Business Results for Third Quarter,
FY2010Creative Links to World Electronic
Feb 8th 2011
Hirose Electric
Co.,Ltd1

Cautionary Statement
In this material, there are descriptions based on
current estimation by Hirose Electric.
Hirose cautions you that a number of important risks,
uncertainties and others could cause actual results
to differ materially from those discussed in the*forward-looking statements. Thank you for yourunderstanding.
*Forward-looking statements include, but are not limited to, those statements using words suchas “believe,” “expect,” “plans,” “strategy,” “prospects,” “forecast,” “estimate,”“project,” “anticipate,” “aim,” “may” or “might” and words of similar meaning inconnection with a discussion of future operations, financial performance, events or conditions.
These statements are based on managementʼs assumptions and beliefs in light of the information
currently available to it.

2Business Situation of 3Q FY2010〔1Q FY2010〕◎Although partial adjustment for overseas mobile, orders and sales for automotive andindustrial area increased steadily〔2Q FY2010〕◎Steady increase in sales, especially in overseas mobile phone and automotive market.
However, in order, there were adjustment after August mainly in industrial area, bringing 2Q
slightly in a lower level than 1Q.

〔3Q FY2010〕◎Orders for partial smartphone and e-book etc. has increased steadily.
However, adjustment is still continued in the industrial market.
◎3Q FY2010 settled on 2.8% YoY in order level (-1.6％ over 2Q
FY2010), 1.4% YoY in sales level (-6.9% over 2Q FY2010)〔1Q-3Q FY2010〕◎1Q-3Q (total) FY2010 settled on 696.0 hundred million yen in orderlevel (9.6% YoY), 700.2 hundred million yen in sales level (12.4% YoY),
187.0 hundred million yen in recurring profit (13.5% YoY).
3

FY2010 Apr-Dec Orders and Sales Changes (Domestic Consolidation Basis, Index Number)
130

120

110

115

117

111

114
112

113

111
113

108
100

116

111

104

107

104

103

Average of FY2009 = 100

90

Order

80

Sales

98

100
95

70
Apr

May

Ju n

Ju l

Au g

Sep

Oc t

Nov

Dec

2010
4

FY2010 Apr-Dec Orders and Sales Changes by Markets (Domestic Consolidation Basis, Index Number)

Mobile

携帯
140

126

118
120

100

109
112
102

116

113
96

110

108

95

112

108 100
Average of FY2009
= 100

103

103

96

80

79
60

40
Apr

May

Jun

Ju l

Aug

Se p

Oct

Nov

De c

FY2010Orde rSale s5

FY2010 Apr-Dec Orders and Sales Changes by Markets (Domestic Consolidation Basis, Index Number)

Digital Consumer Electronic
110
100

Average of FY2009 = 100

89

86

90

79

87
84

80

93
78

94
81

96
80

76

79
70

86

78

75

73

70
60
50
Apr

May

Ju n

Ju l

Au g

Se p

Oc t

Nov

De c

FY2 0 1 0
Orde rSale s6

FY2010 Apr-Dec Orders and Sales Changes by Markets (Domestic Consolidation Basis, Index Number)

Automotive
160

140

122
120

115
105

100

114

129

131

128

126

135

134
117

117

123
126

114

103

115

Average of FY2009 = 100

101
80

60
Apr

May

Ju n

Ju l

Au g

Se p

Oct

Nov

Dec

FY2010Orde rSale s7

FY2010 Apr-Dec Orders and Sales Changes by Markets (Domestic Consolidation Basis, Index Number)

Associated Electric Equipment,
FA Controlling Device, and Others
160

142
140

120

145

143

133
144

132

130

126

127
118

131
117

116

118

Average of FY2009 = 100

100

98

103

108
106

80

60
Apr

May

Ju n

Ju l

Au g

Se p

Oc t

Nov

Dec

FY2 0 1 0
Orde rSale s8

Business Results for Third Quarter, FY2010(h u n dre d million s of Ye n ）（A)FY2009（B)FY2010

1Q-3Q

1Q-3Q

(B)-(A)(B)/(A)

M ajo r C h an ge s o ve r pr io r sam epe r io d(u n it : h u n dr e d m illio n s o f Y e n )[Sales]77.2 incre ase

