60th Fiscal Term

Annual Report

From April 1, 2006 to March 31, 2007

HIROSE ELECTRIC CO., LTD.

HIROSEELECTRIC
CO.,LTD.

To Our Shareholders

We are pleased to report the results of operations
for fiscal 2006, the year ended March 31, 2007（the60th fiscal term, from April 1, 2006, to March 31,2007）.

President and Representative Director

Tatsuro Nakamura

Business Overview
During the year ended March 31, 2007, the Japanese
economy saw a steady undertone of recovery
against a backdrop of improved corporate profitsand employment and increased capital investment
despite a decelerating U.S. economy.
The electronics industry performed steadily on
the whole despite a severe operating environment
epitomized by intensified price competition, a surge
in metallic material prices and inventory
adjustment for some IT-related components.
In this business environment, the Hirose
Electric Group reinforced its product development
capability, developed new products and enhanced
product quality in response to sophisticatedcustomer needs. The Group also pushed forwardwith aggressive management initiatives including
cost-cutting measures such as the promotion of
manufacturing efficiency and an expansion in

Executive Vice President
and Representative Director

Sakae Kushida

Financial Highlight■ Net sales■ Ordinary income

Millions of yen
120,000

115,485
104,407

100,000
80,00089,562

38,62735,00067,89025,00020,00040,00040,19925,957

22,91324,176

18,31515,04315,000

11,39819,937
10,00015,00010,00020,000Millions of yen
25,00020,00030,66430,00060,000

5,000

5,000

0

0
2003



Millions of yen
45,00040,00079,012■ Net income

2004

2005

2006

2007

0

2003

2004

2005

2006

2007

2003

2004

2005

2006

2007

overseas manufacturing, as well as the exploitationof domestic and overseas sales channels and thereinforcement of selling power.
As a result, consolidated net sales for the year
under review amounted to ¥115,485 million, an
increase of 10.6% from a year earlier. Ordinary
income increased 4.1% year over year to ¥40,199
million, and net income rose 5.5% to ¥24,176 million,
both of which were historical highs.
The above figures include a loss on liquidationof HIROSE ENGINEERING CO., LTD., a former
consolidated subsidiary that was dissolved after
withdrawing from the organic EL business.
In the economic environment in which theGroup operates, the market is expected to growthrough expansion in the fields of information andcommunications networks, digital information,
consumer electronics and automotive electronics.
However, the situation will become increasingly
severe, affected by the diversification of markets;
shorter product cycles, which will pose higher
risks in collecting the fruits of our investments; andfurther intensifying competition.
In this tough business environment, the Group■ Net income per shareyen
700
589.03600

June 2007
President and Representative Director

Tatsuro Nakamura

Executive Vice President and Representative Director

Sakae Kushida■ ROA&ROE
621.08%100■ Net assets per share

Equity ratio

Ordinary income ratio to sales

90
70
50

284.87

20

1,000

10
0

0

2003

2004

2005

2006

2007

4,538

2,000

30

100

5,017
4,276

3,000

40

200

6,159
5,612

4,000

60

382.26

400

yen
6,000
5,000

80
468.46500

300

intends to pursue leading-edge technologies,
conduct more efficient distribution andconcentration of resources and consistently carryout reforms and innovations. Such aggressive
initiatives also include the reinforcement of productdevelopment capability to meet new needs, thedevelopment of high-value-added products and thepromotion of manufacturing efficiency and further
improvement of product quality, all of which would
serve to improve our cost competitiveness. At thesame time, we are determined to strengthen ourmanagement foundations toward profitable growthand improve our corporate value through efforts topromote globalization and exploit domestic andoverseas sales channels.
We look forward to your continued support andencouragement.

0

2003

2004

2005

2006

2007

2003

2004

2005

2006

2007



Overview by Product Segment

Multi-Pin Connectors

Our flagship multi-pin connectors include avariety of connector types such as circularand rectangular connectors, connectors forribbon cables, connectors used for printed
circuit boards including FPCs (flexible printed
circuit boards) and PC cards, as well as nylon
connectors.
Major applications of these connectors
include a wide range of industrial fields, suchas computers and peripheral terminals, PCs,
OA equipment, communications equipment,
telephone equipment, measuring and control
equipment, FA equipment, broadcasting
equipment and medical electronics equipment,
digital information consumer electronics andautomotive electronics. Further expansion indemand is expected along with the enhanced
use of electronics and the development of thecontemporary information and communications
society, which is heavily dependent on thesignificant use of computers andcommunications equipment.
As a consequence, consolidated segment
sales for the year under review increased
10.8% year over year to ¥97,971 million, principally
resulting from strong demand in theinformation and communications fields,
particularly for advanced-function mobile
phones and digital consumer electronics.

