ANNUAL REPORT2022

For the ﬁscal year ended March 31, 2022

To Our Shareholders and Investors

We are obliged to you for your continued support andgood patronage.
On this occasion, we would like to express our
deepest sympathy to everyone who has been
affected by COVID-19.
We would like to report on the outline and resultsof the SMK Group’s business for the 100th fiscal year
(from April 1, 2021 to March 31, 2022).
We look forward to your continuing support andencouragement.
June 2022
Yasumitsu Ikeda
President and CEO/COO

Financial Highlights
Percent Change
2021/2022

Millions of yen
Years ended and as of March 31

Thousands of
U.S. dollars

2022

2021

2022

Operating Results
48,560¥ 48,243

Operating income

1,070

703

(34.3)

5,744

Profit attributable to owners of parent

1,917

2,992

56.1

24,44650,332¥ 54,794

27,75130,643

Net sales¥(0.7)%$ 394,174

Financial Position
Total assets¥

Total net assets

Net sales

Millions of yen

75,000250,372

10.4

Millions of yen

2,992

3,000

3,000

59,786$ 447,700

Profit (loss) attributable toowners of parent

Operating income (loss)

Millions of yen

8.9%

1,917
57,38654,161
48,56050,00048,243

1,500

1,500

1,070
703

485
0

0

(244)

(288)
(834)

25,000(1,500)(1,500)(1,834)

0

2018

2019

2020

2021

2022

(3,000)

2018

2019

2020

2021

2022

(3,000)(2,651)
2018

2019

2020

2021

2022

SMK Philosophy

CONTENTS
To Our Shareholders and Investors

SMK is committed to the advancement of mankind
through development of the information society, byintegrating its current technological strengths andcreating advanced technology.

Financial Highlights
2

Overview of Consolidated Results by Division

4

Financial Section

5

Financial Review

6

Consolidated Balance Sheet

8

Consolidated Statement of Income

8

Consolidated Statement of Comprehensive Income

1 Contribute to society with pride and confidence.

9

Consolidated Statement of Changes in Net Assets

10Consolidated Statement of Cash Flows

2 Be customer-oriented, with zeal and sincerity.

11

Notes to Consolidated Financial Statements

29

Officer Introduction

SMK Action Guidelines

3 Challenge courageously for higher goals without

fear of failure.

4 Trust and respect each other for a brighter working

Corporate Information

atmosphere.

5 Keep an open mind, and view SMK from a global

perspective.

Percent Change
2021/2022

Yen
Years ended and as of March 31

U.S. dollars

2022

2021

2022

Per Share Data
Profit attributable to owners of parent
Basic

¥

297.92¥ 472.14

ー

ー

ー

ー

50.00

70.00

40.0

0.57

DilutedCash dividends

$3.86

58.5%

Note 1. The U.S. dollar amounts represent translations of Japanese yen, for convenience only, at the rate of ¥122.39 = U.S. $1.00.
2. The Company carried out a consolidation of share at the ratio of 10 shares to 1 share on October 1, 2018.
Basic earnings per share and diluted earnings per share have been calculated on the assumption that the said consolidation of share wascarried out at the beginning of the year ended March 31, 2017.
3. In the calculation of profit (loss) per share, the Company’s shares remaining in the Board Benefit Trust (BBT), which are recorded astreasury stock under shareholders’ equity, are included in the treasury stocks that are deducted in the calculation of the average numberof shares in the period.
4. The Company and its consolidated subsidiaries have adopted “Accounting Standard for Revenue Recognition” (ASBJ Statement No.29,
March 31, 2020) from the beginning of the fiscal year ended March 31, 2022.
As such, financial position for the year ended March 31, 2022 is calculated after adoptation of its accounting policy.

Total assets / Total net assets
Total assets

Millions of yen

Total net assets

80,000

Basic profit (loss) attributable toowners of parent per shareyenyen
472.14500

61,474297.92300

58,71354,79450,20450,332

80
70.00

400

60,000Cash dividends per share

60

200

50.00

100

40,000030,63728,612

24,62927,75130,643

(100)

40.00
40

(43.63)(126.47)(200)

20,000

20

(300)

8.00

(400)

0

2018

2019

2020

2021

2022

(500)

50.00

(410.88)
2018

2019

2020

2021

2022

0

2018

2019

2020

2021

2022

ANNUAL REPORT 2022 1

Overview of Consolidated Results by Division(April 1, 2021 to March 31, 2022)

The many different electronic components that SMK produces are widelyused by electronics manufacturers in and outside Japan. The markets forthese components can be broadly classified into four markets: ICT Market,
Home Appliance Market, Car Electronics Market and Industry Market.
Two divisions, namely CS (Connection System) Division and SCI(Sensing, Communications and Interface) Division, as well as Research &Development Center, are responsible for developing products that
continually meet market requirements in the wide range of markets
outlined above. The two divisions handle operations ranging from productplanning and design to mass production, whereas Research & Development
Center is primarily in charge of designing and developing products in new
fields.
In this section, we present an overview of our results achieved in eachof the two divisions and Research & Development Center in the fiscal year
under review.

CS(Connection System)
Division
Major Products
Connectors (Coaxial, FPC)
Jacks

Sales by Division
Research &Development
CenterOthers¥ 4 Million

0.1%¥ 309 Million

0.6%

Net sales¥ 48,243

40.5%

MillionSCI
Division¥ 28,387 Million

CS
Division¥ 19,543 Million

SCI (Sensing,Communications andInterface) Division
Major Products
Remote Control Units
Switches
Camera Modules
Touch Sensors

58.8%

Others: businesses of other electronic parts, lease, real-estate rental, andworker dispatching undertakings.

Sales by Market
Industry / Others¥ 4,587 Million

ICT

9.5%
19.5%

Car
Electronics¥ 17,321 Million

Major Products
Wireless Modules

Net sales

35.9%¥ 48,243
Million

35.1%

Others: markets of medical equipment, rehabilitation equipment, etc.

2 ANNUAL REPORT 2022

¥ 9,421 Million

Research &Development
CenterHome
Appliance¥ 16,912 Million

In the car electronics market, sales of mainstay connectors for cameras were
firm, and orders for connectors for electrical devices grew steadily, exceeding
those of the previous year. In the home appliance market, sales exceeded thoseof the previous year due to the adoption of connectors for digital cameras and anincrease in orders of connectors for VR. On the other hand, in the ICT market,
sales of connectors for tablet devices of US customers remained at the samelevel as the previous fiscal year affected by the impact of production adjustments
due to a shortage of semiconductors. In addition, sales of connectors for
smartphones fell below those of the previous year due to a decrease inproduction by some Chinese customers caused by difficulties in obtaining
semiconductors.
As a result, net sales of CS Division amounted to ¥19,543 million (1.5%
decrease year on year), and operating income was ¥1,036 million (28.3%
decrease year on year).

Net sales / Operating income
25,00020,0002,000

19,840

1,600

1,200
1,036

10,000

800

5,000

400

2021

0

2022

Net sales / Operating loss

Millions of yen

40,0004,000

28,431

28,38720,000

2,000

0

(72)

2021

Regarding Bluetooth® modules, the central product of Research & Development
Center’s mainstay wireless communication module businesses, the markets forpayment terminals, mobile printers and medical devices have been expanding.
However, Research & Development Center was not able to secure ICs due to ashortage of semiconductors, and although sales slightly exceeded those of theprevious year, the target value was not reached.
As a result, net sales of Research & Development Center amounted to ¥309
million (8.2% increase year on year), and operating loss was ¥196 million(compared to an operating loss of ¥294 million in the previous fiscal year).

19,5431,444

15,0000

In the car electronics market, orders for camera modules, control units, touch
sensors, etc. were strong due to the recovery of car production mainly in the
U.S. and sales exceeded those of the previous year. Sales of switches for
wearable devices in the ICT market and touch sensors for office machines in theindustry market were strong and exceeded those of the previous year. On theother hand, in the mainstay home appliance market, sales of units for homeequipment and remote control units for air conditioners exceeded those of theprevious year, but sales of remote control units for set-top boxes decreased andfell below those of the previous year.
As a result, net sales of SCI Division amounted to ¥28,387 million (0.2%
decrease year on year), and operating loss was ¥135 million (compared tooperating loss of ¥72 million in the previous fiscal year).

Millions of yen

0
(135)

(2,000)2022

Net sales / Operating loss

Millions of yen
500

500

285

309

0

0

(196)
(294)

2021

2022

(500)

ANNUAL REPORT 2022 3

Financial Section

Five-Year Summary
SMK Corporation and Consolidated Subsidiaries

Thousands of
U.S. dollars

Millions of yen
Years ended andas of March 31

2018

2019

2020

2021

2022

2022

59,786 ¥57,386 ¥54,161 ¥48,560 ¥48,243$ 394,174

Operating income (loss)

485(1,834)

(244)

1,070

703

5,744

Profit (loss) attributable toowners of parent

(288)

(834)

(2,651)

1,917

2,992

24,446

61,474 ¥58,713 ¥50,204 ¥50,332 ¥54,794$ 447,700

30,63728,612

24,62927,75130,643250,372

Operating Results
Net sales¥

Financial Position
Total assets
Total net assets¥

Yen

U.S. dollars

Per Share Data
Total net assets¥ 4,635.03 ¥ 4,415.09 ¥ 3,870.65 ¥ 4,311.91 ¥ 4,914.89$40.16

Profit (loss) attributableto owners of parent
Basic
DilutedCash dividends(43.63)(126.47)(410.88)297.92472.14

3.86

ー

ー

ー

ー

ー

ー

8.00

50.00

40.00

50.00

70.00

0.57

Note 1. The U.S. dollar amounts represent translations of Japanese yen, for convenience only, at the rate of ¥122.39 = U.S. $1.00.
2. The Company carried out a consolidation of share at the ratio of 10 shares to 1 share on October 1, 2018.
Basic earnings per share and diluted earnings per share have been calculated on the assumption that the said consolidation of share wascarried out at the beginning of the years ended March 31, 2017.
3. In the calculation of profit (loss) per share, the Company’s shares remaining in the Board Benefit Trust (BBT), which are recorded astreasury stock under shareholders’ equity,are included in the treasury stocks that are deducted in the calculation of the average number ofshares in the period.
4. The Company and its consolidated subsidiaries have adopted “Accounting Standard for Revenue Recognition” (ASBJ Statement No.29,
March 31, 2020) from the beginning of the fiscal year ended March 31, 2022.
As such, financial position for the year ended March 31, 2022 is calculated after adoptation of its accounting policy.
4 ANNUAL REPORT 2022

Financial Review

SMK’s net sales for the fiscal year ended March
31, 2022 decreased 0.7% year on year to¥48,243 million (US$394,174 thousand),

Total net assets(As of March 31)

Millions of yen
32,00030,637and operating income of ¥703 million(US$5,744 thousand) and profit attributable to30,00028,612owners of parent of ¥2,992 million(US$24,446 thousand) were recorded.

28,000Net Sales

26,000In the car electronics market, sales increased from the previous
fiscal year due to the recovery of car production mainly in China
and the U.S, but sales in the ICT and home appliance markets
decreased from the previous fiscal year due to production
adjustments and a decline in demand caused by a shortage ofsemiconductors plaguing major customers.
As a result, net sales were ¥48,243 million (US$394,174
thousand), down 0.7% year on year.

0

Total Assets / ROA
As of March 31, 2022, total assets were ¥54,794 million(US$447,700 thousand), with ROA of 6.5%.

Cash FlowsNet cash provided by operating activities amounted to ¥2,433
million (US$19,879 thousand), net cash used in investing activities
totaled ¥1,631 million (US$13,326 thousand), and net cash used infinancing activities was ¥971 million (US$7,934 thousand).

2019

2020

2021

2022

Return on equity (ROE)

%

10.2

12
7.3
8

4

0

(0.9)
(2.8)

(4)

(8)

(12)

(9.9)

2018

2019

2020

2021

2022

Return on assets (ROA)

Total Net Assets / ROE
As of March 31, 2022, total net assets were ¥30,643 million(US$250,372 thousand), with ROE of 10.2%.