HiroseForeign
Subsidiaries

+67.8

+5.4

Sales

623.0

700.2

(COGS Ratio)（56.4％）（55.0％） （-1.4％）[COGS Ratio] 1 . 4 po in t de c r e ase(SGA Rat io )（19.4％）（18.9％） （-0.5％）

Purchase Cost Ratio 42.0 % →42.6 %Depreciation Ratio 7.6% →5.7 %Operating
Profit

150.7

182.2

(%)

24.2%

26.0% （+1.8％）

77.2

12.4%

HST
+4.0

31.4 20.9% [SGA Ratio] 0.5 poin t de crease
Although 11.8 increase, 0.5 point decrease
due to the increase in sales[Non- Operating Expen ses]

Recurring
Profit

164.7

187.0

(%)

26.4%

26.7% （+0.3％）

22.3

13.5% Equity Method Profit 4.3→4.7
Interest Received & Dividend 9.1→6.3

Foreign Exchange Loss 1.2→7.2

Net Profit

101.2

94.3

(%)

16.2%

13.5% （-2.7％）

Total Assets

2,535.3

2,569.6

Shareholders'Equity Ratio

92.2%

90.0%

Income Per Share

276.7Yen

265.4Yen

-6.9
34.3

-6.8% [Extraordin ary Losse s]
1.4%

Recognizing the realization of foreign
currency translation adjustment, etc. due
to making Hirose Korea into subsidiary9

Sales by Market
OfficeMachinery3%

FA Controlling
Equipment 2%
Cable
Communication 3%
OfficeMachinery 3%

AssociatedElecric
Equipment 3%

Others19%

FY2009 1Q ‒ 3Q
DigitalConsumerElectronic
13%

Wireless
Communication 3%
Notebook PC
4%Mobile Phone
34%

Computer
RelatedEquipment 6%

Automotive
10%

FA
Controlling
Equipment
3%
AssociatedElectric
Equipment
3%

Others22%

FY2010 1Q ‒ 3Q
Automotive
11%

Notebook PC
3%
Cable
Communicati
on 3%

Wireless
Communicati
on
4%
※２

As this is in round number, please be notedthat some ratio difference may occur. Thankyou for your understanding.

Mobile Phone
33%

Computer
RelatedEquipment 5%

DigitalConsumerElectronic 9%※１※1 Computer Related Equipment ‒ Notebook PC not
included.
※2 Wireless Communication - Mobile Phone not included.

10

Sales Changes by Markets (in round numbers)
8%up

FY2009
1Q-3Q

35%up

FY2010
1Q-3Q

27%up
17%down

Mobile Industrial
Phone and others
Automotive

Notebook Associated FA
OfficeDigital
Cable
Computer
PC
Electronic Controlling Machinery
Consumer RelatedWireless Communication
Equipment Equipment
Electronics Equipment Communication※１※２

As this is in round number, please be notedthat some ratio difference may occur. Thankyou for your understanding.

※1 Computer Related Equipment ‒ Notebook PC not
included.
※2 Wireless Communication - Mobile Phone not included.

11

Overseas Production and Sales Ratio
（％）
59

60

59

56
52

50

47

40

Overseas
Sales
Ratio

36
32

30

34

30

30

20

Overseas
Production
Ratio

10

0

FY2006

FY2007

FY2008FY2009FY2010
1Q-3Q
12Changes in Consolidated Balance Sheet(hundred millions of Yen）
Account（A）Mar 31, 2010 （B）Dec 31, 2010 （B）−（A）

1,045.4 -50.3

RemarkCash and
Cash in Bank

1,095.7

Trade
Receivable

240.1

261.0

20.9 Hirose Korea's＋１５．６

Inventories

63.0

78.8

15.8 Hirose Korea's＋１１．０

Share buyback−２７．９ Construction payment for Yokohama
Center−１９．６
Additional investment to Hirose Korea−２６．３,
Hirose Korea's＋１６．２

Affiliated company share (Hirose Korea's)-４３．５
Hirose Korea's＋１８．７ Corporate bond,
etc.＋５．０

Investment
Securities

652.6

632.8

-19.8

Others

477.6

551.6

74.0 Tangible fixed assets＋６３．５

2,529.0

2,569.6

Total Assets

40.6
13

Changes in Consolidated Balance Sheet(hundred millions of Yen）
Account（A）Mar 31, 2010 （B）Dec 31, 3010

（B）−（A）

RemarkNotes Payables

120.1

129.2

Income Taxes
Payable, etc.

