturing processes.

Schedule of Acquisition of
ISO14001
We consider the environment management
systems as the foundation of the environmental activities. Therefore, we aim toacquire the ISO14001 Certificate in FY2004
for all the CMK production site.
History of ISO14001
Plants and Offices

Acquired Date

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 JAPAN

Sep. 1998
Aug. 1999
Dec. 1999
Oct. 2000
Oct. 2000
Dec. 2000
Feb. 2001
Aug. 2001
Oct. 2001
Dec. 2001
Dec. 2001
Dec. 2002

Environmental Policy
Based on one of our management policies,“fulfillment of the Company’s social
responsibility as a good corporate citizen”,

CMK CORPORATION makes the best
efforts to all the business operation in orderto protect the global environment.

General Environmental Policy
As a member of society, CMK believes that
we are also responsible for harmony with theglobal 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 and strictly control corporate activities.
3. To encourage energy- saving, recycling andthe reduction of industrial waste with an aim
to conserving limited resources.
4. To perform environmental assessment as partof corporate activities to reduce the load on
the environment and promote the use of substitutes for toxic substances.
5. To perform environmental inspections toconfirm and continuously improve environmental control activities.
6. To make every effort to protect natural areasand scenic sites, and coexist with the global
environment.
7. To elevate awareness through environmental
education and open to publicity measures.

The Composition of Environment Management
The Factors of the Practice Plan
CMK aims to develop QCDE idea without
losing balance. We will make a sustainable
contribution to society by coexisting withour customers and communities.

Customers
Community

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

Environmentconscious
products andservices

Continuous
Improvement
based on ISO 14001
Certificate

Plan
ActionEnvironmental report
2003

Q: Quality

E: Environment

C: Cost

oli
lP

ta

en

nm

e

CMK CORPORATION
2003 Annual Report

he

cy

Th

8

me

on

Check

D: Delivery
o
vir
En

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no

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Do

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F
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, 2003, 2002, 2001, 2000 and 1999

Yen
(Millions)

U.S. Dollars(Thousands)

2003

2002

2001

2000

1999

2003

For the year
Net sales
Operating income (loss)
Net income (loss)¥111,745
703(1,058)¥104,540(1,139)(2,871)¥122,293
9,284
4,182

¥121,246
4,945
1,147

¥113,448
895(2,542)$ 929,659
5,849(8,802)

At year end
Shareholders’ equity
Total assets

46,206
154,271

49,716
149,477

52,822
144,749

48,407152,087

47,451
159,902384,410
1,283,453

Yen

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

U.S. Dollars¥(20.16)–¥(54.66)–¥80.3669.75¥22.2119.74¥(49.20)–$(0.17)
–

1,219
460
10.00

1,480
735
12.00

2,390
1,130
10.00

1,600
1,005
10.00

1,810
980
10.00

10.14
3.83
0.08

%

RatiosEquity Ratio
Return on Equity
Price Earnings Ratio

30.0
–
–

33.3
–
–

36.5
8.3
16.8

31.8
2.4
54.9

29.7
–
–

Number of employees (Person)

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 ¥120.20= $1, the Tokyo foreign exchange market rate as of March 31, 2003.
2. All Millions Yen and thousands U.S. Dollars amounts are rounded to the nearest figure.

CMK CORPORATION
2003 Annual Report

9C

Consolidated Balance Sheets
CMK CORPORATION and Consolidated Subsidiaries
March 31, 2003, and 2002ASSETS

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):Land
Buildings and structures
Machinery, equipment and others
Construction in progress
Less accumulated depreciation

Investments and other assets:
Investments in securities (Note 3 & 6)
Long-term loans
Deferred income taxes (Note 9)
OthersTotal investments and other assets
Total assets (Note 14)
The accompanying notes are an integral part of these statements.