2018(Years ended March 31)

Despite our efforts such as proactive launch of new products andinitiatives taken to reduce costs, operating income amounted to¥703 million (US$5,744 thousand) due to the impact of soaring
raw material prices and a decrease in sales.

Profit attributable to owners of parent was ¥2,992 million(US$24,446 thousand) as a result of recording rent income/expense, foreign exchange gains, subsidies for employment
adjustment, etc. in other income/expenses.

27,751

24,629Operating Income

Profit attributable to owners of parent

30,643(Years ended March 31)

%
8
6.5
5.2

6

4

2
0.6

0

(2)

(1.2)

2018

2019

(0.3)

2020

2021

2022

ANNUAL REPORT 2022 5

Consolidated Balance SheetSMK Corporation and Consolidated Subsidiaries
As of March 31, 2021 and 2022

Thousands of
U.S. dollars(Note 2)Millions of Yen

Assets

2021

2022

2022

¥

¥

$

Current assets
Cash and cash equivalents (Note 16)
Time deposits (Note 16)

8,742

8,505

69,491

57

49

400

11,242

ー

ー

ー

53

433

1,325

1,460

11,929ー

11,286

92,213Inventories (Note 3)

6,547

9,545

77,988Other current assets (Note 18 and 22)

1,050

860

7,027

(61)

(31)

(253)

28,90331,730259,253

3,113

3,639

29,733Long-term loans receivable (Note 22)

90

99

809

Asset for retirement benefits (Note 7)

2,058

2,245

18,343

Other investments (Note 22)

661

731

5,973

Allowance for doubtful accounts

(84)

(86)

(703)

5,839

6,628

54,155Land (Note 4)

5,939

5,869

47,953

Buildings

19,386

19,066

155,781

Machinery and vehicles

23,10824,804

202,664

Tooling and office furniture

19,48920,214

165,161

Leased assets

32

29

237

Right of use assets

135

1,599

13,065Construction in progress

128

186

1,520

68,22071,771

586,412(52,816)(55,580)(454,122)

15,403

16,190132,282

Deferred tax assets (Note 13)

92

126

1,029

Intangible assets (Note 12)

93

116

948

185

243

1,985

54,794$ 447,700

Notes and accounts receivable, trade (Note 16)
Notes receivable, trade (Note 16)
Electronically recorded monetary claims (Note 16)
Accounts receivable, trade (Note 16)

Allowance for doubtful accounts

Investments and long-term loans
Investment securities (Note 16 and 17)

Property, plant and equipment （Note 5, 12 and 19)

Less-accumulated depreciation
Other assets

Total assets
See accompanying notes to consolidated financial statements.
6 ANNUAL REPORT 2022¥

50,332¥

Consolidated Balance Sheets

Thousands of
U.S. dollars(Note 2)Millions of Yen

Liabilities and net assets

2021

2022

2022

¥

¥

5,066

$ 41,392

53

407

3,325

5,029

5,404

44,154

Accrued income taxes

330

303

2,476

Accrued bonuses

716

745

6,087

Accrued directors’ and officers’ bonuses

28

30

245

Accounts payable, non-trade

1,775

1,573

12,852Other current liabilities (Note 6 and 18)

1,442

1,648

13,465

15,49815,178124,013

5,180

6,214

50,772

Lease liabilities (Note 16)

32

920

7,517

Deferred tax liabilities (Note 13)

954

961

7,852

Accrued directors’ and officers’ retirement benefits

147

173

1,414

Liability for retirement benefits (Note 7)

61

39

319

Accrued directors’ and officers’ share awards

14

27

221

Other long-term liabilities

691

634

5,180

7,082

8,972

73,307

7,996

7,996

65,332

Capital surplus

12,057

12,057

98,513Retained earnings

13,241

15,925130,117

Treasury stock(4,394)(4,876)(39,840)

28,90031,102

254,122

Net unrealized gains (losses) on other securities

288

425

3,473

Net unrealized gains (losses) from hedging instruments

(7)

(2)

(16)

(1,997)(1,404)(11,472)

568

520

4,249

(1,149)(459)(3,750)27,75130,643250,372¥ 50,332¥ 54,794$ 447,700

Current liabilities
Short-term loans payable (Note 5)
Lease liabilities (Note 16)
Notes and accounts payable, trade6,122

Long-term liabilities
Long-term debt (Note 5 and 16)

Net assets
Shareholders’ equity (Note 8)
Common stock
Authorized : 19,596,127 shares
Issued : 7,500,000 shares

Accumulated other comprehensive income

Foreign currency translation adjustments
Retirement benefits asset and liability adjustments

Total liabilities and net assets

ANNUAL REPORT 2022 7

Consolidated Statement of Income
SMK Corporation and Consolidated Subsidiaries
Years ended March 31, 2021 and 2022

Thousands of
U.S. dollars(Note 2)Millions of Yen

Net sales (Note 20 and 21)
Cost of sales (Note 3 and 9)
Selling, general and administrative expenses (Note 9 and 10)
Operating income (Note 21)

¥

2021

48,56040,119
7,370
1,070

¥

2022

2022

48,24340,1697,369
703$ 394,174
328,205
60,2095,744

Other income
Interest and dividend income (Note 22)
Rent income
Foreign exchange gains
Subsidies for employment adjustment
Gain on sales of fixed assets (Note 11)
Other
Total other income

71
1,066
160
542
21
525
2,387

85
1,057
1,426
318
32
672
3,592

695
8,636
11,651
2,598
261
5,491
29,349Other expenses
Interest expense
Rent expense (Note 22)Compensation expenses
Loss on sales of fixed assets (Note 11)
Loss on disposal of fixed assets (Note 11)
Loss on impairment of fixed assets (Note 12)
Loss on valuation of investment securities
Loss on liquidation of subsidiaries and affiliates
Other
Total other expenses

108
567
87
0
79
130
112
22
76
1,186

103
575
ー
34
38
3
115
ー
171
1,041

842
4,698
ー
278
310
25
940
ー
1,397
8,506

2,271

3,254

26,587

297
93
1,881
(35)
1,917

312
(49)
2,992
ー
2,992

$

2,549
(400)
24,446
ー
24,446$

40.16

Profit before income taxes
Income taxes (Note 13)
Current
DeferredProfitLoss attributable to non-controlling interests
Profit attributable to owners of parent

¥

¥

Yen

Per share data (Note 15)
Total net assets
Profit attributable to owners of parent
Basic
DilutedCash dividends¥ 4,311.91¥ 4,914.89

297.92
ー
50.00

472.14ー
70.00

U.S. dollars(Note 2)

3.86
ー
0.57

See accompanying notes to consolidated financial statements.

Consolidated Statement of Comprehensive Income
SMK Corporation and Consolidated Subsidiaries
Years ended March 31, 2021 and 2022

Thousands of
U.S. dollars(Note 2)Millions of Yen

ProfitOther comprehensive income (Note 14)
Net unrealized gains (losses) on other securities
Net unrealized gains (losses) from hedging instruments
Foreign currency translation adjustments
Retirement benefits asset and liability adjustments
Total other comprehensive income
Comprehensive income
Total comprehensive income attributable to:
Owners of parent
Non-controlling interests
See accompanying notes to consolidated financial statements.
8 ANNUAL REPORT 2022

¥

2021

1,881

¥

2022

2,992

¥

181
10
297
690
1,180
3,061

¥

137
5
593
(47)
689
3,682

¥
¥

3,097
(35)

¥
¥

3,682
ー

2022

$

24,446

$

1,119
41
4,845
(384)
5,630
30,084$$30,084ーConsolidated Statement of Changes in Net Assets
SMK Corporation and Consolidated Subsidiaries
Years ended March 31, 2021 and 2022

Millions of yen

Shareholders’ equity

Balance at April 1, 2020
Cash dividends paid
Profit attributable to owners of parent
Acquisition of treasury stock
Net changes in items otherthan shareholders’ equity
Total changes
Balance at March 31, 2021
Balance at April 1, 2021
Cumulative effect of changein accounting principle
Restated balance at April 2021
Cash dividends paid
Profit attributable toowners of parent
Acquisition of treasury stock
Net changes in items otherthan shareholders’ equity
Total changes
Balance at March 31, 2022

Number ofshares ofcommonstock

Commonstock

CapitalsurplusRetainedearnings

Accumulated other comprehensive income

Total
Net unrealized Net unrealized
Foreign Retirement accumulated
otherTotal gains (losses) gains (losses)
currency benefits asset
Treasury shareholders’on other from hedging translation and liability comprehensive
incomestock
equitysecurities instruments adjustments adjustments

7,500,000 ¥ 7,996 ¥ 12,057 ¥ 11,582 ¥ (4,391) ¥ 27,245 ¥
(259)
(259)
1,917
1,917
(3)
(3)
ー
7,500,000
7,500,000

ー
7,996
7,996

ー
12,057
12,057

1,658
13,241
13,241(3)(4,394)(4,394)15
7,500,000

7,996

12,057

13,256(323)

1,655
28,90028,900Noncontrollinginterests

Total
net assets

106 ¥(18) ¥ (2,295) ¥(122) ¥ (2,329) ¥(286) ¥ 24,629
(259)
1,917
(3)

181

10

297

690

1,180

286

1,466

181
288
288

10
(7)
(7)

297
(1,997)(1,997)

690
568
568

1,180
(1,149)(1,149)

286
ー
ー

3,122
27,751
27,751

15(4,394)

2,992
(481)

28,915
(323)

15
288

(7)

(1,997)568(1,149)ー

27,766
(323)

2,992

2,992

(481)

(481)

ー
ー
ー
2,668
(481)
2,187
7,500,000 ¥ 7,996 ¥ 12,057 ¥ 15,925 ¥ (4,876) ¥ 31,102 ¥

137

5

593

137
425 ¥

5
593
(2) ¥ (1,404) ¥

(47)

689

ー

689

(47)
520 ¥

689
(459) ¥

ー2,876
ー ¥ 30,643

Thousands of U.S. dollars (Note 2)

Shareholders’ equity

Balance at April 1, 2021
Cumulative effect of changein accounting principle
Restated balance at April 2021
Cash dividends paid
Profit attributable toowners of parent
Acquisition of treasury stock
Net changes in items otherthan shareholders’ equity
Total changes
Balance at March 31, 2022

Commonstock

CapitalsurplusRetainedearnings

Accumulated other comprehensive income

Total
Net unrealized Net unrealized
Foreign Retirement accumulated
otherTotal gains (losses) gains (losses)
currency benefits asset
Treasury shareholders’on other from hedging translation and liability comprehensivestock
incomeequitysecurities instruments adjustments adjustments$ 65,332 $ 98,513 $ 108,187 $ (35,902) $ 236,130 $ 2,353 $123$ 65,332 $ 98,513(57) $ (16,317) $ 4,641 $ (9,388) $Noncontrollinginterests

ー $ 226,742

123

123

108,310 $ (35,902) $ 236,253 $ 2,353 $(2,639)(2,639)24,446(3,930)Total net
assets(57) $ (16,317) $ 4,641 $ (9,388) $ー $ 226,865(2,639)24,44624,446(3,930)(3,930)1,119

ーー
21,799(3,930) 17,869
1,119$ 65,332 $ 98,513 $ 130,117 $ (39,840) $ 254,122 $ 3,473 $

41

4,845

(384)

5,630

ー

41
4,845
(384)
5,630
(16) $ (11,472) $ 4,249 $ (3,750) $

5,630

ー
23,499ー $ 250,372

ANNUAL REPORT 2022 9

Consolidated Statement of Cash FlowsSMK Corporation and Consolidated Subsidiaries
Years ended March 31, 2021 and 2022

Thousands of
U.S. dollars(Note 2)Millions of Yen

Cash flows from operating activities
Profit before income taxes
Depreciation and amortization
Loss on impairment of fixed assets
Increase (decrease) in accrued bonuses
Increase (decrease) in accrued directors’ and officers’ retirement benefits
Increase (decrease) in accrued directors’ and officers’ share awards
Increase (decrease) in asset and liability for retirement benefits
Interest and dividend income
Interest expense(Gain) loss on sales of fixed assets(Gain) loss on valuation of investment securities
Loss on disposal of fixed assets
Loss on liquidation of subsidiaries and affiliates(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 refund
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 sales of fixed assets
Purchases of intangible fixed assets
Purchases of investment securities
Proceeds from sales of investment securities
Payments for execution of loans
Collection of loans receivable
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
Payments of lease liabilities
Purchases 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
Decrease in cash and cash equivalents resulting
from exclusion of subsidiaries from consolidation
Cash and cash equivalents at end of the year
10 ANNUAL REPORT 2022