48.9

29.4

-19.5

Others

55.9

71.3

15.4 Increase in account payables

Total Liabilities

224.9

229.9

5.0

Retained
Earnings

2,552.6

2,597.7

45.1 Net income 94.3 - Dividend 47.3

-465.4-493.2-27.8 Share buyback

23.5

21.7

-1.8 Stock price fallen

-45.1

-50.4

-5.3 Due to strong yen

Others

238.5

263.9

25.4 Minority interest

Total Shareholders'Equity2,304.1

2,339.7

35.6

2,529.0 2,569.6

40.6

Treasury Stocks
Valuation
Variance
Translation
Adjustment

Total Liabilities andShareholders' Equity

9.1 Hirose Korea's ＋７．７

14

Capital Investment and Depreciation Change (Domestic Consolidated Basis)（hundred millions of Yen）
120

6 0 . 0 (%)

100

H19年度税制改正に伴う
約14億円
Capital
5 0 . 0 減価償却費増
Investment(対売上比1.2％)

92

90

89

80
66

66

60

60

57

30.0
46

44

38

40
20

40.0

Previous
66 Previous↓ 7560
↓

7.8

10.0

7 .5

7 .3

0
FY2007

FY2008Depreciation

CapitalInvestment
Ratio

20.0
Depreciation
Ratio

7 .8

6.4

6 .6

5 .2

6.1

5 .4

FY2009

H19年度
FY2010(Forecast)

10.0
0.0

FY2010H22.3Q
1Q-3Q

15

Business Forecast for the Year Ended March 31, 2011
Gre e n italic s
n u mbe r : dat aan n o u n c e d o n No v
2010

Note) First Half: 1Q & 2Q, Second Half: 3Q & 4Q

(h u n dre d million s of Ye n ）Second下期
中間期
下期Half

First
中間期
Half

FY2009 (Actual)
First
Half

SecondHalf

For theYear

FY2010 (Forecast)First Half

SecondHalf

444.6

For theYear

Over Previous Actual Amount

Change%For
中間期
the Year
年間

Over Previous Actual Amount Over Previous Actual Amount

Change%920.0

Change

20.0

Sales

401.2 443.5

844.7

475.4

464.6

940.0 74.2 18.5% 21.1 4.8% 95.3

（COGS）（57.2％） （56.2％）（56.7％）（54.0％）（59.3％）（56.6％）

98.9

230.0

0 .0

Operating
Profit

90.4

113.7

204.1

131.1

98.9

230.0 40.7 45.0% -14.8

(%)

22.5%

25.6%

24.2%

27.6%

21.3%

24.5%

Recurring
Profit
(%)

100.9

235.0

220.0

134.1

100.9

235.0 33.3 33.0% -18.3

25.1%

26.0%

28.2%

21.7%

25.0%

61.7

145.0

- 1 5 .4 %

-20.0

61.5

71.2

132.7

83.3

41.7

125.0 21.8 35.4% -29.5 -41.4% -7.7

(%)

15.3%

16.1%

15.7%

17.5%

9.0%

13.3%

Income Per Share--Dividend Per
Share
Dividend
Payout Ratio

-

-

-

33.0%

-

-

0.0%
12.7%

0.0%

6.8%

- 1 3 .8 %-5.8%

FY2010 Re ason for Revision

353.97Yen 1. Hirose Korea's sales, profit and loss from

60Yen 60Yen 120Yen 75Yen 75Yen 150Yen
-

11.3%

15.0

Net Profit

363.15Yen

2.2%

25.9

0 .0

100.8 119.2
26.9%- 1 3 .0 %

%

42.4%

FY2010 4Q included
2. Recognizing the realization of foreign
currency translation adjustment, etc. due tomaking Hirose Korea into subsidiary →19
hundred million yen extraordinary losses

16About “Losses on step acquisition” (Summary)Feb 8th 2011
Hirose Electric Co.,Ltd

１．In the past, as equity method application affiliate, we have been taking in 50% of Hirose Korea’s net

income as non-operating expenses (equity method profit on investment).