CORPORATION
10 CMK
2003 Annual Report

Yen(Millions)

U.S.Dollars(Thousands)

March 31

March 31

2003

2002

2003

¥ 28,524
151

17,873392$ 237,304
1,256

27,200
(45)
9,942
662
1,590
68,024

26,826(85)
10,2881,077
2,380
58,751

226,290(374)
82,712
5,508
13,227565,923

13,46358,262
100,591
1,149
173,465
106,145
67,32014,12556,883103,234
2,965
177,207
106,808
70,399112,005
484,709
836,864
9,559
1,443,137
883,070560,067

7,969
2,894
2,166
5,898
18,927¥154,271

8,709
257
1,687
9,674
20,327¥149,477

66,29824,07718,02049,068
157,463$1,283,453

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 (Notes 9)
Total current liabilities

Yen(Millions)

U.S.Dollars(Thousands)

March 31

March 31

2003
¥

7,448
26,367

2002
¥

2003

6,835
6,781

$

61,963219,359

11,112330
11,08256,33912,226493
11,57337,90892,446
2,745
92,197468,710Long-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

43,239
246
630
1,671
45,78654,345
141
689
1,641
56,816

359,725
2,047
5,241
13,902
380,915

Minority interests in subsidiaries

5,940

5,037

49,418Contingent liabilities (Note 13):

—

—

—

Shareholders’ equity (Note 8):
Common stock
Authorized: 199,871,000 Shares
Issued:March 31, 2003: 53,205,124 Shares
March 31, 2002: 53,205,124 Shares
Additional paid-in capital
Retained earnings
Unrealized gains on securities
Foreign currency translation adjustments
Treasury stock, at cost:
March 31, 2003: 892,084 Shares
March 31, 2002: 675,945 Shares
Total shareholders’ equity
Total liabilities and shareholders’ equity

16,117
15,87518,059(261)(2,087)

134,085
16,117
15,875
20,39832(1,353)(1,497)
46,206¥154,271

132,072
150,241(2,171)(17,363)(12,454)(1,353)49,716¥149,477

384,410$1,283,453

The accompanying notes are an integral part of these statements.

CMK CORPORATION
2003 Annual Report11C

Consolidated Statements of Income
CMK CORPORATION and Consolidated Subsidiaries
Years ended March 31, 2003, 2002 and 2001

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)

Yen(Millions)

U.S.Dollars(Thousands)

Year ended March 31

Year ended March 31

2003

2002

2001

2003

¥111,745
99,768
11,977¥104,540
94,625
9,915¥122,293
101,878
20,415$929,659
830,017
99,642

11,274703

11,054(1,139)

11,131
9,284

93,793
5,849

268(1,183)(922)(1,134)708(1,842)784¥ (1,058)

144(1,239)(1,273)(3,507)(380)(3,127)256¥ (2,871)

349(1,484)
(929)
7,220
2,562
4,658
(476)
¥ 4,182

2,230(9,842)(7,671)(9,434)
5,890(15,324)
6,522$ (8,802)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
2003 Annual Report¥ (20.16)—
10.00¥ (54.66)—
12.00

U.S.Dollars

¥

80.36
69.75
10.00

$

(0.17)—
0.08

C

Consolidated Statements of Shareholders’ Equity
CMK CORPORATION and Consolidated Subsidiaries
Years ended March 31, 2003, 2002 and 2001

Balance at March 31, 2000
Conversion of convertible bonds
Net income
Cash dividends
Bonuses to directors and statutory auditors
Unrealized holding gains arising during the period
Translation adjustment
Purchase of treasury stock
Reissuance of treasury stock
Balance at March 31, 2001
Net income (loss)
Cash dividends
Effect arising from changes of subsidiaries
for consolidation
Bonuses to directors and statutory auditors
Unrealized holding loss arising during the period
Translation adjustment
Purchase of treasury stock
Sale of treasury stock
Balance at March 31, 2002
Net income (loss)
Cash dividends
Effect arising from changes of subsidiaries
for consolidation
Bonuses to directors and statutory auditors
Unrealized holding loss arising during the period
Translation adjustment
Purchase of treasury stock
Sale of treasury stock
Balance at March 31, 2003

Yen
(Millions)
Unrealized
gains onsecurities

Foreigncurrencytranslation
adjustment¥20,422
—
4,182
(515)
(51)
—
—
—
—
¥24,038(2,871)
(631)

