SEMI ANNUAL REPORT 2014

For the six months ended September 30, 2014

HSD connectors

Wing TouchTM 20

Small coaxial camera module

Financial Highlights
SMK Corporation and Consolidated Subsidiaries

Thousands of
U.S. dollars

Millions of yen
Six months ended September 30
2013

Six months ended September 30
2014

Six months ended September 30
2014

Operating Results
Net sales¥34,881¥32,171$293,933

Operating income

1,988

1,125

10,279Net income

1,892

1,678

15,331

As of September 30
2014

As of September 30
2014¥56,235¥57,896$528,972

31,47632,715298,904

As of March 31
2014

Financial Position
Total assets
Total net assets

Yen
Six months ended September 30
2013

U.S. dollars

Six months ended September 30
2014

Six months ended September 30
2014

Per Share Data
Net income :Basic¥26.58¥23.38$0.21

Dilutedー¥23.35$0.21

Note: The U.S. dollar amounts represent translations of Japanese yen, for convenience only, at the rate of ¥109.45 = U.S. $1.00.

Net sales■ Full year

■ ■ First half

Operating income (loss)
Millions of yen■ Full year ■ ■ First half
3,000

80,00061,91455,34060,000Millions of yen

2,754
2,330
1,988

2,284

65,79654,4751,500

40,000 33,002

34,881
28,515

Net income (loss)

1,125

32,171

2,000

1,893

2012

2013

2014
Mar.

2014
Sep.

(1,500)2011

Basic net income (loss) per share■ Full year

■ First half

yen

1,037

■ Full year

35.58
30

23.38

2013

■ First half

53,05953,883

(198)

(799)

2014
Mar.

2014
Sep.

(2,000)2011

Total assets
60,00045(1,166)
2012

1,678

1,159
1,000

(1,000)

(853)

15

2,541

(327)

2011

Millions of yen

00
20,0000■ ■ First half

3,000

(590)

(42)

26,829■ Full year

(1,782)
2013

2014
Mar.

2014
Sep.

Total net assets
Millions of yen

52,498

2012

56,23557,896■ Full year

■ First half

Millions of yen

40,00029,862

28,25728,204

2011

2012

2013

31,47632,71530,00040,00014.14

20,00020,0000(15)

10,000(2.78)

2011(11.04)2012

1 SEMI ANNUAL REPORT 2014

2013

2014
Mar.

2014
Sep.

0

2011

2012

2013

2014
Mar.

2014
Sep.

0

2014
Mar.

2014
Sep.

To Our Shareholders and Investors

We are obliged to you for your continued
support and good patronage.
We would like to report on the outline andresults of the SMK Group’s businesses for thehalf period of the 93rd fiscal year (from April 1,
2014, to September 30, 2014).
We look forward to your continuing supportand encouragement.
November 2014
Yasumitsu Ikeda
President and COO

Performance Overview
During the half period of the 93rd fiscal year ended September 30, 2014, the global economy saw a moderate
recovery. The U.S. economy showed continued steady economic expansion, mainly reflecting improved
employment. Although economic recovery slowed down in Europe, stable growth continued in China, which
maintained a growth rate of 7% level. The Japanese economy, which was on a recovery path from a plunge
following the raise in the consumption tax, saw improvements in corporate earnings and capital investment,
whereas sluggishness remained in business confidence due to a stagnation in production activities and a delayin the recovery of consumer spending.
Under these circumstances, the SMK Group maintained steady sales of products for the automobile market.
In the information and communication market, sales of products for smartphones expanded significantly as our
new products for the China area were increasingly adopted there and an increasing number of our products
were employed as standard components. However, such favorable factors were not enough to offset a plungein sales to some of our customers, resulting in year-on-year decreases both in the SMK Group’s consolidated
net sales and income for the half period of the 93rd fiscal year ended September 30, 2014.
The Group intends to engage in concerted efforts to recover business performance for the full year ending
March 2015 by increasing sales of our main products for automobiles, smartphones, and set-top boxes, etc.,
while reducing costs and reinforcing our global-scale production, development and sales structure.
April 2015 marks the 90th anniversary of us. At this commemorative opportunity, to express appreciation to
our shareholders, we determined to add a commemorative dividend of ¥2 per share to the ordinary dividend of¥5 per share as a year-end dividend for the fiscal year ending March 31, 2015. With deep gratitude to you foryour long-term support, we will continue to pursue further expansion of our earning capabilities.
SEMI ANNUAL REPORT 2014 2