2021

2022

2022

¥

¥

$

¥

2,271
2,237
130
134
13
14
30
(71)
108
(20)
112
79
22
367
103
(838)
7
340
(141)
4,903
77
(114)
63
(275)
4,653

3,254
2,696
3
17
25
12
(289)
(85)
103
1
115
38
ー
1,142
(2,351)(1,084)
(152)
(354)
(551)
2,543
88
(115)
234
(318)
2,433

26,58722,028
25
139
204
98
(2,361)
(695)
842
8
940
310
ー
9,331
(19,209)(8,857)(1,242)(2,892)(4,502)
20,778
719
(940)
1,912
(2,598)19,879(75)
98(2,334)
52
(26)
(63)
0
(9)
31
(2,325)(57)
66(1,976)
415
(35)
(37)
ー
(26)
19
(1,631)(466)
539(16,145)
3,391
(286)
(302)
ー
(212)
155
(13,326)(1,950)1,400(3,055)
(37)
(1)
(259)
(3,904)(94)(1,671)
10,437(2,000)3,800(1,667)
(301)
(479)
(323)
(971)
(66)
(236)
8,742

(16,341)
31,048(13,620)(2,459)(3,914)(2,639)(7,934)(539)(1,928)71,427

(24)

ー

ー

8,742

¥

8,505

$

69,491

Notes to Consolidated Financial Statements
SMK Corporation and Consolidated Subsidiaries

Note 1. Summary of significant accounting policies( a ) Basis of presenting financial statements
The accompanying consolidated financial statements of SMK Corporation (the “Company”) and consolidated subsidiaries
are prepared on the basis of accounting principles generally accepted in Japan, which are different in certain respects as tothe application and disclosure requirements of International Financial Reporting Standards, and are compiled from theconsolidated financial statements prepared by the Company as required by the Financial Instruments and Exchange Act ofJapan. For the purpose of this document, certain reclassifications have been made in the accompanying consolidated
financial statements to facilitate understanding by readers outside Japan. In addition, certain reclassifications have been
made to the prior year’s consolidated financial statements to conform to the current year’s presentation.
( b ) Basis of consolidation and investments in affiliated companies
The accompanying consolidated financial statements include the accounts of the Company and its subsidiaries over which
substantial control is exercised either through majority ownership of voting stock and/or by other means.
All significant intercompany balances and transactions have been eliminated in consolidation.
Certain foreign subsidiaries’ fiscal period ends on December 31, which differs from the year-end date of the Company;
however, the financial statements of these companies were tentatively closed as of March 31 and necessary adjustments
for consolidation were made.
Investments in affiliates (companies over which the Company has the ability to exercise significant influence) are accounted
for by the equity method. Consolidated profit attributable to owners of parent includes the Company’s equity in the current
profit attributable to owners of parent or loss of such companies, after the elimination of unrealized intercompany profits.
All assets and liabilities of the Company’s subsidiaries are revalued at the acquisition, if applicable, and the excess of costover the underlying net assets at the date of acquisition is amortized over a period of five years on a straight-line basis if
such excess is material, or charged to income when incurred if immaterial.
( c ) Scope of consolidation
Number of consolidated subsidiaries: 25( d ) Application of equity method of accounting
Number of affiliated companies accounted for using the equity method: 1( e ) Translation of foreign currencies
Receivables and payables denominated in foreign currencies are translated into yen at the appropriate closing rate at theend of the reporting period, and differences arising from the translation are included in the consolidated statement ofincome.
All asset and liability accounts of foreign subsidiaries and affiliates are translated into Japanese yen at the appropriate
closing rate at the end of the reporting period. Revenue and expense accounts are translated at the average rates of
exchange prevailing during the year. Differences arising from the translation are presented as foreign currency translation
adjustments in the consolidated financial statements.
( f ) Cash and cash equivalents
Cash and cash equivalents consist of cash on hand, cash in banks which can be withdrawn at any time and short-term
investments with a maturity of three months or less when purchased which can easily be converted to cash and are
subject to little risk of change in value.
( g ) Inventories
Inventories are mainly stated at the lower of cost or market. The following inventories are measured principally by theirrespective methods:
Finished products: Retail cost method
Work in process: Actual raw material cost, determined by the most recent purchase cost method, plus direct labor costs
and manufacturing overheads
Raw materials and supplies: Most recent purchase cost method
Consolidated subsidiaries adopt mainly the moving average method.
( h ) Securities
Marketable securities classified as other securities are carried at fair value with any changes in unrealized holding gain or
loss, net of the applicable income taxes, included directly in net assets. Non-marketable securities classified as othersecurities are carried at cost. Cost of securities sold is determined by the moving average method.
( i ) Derivatives
Derivatives are stated at fair value.
( j ) Property, plant and equipment and depreciation (except for leased assets, Right of use assets)
Property, plant and equipment are stated at cost. Depreciation of property, plant and equipment is calculated principally by
the declining-balance method for the Company and its domestic subsidiaries, and by the straight-line method mainly forforeign subsidiaries. Certain buildings of the Company and its domestic subsidiaries acquired on or after April 1, 1998 andfacilities attached to buildings and other non-building structures acquired on or after April 1, 2016 are depreciated by thestraight-line method.
The estimated useful lives of the assets are as follows:
Buildings:
10 to 50 years
Machinery and vehicles:
4 to 10 years
Tooling and office furniture:
2 to 6 years
The residual values of the property, plant and equipment acquired on or before March 31, 2007 are depreciated equally
over a period of 5 years starting from the year following the year in which they have been depreciated up to theirdepreciable limit or 5% of the acquisition cost.
( k ) Intangible assets (except for leased assets)
Amortization of intangible assets is calculated by the straight-line method. Software for own use is amortized based on theutilizable period (5 years).
ANNUAL REPORT 2022 11

( l ) Leased assets
Noncancellable lease transaction that transfer substantially all risks and rewards associated with the ownership of assets
are accounted for as finance leases. Depreciation of leased assets is calculated by the straight-line method based on thelease life as the useful life and the residual value is zero.
(m ) Right of use assets
Depreciation of right of use assets is calculated by the straight-line method based on the lease term as the useful life andthe residual value is zero.
( n ) Allowance for doubtful accounts
The allowance for doubtful accounts is provided based on past experience for normal receivables and on an estimate of thecollectability of receivables from companies in financial difficulty.
( o ) Accrued bonus
Accrued bonuses are provided on the estimate of the amounts to be paid in the future by the Company, domestic
consolidated subsidiaries and certain overseas subsidiaries based on an accrual basis at the balance sheet date.
( p ) Accrued directors’ and officers’ bonuses
Accrued directors’ and officers’ bonuses are provided on the estimate of the amounts to be paid subsequent to the balance
sheet date.
( q ) Accrued directors’ and officers’ retirement benefits
Accrued directors’ and officers’ retirement benefits have been provided at an amount equal to 100% of the amount which
would be required to be paid based on the Company’s bylaws if all directors and officers resigned from the Company on
the balance sheet date.
( r ) Accrued board benefit trust
Accrued board benefit trust have been provided at an amount equal to 100% of the amount which would be required to be
paid based on the Company’s bylaws if all directors and officers exercised board benefit trust on the balance sheet date.
( s ) Retirement benefits
Asset and liability for retirement benefits for employees are recorded mainly at the amount calculated based on theretirement benefit obligation and the fair value of the pension plan assets as of balance sheet date.
The retirement benefit obligation for employees is attributed to each period by the benefit formula method over theestimated years of service of the eligible employees. Actuarial gain or loss is amortized in the year following the year inwhich the gain or loss is recognized primarily by the straight-line method over a period of 5 years, which is within theestimated average remaining years of service of employees.
( t ) Significant revenue and expenses
The main performance obligations in key businesses of the Company and its consolidated subsidiaries concerning revenue
from contracts with customers is the sales of the parts for electro-communication device and electronic equipment inJapan and abroad. For the sales of these products, revenue is recognized at the point in time when the products aredelivered to the customer. However, for sales within Japan of these products, revenue is recognized at the time of
shipment in accordance with the alternative treatment prescribed in Paragraph 98 of “the Implementation Guidance on
Accounting Standard for Revenue Recognition”.
( u ) Hedge accounting(1) Method of hedge accounting
Deferral hedge accounting is applied for interest rate swap transactions.
The exceptional treatment is applied for interest rate swap transactions meeting certain conditions.
(2) Hedging instruments and hedged items
Hedging instruments: interest rate swaps
Hedged items: long-term debt subject to interest rate fluctuation risk.
(3 ) Hedging policy
The Company uses interest rate swaps to hedge risks from interest rate fluctuations on borrowings, only whenapproved by the management.
(4) Assessment of effectiveness of hedging activities
The Company evaluates the hedge effectiveness by comparing accumulated fluctuations of the hedging instrument andhedged item every quarter.
When the exceptional treatment is applied for interest rate swaps, the assessment of hedge effectiveness is omitted.
( v ) Income taxes
Deferred income taxes are recognized based on the differences between financial reporting and the tax bases of the assets
and liabilities and are calculated using the enacted tax rates and laws which will be in effect when the differences are
expected to reverse.
( w ) Per share information
Basic net income per share is computed based on the net income available for distribution to shareholders of common
stock and weighted-average number of shares of common stock outstanding during the year. Diluted profit attributable toowners of parent per share is computed based on the profit attributable to owners of parent available for distribution toshareholders and average number of shares of common stock outstanding during each year after giving effect to thedilutive potential of shares of common stock to be issued upon the conversion of convertible bonds.
Net assets per share is computed based on the net assets available for distribution to shareholders of common stock andthe number of shares of common stock outstanding at the balance sheet date. Cash dividends per share shown for eachperiod in the consolidated statement of income represent the dividends applicable to the respective period.
( x ) Consumption taxes on assets
Nondeductible consumption taxes on assets are expensed in the consolidated financial statements.
( y ) Consolidated taxation system
The Company and its consolidated subsidiaries apply consolidated taxation system.
( z ) Adoption of tax effect accounting for the transition from the consolidated taxation system to the group tax sharing system.
The Company and its domestic subsidiaries expect to shift to the group tax sharing system from the beginning of the next
fiscal year. However for items that have transitioned to the group tax sharing system and those for which the nonconsolidated tax payment system have been reviewed in line with the transition to the group tax sharing system,
established under the ” Act for Partial Revision of the Income Tax Act and Other Acts” (Act No. 8 of 2020), the Company

12 ANNUAL REPORT 2022

adopts the treatment set forth in Paragraph 3 of the “Practical Solution on the Treatment of Tax Effect Accounting for theTransition from the Consolidated Taxation System to the Group Tax Sharing System” (ASBJ Practical Issues Task Force No.
39, March 31, 2020) not to apply provisions of Paragraph 44 of the “Implementation Guidance on Tax Effect Accounting”(ASBJ Guidance No. 28, February 16, 2018). The amounts of deferred tax assets and deferred tax liabilities are, therefore,
based on provisions of the tax code prior to the revision.
In addition, the Company and its domestic subsidiaries expect to adopt “Practical solution on the Accounting and Disclosure
under the Group Tax Sharing System” (ASBJ Practical Issues Task Force No. 42, August 12, 2021) from the beginning of
the next fiscal year.
(aa) Significant accounting estimates
1. Impairment of fixed assets(1) Amount recorded in the consolidated financial statements
2021

Millions of yen

2022

Thousands of U.S. dollars
2022

2022

Thousands of U.S. dollars
2022

Property, plant and equipment¥ 15,403¥ 16,190$ 132,282
Note: Of which, SCI Division (Facilities of remote controls, switches and camera modules): ¥503 million ($4,110
thousand) for the year ended March 31, 2022.
Impairment loss