—
—
—
—
—
223
—
—
—
¥ 223
—
—

¥(1,413)
—
—
—
—
—
(647)
—
—
¥(2,060)
—
—

¥

—
—
—
—
—
—
¥15,875
—
—

(67)
(71)
—
—
—
—
¥20,398(1,058)
(525)

—
—
(191)
—
—
—
¥ 32
—
—

—
—
—
707
—
—
¥(1,353)
—
—

—
—
—
—
(22)
39
¥(1,353)
—
—

—
—
—
—
—
—
¥15,875

(751)
(5)
—
—
—
—
¥18,059

—
—
(293)
—
—
—
¥(261)

—
—
—
(734)
—
—
¥(2,087)

—
—
—
—
(338)
194
¥(1,497)

Unrealized
gains(losses) on
securities

Foreigncurrencytranslation
adjustment

Treasurystock, at cost

Commonstock

Additional
paid-in capital

Retainedearnings¥14,821
1,296
—
—
—
—
—
—
—
¥16,117——¥14,578
1,297
—
—
—
—
—
—
—
¥15,875
—
—

—
—
—
—
—
—
¥16,117
—
—
—
—
—
—
—
—
¥16,117

Treasurystock, at cost

(1)
—
—
—
—
—
—
(1,536)167¥(1,370)——

U.S.Dollars(Thousands)

Balance at March 31, 2002
Net income (loss)
Cash dividends
Effect arising from changes of subsidiaries
for consolidation
Bonuses to directors and statutory auditors
Unrealized holding loss arising during the period
Translation adjustment
Purchase of treasury stock
Sale of treasury stock
Balance at March 31, 2003

Commonstock

Additional
paid-in capital

Retainedearnings$134,085——$132,072——$169,701(8,802)(4,368)$$(11,256)——$(11,256)
—
—

—
—
—
—
—
—
$134,085

—
—
—
—
—
—
$132,072(6,248)
(42)
—
—
—
—
$150,241————(2,437)——(6,107)————$(2,171) $(17,363)————(2,812)
1,614$(12,454)

266——

The accompanying notes are an integral part of these statements.
CMK CORPORATION
2003 Annual Report

13

C

Consolidated Statements of Cash Flows
CMK CORPORATION and Consolidated Subsidiaries
Years ended March 31, 2003, 2002 and 2001

Yen
(Millions)

U.S.Dollars(Thousands)

Year ended March 31

Year ended March 31

2003

2002

2001

2003

¥ (1,058)¥ (2,871)¥ 4,182$ (8,802)

9,459
348
(59)
158

10,062331
46(1,023)

10,344
189
140
(508)

78,694
2,895
(491)
1,315

(631)
209
201
861
378
(246)
9,620

7,216
63
(116)
(2,474)(844)
366
10,756520
773(4,586)
(749)
3,376
791
14,472(5,250)
1,739
1,672
7,163
3,145
(2,047)80,033

Cash flows from investing activities:
Decrease (increase) in investments and advances
Payment for purchase of property, plant and equipment
Proceeds from sales of property, plant and equipment
Acquisitions of subsidiaries, net of cash acquired
Others, net
Net cash used in investing activities(2,748)(9,863)
781
3,431
125
(8,274)(3,681)(11,447)547
65(1,118)(15,634)(492)(7,455)
1,119
—
(240)
(7,068)(22,862)(82,055)
6,498
28,544
1,040(68,835)

Cash flows from financing activities:
Increase (decrease) in short-term borrowings
Repayment of long-term debt
Proceeds from long-term debt
Cash dividends paid
Others, net
Net cash provided by (used in) financing activities
Effect of exchange rate changes on cash
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year (Note 5)

1,023(6,788)
9,664
(525)
5,671
9,045
(136)
10,255
17,723¥27,978

41,687(54,864)
21,300
(631)
967
8,459
8
3,589
14,134¥17,723(1,372)(10,290)
2,150
(515)
(773)
(10,800)(975)(4,371)
18,505¥14,134

8,511(56,473)
80,399(4,368)47,18075,249(1,131)
85,316
147,446$232,762

Supplemental data:
Cash paid (refund) during the year for:
Income taxes
Interest¥ (311)
1,174¥ 3,116
1,192¥ 3,819
1,495$ (2,587)
9,767

Cash flows from operating activities:
Net income (loss)
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization
Loss on disposal of fixed assets
Provision for officers’ retirement benefit
Deferred income taxes (Note 9)
Changes in assets and liabilities:(Increase) decrease in trade accounts and notes receivable(Increase) decrease in inventories
Increase (decrease) in trade payable
Increase (decrease) in income taxes payable
Changes in other current assets and liabilities
Others, net
Net cash provided by operating activities

The accompanying notes are an integral part of these statements.