Overview of Consolidated Results by Division(April 1, 2014 to September 30, 2014)

Touch Panel Division

Other¥7,477 Million
23.2%¥51 Million
0.2%

Net sales¥ 32,171
MillionConnection System
Division¥13,043 Million
40.5%

Functional Components
Division¥11,600 Million
36.1%

Connection System Division

FPC to Board connector
Application:
Smartphones, tablet PCs,
mobile phones

Major Products● RF coaxial connectors● Board to Board connectors● FPC connectors● Jacks

3 SEMI ANNUAL REPORT 2014

In the information communication market, customers in China area
to which sales of our main products for smartphones have been
growing remarkably increasingly employed our products asstandard components, leading to a significant advance in sales.
Sales of our products to Japanese and U.S. customers weresluggish due to stagnant sales of devices and the delayed launchof our products. In the automobile market, demand expanded for
infotainment and safe driving areas in which we have special
competence. In the environmental market, with regard to products
for solar systems, which is another area of our strength, we
maintained the number of our products employed overseas
although Japanese competitors are struggling in this field. We arealso accumulating business results in the LED lighting andhealthcare fields, striving for further sales expansion.

Functional Components Division

Standard RF remote control
Application:TVs, set-top boxes,
home network related devices

Major Products

Sales of remote controls, our mainstay products, continued
to progress favorably, acquiring new customers not only inNorth America, our major market, but also in the Chinese
market for overseas Internet protocol set-top boxes thatoffer movie, music and game play. With regard to theautomobile market, we newly entered camera modules andswitches fields, and expanded sales. Going forward, we will
focus on HEMS related field, which recently has beendrawing attention, in addition to our products for set-top
boxes and automobiles.

● Remote controls● Wireless devices units● Switches● Camera modules

Touch Panel Division

OGS capacitive touch panel
Application:
Car navigation systems,
Audio Visual Display

Major Products● Resistive touch panels

Sales of our products for automobiles remained favorable.
Due to the growth of the Chinese market in addition to theNorth American market, our major market, sales of our
products for car navigation systems progressed asplanned. However, for the industrial machinery market, we
struggled, caught up in the fierce price competition in the
ATM market. As we have started businesses for newmarkets such as home appliances and wearable devices,
we will strive to obtain information concerning markets with
future potential before competitors and aggressively
develop new technologies and products and expand sales.

● Capacitive touch panels● Optical touch panels

SEMI ANNUAL REPORT 2014 4

Topics

Establishment of a photovoltaic power plant at the Ibaraki site
With the aim of protecting the environment and cutting CO2 emissions, we established a photovoltaic
power plant at the Ibaraki site on July 28, 2014. This photovoltaic power plant’s anticipated annual
power generation will be 330,000kWh, which is equivalent to the annual used power of about 100
standard households. The CO2 and oil reduction effects are expected to be 105t-CO2 per annum andabout 76kL per annum (about 379 drums), respectively.
Our key eco-product, the connector for photovoltaic module (PV-03 Series), is used in photovoltaic
power generation modules.
We regards ecological measures as a priority management theme. In the development of our“Eco-Products” with environmental consideration, we focused on the development and supply ofcomponents for customers’ ecology related products such as photovoltaic power generation systems
and LED lighting, while developing energy-saving and high-efficiency components, saving resources
by making products lighter and smaller, and reducing the environmental burden throughout our
production processes.
Going forward, we intend to promote corporate management harmonized with the global environment.

Connector for photovoltaic module (PV-03 Series)

Exterior view of our photovoltaic power plant

Outline of the facility of the photovoltaic power plant
Installation area
Number of photovoltaic power generation modules
Number of Connectors for photovoltaic modules
Module capacity
Anticipated annual power generation

5 SEMI ANNUAL REPORT 2014

4,183m2
1,316pcs
8,000pcs
322.46kW
333,844kWhSMK network

Ever-Evolving SMK Global Network
The year 2015 marks the 90th anniversary of our Company. During its long history, starting in
1973 when the Company established a sales base in the United States, the Company has globallydeveloped production and sales bases rooted in the local community. Currently, the SMK Grouphas 6,192 employees (as of September 2014), of whom approximately 90% are working overseas.
With the concerted efforts of all the employees of the SMK Group, we will continue to offer
even better products that address the needs of customers, thereby contributing to society as acompany that can live up to all of your trust.
● Sales Office● Works● Works & Sales Office● R&D Locations / Works● R&D Locations / Sales Office● R&D Locations