¥

2021

Millions of yen

130

¥

3

$

25

Note: Of which, SCI Division (Facilities of remote controls, switches and camera modules): ¥－ million ($－ thousand)for the year ended March 31, 2022.
(2) Other information that facilitates users’ understanding of financial statements( i ) Calculation method
Assets or asset groups that have an indication of impairment are tested for impairment, and when it isdetermined that an impairment loss should be recognized, the book value is reduced to the recoverable amountand an impairment loss is recorded. The recoverable amount is measured at value in use or net realizable value.
Value in use is calculated by discounting future net cash flows estimated based on the future business plan tothe present value.
( ii ) Key assumptions
The key assumptions used in estimating future cash flows are forecasts of sales volume and sales prices, which
serve the basis of the business plan. The forecast of sales volume is calculated based on the estimated futureorder documents prepared by the customers. The impact of COVID-19 has been calculated assuming a main
scenario in which vaccination will expand and prevention of COVID-19 and economic growth will coexist.
(iii) Effect on the consolidated financial statements for the next fiscal year ending March 31, 2023
The estimation of projected sales volume, which is one of the key assumptions, is highly uncertain. If the
projected sales volume decreases significantly in the future due to the timing as to when the COVID-19
pandemic will subside and the impact that the pandemic will have on the economic environment, or due tochanges in the market trend, impairment losses may be incurred in the year ending March 31, 2023.
2. Recoverability of deferred tax assets(1) Amount recorded in the consolidated financial statements
2021

Millions of yen

2022

Thousands of U.S. dollars
2022

Deferred tax assets, net
¥
92
¥
126
$ 1,029
Note: The amount before offsetting with deferred tax liabilities is ¥566 million ($4,625 thousand) for the year ended
March 31, 2022.
(2) Other information that facilitates users’ understanding of financial statements( i ) Calculation method
The recoverability of deferred tax assets for deductible temporary differences and operating loss carryforwards
for tax purposes is determined by estimating taxable income based on future profitability. Estimates of taxable
income derived from future profitability are based on future business plans.
( ii ) Key assumptions
The key assumptions used in estimating taxable income are forecasts of sales volume and sales prices, which
serve the basis of the business plan. The forecast of sales volume is calculated based on the estimated futureorder documents prepared by the customers. The impact of COVID-19 has been calculated assuming a main
scenario in which vaccination will expand and prevention of COVID-19 and economic growth will coexist.
(iii) Effect on the consolidated financial statements for the next fiscal year ending March 31, 2023
The estimation of projected sales volume, which is one of the key assumptions, is highly uncertain. If the
projected sales volume decreases significantly in the future due to the timing as to when the COVID-19
pandemic will subside and the impact that the pandemic will have on the economic environment, or due tochanges in the market trend, changes in estimates of taxable income may result in the reversal of deferred tax
assets.
(ab) Change in accounting policies
Application of Accounting Standard for Revenue Recognition“Accounting Standard for Revenue Recognition” ((ASBJ statement No.29, March 31, 2020), hereinafter “Revenue
Recognition Standard”) has been adopted from the beginning of the current fiscal year, and revenue is recognized in theamount expected to be received in exchange for applicable goods or services when control of the promised good or service
is transferred to the customer.
As a result, certain of the Companies’ subsidiaries previously recognized revenue at the time of shipment, but has changed
its method of accounting to recognize revenue at the point in time when the products are delivered to the customer. For
sales within Japan of these products, revenue is recognized at the time of shipment in case the term from the shipping to
the customers’ obtaining of control of the products is normal in accordance with the alternative treatment prescribed in
Paragraph 98 of “the Implementation Guidance on Accounting Standard for Revenue Recognition” . For supply-for-a-fee
transactions, the company previously recognized revenue at the time of transferring of the supplied materials, but haschanged its method of accounting to recognize processing fee as revenue at the time of repurchasing of materials.

ANNUAL REPORT 2022 13

The Revenue Recognition Standard has been applied effective from the beginning of the current fiscal year in accordance withthe transitional treatment prescribed in Paragraph 84 of the Accounting Standard for Revenue Recognition, and the cumulative
effects of retroactively applying new accounting policies have been reflected in the beginning balance of retained earnings forthe current fiscal year. However, as provided for in Paragraph 86 of the Revenue Recognition Standard, the new accounting
policies have not been retroactively adopted for contracts in which substantially all revenue amounts have been recognizedprior to the beginning of the current fiscal year in accordance with the previous treatment.
In relation to this, “notes and accounts receivable, trade” previously presented in current assets have been reclassified to“notes receivable, trade” and “accounts receivable, trade” in consolidated balance sheet as of March 31, 2022. However, thischange in presentation is not applied in consolidated balance sheet as of March 31, 2021 in accordance with the transitional
treatment provided for in Paragraph 89-2 of the Revenue Recognition Standard.
As a result, in the consolidated balance sheet for the current fiscal year, “net sales” decreased by ¥10 million ($82 thousand),“cost of sales” decreased by ¥46 million ($376 thousand), “operating profit” and “profit before income taxes” increased by ¥36
million ($294 thousand), respectively, and “profit” increased by ¥37 million ($302 thousand). Also, the beginning balance ofretained earnings for the current fiscal year increased by ¥15 million ($123 thousand).
In accordance with the transitional treatment provided for in Paragraph 89-3 of the Revenue Recognition Standard, notes
related to revenue recognition for the prior fiscal year are omitted.
Application of Accounting Standard for Fair Value Measurement“Accounting Standard for Fair Value Measurement” ((ASBJ Statement No.30, July 4, 2019) hereinafter “Fair Value Measurement
Standard” ) has been adopted from the beginning of the current fiscal year, and new accounting policies prescribed by the Fair
Value Measurement Standard will be adopted prospectively in accordance with the transitional treatment prescribed in
Paragraph 19 of the Fair Value Measurement Standard and Paragraph 44-2 of the Accounting Standard for Financial
Instruments (ASBJ Statement No.10, July 4, 2019). Also, there is no impact on the consolidated financial statement.
In addition, notes regarding the breakdown of fair value of financial instruments by level are included in the Note 16, “Financial
Instruments” . However, notes for the prior fiscal year have not been included in accordance with the transitional treatmentprescribed in Paragraph 7-4 of the Implementation Guidance on Disclosures about Fair Value of Financial Instruments (ASBJ
Guidance No.19, July 4, 2019).
(ac) Change in presentation(Consolidated Balance Sheet)
Lease liabilities previously presented as “other current liabilities” in current liabilities and as “other long-term liabilities” inlong-term liabilities have been reclassified to “lease liabilities”, respectively for the year ended March 31, 2022 because of its
increased quantitative materiality.
As a result, ¥1,495 million ($12,215 thousand) of “other current liabilities” in current liabilities and ¥723 million ($5,907
thousand) of “other long-term liabilities” in long-term liabilities previously presented in consolidated balance sheet for the year
ended March 31, 2021 have been reclassified to ¥53 million ($433 thousand) of “lease liabilities” and ¥1,442 million ($11,782
thousand) of “other current liabilities” and ¥32 million ($261 thousand) of “lease liabilities” and ¥691 million ($5,646 thousand)of “other long-term liabilities” in consolidated balance sheet as of March 31, 2021.
(ad) Additional information
Introduction of Board Benefit TrustWe introduced a new share-based compensation plan, a “Board Benefit Trust (BBT)” (the “Plan” ) for directors (including
executive officer, excluding outside directors; “Directors” ) based on the resolution at the 96th General Meeting of
Shareholders on June 22, 2018 for the purpose of raising awareness of contributing to the improvement of medium- tolong-term business results.
Regarding the accounting treatment for the plan, the gross method is adopted based on the “Practical Solution on Transactionsof Delivering the Company’ s Own Stock to Employees, etc. through Trusts” (ASBJ Practical Issue Task Force No.30, March 26,2015).
(1) Outline of the Plan
The Plan is a share-based compensation plan under which our shares are acquired through a trust (the trust established inaccordance with the Plan, the “Trust”) by using the funds contributed by the Company. Directors will receive theCompany’s shares through the Trust in accordance with the officer stock benefit rules prescribed by the Company. In
principle, Directors will receive benefits, such as the Company’s shares, on their retirement.
(2) The Company’s shares remaining in the Trust
The Company’s shares remaining in the Board Benefit Trust (BBT) are recorded by the Company as treasury stock under
net assets at their book value in the BBT (excluding the amount of ancillary expenses). As of March 31, 2021, the bookvalue of the said treasury stock was ¥160 million ($1,307 thousand), and the number of shares was 43,800.

Note 2. U.S. dollar amounts
The U.S. dollar amounts are stated solely for the convenience of the reader at the rate of U.S. $1.00 = ¥122.39, the approximate
rate of exchange at March 31, 2022. The translation should not be construed as a representation that the Japanese yenamounts actually represent, have been or could be converted into U.S. dollars at that or any other rate.

14 ANNUAL REPORT 2022

Note 3. Inventories
Inventories as of March 31, 2021 and 2022 consisted of the following:
Finished products
Work in process
Raw materials and supplies
Total

¥
¥

2021

Millions of yen

2,721
707
3,118
6,547

¥
¥

2022

3,592
961
4,991
9,545

Thousands of U.S. dollars
2022$ 29,349
7,852
40,779$ 77,988

The write-downs of inventories resulting from decreased profitability for the years ended March 31, 2021 and 2022 were as
follows:
Millions of yen

Cost of sales

¥

2021

370

Thousands of U.S. dollars

¥

2022

345

$

2022

2,819

Note 4. Reduction entries
Reduction entries due to acceptance of prefectural government’s grants relating to property, plant and equipment as of March 31,
2021 and 2022 were as follows:
Land

¥

2021

Millions of yen

101

¥

2022

101

Thousands of U.S. dollars
2022

$

825

Note 5. Short-term loans payable and long-term debt
Short-term loans payable and long-term debt as of March 31, 2021 and 2022 consisted of the following:
Millions of yen
Short-term loans payable
Average interest rate on short-term loans payable, principally from banks, is 0.47%
SecuredUnsecured
Total

2021

¥
¥

Long-term debt
Average interest rate on long-term debt, principally from banks, is 0.99%
SecuredUnsecured
Less: portion due within one year
Total

900
3,554
4,454
2021

¥
¥

2022

¥
¥
Millions of yen

2,832
4,016
(1,667)
5,180

—
2,300
2,300

Thousands of U.S. dollars
2022

$

—
18,792$ 18,792

2022

Thousands of U.S. dollars
2022

4,628
4,352
(2,766)¥ 6,214$ 37,814
35,558(22,600)$ 50,772¥

The assets pledged as collateral for short-term and long-term debt as of March 31, 2021 and 2022 were summarized as follows:
Millions of yen(1) Factory foundation
Buildings
Machinery and vehicles
Tooling and office furniture
Land
Total
(2) Other
Buildings
Tooling and office furniture
Land
Total

Thousands of U.S. dollars

2021

¥

¥
¥
¥

1,066
51
90
256
1,465
212
1
39
252

2022

¥

¥
¥
¥

1,019
44
80
256
1,400
200
0
39
240

2022

$

8,326
360
654
2,092
$ 11,439
$
$

1,634
0
319
1,961

The aggregate annual maturities of long-term debt (including current portion) outstanding as of March 31, 2022 weresummarized as follows:
Millions of yen
Thousands of U.S. dollars
Year ending March 31,
2023¥ 2,766$ 22,600
3,654
29,855
2024
2025
720
5,883
720
5,883
2026
720
5,883
2027
2028 and thereafter
400
3,268
Total
¥ 8,980$ 73,372

Note 6. Other current liabilities
Of which, contract liabilities are as follows.
Contract liabilities

Millions of yen
2022

¥

56

Thousands of U.S. dollars
2022

$

458

ANNUAL REPORT 2022 15

Note 7. Retirement benefits plans
The Company and certain of its domestic consolidated subsidiaries have either funded or unfunded defined benefit pension
plans and defined contribution benefit pension plans.
The Company has funded corporate pension fund plans and defined contribution pension plans. As a defined benefit pension
plan, the Company has adopted a cash balance plan. Under the cash balance plan, the plan sponsor contributes money into aplan participant’s account based on the points according to the employee’s years of service and job performance and the points
are calculated with an interest credit that reflects changes in market interest rates.
Certain subsidiaries have funded and unfunded lump-sum payment plans and defined contribution pension plans. The simplified
method is applied for the calculation of liability for retirement benefits and retirement benefit expense of certain domestic
subsidiaries.
The changes in the retirement benefit obligation during the years ended March 31, 2021 and 2022 were as follows:
Balance at the beginning of the year
Service cost
Interest cost
Actuarial gain and loss
Retirement benefit paid
Other
Balance at the end of the year

