SEMI ANNUAL REPORT 2013
For the six months ended September 30, 2013

Automotive capacitive
touch panel

Touch
Panel
Division

Connection
SystemDivision

Functional
Components
Division

SMB coaxial connector
with a molded
locking provision

Rectangular coaxial
connector

Wide-angle
camera module

Top push switch(long stroke type)

FPC connector

Financial Highlights
SMK Corporation and Consolidated Subsidiaries

Thousands of
U.S. dollars

Millions of yen
Six months ended September 30

2012

2013

Millions of yen
2013

2013

Year ended March 31

Operating Results
Net sales¥ 26,829¥ 34,881$ 356,839¥ 54,475

(327)

1,988

20,337(853)(1,782)

1,893

19,366(198)¥ 50,627¥ 59,268$ 606,322¥ 52,498

25,15730,212309,074

28,204

Operating income (loss)
Net income (loss)

Financial Position
Total assets
Total net assets

Per Share Data

Yen

U.S. dollars

Yen

Net income (loss):Basic¥ (24.83)

¥

26.58

$

¥

0.27

(2.78)

Note: The U.S. dollar amounts represent translations of Japanese yen, for convenience only, at the rate of ¥97.75 = U.S. $1.00.

Net sales

Operating income (loss)■ Full year ■ ■ First half

Millions of yen■ Full year ■ ■ First half
3,000

80,00064,371Millions of yen

2,754
2,479

■ Full year

940

1,643

54,475

Millions of yen
1,893

2,284
1,988

55,340■ ■ First half

1,862

2,000

61,91460,000Net income (loss)

1,159
1,037

1,500
(590)
40,00032,28033,002

34,881
28,515

(198)

0
(42)

26,829
0

(799)

(327)

20,000(853)(1,166)
0

2010

2011

2012

2013
Mar.

2013
Sep.

(1,500)2010

Basic net income (loss) per share■ Full year ■ First half
30

yen
26.58

25.19

2011

2012

2013
Mar.

2013
Sep.

(2,000)2010

Total assets■ Full year

■ First half

60,000 56,113

53,0592012(1,782)
2013
Mar.

2013
Sep.

Total net assets
Millions of yen
59,26853,883

2011

52,498■ Full year ■ First half

Millions of yen

40,00031,127

29,862

28,25728,20430,212

2010

2011

2012

2013
Mar.

2013
Sep.

30,00014.14
40,00015

20,000(11.04)20,0000(2.78)

(15)

2010

2011

1 SEMI ANNUAL REPORT 2013

2012

2013
Mar.

10,000

2013
Sep.

0

2010

2011

2012

2013
Mar.

2013
Sep.

0

To Our Shareholders and Investors

We are obliged to you for your continued
support and good patronage.
We would like to report on the outline
and results of the SMK Group’sbusinesses for the half period of the
92nd fiscal year (from April 1, 2013 to
September 30, 2013).
We look forward to your continuing
support and encouragement.
November 2013

Yasumitsu Ikeda

Tetsuya Nakamura

President and COO

Chairman and CEO

Perfomance Overview
Looking at the global economy during the half period of the 92nd fiscal year ended September 30,
2013, the U.S. economy made a moderate recovery owing to steady consumer spending and an
improved employment situation, despite some negative factors such as the uncertainty of thegovernment’s financial issues. The European economy also showed a gradual recovery as a whole,although weakness remains mainly in Southern European countries. Meanwhile, the emerging nations
including China suffered a slowdown in growth rates due to the factors such as uncertain businessconditions and increase in prices and labor costs. As for the Japanese economy, the recovery ofoverseas economies and the correction of yen appreciation pushed exports on an increasing trend,
and improvements in the employment and income situations led to a moderate expansion. The
electronic components industry benefitted from favorable demand of the automotive markets in the
United States and emerging nations. Although the demand for components for personal computers andtelevisions was sluggish, components for smartphones and tablet devices kept steady demand.
Under these circumstances, we achieved increases in consolidated sales and income for the half
period of the 92nd fiscal year ended September 30, 2013. This was mainly due to the strong
performance of our new products for smartphones, the brisk sales of our components for the
automotive market in North America and our remote control business with new customers gaining
momentum.
Although there are uncertainties about the future of the global economy, we will make continued
efforts to build corporate systems that can swiftly accommodate to changing needs by actively
promoting businesses in new markets such as those related to the environment, energy and healthcarewith constant attention to market moves, and further expand our earning capabilities.
SEMI ANNUAL REPORT 2013 2