Sales Expansion Activities inSoutheast Asia and India
In Southeast Asia and India, we are expanding sales in
new fields such as automobiles, LED streetlights andphotovoltaic power generation. As one such measure,
we released the “LT Series” of LED lighting connectors.
Given that LED lighting has been increasingly adopted
for streetlights to save energy in many countries, we areconducting aggressive
proposal activities. In July
2014, we established a
representative office inThailand, reinforcing ourbusiness structure to
expand business inSoutheast Asia.
LED lighting connectors

Domestic Bases

Toyama Works
Hokuriku Sales OfficeOsaka Branch
Fukuoka Sales OfficeHitachi Works
Ibaraki Sales Office
Head Office
Gate City Office
Nagoya Branch

SEMI ANNUAL REPORT 2014 6

Consolidated Balance Sheets
SMK Corporation and Consolidated Subsidiaries
Thousands of
U.S. dollars

Millions of yen
As of March 31

As of September 30

As of September 30

2014

2014

2014

¥ 11,134¥ 10,386$ 94,893

93

99

905

14,681

16,089146,999

(36)

(33)

(302)

5,905

5,951

54,372

Deferred tax assets

744

466

4,258

Other current assets

2,704

3,406

31,11835,22536,364332,243

2,656

2,844

25,984

126

102

932

Other investments

1,146

627

5,729

Allowance for doubtful accounts

(111)

(111)

(1,015)

3,817

3,462

31,630

Land

4,254

4,253

38,858

Buildings

17,337

17,555160,393

Machinery and vehicles

18,276

19,679179,799

Tooling and office furniture

21,75322,921

209,420

Construction in progress

246

346

3,161

61,86664,754

591,631(45,035)(47,120)(430,516)

16,831

17,634

161,115

Deferred tax assets

167

182

1,663

Intangible assets

195

254

2,321

362

436

3,984

¥ 56,235¥ 57,896$ 528,972

AssetsCurrent assets
Cash and cash equivalents
Time deposits
Notes and accounts receivable, trade
Allowance for doubtful accounts
Inventories

Investments and long-term loans
Investment securities
Long-term loans receivable

Property, plant and equipment

Less-accumulated depreciation

Other assets

Total assets

Note: The U.S. dollar amounts represent translations of Japanese yen, for convenience only, at the rate of ¥109.45 = U.S. $1.00.

7 SEMI ANNUAL REPORT 2014

Thousands of
U.S. dollars

Millions of yen
As of March 31

As of September 30

As of September 30

5,119¥ 5,823$ 53,202

3,733

3,920

35,815

798

373

3,408

Accrued bonus

1,069

754

6,889

Accounts payable, non-trade

5,928

7,114

64,998Other current liabilities

1,475

1,620

14,802

18,122

19,604

179,114

5,447

4,364

39,872

Accrued directors' and officers' retirement benefits

180

113

1,032

Liability for retirement benefits

36

44

402

Other long-term liabilities

974

1,056

9,648

6,637

5,577

50,954

Issued and outstanding : 79,000,000 shares

7,996

7,996

73,056

Capital surplus

12,327

12,326112,618

Retained earnings

15,982

16,594

151,613

Treasury stock(3,434)(3,427)(31,312)32,871

33,489305,975

274

429

3,920

(2,171)(1,638)(14,974)

463

398

3,636

(1,434)(811)(7,418)

39

38

347

31,47632,715298,904¥56,235¥ 57,896$ 528,972

Liabilities and net assets

2014

2014

2014

Current liabilities
Short-term loans payable¥

Notes and accounts payable, trade
Accrued income taxes

Long-term liabilities
Long-term debt

Net assets
Shareholders’ equity
Common stock
Authorized :

195,961,274 shares

Accumulated other comprehensive income
Net unrealized gains (losses) on other securities
Foreign currency translation adjustments
Retirement benefit asset and liability adjustments

Subscription rights to shares

Total liabilities and net assets

SEMI ANNUAL REPORT 2014 8

Consolidated Statements of Income
SMK Corporation and Consolidated Subsidiaries
Thousands of
U.S. dollars