Coaxial Connectors

Coaxial connectors are a special type of highperformance connector used primarily for
microwave and other high-frequency signals. Theirapplications include microwave communications
devices, satellite communications equipment,
electronic measuring instruments, mobile
communications equipment such as mobile
phones and PHSs, and switching andtransmission equipment and other electronicequipment. Optical fiber connectors are also
included in this segment.
Consolidated segment sales for the year underreview increased 15.5% to ¥12,793 million due
to a recovery in demand for mobile communications
equipment and investments in communications
infrastructure.

Other Products

The Other Products segment includes highfrequency devices such as directional
couplers, non-reflecting terminal equipment,
fixed attenuators, circulators and coaxial
switches, as well as low-frequency equipment
designed for medical treatment applications
and instruments for connectors.
Consolidated segment sales for the year
under review decreased 4.6% to ¥4,719 million.

Consolidated Financial Statements
Consolidated Balance Sheets
Account item

（Millions of yen）

Consolidated Statements of Income

As of March 31, 2007 As of March 31, 2006

Assets（Millions of yen）

From April 1, 2006 From April 1, 2005
to March 31, 2007 to March 31, 2006

Account item
Net sales

115,485

104,407

Current assets

190,420

199,032

Fixed assets

Cost of sales

58,42049,97581,092

56,387

Property, plant and equipment

22,80518,048Gross profit

57,06454,432Intangible assets

2,188

3,114

19,02917,54038,03536,891Other income

2,227

2,251

Other expenses

63

515

40,19938,627

Investments and other assets
Total assets

56,09835,224

271,513

255,419

28,12831,649Liabilities
Current liabilities

Selling, general and administrative expenses
Operating income

Ordinary incomeLong-term liabilities

3,634

5,198

Special gains

376

21

Total liabilities

31,762

36,847

Special losses

1,772

276
38,372━

Income before income taxes

38,802

Common stock

9,404

Additional paid-in capital━

Provision for income taxes―Current

15,367

15,645

14,362Retained earnings━

202,643

Provision for income taxes―Deferred

（741）

（186）

Unrealized gain on available-for-sale securities

━

3,183

Net income

24,176

22,913Foreign currency translation adjustments━

530

Treasury stock, at cost━

（11,554）

Total shareholders’ equity━

218,571

Total liabilities and shareholders’ equity━

255,419

Shareholders’ equity

234,446━

Common stock

9,404

━

Additional paid-in capital

14,370━Retained earnings

222,222━

Treasury stock, at cost

（11,550）

━

5,304

━

Total net assets

239,750

Total liabilities and net assets

271,513

Shareholders’ equity

Note: Amounts less than ¥1 million are truncated.

Consolidated Statements of Cash Flows（Millions of yen）

Valuation, translation adjustments and others

Note: Amounts less than ¥1 million are truncated.

From April 1, 2006 From April 1, 2005
to March 31, 2007 to March 31, 2006

Account item

Net assets

Operating activities

26,84527,879Investing activities（42,248）（8,648）Financing activities（4,454）（1,814）

Effect of exchange rate change on cash and cash equivalents

440

499

Net increase/decrease in cash and cash equivalents（19,417）

17,916━

Cash and cash equivalents, beginning of the year

143,901

125,985━

Cash and cash equivalents, end of the year

124,483

143,901

Note: Amounts less than ¥1 million are truncated.

Consolidated Statements of Changes in Net Assets.（From April 1, 2006 to March 31, 2007）	（Millions of yen）

Shareholders’ equity
Valuation, translation
Total net assets
Common stock Additional paid-in capital Retained earnings Treasury stock, at cost Total shareholders’ equity adjustments and others
Balance at March 31, 2006
Amount of changes during the period
Dividends from surplus
Bonuses paid to Directors and Corporate Auditors
Net income for the period
Acquisition of treasury stock
Disposition of treasury stock
Net amount of changes during theperiod other than shareholders’ equity
Total amount of changes during the period
Balance at March 31, 2007
Note: Amounts less than ¥1 million are truncated.



9,404

14,362

202,643（11,554）（4,476）（121）
24,176
（33）
36

7

━
9,404

7
14,37019,578222,2223（11,550）

214,856

3,714

218,571（4,476）（121）
24,176（4,476）（121）
24,176

（33）
44

（33）
44

━

1,589

1,589

19,589234,446

1,589
5,304

21,179239,750

Nonconsolidated Financial Statements
Nonconsolidated Balance Sheets
Account item

（Millions of yen）

As of March 31, 2007 As of March 31, 2006

AssetsCurrent assets

135,928

142,283

Fixed assets

43,02030,495

Property, plant and equipment

11,661

7,463

Intangible assets

2,111

1,574

Investments and other assets

29,24721,457

178,948

172,778

Total assets

Nonconsolidated Statements of Income （Millions of yen）
From April 1, 2006
to March 31, 2007