２．The above 50% of Hirose Korea’s net income in Korean Won has been converted into Japanese yen withthe average rate of every fiscal year in Hirose consolidated income statement and retained earnings.

３．At the end of every fiscal year, the difference between the 50% of Hirose Korea’s net asset that has been

converted with the closing rate and the total of the above would be processed as “foreign currencytranslation adjustment.”

４．The balance of Hirose Korea’s “foreign currency translation adjustment” on Dec 31th 2010 isapproximately a negative 23 hundred million yen.

５．According to “Accounting standards for business combination” applied from Apr 1st 2010, when one

company acquires another company’s share step by step, and has obtained the control, the substance ofthe previously owned investment would be regarded as changed, and considered that the investment at
the time is once liquidated and acquired again, and is required to reassess the value at that time.

６．As a result, the unrealized foreign exchange gain or loss that has been processed as “foreign currencytranslation adjustment” in 4.would be regarded as recognized by reassessing the value, and it is required
to reflect the difference in the Income Statement of this term as “profits and losses on step acquisition.”

７．The market valuation amount of Hirose Korea’s existing stocks (50%) would be approximately 52

hundred million yen (doubling the acquisition cost of 26 hundred million yen, the newly acquired 25%),so the difference between this and the profit on investment total taken in by the equity method,
approximately 48 hundred million yen, would be 4 hundred million yen, and this deducted from the“foreign currency translation adjustment” balance of 23 hundred million yen would leave approximately
19 hundred million yen, which would be recognized as “losses on step acquisition” (extraordinary losses).

This loss does not mean devaluing the investment value of Hirose Korea or damaging the net assets value of Hirose
consolidated, or the occurrence of additional financial outflow due to the loss add up.
Regarding the comprehensive income statement, which would be applied at the end of this fiscal year, the amountadded up as the recognition of the “foreign currency translation adjustment” of the extraordinary losses is estimated tohave no influence on the “comprehensive income”, as the amount would offset at “foreign currency translation
adjustment” in other comprehensive income as profit.
17

Account Processing on making Hirose Korea into Subsidiary
１．Background1）On Dec 2010, we have decided to make Hirose Korea, former equity method application affiliate(Korea, founded in Oct.1985, investment ratio 50%), into consolidated subsidiary, and increase
investment ratio by 25%, making into 75% investment.
2）In the account processing for this 3Q, the 50% would be included in “Profit on investment by
equity method“(469 million yen) in P/L as before, and added in consolidation process as of the last dayof this quarter in B/S.
Moreover, by making Hirose Korea into subsidiary and conducting account processing according
to the revised “Accounting standards for business combination” (applied from Apr 2010), 1,895 million
yen is added to the extraordinary losses as “Losses on step acquisition.” The main content for this loss
is the recognition of the unrealized currency loss that has been directly added to “Foreign Currencytranslation adjustment” of shareholders’ equity when equity method applied.
Further more, we plan to consolidate Hirose Korea’s sales, profit and loss of this fiscal year on the 4Q.

２．Account processing by making Hirose Korea into subsidiary (account processing on step
acquisition)
Former Accounting Standards

Concept

The investment amount to the subsidiary would be thetotal cost of shares acquired from the past, i.e. regard
each market value at the time of every individualtransaction that had resulted in obtaining control as thevalue of acquisition, and the cumulative total amount of
those to be the acquisition cost.
The concept is that we are increasing the investment
ratio to the equity method affiliated, and even as
consolidated subsidiary we are still continuing to invest.

“Accounting standards for business combination"
applied from Apr 2010
The fact of making the equity method affiliated into
consolidated subsidiary and obtaining control, differs by
far from a mere additional share acquisition. The actual
condition or substance of investment held in the pastwould be regarded as changed, and the market value as of
the business combination would be the new investment
cost.
The concept is that the past investment to the equity
method affiliated would be regarded as once liquidated(sold) and is acquired again in the market value as of thebusiness combination.