Millions of yen
Six months ended
September 30

Six months ended
September 30

Six months ended
September 30

2013

2014

2014

¥ 34,881
28,3894,504
1,988¥ 32,171
26,5544,492
1,125$ 293,933
242,61341,041
10,279Other income
Interest and dividend income
Rent income
Foreign exchange gain, net
Gain on sales of fixed assets
Gain on sales of investment securities
Other
Total other income

37
373
575
34
0
119
1,138

55
370
979
20
90
142
1,656

503
3,381
8,945
183
822
1,296
15,130

Other expenses
Interest expense
Rent expense
Loss on disposal of fixed assets
Loss on impairment of fixed assets
Other
Total other expenses

53
125
151
142
85
556

47
144
10
99
51
351

429
1,316
91
905
466
3,207

2,570

2,431

22,202

767
(90)
1,893
¥ 1,893

358
394
1,678
¥ 1,678

3,271
3,600
15,331$ 15,331

Net sales
Cost of sales
Selling, general and administrative expenses
Operating income

Income before income taxes and minority interests
Income taxes
Current
DeferredIncome before minority interests
Net income

Yen

Per share data
Net income
Basic
DilutedU.S. dollars¥ 26.58
ー¥ 23.38¥ 23.35

$
$

0.21
0.21

Note: The U.S. dollar amounts represent translations of Japanese yen, for convenience only, at the rate of ¥109.45 = U.S. $1.00.

Consolidated Statements of Comprehensive Income
SMK Corporation and Consolidated Subsidiaries
Thousands of
U.S. dollars

Millions of yen

Income before minority interests
Other comprehensive income
Net unrealized gains (losses) on other securities
Foreign currency translation adjustments
Retirement benefit asset and liability adjustments
Total other comprehensive income
Comprehensive income
Total comprehensive income attributable to:Shareholders of the Company

9 SEMI ANNUAL REPORT 2014

Six months ended
September 30

Six months ended
September 30

Six months ended
September 30

2013

2014

2014

¥1,893¥ 1,678$ 15,331

191
251
ー
442
¥2,335

154
533
(64)
623
¥ 2,301

1,407
4,870
(585)
5,692
$ 21,023¥2,335¥ 2,301$ 21,023

Consolidated Statements of Cash FlowsSMK Corporation and Consolidated Subsidiaries
Thousands of
U.S. dollars

Millions of yen

Cash flows from operating activities
Income before income taxes and minority interests
Depreciation and amortization
Loss on impairment of fixed assets
Amortization of goodwill
Increase (decrease) in accrued bonus
Increase (decrease) in accrued directors' and officers' retirement benefits
Increase (decrease) in accrued employees' retirement benefits
Increase (decrease) in liability for retirement benefits
Interest and dividend income
Interest expense
Loss on disposal of fixed assets(Increase) decrease in notes and accounts receivable, trade(Increase) decrease in inventories
Increase (decrease) in notes and accounts payable, trade(Increase) decrease in accounts receivable, non-trade
Increase (decrease) in accounts payable, non-trade
Other
SubtotalInterest and dividends received
Interest paid
Income taxes paid
Net cash provided by (used in) operating activities
Cash flows from investing activities
Payments into time deposits
Proceeds from time deposits
Purchases of fixed assets
Proceeds from sale of fixed assets
Purchases of intangible fixed assets
Purchases of investment securities
Proceeds from sale of investment securities
Payment for execution of loans
Collection of loans receivable
Other
Net cash provided by (used in) investing activities
Cash flows from financing activities
Increase (decrease) in short-term loans payable
Proceeds from long-term debt
Payments of long-term debt
Purchases of treasury stock
Proceeds from sale of treasury stock
Dividends paid
Net cash provided by (used in) financing activities
Effect of exchange rate changes on cash and cash equivalents
Increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of the year
Increase in cash and cash equivalents from newly consolidated subsidiary
Cash and cash equivalents at end of six months and the year

Six months ended
September 30

Six months ended
September 30

Six months ended
September 30

2013

2014

2014

¥ 2,570
1,536
142
30
345
12
37
ー
(37)
53
151
(1,849)
(109)
361
(493)
1,212
(47)
3,917
37
(53)
(381)
3,520