CORPORATION
14 CMK
2003 Annual Report

N

Notes to Consolidated Financial Statements
CMK CORPORATION and Consolidated Subsidiaries

1. Summary of significant accounting policies(a) Basis of presenting consolidated financial statements
The accompanying consolidated financial statements of CMKCORPORATION (the “Company”) and its consolidated subsidiaries have been prepared in accordance with the provisions
set forth in the Japanese Securities and Exchange Law and its
related accounting regulations, and in conformity withaccounting principles and practices generally accepted in Japan,
which are different in certain respects as to application anddisclosure requirements of International Accounting Standards.
The consolidated financial statements are not intended to present
the financial position, results of operations and cash flows inaccordance with accounting principles and practices generally
accepted in countries and jurisdictions other than Japan.
In preparing the consolidated financial statements, certain
reclassifications and rearrangement have been made to the consolidated financial statements issued in Japan in order to present
them in a form that is more familiar to readers outside Japan.

classified as “trading” securities are reported at fair value, withunrealized 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 shareholders’equity section of the consolidated balance sheet. Realized
gains and losses which are determined on the moving average
cost method are reflected in income.

(b) Principle of consolidation
The Company had 26 and 25 subsidiaries as of March 31, 2003
and 2002, respectively. The consolidated financial statements
included the accounts of the Company and its 21 and 20 significant subsidiaries as of March 31, 2003 and 2002, 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
for subsidiaries in Japan, twenty-years for subsidiaries outside
Japan.

(f) 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 arecharged to income as incurred.

(c) Cash and cash equivalents
For the purpose of the consolidated statements of cash flows,
cash and cash equivalents consist of cash on hand, deposits
with banks withdrawable on demand, and short-term investments which are readily convertible to cash subject to an
insignificant risk of any change in their value and which werepurchased with an original maturity of three months or less.
(d) 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 andreported at amortized cost. Debt and equity securities that are(e) Inventories
Merchandise except for molds, raw materials, finished goods
and work in process are stated at cost determined by the average 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.

(g) Accounting for leases
Finance leases other than those which are deemed to transfer theownership of the leased assets to lessees, are accounted for by themethod similar to that applicable to ordinary rental transactions.
(h) 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 consequencesof temporary differences between the carrying amounts and thetax bases of assets and liabilities.
(i) Retirement and pension plans
The Company and its subsidiaries inside 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.

CMK CORPORATION
2003 Annual Report15

(j) Research and development costs
Research and development costs are charged to income as
incurred.
(k) Foreign currency translation
All asset and liability accounts of foreign subsidiaries andaffiliates are translated into Japanese Yen at appropriate yearend 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.

(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, 2002 and 2001
have been made to conform to the presentation in the year
ended March 31, 2003.
All Millions Yen and thousands U.S. Dollars amounts arerounded to the nearest figure.

2. Translation into U.S. Dollars
The consolidated financial statements presented herein are
expressed in Japanese Yen and, solely for the convenience ofthe reader, have been translated into U.S. Dollars at the rate of¥120.20 = U.S. $1, the exchange rate on March 31, 2003. The

translations should not be construed as representation that theJapanese Yen amounts actually represent, or have been or
could be converted into U.S. Dollars.