¥

¥

2021

Millions of yen

5,877
262
38
48
(589)
5
5,644

2022

Thousands of U.S. dollars
2022

2022

Thousands of U.S. dollars
2022¥ 5,644
247
38
43
(621)
10
¥ 5,362

The changes in plan assets during the years ended March 31, 2021 and 2022 were as follows:
Balance at the beginning of the year
Expected return on plan assets
Actuarial gain and loss
Contributions by the Company
Retirement benefits paid
Balance at the end of the year

¥

¥

2021

Millions of yen

6,929
126
945
220
(580)
7,641

¥ 7,641
134
182
226
(616)
¥ 7,567$ 46,115
2,018
310
351
(5,074)82$ 43,811$ 62,432
1,095
1,487
1,847
(5,033)$ 61,827

The funded status of the plans and the amounts recognized in the consolidated balance sheet as of March 31, 2021 and 2022
were as follows:¥ 5,338(7,567)(2,229)23(2,205)

Thousands of U.S. dollars
2022

Unfunded retirement benefit obligation
Net liability for retirement benefits in the balance sheet

5,623(7,641)(2,017)20(1,996)2022

Liability for retirement benefits
Asset for retirement benefits
Net liability for retirement benefits in the balance sheet

61(2,058)¥ (1,996)

39(2,245)¥ (2,205)

319(18,343)$ (18,016)

Funded retirement benefit obligation
Plan assets at fair value

¥

2021

Millions of yen$ 43,615(61,827)(18,212)188(18,016)

The components of retirement benefit expense for the years ended March 31, 2021 and 2022 were as follows:
Service cost
Interest cost
Expected return on plan assets
Amortization of actuarial gain and loss
Retirement benefit expense

¥

¥

2021

Millions of yen

259
38
(126)
93
265

¥

¥

2022

248
38
(134)
(220)
(68)

Thousands of U.S. dollars
2022

$

2,026
310
(1,095)(1,798)$(556)

The components of retirement benefits asset and liability adjustments included in other comprehensive income (before tax
effect) for the years ended March 31, 2021 and 2022 were as follows:
Actuarial gain and loss

¥

2021

Millions of yen

990

¥

2022

(77)

Thousands of U.S. dollars
2022

$

(629)

The components of retirement benefits asset and liability adjustments included in accumulated other comprehensive income(before tax effect) as of March 31, 2021 and 2022 were as follows:
Unrecognized actuarial gain and loss

¥

2021

811

Millions of yen

¥

2022

733

Thousands of U.S. dollars
2022

$

5,989

The fair value of plan assets, by major category, as a percentage of total plan assets as of March 31, 2021 and 2022 were as
follows:
Bonds
StocksLife insurances
Funds
Other
Total
16 ANNUAL REPORT 2022

2021

7.1%
34.2
33.4
9.4
15.9
100.0%

2022

7.1%
36.8
32.0
14.0
10.1
100.0%

1. The total plan assets include retirement benefit trusts which constitute 14.5% for the year ended March 31, 2021 and 17.2%
for the year ended March 31, 2022.
2. The expected rates of return on plan assets has been estimated based on the anticipated allocation of plan assets to each asset
category and the expected long-term returns on plan assets held in each category.
The required contributions to the defined contribution plans by the Company and its consolidated subsidiaries for the years ended
March 31, 2021 and 2022 amounted to ¥92 million and ¥83 million ($678 thousand), respectively.
Assumptions to calculate the actuarial present value of the benefit obligation and the expected return on plan assets as of March
31, 2021 and 2022 were as follows:
2021

Discount rate
Re-evaluation rate
Expected rates of return on plan assets

2022

0.6%
0.58%
2.0%

0.6%
0.51%
2.0%

Note 8. Net assets
Information regarding changes in net assets for the years ended March 31, 2021 and 2022 was as follows:
1. Shares issued and outstanding / Treasury stock

Types of shares

Shares issued:
Common stock
Treasury stock:
Common stock

Number ofshares at April
1, 2020

2021

Increase

Decrease

Number ofshares at March
31, 2021

Number ofshares at April
1, 20212022

Increase

Decrease

Number ofshares at March
31, 2022

7,500,000——

7,500,000

7,500,000——

7,500,000

1,062,909

1,127

—

1,064,036

1,064,036

201,150—

1,265,186

The Company’s shares remaining in the Board Benefit Trust (BBT) are included in treasury stock (43,800 shares at March 31, 2021
and 2022).
Details of the increase of treasury stock are as follows:
Increase due to purchase of shares
Increase due to purchase of shares of less than standard unit
Increase in shares held by affiliates accounted for by the equity method

Number of shares

2021

2022

—
573
554

200,000
514
636

2. Dividends(1) Dividends paid
Resolution

Type of shares

Shareholders’ meeting on Common
stockJune 23, 2020

Total dividends Dividends per share(Millions of yen)
(Yen)

259

40

2021

Cut-off date

Effective date

March 31, 2020

June 24, 2020

2022

Resolution

Type of shares

Shareholders’ meeting on Common
June 23, 2021
stock

Total dividends Dividends per share(Millions of yen)
(Yen)

324

50

2022

Cut-off date

Effective date

March 31, 2021

June 24, 2021

Total dividends(Thousands of
U.S. dollars)

Dividends per share(U.S. dollars)

2,647

0.41

(2) Dividends with the cut-off date in the year ended March 31, 2021 and the effective date in the year ending March 31, 2022
Resolution

Total dividends Dividends per share
Type of shares Source of dividends (Millions of yen)
(Yen)

Shareholders’Commonmeeting on
stock
June 23, 2021

Retainedearnings

324

50

2021

Cut-off date

Effective date

March 31, 2021

June 24, 2021

Dividends with the cut-off date in the year ended March 31, 2022 and the effective date in the year ending March 31, 2023
2022

Resolution

Total dividends Dividends per share
Type of shares Source of dividends (Millions of yen)
(Yen)

Shareholders’Commonmeeting on
stock
June 22, 2022

Retainedearnings

440

70

2022

Cut-off date

Effective date

March 31, 2022

June 23, 2022

Total dividends(Thousands of
U.S. dollars)

3,595

Dividends per share(U.S. dollars)

0.57

Dividends of the Company’s shares remaining in the Board Benefit Trust (BBT) ¥3 million ($25 thousand) are included in total
dividends based on the resolution at shareholders’ meeting on June 22, 2022.

Note 9. Research and development costs
Research and development costs included in cost of sales and selling, general and administrative expenses for the years ended
March 31, 2021 and 2022 amounted to ¥2,515 million and ¥2,384 million ($19,479 thousand), respectively.

ANNUAL REPORT 2022 17

Note 10. Selling, general and administrative expenses
Major elements of selling, general and administrative expenses for the years ended March 31, 2021 and 2022 were as follows:
Salaries and wages of employees
Provision for bonus
Provision for directors’ and officers’ bonus
Retirement benefit cost
Provision for directors’ and officers’ retirement benefits
Provision for directors’ and officers’ share awards
Provision for doubtful accounts¥

Millions of yen

2021

3,601
308
28
131
25
14
2

Thousands of U.S. dollars
2022

2022

¥ 3,706
308
30
11
24
12
(34)

$ 30,280
2,517
245
90
196
98
(278)

Note 11. Gains and losses of fixed assets
The components of gains and losses of fixed assets for the years ended March 31, 2021 and 2022 were as follows:
Gains on sales of fixed assets
Buildings
Machinery and vehicles
Tooling and office furniture
Land
Total

¥

Millions of yen

2021

—
14
7
—
21

¥

Loss on sales of fixed assets
Buildings
Machinery and vehicles
Tooling and office furniture
Land
Total

¥

2021

¥

—
—
0
—
0

¥

¥

—
60
19
—
79

¥

¥

$

Thousands of U.S. dollars
2022

31
1
0
1
34

$

253
8
0
8
278

$

Thousands of U.S. dollars
2022

2022

16
13
8
0
38

¥

131
25
16
82
261

$

2022

¥
Millions of yen

2021

16
3
2
10
32

¥
Millions of yen

Loss on disposal of fixed assets
Buildings
Machinery and vehicles
Tooling and office furniture
Intangible asset
Total

¥

Thousands of U.S. dollars
2022

2022

$

131
106
65
0
310

$

Note 12. Loss on impairment of fixed assets
An impairment loss is recognized when the carrying amount of an asset exceeds undiscounted future net cash flows which are
expected to be generated by such asset. The impairment loss is measured by the amount by which the carrying amount of theasset exceeds its recoverable amount being the higher of the discounted future net cash flows or net realizable value.
For the year ended March 31, 2021, impairment losses were recognized for the following assets.
Millions of yen
2021

Asset group

Location

Research &Japan
Development Center

Other parts business Japan

Use

Wireless module¥
production facilities
Other parts production
facilities

Land

—

Buildings

Machinery
Toolingandand officevehiclesfurniture

LeasedassetsRight ofuse
assetsIntangible
assets

¥

¥

¥

¥

¥

—

—

¥

2

—

—

—

Total

¥

2

—

—

—

0

—

—

—

0

SMK Electronics(Europe) Ltd.

Ireland Business assets

—

0

0

0

—

13

0

15

SMK Hungary Kft.

Hungary Assets to be sold

15

44

2

2

—

—

—

64

Business assets

—

2

—

3

—

—

5

11

Real estate for rent

27

0

4

0

1

—

—

34

SMK Electronics
Technology Development China(Shenzhen) Co.,Ltd.
Showa Enterprize,
Japan
HaibaraTotal

18 ANNUAL REPORT 2022

¥

42

¥

48

¥

7

¥

10

¥

1

¥

13

¥

5

¥

130

For the year ended March 31, 2022, impairment losses were recognized for the following assets.

Millions of yen
2022

Asset group

LocationSCI Division

Japan

Total

Use

Touch sensor
production facilities

Land

Buildings

Machinery
Toolingandand officevehiclesfurniture

LeasedassetsRight ofuse
assetsIntangible
assets

¥

—

¥

3

¥

—

¥

—

¥

—

¥

—

¥

—

¥

3

¥

—

¥

3

¥

—

¥

—

¥

—

¥

—

¥

—

¥

3

Thousands of U.S. dollars
2022

Asset group

LocationSCI Division

Japan

Total

Use

Touch sensor
production facilities

Total

Land

Buildings

Machinery
Toolingandand officevehiclesfurniture

LeasedassetsRight ofuse
assetsIntangible
assets

Total

$

—

$

25

$

—

$

—

$

—

$

—

$

—

$

25

$

—

$

25

$

—

$

—

$

—

$

—

$

—

$

25

The Company’s assets for business operations are categorized into groups on a division-by-division basis and the Company’s
rental property and idle property on an individual property basis, whereas consolidated subsidiaries’ assets for business operations
are categorized into groups on a subsidiary-by-subsidiary basis and their rental property and idle property on an individual
property basis.
Of the above asset groups, SCI Division (Facilities of touch sensor) suffered declining trends in net sales and income due tointense price competition in the market. The future cash flows from their asset groups were estimated and it was found that they
could not generate sufficient profitability to recover the carrying value of the asset groups, and therefore their book value was
reduced to the recoverable amounts.
The recoverable amount of the asset group of the SCI Division (Facilities of touch sensor) was measured at value in use, andsince no future cash flows are expected, the full amount of the book value of the fixed assets regarding this business is recorded
as impairment loss.