Overview of Consolidated Results by Division(April 1, 2013 to September 30, 2013)

Other¥100 Million
0.3%

Touch Panel Division¥7,807 Million
22.4%
Net sales¥ 34,881
Functional Components
Division

MillionConnection System
Division¥15,497 Million
44.4%¥11,477 Million
32.9%

Connection System Division
In the information and communication market for which we have many
strengths, our new products for smartphones, sales of which are
growing rapidly, have been adopted and deployed as standard
components by smartphone manufacturers both at home and abroad. In
the automotive market, we benefitted from the favorable sales ofcomponents for the North American market and an increase in demandfor connectors that feature safety and security functions. In the
Receptacle for LED lighting
Application: LED lighting

Major Products● Board to board connectors● Battery connectors● Interface connectors

environment market, there was a rapid expansion of the photovoltaic
generation systems business in Japan. From these reasons, this divisionachieved a significant year-on-year increase in net sales.
The businesses in the electronic components industry in which we
operate have been always experiencing ups and downs. To survive in● Card connectors

the industry’s drastic changes, we will strive to develop new products● Jackstargeted at growing markets and manufacturers.

3 SEMI ANNUAL REPORT 2013

Functional Components Division
In the audiovisual (AV) market, the products for settop boxes achieved further advancement in functions
and considerable growth in sales to new customers inWestern countries, contributing to increase in theoverall sales of this division. Meanwhile, sales of
products for conventional flat-panel televisions andHigh-load push switch
Applications: Keyless entry systems, car audio equipment andoperational use for other devices and equipment

digital home appliances remained at a low level.
Although sales of the division’s products for
smartphones suffered a significant decline due to

Major Products● Remote controls● Switches®
● Bluetooth units● Camera modules

customers’ sluggish business, we will focus on
acquiring new orders for functional components withhigh growth potential in markets related to automotive
products, HEMS (home energy management system)and healthcare.

Touch Panel DivisionPartly due to the booming market situation, sales of ourtouch panels for car navigation systems increased
drastically, centering on those for the North American
market. Sales of touch panels for ATMs performed well
as planned. However, sales of touch panels for thesmartphone market struggled due to the shakeout ofcustomers and intensified competition. We will direct
our attention to new markets as well, including theTransparent capacitive touch switches
Applications: Home appliances such as microwave ovens,refrigerators and rice cookers, and office equipment, including printers

Major Products● Resistive touch panels

market for home appliances, where an increasing ratio
of installment of inexpensive touch panels andtransparent capacitive touch switches is expected, in
promoting product development and sales expansion.

● Capacitive touch panels● Optical touch panels

SEMI ANNUAL REPORT 2013 4

Topics

1

Celebrating the 40th anniversary of
SMK America and the 25th anniversary of SMK Mexico

This year marks the 40th anniversary of SMK Electronics Corporation U.S.A. (SMK America), our sales subsidiary,
and the 25th anniversary of SMK Electronica S.A. de C.V. (SMK Mexico), our production subsidiary. On September
19, 2013, we had an anniversary party and looked back at the histories of the two companies with 150 participants.
SMK Electronics Corporation U.S.A. started as a representative office that opened in March 1973 and wasincorporated as a subsidiary in September 1973. Currently, the subsidiary is based in Chula Vista, California, with
about 50 employees engaging in sales activities at seven offices including a SOHO, in the United States. SMK
Electronica S.A. de C.V. was established in March 1988 in Tijuana in the state of Baja California, Mexico, and started
operations in October 1988. We had expanded thefactories afterward and in January 2013, those wereconsolidated into one location to ensure the efficientmanagement of production. Currently, about 1,000
SMK Electronica S.A. de C.V.

SMK Electronics Corporation U.S.A.

employees engage in the production of remotecontrols, control panels and other products.
Our sales to the North American market account foraround 25% of total sales. The two companies thatcelebrated their 40th and 25th anniversaries this year
have a vital role in our business development in North
America.

2 Participating in the International Broadcasting Convention
We had a booth at the International Broadcasting Convention held in Amsterdam, theNetherlands, September 13 to 17, 2013, displaying some of our products, including
IPTV remote controls equipped with motion sensors and speech recognition remotecontrols. This was our third IBC, and we presented a variety of remote controls at ourbooth, including Bluetooth-compliant remote controls with low power consumption,
speech recognition remote controls and keyboard-type remote controls, and also, new
SMK booth at the IBC
products featuring a European design attracted the attention of visitors. We willcontinue to be attentive to feedback from users and thereby develop new markets for our remote controls.