3. Marketable securities and investment
The cost and fair value of marketable securities and investments as of March 31, 2003 are shown below:
Yen(Millions)

U.S. Dollars(Thousands)

2003

2003

¥2,41195(544)¥1,962$20,058790(4,525)$16,323

Debt and equity securities – available-for-sale:
Cost
Gross unrealized gains
Gross unrealized losses
Amount in balance sheet

4. Inventories
Inventories at March 31, 2003 and 2002 comprise the following:
Yen(Millions)

Merchandise
Finished goods
Work in process
Raw materials and supplies

CORPORATION
16 CMK
2003 Annual Report2003¥ 1,503
2,648
3,436
2,355
¥ 9,9422002¥ 1,487
2,325
3,976
2,500
¥10,288

U.S. Dollars(Thousands)

2003$12,504
22,03028,586
19,592$82,712

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, 2003 and 2002:
Yen(Millions)2003¥28,524
151(697)¥27,978

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

U.S. Dollars(Thousands)

2002¥17,873
392(542)¥17,7232003$237,304
1,256(5,798)$232,762

6. Investments in non-consolidated subsidiaries and affiliates
Investments in non-consolidated subsidiaries and affiliates at March 31, 2003 and 2002 are shown below:
Yen(Millions)

U.S. Dollars(Thousands)

2003
Investment in:
Non-consolidated subsidiaries
Affiliates

¥

2002

172
3,200

¥

2003

310
2,734

$

1,431
26,622

7. Short-term borrowings and Long-term debt
Short-term borrowings principally represent notes due within
one year. Such borrowings are bearing interest at averageannual rates of approximately 2.2% and 2.8% in 2003 and2002, respectively.

Long-term debt at March 31, 2003 and 2002 is as follows:
Yen(Millions)

Unsecured convertible bonds:
Due 2005, interest 0.7%
Unsecured bonds:
Due 2003, interest 2.25%
Due 2006, interest 0.43%
Due 2008, interest 1.29%
Due 2008, interest 1.23%
Loans, principally from banks and insurance companies:
Secured, due 2002~2008 interest 1.875%~5.5%
Secured, due 2003~2016 interest 0.99%~2.94%
Unsecured, due 2002~2008 interest 1.85%~8.5%
Unsecured, due 2003~2008 interest 0.59%~3.97%
Less current portion

U.S. Dollars(Thousands)

2003

2002

2003

¥12,408¥12,408$103,228

20,000
100
2,500
3,000

20,000———166,389832
20,79924,958

4,534
3,913

32,55424,184

27,68569,60626,367¥43,239

61,126
6,781¥54,345

230,324
579,084
219,359$359,725

CMK CORPORATION
2003 Annual Report17

As of March 31, 2003 , the loans in amount of ¥3,940 million($32,778 thousand), including short-term borrowings of ¥27
million ($225 thousand), are secured by property, plant, equipment and investment securities with a net value of ¥13,291
million ($110,574 thousand) .

As is customary in Japan, short-term and long-term bank loans
are made under general agreements, which provide that security,and guarantees for future and present indebtedness will begiven upon request of the bank.

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

2004
2005
2006
2007
2008
2009 and thereafter

Yen(Millions)

U.S. Dollars(Thousands)¥26,367
4,782
18,826
11,891
7,403
337¥69,609$219,359
39,784
156,622
98,927
61,5892,803$579,084

8. Shareholders’ equity
The Japanese Commercial Code provides that an amount equal
to at least 10% of cash dividends and other distributions fromretained earnings paid by the parent company and its Japanesesubsidiaries be appropriated as a legal reserve. The capital surplus and legal reserve, up to 25% of stated capital, are notavailable for dividends but may be used to reduce a deficit or
may be transferred to stated capital. The capital surplus andlegal reserve, exceeding 25% of stated capital, are available for
distribution upon approval of the shareholders’ meeting.
In accordance with customary practice in Japan, the appropriations are not accrued in the financial statements for theperiod to which they relate, but are recorded in the subsequentaccounting period after shareholders’ approval has beenobtained.
In October 2001, the Japanese Commercial Code has been
modified. The new Japanese Commercial Code allows thecompany to purchase treasury stock at any reason at any timeby the resolution of the Board of Directors up to the limitation
approved by the shareholders’ meeting. On June 27, 2003, theshareholders of the parent company approved to purchase treasury stock up to 3 million shares and up to ¥1,500 million($12,479 thousand) during the period up to the resolution ofnext Ordinary General Shareholders’ Meeting which would beheld in June 2004. In this connection, the company purchased
0.3 million shares with ¥178 million ($1,481 thousand), though
the limitation, which approved by the shareholders’ meeting in
June 2002, was up to 3 million shares and up to ¥3,000 million($24,958 thousand).
The Company has a stock option plan. On June 29, 2000,
the shareholders approved the grant of 155,000 and 535,000
stock options for the directors and employees of the Company,
respectively, to raise corporate performance and maximizing
corporate value. The exercise period of the options is from July
1, 2002 to June 30, 2005.