Note 13. Income taxes
Income taxes applicable to the Company and its domestic subsidiaries comprised corporation, inhabitants’ and enterprise taxes
which, in the aggregate, resulted in statutory tax rates of approximately 30.5% for the year ended March 31, 2021 and 2022.
A reconciliation between the statutory tax rate and the effective tax rate for the years ended March 31, 2021 and 2022 were as
follows.
Statutory tax rate
Items such as entertainment expenses permanently non-deductible for tax purposes
Items such as dividend income permanently non-taxable
Change in valuation allowance
Tax credit for R&D expenses
Foreign withholding taxes
Inhabitant tax on per capita basis
Statutory tax rate differences in subsidiaries
Elimination of dividend income
Accumulated surplus of subsidiaries
Other
Effective tax rate

2021

30.5%
1.3
(6.6)
(4.0)
(3.7)
1.6
0.9
(9.0)
8.0
0.4
(2.2)
17.2%

2022

30.5%
0.5
(5.4)
(12.6)
(2.8)
0.5
0.6
(7.1)
6.8
0.8
(3.7)
8.1%

ANNUAL REPORT 2022 19

The significant components of deferred tax assets and liabilities at March 31, 2021 and 2022 were as follows:
Millions of yen

2021

Deferred tax assets:
Inventory write-down
Accrued bonuses
Intercompany profit on inventory
Liability for retirement benefits
Allowance for doubtful accounts
Impairment loss
Operating loss carryforwards for tax purposes
Other
Total gross deferred tax assets
Valuation allowance for net operating loss carryforwards
Valuation allowance for deductible temporary differences
Total valuation allowance
Total deferred tax assets¥

Deferred tax liabilities:
Asset for retirement benefits
Deferred gain on land
Advanced depreciation on buildings
Reserve for special depreciation
Net unrealized gains on other securities
Accumulated surplus of foreign subsidiaries
Valuation difference on subsidiaries
Other
Deferred tax liabilities
Net deferred tax assets

93
202
45
7
858
736
1,186
825
3,955
(1,140)(2,422)(3,563)
392

2022

¥

(628)
(36)
(5)
(4)
(114)
(116)
(308)
(38)
(1,254)
¥
(861)

102
204
63
8
38
574
2,036
828
3,856
(1,976)(1,313)(3,290)566

Thousands of U.S. dollars
2022

$

833
1,667
515
65
310
4,690
16,635
6,765
31,506(16,145)(10,728)(26,881)
4,625

(685)
(36)
(5)
—
(175)
(143)
(307)
(47)
(1,401)¥ (834)(5,597)
(294)
(41)
—
(1,430)(1,168)(2,508)(384)(11,447)$ (6,814)

1. Valuation allowance has decreased by ¥273 million ($2,231 thousand). This decrease is due to the reversal of valuation
allowance for impairment loss in the Company and its consolidated subsidiaries ¥192 million ($1,569 thousand).
2. A breakdown of net operating loss carryforwards and valuation allowance by expiry date as of March 31, 2021 and 2022 is asfollows:

2021

Net operating loss carryforwards (a)Valuation allowance
Deferred tax assets

2022

Net operating loss carryforwards (a)Valuation allowance
Deferred tax assets

2022

Net operating loss carryforwards (a)Valuation allowance
Deferred tax assets

Due inone yearor less

¥

¥

14
(14)
—

Due inone yearor less

¥

¥

1
(1)
—

Due inone yearor less

$
$

8
(8)
—

Millions of yen

Due after
one yearthrough
two years

Due after
two years
throughthree years

Due after
three years
throughfour years

¥

¥

¥

¥

1
(1)
—

¥

4
(4)
—

¥

149
(149)
—

Millions of yen

Due after
one yearthrough
two years

Due after
two years
throughthree years

Due after
three years
throughfour years

¥

¥

¥

¥

162
(162)
—

Due after
one yearthrough
two years$ 1,324(1,324)
$
—

¥

11
(11)
—

¥

29
(29)
—

Thousands of U.S. dollars

Due after
two years
throughthree years

Due after
three years
throughfour years

$

$

$

90
(90)
—

$

237
(237)
—

Due after
four years
throughfive years

¥

¥

31
(31)
—

Due after
four years
throughfive years

¥

¥

6
(6)
—

Due after
four years
throughfive years

$

$

49
(49)
—

Due after
five years

¥

¥

983
(938)
45

Due after
five years¥ 1,825(1,764)¥60

Due after
five years$ 14,911(14,413)
$
490

Total

¥ 1,186(1,140)
¥
45

Total

¥ 2,036(1,976)
¥
60

Total

$ 16,635(16,145)$490(a) The amount is determined by multiplying the corresponding net operating loss carryforwards by the effective statutory tax rate.

20 ANNUAL REPORT 2022

Note 14. Other comprehensive income
The following table presents reclassification adjustments and tax effects allocated to each component of other comprehensive
income for the years ended March 31, 2021 and 2022.
Net unrealized gains (losses) on other securities:
Amount arising during the year
Reclassification adjustments for gains and losses included in
profit attributable to owners of parent
Amount before tax effectTax effectNet unrealized gains (losses) on other securities
Net unrealized gains (losses) from hedging instruments:
Amount arising during the year
Reclassification adjustments for gains and losses included in
profit attributable to owners of parent
Amount before tax effectTax effectNet unrealized gains (losses) from hedging instruments
Foreign currency translation adjustments:
Amount arising during the year
Reclassification adjustments for gains and losses included in
profit attributable to owners of parent
Amount before tax effectTax effectForeign currency translation adjustments
Retirement benefits asset and liability adjustments:
Amount arising during the year
Reclassification adjustments for gains and losses included in
profit attributable to owners of parent
Amount before tax effectTax effect
Retirement benefits asset and liability adjustments
Total other comprehensive income

Millions of Yen

2021

¥

¥

259

Thousands of U.S. dollars
2022

2022

¥

198

$ 1,618

(0)

—

—

259
(77)
181

198
(60)
137

1,618
(490)
1,119

(7)

(2)

(16)

18

7

57

10
—
10

5
—
5

41
—
41

325

595

4,862

(22)

—

—

302
(4)
297

595
(2)
593

4,862
(16)
4,845

896

142

1,160

93

(220)

(1,798)

990
(300)
690
1,180

(77)
30
(47)
689

(629)
245
(384)
$ 5,630¥

Note 15. Amounts per share
1. In the calculation of total net assets and profit per share, the Company’s shares remaining in the Board Benefit Trust (BBT),
which are recorded as treasury stock under shareholders’ equity, are included in the treasury stocks that are deducted in thecalculation of the number of shares as of March 31, 2021 and 2022 and the average number of shares for the year ended
March 31, 2021 and 2022. In the calculation of total net assets per share, the said treasury stock deducted as of March 31,
2021 and 2022 is 43,800 and 43,800, respectively. In the calculation of profit per share, the said treasury stock deducted forthe year ended March 31, 2021 and 2022 is 43,800 and 43,800, respectively.
2. Profit attributable to owners of parent per share of common stock is based on the following information:
Basic Profit attributable to owners of parent per share:
Profit attributable to owners of parent
Profit attributable to owners of parent not attributable tocommon stockholders
Profit attributable to owners of parent attributable to common
stock
Average number of shares of common stock outstanding during
the year

Millions of yen

2021

Thousands of U.S. dollars
2022

2022

¥1,917¥2,992$24,446

—

—

—

1,917

2,992

24,446

2021

Thousands of shares

6,436

2022

6,337

Note 16. Financial instruments(1) Policy for financial instruments
The Company and consolidated subsidiaries manage temporary cash surpluses through low-risk financial assets.
The Company and consolidated subsidiaries raise funds through bank borrowings.
The Company and consolidated subsidiaries use derivatives for the purpose of reducing risk and do not enter into derivatives
for speculative or trading purposes.

ANNUAL REPORT 2022 21

(2) Types of financial instruments and related risk
Trade receivables - trade notes, electronically recorded monetary claims and trade accounts receivable- are exposed to credit
risk in relation to customers. Regarding this risk, the credit management is executed periodically.
Marketable securities and investment securities are exposed to market risk. The fair value of those securities is reported in aboard meeting periodically.
Substantially all trade payables - trade notes and accounts payable - have payment due dates within one year.
Short-term loans payable are raised mainly in connection with business activities, and the repayment dates of long-term debt
extend up to five years from the balance sheet date and lease liabilities are raised mainly in connection with capital
investment. Long-term debt with variable interest rates is exposed to interest rate fluctuation risk. However, to reduce suchrisk and fix interest expense for long-term debt bearing interest at variable rates, the Company and consolidated subsidiaries
utilizes interest rate swap transactions as a hedging instrument. Information regarding the method of hedge accounting,hedging instruments and hedged items, hedging policy, and the assessment of effectiveness of hedging activities is found in
Note 1 (u).
Execution and management of derivatives transactions are carried out in accordance with the company rules specifying thetransaction authority. In addition, in order to alleviate credit risk, derivative transactions are only dealt with banks with highcredit ratings. Although operating liabilities and loans payable are exposed to liquidity risk, the Group’s companies are able tomanage it by using methods such as preparing monthly cash management plans.
(3) Additional information regarding fair value of financial instruments
The contract amounts, etc. relating to derivatives transactions are described in Note 18. Derivatives themselves do not serve
as indicators of market risk involved in derivatives transactions.
Information regarding fair value of financial instruments at March 31, 2021 and 2022 was summarized as follows:

Investment securities
Long-term debt
Lease liabilities
Derivatives

Book value¥ 1,904
6,848
85
(47)

Millions of yen

2021

Fair value¥ 1,904
6,776
81
(47)

Difference

¥

—
(71)
(3)
—

Book value¥ 2,130
8,980
1,327
(41)

2022

Fair value¥ 2,130
8,977
1,327
(41)

Difference

¥

—
(3)
(0)
—

Thousands of U.S. dollars
2022

Book value$ 17,403
73,372
10,842(335)

Fair value$ 17,403
73,347
10,842(335)

Difference

$

—
(25)
(0)
—

1. “Cash and cash equivalents, time deposits” , “notes receivable, trade” , “electronically recorded monetary claims” , “accounts
receivable, trade” , “notes and account payable, trade” , “short-term loans payable” , and “accounts payable, non-trade” areomitted because these are cash items and their fair values approximate their carrying values due to their short maturities.
2. Investment in limited liability partnership ¥1,069 million ($8,734 thousand) in the consolidated balance sheet as of March 31,
2022 is omitted.
3. Financial instruments whose fair value is extremely difficult to determine
Unlisted securities¥

Millions of yen

2021

1,209

¥

Thousands of U.S. dollars
2022

2022

439

$ 3,587

4. Long-term debt includes current portion of long-term debt recorded as short-term loans payable in the consolidated balance
sheets.
5. The assets and liabilities arising from derivatives are shown on a net basis with the amount in parentheses representing a net
liability position.
6. The schedules for redemption of monetary assets and securities with maturities
Millions of yen

2021

Cash equivalents and time deposits
Notes and accounts receivable,
trade
Notes receivable, trade
Electronically recorded monetaryclaims
Accounts receivable, trade
Total

2022

Thousands of U.S. dollars
2022

Due inone yearor less

Due after
one yearthroughfive years

Due after
five years
throughten years

Due inone yearor less

Due after
one yearthroughfive years

Due after
five years
throughten years—$ 69,826

11,242

—

—

—

—

—

—

—

—

—

—

—

53

—

—

433

—

—

1,325

—

—

1,460

—

—

11,929————11,286¥ 21,347——

92,213$ 174,418¥ 8,790—¥ 21,358

¥

¥

—

—
—

¥

¥

—

¥ 8,546

¥

¥

—

—
—

¥

¥

Due inone yearor less

Due after
one yearthroughfive years

$

$

—

—
—

Due after
five years
throughten years

$

$

—

—
—

7. The redemption schedule for short-term loans payable and long-term debt are disclosed in Note 5.
Breakdown of fair value of financial instruments by level
Fair values of financial instruments are categorized into these levels as described below on the basis of the observability and themateriality of the inputs used in the fair value measurement.
Level1: Fair values measured using quoted prices of identical assets or liabilities in active markets among observable valuation
inputsLevel2: Fair values measured using inputs other than inputs included within Level 1 among observable valuation inputs
Level3: Fair values measured using unobservable valuation inputs
When several inputs that have significant impact on fair value measurement are used and those inputs are categorized into
different levels, the fair value is categorized into the lowest hierarchy level for fair value measurement among those in which eachof the inputs belongs.