3“Monozukuri Class” held at SMK
Since its launch in 2008, the Monozukuri Class sessions havebeen held yearly by the Japan Electronics and Information
Technology Industries Association (JEITA) to help raise theinterest of children in monozukuri, or industrial engineering,and to prevent them from turning away from science. This year,
A melody IC was added to provide
a sound.

The children tackled the work in all seriousness. Some struggled with their firstexperience of soldering, but all the participants ended with bright smiles, completing
their tasks successfully.

5 SEMI ANNUAL REPORT 2013

the sixth session of the Monozukuri Class was held with thetheme of “Turn on the Light with a Remote Control” at the SMK
Toyama Works. It attracted 30 participants in the fifth and sixth
grades who go to elementary schools near the Toyama Office.

Global Network

Sales Office
Works
Works & Office
R&D Locations

Head Office(Tokyo)ASIAEUROPESMK High-Tech Taiwan Trading Co., Ltd.

SMK Europe N.V.

SMK Electronics (H.K.) Ltd.

SMK Europe N.V., U.K. Branch

SMK Trading (H.K.) Ltd.

SMK Europe N.V., France Branch

SMK Electronics (Dongguan) Co., Ltd.

SMK Europe N.V., Munich Office

SMK Electronics (Shenzhen) Co., Ltd.

SMK Europe N.V., Dusseldorf Branch

SMK Electronics Trading (Shenzhen) Co., Ltd.

SMK Hungary Kft.

SMK Electronics Trading (Shenzhen) Co., Ltd. Xi’an Office
SMK Electronics Trading (Shenzhen) Co., Ltd. Chongqing Office

AMERICASMK Electronics Technology Development (Shenzhen) Co., Ltd.

SMK Electronics Corporation U.S.A.

SMK Electronics Trading (Shanghai) Co., Ltd.

SMK Electronics Corporation U.S.A., San Jose Office

SMK Electronics INT’L Trading (Shanghai) Co., Ltd.

SMK Electronics Corporation U.S.A., East Office

SMK Electronics INT’L Trading (Shanghai) Co., Ltd. Beijing Office

SMK Electronics Corporation U.S.A., Los Angeles Office

SMK Electronics INT’L Trading (Shanghai) Co., Ltd. Qingdao Office

SMK Electronics Corporation U.S.A., Seattle Office

SMK Electronics Singapore Pte. Ltd.

SMK Electronics Corporation U.S.A., Chicago Office

SMK Electronics (Malaysia) Sdn. Bhd.

SMK Electronics Corporation U.S.A., Detroit Office

SMK Electronics (Phils.) Corporation

SMK-Link Electronics Corporation

SMK Korea Co., Ltd.

SMK-Link Electronics Corporation, San Jose Office
SMK Manufacturing, Inc.
SMK Electronica S.A. de C.V.
SMK Mexicana S de RL de C.V.
SMK Mexicana S de RL de C.V. Mexico City Office

SEMI ANNUAL REPORT 2013 6

Consolidated Balance Sheets
SMK Corporation and Consolidated Subsidiaries
As of September 30

Thousands of
U.S. dollars

Millions of yen

AssetsMillions of yen
As of March 31

2012

2013

2013

¥ 7,903¥ 11,396$ 116,583¥ 8,631

58

90

921

82

14,15916,976

173,668

14,551

(44)

(57)

(583)

(53)

5,714

5,753

58,854

5,466

Deferred tax assets

ー

651

6,660

472

Other current assets

3,771

3,619

37,022

3,484

31,561

38,428393,125

32,633

1,713

2,686

27,478

1,908

Long-term loans receivable

131

139

1,422

141

Other investments

752

617

6,312

619

Allowance for doubtful accounts

(118)

(111)

(1,136)

(112)

2,478

3,331

34,076

2,556

Land

4,424

4,237

43,345

4,358

Buildings

17,161

16,941

173,309

17,055

Machinery and vehicles

17,087

17,642

180,481

17,132Tooling and office furniture

20,89622,219227,304

21,174

Construction in progress

122

297

3,039

357

59,69061,336

627,478

60,076(43,628)(44,336)(453,565)(43,370)

16,062

17,000173,913

16,706

Deferred tax assets

246

185

1,893

290

Intangible assets

280

324

3,315

313

526

509

5,208

603

¥ 50,627¥ 59,268$ 606,322¥ 52,498

2013

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

Investments and long-term loans
Investment securities

Property, plant and equipment

Less-accumulated depreciation

Other assets

Total assets

Note: The U.S. dollar amounts represent translations of Japanese yen, for convenience only, at the rate of ¥97.75 = U.S. $1.00.