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, 2003 and 2002.

Income tax expense comprises the following:
Yen(Millions)

Income taxes:
Current
Deferred

CORPORATION
18 CMK
2003 Annual Report

U.S. Dollars(Thousands)

2003

2002

2003

¥ 550
158
¥ 708

¥ 642
(1,022)¥ (380)$ 4,576(1,314)$ (5,890)

The significant components of deferred tax assets and liabilities are as follows:
Yen(Millions)Deferred tax assets:
Accrued employee’s bonuses
Accrued pension severance cost
Provision for enterprises tax
Depreciation
Fixed assets - intercompany profits
Inventory - intercompany profits
Securities valuation loss
Tax loss
Retirement and severance benefit
Unrealized gains on securities
OthersGross deferred tax assets
Deferred tax liabilities:
Allowance for doubtful receivables - intercompany losses
Reserve for special depreciation
OthersGross deferred tax liabilities

U.S. Dollars(Thousands)

2003

2002

2003

¥ 241
126
25
297
115
22
842
212
256
200
492
2,828

¥ 188
64
—
346
92
57
712
774
289
—
243
2,764

$ 2,005
1,048
208
2,471
957
183
7,005
1,764
2,130
1,664
4,093
23,528

(21)
(8)
(30)
(59)
¥2,769

(31)
(10)
(16)
(57)
¥2,707

(175)
(66)
(250)
(491)
$23,037

2003
42.0%

2002
42.0%

(78.8%)(2.6%)(3.5%)(13.7%)(2.4%)(3.4%)(62.4%)(29.4%)(1.1%)(1.1%)(1.0%)
—
1.5%
10.9%

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

Statutory tax rate
Increase (reduction) in taxes resulting from:Tax loss carry forward
Non-deductible entertainment expenses
Per capita
Effect of changes in tax rate applied
Foreign tax credit
Others
Effective income tax rate
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

2003
¥ 662
2,166
(6)
(53)
¥2,769U.S. Dollars(Thousands)

2002¥1,077
1,687
(5)
(52)
¥2,7072003$ 5,508
18,020(50)(441)$23,037

CMK CORPORATION
2003 Annual Report1910. Leased assets
Under Japanese accounting standards for leases, finance leases
that do not transfer ownership of the leased assets to thelessees are permitted to be accounted for as rental transactions
if certain “as if capitalized” information is disclosed in notes tolessee’s financial statements. For the years ended March 31,

2003, 2002 and 2001, the Company and its domestic subsidiaries made payments of ¥581 million ($4,834 thousand),¥634 million and ¥818 million, respectively, on these financeleases.

Yen(Millions)

2003

U.S. Dollars(Thousands)

2002

Class of property (inclusive of interest)
Machinery and equipment
Others
Accumulated depreciation¥ 2,630¥ 2,244966
1,014(2,146)(1,716)¥ 1,450¥ 1,542
Depreciation charges are computed using straight-line method over lease terms assuming no residual value.

2003$ 21,880
8,037(17,854)$ 12,063

Future minimum lease payments, inclusive of interest, as of March 31, 2003 and 2002 are:
Yen
(Millions)Year ending March 31

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

2003
566
884
¥ 1,450¥

U.S. Dollars(Thousands)

2002
539
1,003
¥ 1,542

¥

2003
4,709
7,354
$ 12,063$

11. Derivative financial instruments
Foreign exchange forward contracts are used to hedge the riskof changes in foreign currency exchange rates substantiallyassociated with accounts receivable denominated in foreign
currencies. As foreign exchange forward contracts are utilized
for hedging purposes, such resulting gains or losses are effectively offset against foreign exchange gains or losses on theunderlying hedged assets by recognizing them in the same

period. The purpose of the Company’s foreign currency hedging activities is to protect the Company from the risk thateventual Yen net cash inflows resulting from the sale of products to foreign customers will be adversely affected by changes
in exchange rates. The contracted amounts outstanding at
March 31, 2003 and 2002 are shown below.