22 ANNUAL REPORT 2022

(1) Financial instruments measured at fair value
Category

Investment securities
Other securities
StocksTotal assets
Derivatives
Currency-related derivative financial
instruments
Interest-related derivative financial
instruments
Total liabilities

Millions of yen
2022

Fair value
Level2
Level3

Level1¥ 2,130
2,130¥

Thousands of U.S. dollars
2022

¥

—
—

¥

Fair value
Level2
Level3

Total

Level1——¥ 2,130
2,130$ 17,403
17,403¥——$ 17,403
17,403

—

39

—

319

—

319

—

2

—

2

—

16

—

16

—

Level1

—
—
—

¥

$

39

¥

41

¥

—

¥

41

$

—

Millions of yen
2022

Long-term debt
Lease liabilities
Total liabilities———(2) Financial instruments other than those measured at fair value
Category

$

Total

¥

Total

—
―
—

¥

335

$

—

$

335

Thousands of U.S. dollars
2022

Fair value
Level2
Level3¥ 8,977
1,327¥ 10,305$¥ 8,977
1,327¥ 10,305$

Level1———$

Fair value
Level2
Level3$ 73,347
10,842$ 84,198

$

—
—
—

$

Total

$ 73,347
10,842$ 84,198

Investment securities
Listed stocks are determined by using quoted prices. Fair values of listed stocks are categorized as Level 1 since they are tradedin active markets.
Derivatives
The fair value of interest rate swaps and foreign exchange forward contracts are categorized as Level 2 because they aremeasured using the discounted present value method with observable inputs such as interest rates and exchange rates.
Long-term debt and lease liabilities
Fair values are measured using the discounted present value method based on the total amount of principle and interest,
remaining maturity, and interest rates taking into account credit risk, and are categorized as Level 2.

Note 17. Securities
Information regarding securities classified as other securities at March 31, 2021 and 2022 was summarized as follows:
Book
value

Securities whose book value exceeds
their acquisition
Stocks¥ 1,896
Subtotal
1,896
Securities whose acquisition exceeds
their book value
Stocks7
Subtotal
7
Total¥ 1,904

2021

Acquisition¥ 1,4981,498
8
8¥ 1,506

Millions of yen

Unrealized
gain (loss)

¥

¥

398
398

2022

Book
value

Acquisition

Unrealized
gain (loss)¥¥¥ 1,639
1,639

(1)
490
(1)
490
397 ¥ 2,130

993
993

537
537
¥ 1,530¥

Thousands of U.S. dollars
2022

Book
value

Acquisition

Unrealized
gain (loss)$ 13,392
13,392$ 8,113
8,113$ 5,278
5,278

(46)
4,004
(46)
4,004
600 $ 17,403

4,388
4,388
$ 12,501

(376)
(376)
$ 4,902

646
646

Unlisted stocks of ¥853 million at March 31, 2021 is not included in the above table because there were no quoted market prices
available and the fair value is extremely difficult to determine. Unlisted stocks of ¥1,103 million ($9,012 thousand) at March 31,
2022 is not included in the above table because there were no quoted market prices available.
Investment securities in unconsolidated subsidiaries and affiliates are as follows:
Investment securities

¥

2021

Millions of yen

355

¥

2022

404

Thousands of U.S. dollars
2022$ 3,301

Information regarding sales of securities classified as other securities for the years ended March 31, 2021 and 2022 was asfollows:
Proceeds from sales of securities
StocksGains on sales
Stocks
Losses on sales
Stocks¥2021

Millions of yen

0
0
0
0
0
0

¥

2022

—
—
—
—
—
—

Thousands of U.S. dollars
2022

$

—
—
—
—
—
—

Impairment of investment securities classified as other securities for the years ended March 31, 2021 and 2022 were as follows:
Stocks

¥

2021

112

Millions of yen

¥

2022

115

Thousands of U.S. dollars
2022

$

940

ANNUAL REPORT 2022 23

Note 18. Derivatives
As a matter of policy, the Company does not speculate in derivative transactions. The Company does not anticipate
nonperformance by any of the counterparties to the derivative transactions, all of whom are leading domestic financial institutions
with high bond ratings.
In accordance with the Company’s policy, the accounting department controls derivative transactions and requires approval by
the director responsible for accounting and the representative directors of the Company. The director who has the responsibility
to control the performance and the related risks connected with derivatives reports these to the Management Committee of theCompany.
The Company uses interest rate swaps to hedge the risks from interest rate fluctuations on borrowings. The exceptional methodof hedge accounting is used to account for those transactions.
Millions of yen
Thousands of U.S. dollars(Currency related)
Contract amount2021
Forward foreign exchange contracts:
Sell: US$ / Buy: Yen
¥
722
Total
¥
722

¥
¥

2022

779
779

Fair value¥¥(Interest related)2021(39) ¥(39) ¥

Unrealized gain (loss)

2022(39) ¥(39) ¥

2021(39) ¥(39) ¥

2022

Contract amountInterest rate swaps(Deferral hedge accounting)2022¥ 3,072¥ 1,940

Fair value2022¥ 1,940¥

Fair value

$
$

2022

Unrealized
gain (loss)(319) $
(319) $

2022

(319)
(319)

Thousands of U.S. dollars

Due after one year
2021

2022

(39) $ 6,365(39) $ 6,365

Millions of yen

2021

Contract
amount

—

2021

¥

2022

(7) ¥

Contract
amount2022(2) $ 15,851

Due after
one year
2022$

Fair value
2022

— $

(16)

Note 19. Investment and rental property
The profit of investment and rental property for the year ended March 31, 2021 amounted to ¥498 million and the loss on
impairment of fixed assets amounted to ¥34 million.
The profit of investment and rental property for the year ended March 31, 2022 amounted to ¥481 million ($3,930 thousand).
Information on the fair value of investment and rental property at March 31, 2021 and 2022 was summarized as follows:
Millions of yen

2021

Book value
Book value
beginning
end of theof the year Net change
year

¥

6,936

¥

(154) ¥

6,782

Fair value
end of theyear¥ 14,741

2022

Book value
Book value
beginning
end of theof the year Net change
year

¥

6,782

¥

(111) ¥

6,671

Fair value
end of theyear¥ 13,161

Thousands of U.S. dollars
2022

Book value
Book value
beginning
end of theof the year Net changeyear$ 55,413$(907) $ 54,506

Fair value
end of theyear$ 107,533

1. The fair value represents the acquisition cost less accumulated depreciation.
2. The components of net change in book value for the year ended March 31, 2021 included increases mainly due to acquisitionsin the amount of ¥22 million and decrease mainly due to depreciation ¥148 million and impairment of fixed assets ¥28 million.
The components of net change in book value for the year ended March 31, 2022 included increases mainly due to acquisitionsin the amount of ¥57 million ($466 thousand), and decrease mainly due to depreciation ¥149 million ($1,217 thousand).
3. The fair value is mainly based upon the amount appraised by outside independent real estate appraisers.

24 ANNUAL REPORT 2022

Note 20. Revenue recognition
1. Information on disaggregated revenue arising from contracts with customers
Millions of yen
Reportable segments

Japan
China
Other Asia
U.S.A.
Other North America
EuropeRevenue from contracts with customers
Revenue from external customers

CS Division

¥

4,776
6,965
2,908
4,424
—
468
19,543¥ 19,543

SCI Division¥ 10,705
2,753
3,725
9,838
438
926
28,387¥ 28,387

2022

Research &Development
Center

¥

¥

305
2
—
—
—
0
309
309

Subtotal¥ 15,787
9,721
6,633
14,262
438
1,394
48,239¥ 48,239¥

Others

Total

4
—
—
—
—
—
4
4

¥ 15,792
9,721
6,633
14,262
438
1,394
48,243¥ 48,243

33
—
—
—
—
—
33
33

$ 129,030
79,42654,196
116,529
3,579
11,390394,174$ 394,174¥

Thousands of U.S. dollars
Reportable segments

Japan
China
Other Asia
U.S.A.
Other North America
EuropeRevenue from contracts with customers
Revenue from external customers

CS Division$ 39,023
56,90823,76036,147—
3,824
159,678$ 159,678

SCI Division$ 87,466
22,49430,43580,382
3,579
7,566
231,939$ 231,939

2022

Research &Development
Center

$

$

2,492
16
—
—
—
0
2,525
2,525

Subtotal$ 128,989
79,42654,196
116,529
3,579
11,390394,142$ 394,142$$

OthersTotal

Note1: “Others” which includes other parts business is a business segment that is not included in reportable segments.
Note2: The sales by regions is based on customers’ locations and is classified by countries or regions.
2. Information providing a basis for understanding revenue arising from contracts with customers
The Company and its consolidated subsidiaries sell the parts for electro-communication device and electronic equipment inJapan and abroad. The satisfied point of performance obligations is the point in time when the products are delivered to thecustomer because it can be judged that the customer obtains control of the product at the time. However, for sales within
Japan of these products, revenue is recognized at the time of shipment in accordance with the alternative treatment prescribedin Paragraph 98 of “the Implementation Guidance on Accounting Standard for Revenue Recognition” . The consideration fortransactions is generally received within approximately 3 months after delivery of the goods. Furthermore, there is no
adjustment for the significant financing component concerning receivables arising from contracts with customers.
3. Information about the relationship between the satisfaction of performance obligations under contracts with customers andcash flows from these contracts, and the amount and timing of revenue from contracts with existing customers at the end of
the fiscal year that are expected to be recognized in the following fiscal year or beyond(1) Balance of contract assets and contract liabilities
Receivables arising from contracts with customers (balance at the beginning of the year)
Receivables arising from contracts with customers (balance at the end of the year)
Contract liabilities (balance at the beginning of the year)
Contract liabilities (balance at the end of the year)

Millions of yen
2022¥ 12,567
12,800138¥
56

Thousands of U.S. dollars
2022$102,680
104,584
1,128
$
458

Contract liabilities mainly relate to advance payments received from customers for sales of tooling based on payment terms.
Contract liabilities are reversed as revenue is recognized.
The revenue recognized during the fiscal year that was included in the balance of contract liabilities at the beginning of the year
was ¥138 million ($1,128 thousand). The main reasons for the decrease of ¥81 million ($662 thousand) in contract liabilities in
the fiscal year were reversal as revenue is recognized.
(2) Transaction price allocated to remaining performance obligations
At the end of the fiscal year ended March 31, 2022, there is no unsatisfied performance obligations which needs to be noted.
Furthermore, the Company and consolidated subsidiaries have been adopted the treatment prescribed in Paragraph 80-22 (1)of “Accounting Standard for Revenue Recognition” (ASBJ statement No.29, March 31, 2020) and the contracts which are
initially expected to terminate within one year are not included in this notes.