¥ 2,431
1,609
99
ー
(324)
(68)
ー
(278)
(55)
47
10
(391)
215
(906)
(533)
989
(122)
2,723
79
(50)
(815)
1,937

$ 22,211
14,701905
ー(2,960)(621)
ー(2,540)
(503)
429
91
(3,572)
1,964(8,278)(4,870)9,036(1,114)24,879722(457)(7,446)
17,698(42)
38(1,790)
138
(54)
(491)
456
(46)
53
(2)
(1,740)(43)
43(1,961)
60
(93)
ー
126
(39)
45
ー
(1,862)(393)
393(17,917)
548
(850)
ー
1,151
(356)
411
ー
(17,013)

1,737
1,500
(1,850)
(3)
22
(354)
1,052
(67)
2,765
8,631
ー
¥ 11,396

(100)
ー
(344)
(3)
8
(359)
(799)
(39)
(763)
11,13414¥ 10,386(914)
ー(3,143)(27)
73(3,280)(7,291)(356)(6,962)
101,737118$ 94,893

Note: The U.S. dollar amounts represent translations of Japanese yen, for convenience only, at the rate of ¥109.45 = U.S. $1.00.

SEMI ANNUAL REPORT 2014 10

Corporate Information(As of September 30, 2014)

Corporate Data

Shares and Shareholders
SMK Corporation

Total number of Authorized shares

195,961,274

Established

April 3, 1925

Total number of Issued shares

79,000,000

Registered

January 15, 1929

Primary business

Manufacture and sale ofvarious parts forelectro-communication device
and electronic equipment

Name

8,474

Number of shareholders
Major shareholders (top ten)

Shares owned(1,000 shares)

Percentageof shares (%)

Mizuho Bank, Ltd.

3,531

4.90

Nippon Life Insurance Company

3,241

4.50

Dai Nippon Printing Co., Ltd.

3,200

4.44

Capital¥7,996,828,021

Stock exchange listing

Tokyo Stock Exchange

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

2,924

4.06

Administrator ofshareholders register

Mitsubishi UFJ Trust and Banking
Corporation

Japan Trustee Services Bank, Ltd.
(Trust Account)

2,895

4.02

Independent auditors

Ernst & Young ShinNihon LLC
Tokyo, JapanSMK Cooperating Company Share
Holding Association

2,872

3.99

The Bank of Tokyo-Mitsubishi UFJ, Ltd.

2,508

3.48

Employees (SMK-Group)

6,192

Head office5-5, Togoshi 6-chome,
Shinagawa-ku,
Tokyo 142-8511, Japan
TEL : 81-3-3785-1111
FAX : 81-3-3785-1878

Mitsubishi UFJ Trust and Banking
Corporation

1,800

2.50

SMK Employees Share Holding
Association

1,714

2.38

The Showa Ikeda Memorial Foundation

1,500

2.09

Note: SMK holds 7,040 thousand shares of treasury stock, but these areexcluded from the above list. Figures for percentage of shares arecalculated excluding the treasury stock.

Board of Directors and Corporate Auditors
Directors
President and COO

Corporate Executive Officers
Yasumitsu Ikeda

Director,
Executive Deputy President, Chief Information Officer Yoshio Sakurai
Director,
Yoshiyuki Kaku
Executive Vice President, Chief Technology Officer
Director,
Mikio Wakabayashi
Executive Vice President
Director

Yuji Tanahashi

Auditors

Executive Vice President

Paul Evans

Executive Vice President, Chief Financial Officer

Kohei Ohgaki

Vice President

Hideo Matsumoto

Vice President

Tsutomu Isoda

Vice President

Hiroshi Miyakawa

Vice President

Shigechika Yanagi

Vice President

Takemi Ishibashi

Chairman of Auditors Meeting

Terutaka Ikeda

Vice President

Harutaka Seki

Statutory Auditor

Hajime Yamada

Vice President

Masanobu Ikeo

Statutory Auditor

Kouichiro Sugihara

Vice President

Mitsuhiko Goto

Statutory Auditor

Naru Nakashima

Vice President

Tetsuo Hara

5-5, Togoshi 6-chome, Shinagawa-ku, Tokyo 142-8511, JAPAN
Telephone: 81-3-3785-1111 Fax: 81-3-3785-1878

http://www.smk.co.jp/