Yen(Millions)

2003
Forward exchange contracts:
To sell foreign currencies
To buy foreign currencies¥¥

CORPORATION
20 CMK
2003 Annual Report

—
16
16

U.S. Dollars(Thousands)

2002
¥
¥

—
—
—

2003
$
$

—
133
133

12. 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, 2003

Benefit obligation
Plan assets
Funded status
Unrecognized actuarial loss
Net amount recognizedPrepaid benefit costAccrued pension and severance costs

Yen(Millions)

U.S. Dollars(Thousands)

2003¥ (4,338)
3,097(1,241)998(243)
3¥ (246)2003$ (36,090)
25,765(10,325)8,303(2,022)25$ (2,047)

Yen(Millions)

U.S. Dollars(Thousands)

2003
358
103
(87)
58
¥ 432

Detail of net periodic benefit cost at March 31, 2002

Service cost
Interest cost
Expected return on plan assets
Amortization of net transition obligation
Net periodic benefit cost

¥

2003
2,978
857
(724)
483
$ 3,594
$

2003
2.5%
2.5%

Actuarial assumptions

Discount rate
Expected return on plan assets

13. Contingent liabilities
Contingent liabilities at March 31, 2003 and 2002 are as follows:
Yen(Millions)

Notes receivable discounted with banks
Endorsed notes

2003
224
446
¥ 670

¥

U.S. Dollars(Thousands)

2002
101
945
¥ 1,046¥2003$ 1,864
3,710$ 5,574

CMK CORPORATION
2003 Annual Report2114. Segment information
The Company and its consolidated subsidiaries principally
operate a printed circuit board business in Japan and foreigncountries. The amounts of operating revenues and total assetsof this business exceed 90% of the amounts of combined operating revenues and total assets of all segments, respectively.
Therefore, business segment information is not disclosed.

Geographic areas:
Yen(Millions)

U.S.Dollars(Thousands)

Year ended March 31

Year ended March 31

2003

2002

2001

2003

¥ 89,880
4,117
93,997¥ 86,323
2,645
88,968¥101,788
2,920
104,708$ 747,754
34,251
782,005¥ 19,418
3,620
23,038¥ 16,512
1,318
17,830¥ 18,764
558
19,322$ 161,548
30,116
191,664

¥

2,447
9
2,456
(7,746)¥111,745

¥

1,706
—
1,706
(3,964)¥104,540

¥

1,741
20
1,761
(3,498)¥122,293$

20,35875
20,433(64,443)$ 929,659¥

3,094(1,041)(145)(1,205)
¥
703

¥

438
(465)
(267)
(845)
¥ (1,139)

¥

9,111
1,287
(182)
(932)
¥ 9,284$

Identifiable assets:
Japan
Asia
EuropeCorporate and elimination
Consolidated¥111,159
19,5652,303
21,244¥154,271¥107,058
17,492
2,034
22,893¥149,477¥115,709
17,465
2,057
9,518¥144,749$ 924,784
162,770
19,160176,739$1,283,453

Export sales:
To Asia
To Europe
To Others
Total¥ 19,647
2,518
1,849
¥ 24,014¥ 18,413
1,753
2,135
¥ 22,301¥ 20,193
1,783
1,509
¥ 23,485$ 163,453
20,94815,383$ 199,784

Sales and operating revenue:
Japan
Customers
Intersegment
Total
Asia
Customers
Intersegment
Total
EuropeCustomers
Intersegment
Total
Corporate and elimination
Consolidated
Operating income:
Japan
Asia
EuropeCorporate and elimination
Consolidated

General corporate expenses of ¥1,591million ($13,236 thousand), ¥1,221 million and ¥1,366 million in 2003, 2002 and2001, respectively, are included in “Corporate and elimination”.