7 SEMI ANNUAL REPORT 2013

Thousands of
U.S. dollars

Millions of yen

Liabilities and net assets

Millions of yen
As of March 31

2012

2013

2013

¥ 9,121¥ 7,343$ 75,120¥ 7,141

3,111

4,331

44,307

3,194

Accrued income taxes

89

682

6,977

370

Accrued bonus

633

822

8,409

476

Accounts payable, non-trade

6,498

8,093

82,793

6,657

Other current liabilities

1,275

1,350

13,811

1,326

20,727

22,621

231,417

19,164

4,213

5,532

56,593

4,347

Accrued employees' retirement benefits

17

200

2,046

162

Accrued directors' and officers' retirement benefits

122

156

1,596

143

Other long-term liabilities

391

547

5,596

478

4,743

6,435

65,8315,130

Issued and outstanding : 79,000,000 shares

7,996

7,996

81,801

7,996

Capital surplus

12,345

12,344

126,281

12,345Retained earnings

12,571

15,691

160,522

14,154

Treasury stock(3,697)(3,672)(37,565)(3,697)

29,21532,359331,039

30,798

(204)

261

2,670

70

(3,909)(2,492)(25,494)(2,742)(4,113)(2,231)(22,824)(2,672)

55

84

859

78

25,15730,212309,074

28,204¥ 50,627¥ 59,268$ 606,322¥ 52,498

2013

Current liabilities
Short-term loans payable
Notes and accounts payable, tradeLong-term liabilities
Long-term debt

Net assets
Shareholders’ equity
Common stock
Authorized :195,961,274 shares

Accumulated other comprehensive income
Net unrealized gains (losses) on other securities
Foreign currency translation adjustments

Subscription rights to shares

Total liabilities and net assets

SEMI ANNUAL REPORT 2013 8

Consolidated Statements of Income
SMK Corporation and Consolidated Subsidiaries
Six months ended September 30

Thousands of
U.S. dollars

Millions of yen
2012

Net sales
Cost of sales
Selling, general and administrative expenses
Operating income (loss)
Other income
Interest and dividend income
Rent income
Foreign exchange gain, net
Gain on sales of fixed assets
Other
Total other income
Other expenses
Interest expense
Rent expense
Foreign exchange loss, net
Loss on disposal of fixed assets
Loss on valuation of investment securities
Loss on impairment of fixed assets
Other
Total other expenses
Income (loss) before income taxes and minority interests
Income taxes
Current
DeferredIncome (loss) before minority interests
Minority interests
Net income (loss)

As of March 31

2013

2013

¥ 26,829
22,981
4,175(327)¥ 34,881
28,3894,504
1,988$ 356,839
290,425
46,077
20,337¥ 54,475
47,047
8,281
(853)

40
342
ー
28
120
530

37
373
575
34
119
1,138

379
3,816
5,882
348
1,217
11,642

73
718
1,963
144
555
3,453

66
140
697
50
67
ー
79
1,099

53
125
ー
151
ー
142
85
556

542
1,279
ー
1,545
ー
1,453
868
5,687

127
294
ー
256
ー
200
376
1,253

(896)

2,570

26,292

1,347

161
730
(1,787)(5)¥ (1,782)

767
(90)
1,893
ー
¥ 1,893

7,847
(921)
19,366ー$ 19,366

488
1,062
(203)
(5)
¥ (198)Yen

Per share data
Net income (loss)
Basic

Millions of yen¥ (24.83)

2013

U.S. dollars¥ 26.58

$

0.27

Yen

¥

(2.78)

Note: The U.S. dollar amounts represent translations of Japanese yen, for convenience only, at the rate of ¥97.75 = U.S. $1.00.

Consolidated Statements of Comprehensive Income
SMK Corporation and Consolidated Subsidiaries
Six months ended September 30

Thousands of
U.S. dollars

Millions of yen
2012

Income (loss) before minority interests
Other comprehensive income
Net unrealized gains (losses) on other securities
Foreign currency translation adjustments
Total other comprehensive income
Comprehensive income
Total comprehensive income attributable to:Shareholders of the Company
Minority interests
9 SEMI ANNUAL REPORT 2013

2013

2013

¥ (1,787)¥ 1,893$ 19,366

(351)
(410)
(761)
¥ (2,548)

191
251
442
¥ 2,335

1,954
2,567
4,521
$ 23,887¥ (2,543)(5)¥ 2,335ー$ 23,887
ーMillions of yen
As of March 31