ANNUAL REPORT 2022 25

Note 21. Segment information(Overview)
The reporting segments of the Company and consolidated subsidiaries are designed as business segments whose segregatedfinancial information can be obtained and to which the management reviews to decide on the allocation of managerial andfinancial resources and to evaluate their financial performance.
The Company and consolidated subsidiaries are primarily engaged in the three divisions as follows;
CS (Connection System) Division: The division produces and sells connectors and jacks.
SCI (Sensing, Communications and Interface) Division: The division produces and sells remote controls, switches, camera
modules and touch sensor.
Research & Development Center: The center produces and sells wireless module.
(Changes in reporting segments)
In line with changes in the company organization as of April 1, 2021, the part of other parts business which was previously
included in “Other” has been included in “Research & Development Center”.
Also, the segment information of the previous fiscal year has been presented based on the reclassification and calculation
methods after the change to the reporting segments.
The business segment information is prepared in a manner similar to the accounting treatment as described in Note 1. Segment
performance is evaluated based on operating income or loss.
(Application of Accounting Standard for Revenue Recognition)
In line with the adoption of “Accounting Standard for Revenue Recognition” from the beginning of the fiscal year and the changing
of accounting method which are described in “change in accounting policies” , the calculation method of profit or loss of businesssegment has changed as well.
As a result, in CS Division the sales increased by ¥16 million ($131 thousand), the operating income increased by ¥34 million($278 thousand) for the current fiscal year compared to the traditional method. In SCI Division the sales decreased by ¥26 million($212 thousand), the operating income increased by ¥2 million ($16 thousand) for the current fiscal year compared to the
traditional method. Also, there are no changes for Research and Development Center.
1. Business segment information

CS
Division

2021

Net sales
Outside customers
Intersegment sales
Total
Operating income (loss)
Identifiable assets
OthersDepreciation
Increase in fixed assets andintangible fixed assets¥

26 ANNUAL REPORT 2022

19,840—19,8401,444
11,461¥¥Millions of yen

Subtotal

Other

48,560—48,5601,070
34,272

¥

¥

1,098

947

6

2,051

186

2,237

—

2,237

1,574

645

4

2,225

30

2,256

—

2,256

Total

Adjustment

Consolidated

48,243—48,243703
38,548¥¥¥¥

Consolidated

48,556—48,556
1,077
27,417

19,543—
19,543
1,036
13,112

3
—
3
7
6,855

Adjustment

285 ¥
—
285
(294)
293

Reporting Segments
Research &SCI
Development
Division
Center¥Total

28,431 ¥—28,431(72)
15,661CS
Division

2022

Net sales
Outside customers
Intersegment sales
Total
Operating income (loss)
Identifiable assets
OthersDepreciation
Increase in fixed assets andintangible fixed assets

Reporting Segments
Research &SCI
Development
Division
Center

————16,05948,560—48,5601,070
50,332Millions of yen

Subtotal

Other28,387 ¥—28,387(135)
18,401

309 ¥
—
309
(196)
288

48,239—48,239703
31,803

¥

4
—
4
0
6,745

¥

—
—
—
—
16,24648,243—48,243703
54,794

1,579

926

4

2,509

187

2,696

—

2,696

1,146

744

2

1,893

62

1,955

—

1,955

2022

Net sales
Outside customers
Intersegment sales
Total
Operating income (loss)
Identifiable assets
OthersDepreciation
Increase in fixed assets andintangible fixed assets

CS
Division$ 159,678―
159,678
8,465
107,133

Reporting Segments
Research &SCI
Development
Division
Center$ 231,939 $―
231,939(1,103)
150,347

Thousands of U.S. dollars

Subtotal

Other2,525 $ 394,142
―
―
2,525
394,142(1,601)5,744
2,353
259,850

$

Total

33
―
33
0
55,111$ 394,174―
394,1745,744
314,960

Adjustment

Consolidated

$

―
―
―
―
132,740$ 394,174―
394,1745,744
447,700

12,901

7,566

33

20,5001,528

22,028―22,028

9,364

6,079

16

15,467507

15,974―

15,974

Other is business segments not included in the reportable segments. It includes other parts, leasing, property rental and worker
dispatch businesses.
Adjustment includes corporate assets which are not allocable to the reportable segments.
2. Geographical information(1 ) Net sales
2021

Net sales
2022

Net sales
2022

Net salesJapan¥ 13,657

China¥ 10,501

Japan¥ 15,792¥

Japan$ 129,030

China

¥

¥

Fixed assets
2022

Fixed assets
2022

Fixed assets

Japan¥ 11,412¥

Japan¥ 11,046
Japan$ 90,252

¥

China

China

China

¥

$ 35,738

¥

660

¥

1,208

Consolidated¥ 48,560

North America
U.S.A.
Other¥ 14,262¥

Europe

438

¥

1,394

Consolidated¥ 48,243

North America
U.S.A.
Other$ 116,529

$

3,579

EuropeConsolidated$ 11,390$ 394,174

Other

735

North
America¥54

Europe¥202

Consolidated¥ 15,403

Millions of yen

¥

Asia

¥ 16,941

EuropeMillions of yen

Asia

4,374

6,633

$ 54,196

Asia

2,998

Other

Other

(2 ) Fixed assets
2021

5,591

North America
U.S.A.
Other

Thousands of U.S. dollars

Asia$ 79,426

Other

Millions of yen

Asia

9,721

China

Millions of yen

Asia

Other

687

North
America¥69

Europe¥12Consolidated¥ 16,190

Thousands of U.S. dollars

$

Other

5,613

North
America$

564

Europe$98

Consolidated$ 132,282

3. Information about major customers
The company and consolidated subsidiaries have no major customers which account for 10% or more of net sales.
4. Information about the loss on impairment of fixed assets
CS Division
SCI Division
Research & Development Center
Subtotal
Other
Adjustments and eliminations
Consolidated

¥

¥

2021

8
18
2
30
35
64
130

Millions of yen

¥

¥

2022

—
3
—
3
—
—
3

Thousands of U.S. dollars
2022

$

$

—
25
—
25
—
—
25

5. Information about the amortization of goodwill and the balance of goodwill
For the years ended March 31, 2021 and 2022, there was no amortization and balance of goodwill.

ANNUAL REPORT 2022 27

Note 22. Related party transactions
Significant transactions with related parties for the years ended March 31, 2021 and 2022 were as follows:
Transactions

2021

Terutaka Ikeda (Supreme corporate adviser)¥

Millions of yen

Balances
Other
Other
current
assetsinvestments

Rent

14

¥

14

¥

1

Millions of yen

Transactions
Collection ofInterest
loan
incomereceivable

Paul Evans (Director)

¥

1

¥

Transactions

2022

Terutaka Ikeda (Supreme corporate adviser)¥

Balances
Other
Long-term
current
loans
assetsreceivable

0

¥

1

¥

28

Millions of yen

Balances
Other
Other
current
assetsinvestments

Rent

14

¥

14

¥

1

Millions of yen

Transactions
Collection ofInterest
loan
receivable
incomePaul Evans (Director)

¥

1

¥

Balances
Other
Long-term
current
loans
assetsreceivable

0

¥

2

¥

29

Thousands of U.S. dollars

Transactions

2022

Balances
Other
Other
current
assetsinvestments

Rent

Terutaka Ikeda (Supreme corporate adviser)

$ 114

$ 114

$

8

Thousands of U.S. dollars

Transactions
Collectionof loanInterest
receivable
incomePaul Evans (Director)

$

8

$

0

Balances
Other
Long-term
current
loans
assetsreceivable

$

16

$ 237

1. Business transactions with related parties are carried out on an arm’s-length basis similar to third party transactions.
2. Terutaka Ikeda is the parent of President and CEO / COO Yasumitsu Ikeda.

Note 23. Subsequent Events
1. Third-party share allotment
The Company resolved to carry out a third-party allotment at the Board of Directors’ meeting held on April 28, 2022 and to
propose an agenda item at the 100th General Meeting of Shareholders on June 22, 2022. This proposal was approved at theGeneral Meeting of Shareholders.
(1) Overview
1) Number of Shares
2) Price3) Total amount
4) Method5) Allottees
6) Dates

200,000 shares of Common stock¥1 per share¥200,000 ($1,634)
Third-Party Allotment of Common Shares
Showa Ikeda Memorial Foundation, a nonprofit corporation
TBD(2) Rationale
The Company is committed to implementing SMK Philosophy for engagement in society and respects our bonds with
communities and traditions as a good corporate citizen, and has carried out a variety of activities as a corporation thatcoexists with regional societies. From ESG perspective, the contribution for the Foundation leads to enhance the company’svalue in the medium-to long-term.
The Foundation was established in 1976 with the funds which were raised by the founder of the Company and his wife, andpartial contribution made by the Company. The Company decided to carry out a third-party allotment in order to contribute to
the Foundation’s reinforcement of financial basis and engagement in society. As a result of this, the Foundation is expected togain dividends continuously and will be possible to engage in society for long term by adding of dividends to its financial basis.
2. Cancellation of treasury stock
The Company resolved to cancel treasury stock in accordance with Article 178 of the Companies Act at the Board of Directors’
meeting held on April 28, 2022 on condition that the agenda item for the third-party share allotment is approved at the 100th
General Meeting of Shareholders on June 22, 2022. The agenda item for the third-party share allotment was approved at theGeneral Meeting of Shareholders.
1) Objective: To reduce the concern of stock dilution due to the future disposition of common stock2) Class of treasury stock: Common stock3) Total treasury stock cancelled: 300,000 shares
4) Date of cancellation: June 30, 2022
5) Total number of treasury stock issued after cancellation: 7,200,000 shares
28 ANNUAL REPORT 2022

Officer Introduction(As of June 22, 2022)

Directors

Masanobu Ikeo

Paul Evans

Director andExecutive Deputy President,
Chief Technology Officer

Director andExecutive Vice President

Yasumitsu Ikeda

President,
Chief Executive Officer andChief Operating Officer

Tetsuo Hara

Toshio Nakamura

Director andExecutive Vice President

Kaoru Ishikawa

Director (Outside)

Director (Outside)

Auditors

Morikazu Fukui
Full-Time Auditor(Outside)

Naru Nakashima

Fumio Nishimura

Hiroshi Usami

Mitsuyuki Masubuchi

Auditor (Outside)

Auditor (Outside)

Corporate Executive Officers

Kohei Ohgaki

Executive Vice President,
Chief Financial Officer

Atsushi Obinata
Vice President

Executive Vice President,
Chief Information Officer

Fumikazu Hata
Vice President

Vice President

Mikio Otsubo
Vice President

Hideo Sugano
Vice President

ANNUAL REPORT 2022 29

Corporate Information(As of March 31, 2022)

Corporate Data

Shares and Shareholders

Name

SMK Corporation

Established

April 3, 1925

Registered

January 15, 1929

Primary business

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

Capital¥ 7,996,828,021

Stock exchange listing

Tokyo Stock Exchange

Administrator ofshareholders register

Mitsubishi UFJ Trust and Banking
Corporation

Independent auditors

Ernst & Young ShinNihon LLC
Tokyo, Japan

Employees (Consolidated)

4,963

Global network（As of July 31, 2022）

Domestic bases（7 Bases）

Overseas bases（15 Countries/Areas, 32 Bases）

Tokyo（Head office）, Toyama,
Hitachi, Osaka, Nagoya, Ibaraki
and Fukuoka
Taiwan, Hong Kong, China,
Singapore, Thailand, Malaysia,
Philippines, Korea, Ireland, U.K.,
France, Germany, Belgium,
U.S.A. and Mexico

Authorized shares

19,596,127
7,500,000(including 1,253,003 shares of treasury stock)

Issued shares
Number of shareholders

Major shareholders (top ten)

6,145
Shares owned(1,000 shares)

Percentage ofshares (%)

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

589

9.43

SMK Cooperating Company Share
Holding Association

453

7.26

Nippon Life Insurance Company

324

5.19

Dai Nippon Printing Co., Ltd.

320

5.12

Mizuho Bank, Ltd.

312

5.00

SMK Employees Share Holding Association

219

3.52

MUFG Bank, Ltd.

181

2.91

Custody Bank of Japan, Ltd. (Trust Account)

159

2.55

The Showa Ikeda Memorial Foundation

150

2.40

Meiji Yasuda Life Insurance Company

137

2.21

Note: The Company holds 1,253 thousand shares of treasury stock,
but is excluded from the above list. Figures for percentage ofshares are calculated after subtracting the number of treasury
stock. The number of treasury stock includes the 43 thousand
shares of the Company held by the Officer Stock Benefit Trust.

Share ownership by shareholder type
Financial institutions

26.40%

Financial instruments dealers

0.82%

Other entities

13.01%

Foreign entities, etc.

4.65%

Individuals and others

55.12%

Please see our website for detailed IR
information.
The IR Information section of SMK’s website includes
annual reports and presentation materials. The website
also carries information about SMK’s products, corporate
data and CSR/ESG initiatives.

Head Office

WebsiteToyama Works

https://www.smk.co.jp/

Hitachi Works＊ The Bluetooth® word mark and logos are registered trademarks owned by Bluetooth SIG, Inc. and any use of such marks by SMK Corporation isunder license.
＊ Other products and company names listed in this report are the registered trademarks or trademarks of their respective holders.

SMK CORPORATION
5-5, Togoshi 6-chome, Shinagawa-ku, Tokyo 142-8511, JAPAN
Tel: +81-3-3785-1111 Fax: +81-3-3785-1068