CORPORATION
22 CMK
2003 Annual Report

25,740(8,660)(1,206)(10,025)$ (5,849)

Corporate assets of ¥31,843 million ($264,917 thousand),¥30,390 million and ¥17,679 million in 2003, 2002 and 2001,
respectively, which mainly consists of investment securities andcorporate properties, are included in “Corporate and elimination”.

I

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, 2003 and 2002, and the related consolidated statements of income, shareholders’ equity andcash flows for each of the years in the three-year period ended March 31, 2003, 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, 2003 and 2002, and theresults of their operations and their cash flows for each of the years in the three-year period ended March 31,
2003, in conformity with accounting principles generally accepted in Japan.
The accompanying consolidated financial statements as of and for the year ended March 31, 2003 have beentranslated into U.S. Dollars solely for the convenience of the reader. We have reviewed the translation and, in
our opinion, the consolidated financial statements expressed in Yen have been translated into U.S. Dollars on
the basis set forth in Note 2 to consolidated financial statements.
Tokyo, Japan
June 27, 2003

CMK CORPORATION
2003 Annual Report23

GGroup Companies(As of March 31, 2003)

Company Name

Equity heldby the Company (%)

Principal BusinessCountry

Subsidiaries
CMK MECHANICS CORPORATION

100.0

Manufacturing and sales of PWBs and molds

Japan

CMK NIIGATA 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 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.

95.1 (95.1)

Manufacturing and sales of PWBs

China

49.0

Manufacturing and sales of copper-clad laminates

Malaysia

Affiliate
SNC INDUSTRIAL LAMINATES SDN. BHD.

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

CORPORATION
24 CMK
2003 Annual Report

P
ProfileAs 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 our corporate strategy withthe world market as the target. In this process, the group is moving factories to China, making capital alliances that aim for expansion of market-share in the European and US automotive-related
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 ourcompany motto of “Permanent Growth”

CMK—Invisible, but everywhere.

M C
Managements

Corporate Data

(As of June 27, 2003)(As of March 31, 2003)

Directors
ChairmanNoboru Nakayama

Vice Chairman

Eiji Watanabe

President and Chief Executive Officer

Takahiro Nakayama

Director and Executive Vice Chairman

Kameharu Seki

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

Mikihiko Hattori

Director

Ichiyo Kotani

Auditors

AV equipment



Mobile communications

OthersStanding Auditor

Norimasa Sato

Auditor

Hideaki Takahashi

Auditor

Tatsunao Matsuta

Executive officers

Car electronics



Information devices

Executive Vice President

Shigeo Araki

Executive officer

Shinji Kadono

Executive officer

Sadanobu Kondou

Executive officer

Takeo Takai

Executive officer

Tsutomu Yamaguchi

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

Number ofshares held(Thousands)

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

Percentage
(%)

5,162
2,651
2,591
2,504

9.9
5.1
5.0
4.8

2,500
2,345
1,860

4.8
4.5
3.5

1,822
1,613
1,557

3.5
3.1
3.0

Correspondent Banks(As of June 27, 2003)

Mizuho Corporate Bank, Ltd.
Mizuho Bank, Ltd.
Sumitomo Mitsui Banking Corporation
The Tokyo Tomin Bank, Ltd.
Resona Bank, Limited.
Principal Customers
Matsushita Electric Industrial Co., Ltd.
Sharp Corporation
Denso Corporation
Sanyo Electric Co., Ltd.
Sony 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 KANBARA ELECTRONIC
08 Environmental Protection
09 Financial Section
24 Group Companies
25 Management
25 Corporate Data

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 performance of
CMK, which are based on management’s assumptions and beliefs in light of the information currently
available to it, and involve risks and unpredictability. Potential risks and unpredictability include, without limitation, general economic conditions in CMK’s markets; industrial market conditions, exchange
rates in which CMK makes significant sales or in which CMK’s assets and liabilities are denominated;
and CMK’s ability to continue to win acceptance of its products and services, which are offered inhighly competitive markets characterized by the continual introduction of new products, rapid developments in technology, and changing customer requirements.
CMK CORPORATION
2003 Annual Report25

Invisible, buteverywhere.
CMK CORPORATION
2003 Annual Report
Year ended March 31, 2003

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