18

Former Accounting Standards

Exemplificat
ion ofaccount
processing(The impact
onconsolidated
financialstatement)

Notes(Former Standards Consolidated B/S)
Assets
15,000 Liability
3,000
Subsidiary Shares△2,000 Capital
Retained earnings
9,000
Foreign currency△2,000translation adjustment
Minority interest
3,000
Total liabilities andTotal shareholders'
13,00013,000shareholders's equity
equity“Accounting standards for business combination"
applied from Apr 2010
(New Standards Consolidated B/S)
Assets
15,000 Liability
Subsidiary Shares△2,000 Capital
Retained earnings
Foreign currencytranslation adjustment
Minority interest
Total shareholders'
Total liabilities and13,000equityshareholders's equity(New Standards Consolidated P/L)
Losses on step
Foreign currency
2,000
acquisitiontranslation adjustment（Extraordinary losses）

The retained earnings and foreign currencytranslation adjustment that has been recognizedwhen the equity method was applied would
each be continued to be calculated anddisclosed within net assets after the shift toconsolidation.

3,000
7,000
3,000
13,0002,000（unrealized foreign exchanged gain orloss resulted by the past acquired
retained earnings)

With the market valuation of investment, the unrealized
foreign exchange profit or loss (foreign currency translation
adjustment) will also be recognized as profit or loss, and as
a result, would be reflected on retained earnings.
１．This loss does not mean devaluing the investment
value of Hirose Korea or damaging the net assets value ofHirose consolidated, or the occurrence of additional
financial outflow due to the loss add up.
２． Regarding the comprehensive income statement, which
would be applied at the end of this fiscal year, the amountadded up as the recognition of the “foreign currencytranslation adjustment” of the extraordinary losses is
estimated to have no influence on the “comprehensive
income”, as the amount would offset at “foreign currencytranslation adjustment” in other comprehensive income as
profit.

19

[Reference] Won/Yen Rate change （from Mar 1986）
1986.3 1987.3 1988.3 1989.3 1990.3 1991.3 1992.3 1993.3 1994.3 1995.3 1996.3 1997.3 1998.3
平均rate18.22 17.17 18.06 21.09 19.68 17.83 15.83 13.39 12.47 12.57 13.77 11.64
Averagerate 25.03
Closing
price 20.01
終値rate17.12 16.55 19.68 22.43 19.30 17.00 14.50 12.80 11.58 13.68 13.94
9.59
rate

1999.3 2000.3 2001.3 2002.3 2003.3 2004.3 2005.3 2006.3 2007.3 2008.3 2009.3 2010.3 2010.12
Averagerate 9.99
平均rate
9.61
9.57
9.68
10.03
9.59
9.77
11.26 12.43 12.29
8.54
7.70
7.49
Closing price
終値rate 10.02
9.66
9.44
10.11
9.59
9.22
10.61 12.05 12.56 10.11
7.03
8.23
7.16
rate

30.00
25.00
20.00
Average rate

15.00
10.00

Closing price
rate

5.00

19

86
19 .3
88
.
19 3
90
19 .3
92
19 .3
94
19 .3
96
19 .3
98
.
20 3
00
20 .3
02
20 .3
04
20 .3
06
.
20 3
08
20 .3
10
.3

0.00

20

Display on the consolidated comprehensive income statement of this fiscal year

・・・

The account for the comprehensive income will be displayed on the consolidated
financial statement from the end of this fiscal year.
＜Impact on consolidated F/S＞
(hundred millions of Yen)
Consolidated profit/loss and【Net Profit/Loss Calculating Stage】
Comprehensive income statement
Negative influence on net profit
Extraordinary losses
and loss mainly with therecognition of the foreign△1,895Losses on step acquisition
currency translation adjustment

XX,XXX

Net income

・・・

Minority equity (added)
XX,XXX
Net income before minority profit or
XX,XXX
loss
Other comprehensive income：
Foreign currency translation
adjustment
Comprehensive income＋2,318【Comprehensive income calculating stage】
Positive influence on comprehensive
income with the decrease in foreign
currency translation adjustment.

XX,XXX

It is estimated that the recognition of foreign currency translation adjustment will not
influence at the stage of comprehensive income. (Estimated no influence on the total net
asset)

21