2013

¥

(203)

¥

(77)
757
680
477

¥

482
(5)

Consolidated Statements of Cash FlowsSMK Corporation and Consolidated Subsidiaries
Six months ended September 30

Thousands of
U.S. dollars

Millions of yen
2012

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

2013

2013

Millions of yen
As of March 31

2013¥ (896)
1,561
ー
81
(4)
276
4
(40)
66
50
311
(464)
746
(747)
106
1,050
28
(66)
(150)
10
ー
872

¥ 2,570
1,536
142
30
37
ー
12
(37)
53
151
(1,849)
(109)
361
1,212
(192)
3,917
37
(53)
(382)
1
ー
3,520

$ 26,292
15,714
1,453
307
379
ー
123
(379)
542
1,545
(18,916)(1,115)
3,693
12,399(1,965)40,072379(542)(3,909)10ー
36,010¥ 1,347
3,439
200
110
138
410
25
(73)
127
256
2,520
541
(2,236)
(925)
(148)
5,731
79
(129)
(181)
16
(206)
5,310

(8)
29
(1,957)
84
(9)
ー
ー
(49)
45
5
(1,860)(42)
38(1,790)
138
(54)
(491)
456
(46)
53
(2)
(1,740)(430)
389(18,312)
1,412
(552)
(5,023)
4,665
(471)
542
(21)
(17,801)(65)
77(3,823)
439
(62)
38
ー
(112)
70
36
(3,402)

1,400
2,400
(2,579)
(141)
0
(429)
651
(150)
(487)
8,390
¥ 7,903

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

17,77015,345(18,926)(31)
225(3,621)
10,762(685)
28,28688,297$ 116,583

(800)
2,940
(2,928)
(142)
0
(430)
(1,360)
(307)
241
8,390
¥ 8,631

Note: The U.S. dollar amounts represent translations of Japanese yen, for convenience only, at the rate of ¥97.75 = U.S. $1.00.

SEMI ANNUAL REPORT 2013 10

Corporate Information(As of September 30, 2013)

Corporate Data

Shares and Shareholders

Name

SMK Corporation

Total number of Authorized shares

195,961,274

Established

April 1925

Total number of Issued shares

79,000,000

Registered

January 15, 1929

Primary business

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

9,268

Number of shareholders
Major shareholders (top ten)

Shares owned(1,000 shares)

Percentageof shares (%)

Capital¥7,996,828,021

Japan Trustee Services Bank, Ltd.
(Trust Account)

3,687

5.16

Stock exchange listing

Tokyo Stock Exchange

Mizuho Bank, Ltd.

3,531

4.94

Administrator ofshareholders register

Mitsubishi UFJ Trust and Banking
Corporation

Nippon Life Insurance Company

3,421

4.78

Independent auditors

Ernst & Young ShinNihon LLC
Tokyo, Japan

Dai Nippon Printing Co., Ltd.

3,200

4.48

3,111

4.35

Employees (SMK-Group)

6,667

SMK Cooperating Company Share
Holding Association

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

The Bank of Tokyo-Mitsubishi UFJ, Ltd.

2,508

3.51

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

2,204

3.08

SMK Employees Share Holding
Association

1,973

2.76

Subsidiaries - 4 companies

Mitsubishi UFJ Trust and Banking
Corporation

1,937

2.71

Affiliates -The Showa Ikeda Memorial Foundation

1,500

2.09

Subsidiaries & affiliates
Domestic
Overseas
Website1 company

Subsidiaries - 23 companies
http://www.smk.co.jp/

Note: SMK holds 7,566 thousand shares of treasury stock, but these areexcluded from the above list. Figures for percentage of shares arecalculated excluding the treasury stock.

Board of Directors and Corporate Auditors
Directors

Corporate Executive Officers

Chairman and CEO

Tetsuya Nakamura

Executive Vice President

Paul Evans

President and COO

Yasumitsu Ikeda

Executive Vice President

Mikio Wakabayashi

Executive Vice President, Chief Financial Officer

Kohei Ohgaki

Vice President

Hideo Matsumoto

Vice President

Tsutomu Isoda

Vice President

Hiroshi Miyakawa

Vice President

Shigechika Yanagi

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

Yuji Tanahashi

Auditors
Auditor and Chairman of Auditors Meeting

Terutaka Ikeda

AuditorHajime Yamada

Vice President

Takemi Ishibashi

AuditorKouichiro Sugihara

Vice President

Harutaka Seki

AuditorNaru Nakashima

Vice President

Masanobu Ikeo

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

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