From April 1, 2005
to March 31, 2006

Net sales

109,438

99,442

Cost of sales

72,64865,411Gross profit

36,79034,031

14,611

13,40922,17920,621Other income

4,890

3,604

Other expenses

2,039

1,420

25,02922,805Special gains

376━

Special losses

4,082

165

Income before income taxes

21,323

22,639Provision for income taxes―Current

9,851

9,438

Provision for income taxes―Deferred（1,347）（372）

Net income

12,818

13,574━

10,082

Interim dividend

━

1,354

Unappropriated retained earnings━

22,302

Account item

Selling, general and administrative expenses
Operating income

Liabilities
Current liabilities

16,30417,014Long-term liabilities

1,054

2,975

Total liabilities

17,35919,990Common stock

━

9,404

Additional paid-in capital━

14,362Retained earnings━

137,401

Unrealized gain on available-for-sale securities

━

3,173

Treasury stock, at cost━

（11,554）

Total shareholders’ equity━

152,788

Total liabilities and shareholders’ equity━

172,778

Shareholders’ equity

157,847━

Common stock

9,404

━

Additional paid-in capital

14,370━Retained earnings

145,623━

Treasury stock, at cost

（11,550）━

Valuation, translation adjustments and others

3,742

━

Total net assets

161,589━

Total liabilities and net assets

178,948━

Shareholders’ equity

Net assets

Note: Amounts less than ¥1 million are truncated.

Ordinary income

Retained earnings brought forwardfrom the previous fiscal term

Note: Amounts less than ¥1 million are truncated.

Introduction of Our New ProductsNew
products

The Company launches many new products every year into the market. The following product series are
typical of our recent introductions.
MS-166

Space-saving and highly reliable low-profile
1.2-mm coaxial switches used for mobile
phones and wireless LAN
DF36

A wide variety of narrow pitch thin-wirecoaxial cable connectors used for mobile
phones and DSC ranging from the spacesaving type to the grounding-reinforcement
type



SMPM

Coaxial connectors for optical modules used in
optical transmission equipment that arecompatible with frequencies up to 65 GHz
DF37Space-saving and low-profile connectors
used for connections inside DSC and mobile
phones with a highly reliable configurationand featuring a wide variety from single tomulti-polar types

Group Network■ Overseas bases（Branches, manufacturing subsidiaries,
sales subsidiaries and affiliates）■ Overseas agencies■ Major exporting destinations● Head office● HIROSE ELECTRIC
MALAYSIA Sdn.
Bhd.（Malaysia）● Yokohama
Engineering Center● Head office● Sales & Marketing
Division
Domestic Sales offices
Overseas offices● Sales & Marketing
Division

5-23, Osaki 5-chome, Shinagawa-ku, Tokyo1-11, Osaki 5-chome, Shinagawa-ku, Tokyo achikawa Sales Office,T
Osaka Branch, Nagoya Sales Office ong Kong Branch, Singapore Branch,H
Shenzhen Representative Office,Beijing Representative Office● Engineering Division okohamaY
Engineering Center● Production DivisionSeparate Office of Yokohama
Engineering Center -13, Kikuna 7-chome, Kohoku3ku, Yokohama
 5-10, Shin-Yokohama 2-chome,
1
Kohoku-ku, Yokohama●P .T. HIROSE
ELECTRIC INDONESIA（Indonesia）● H IROSE ELECTRIC（DONG GUAN）CO.,LTD.（China）● Subsidiaries （Domestic）
TOHOKU HIROSE ELECTRIC CO., LTD.（Miyako, Iwate）
KORIYAMA HIROSE ELECTRIC CO., LTD.（Koriyama, Fukushima）
ICHINOSEKI HIROSE ELECTRIC CO., LTD.（Ichinoseki, Iwate）
HST CO., LTD.（Yokohama, Kanagawa）（Overseas）
HIROSE ELECTRIC（U.S.A.）, INC.（U.S.A.）HIROSE ELECTRIC GmbH（Germany）
HIROSE ELECTRIC UK LTD.（U.K.）
HIROSE ELECTRIC EUROPE B.V.（The Netherlands）
HIROSE ELECTRIC MALAYSIA Sdn. Bhd.（Malaysia）
HIROSE ELECTRIC（TAIWAN）CO., LTD.（Taiwan）
P.T. HIROSE ELECTRIC INDONESIA（Indonesia）
HIROSE ELECTRIC HONG KONG CO., LTD.（Hong Kong）
HIROSE ELECTRIC（DONG GUAN）CO., LTD.（Dong Guan, China）
HIROSE ELECTRIC（SHANGHAI）CO., LTD.（Shanghai, China）● Affiliates
HIROSE KOREA CO., LTD.（South Korea）
WEI-HAI HIROSE KOREA ELECTRIC CO., LTD.（Weihai, China）
Corporate Data

Corporate Data（As of March 31, 2007）
Trade name

HIROSE ELECTRIC CO., LTD.

Date of incorporation

June 15, 1948

Number of employees

713 (excluding part-timers)

Paid-in capital¥9,404,379,401

Directors and Corporate Auditors（As of June 28, 2007）
President and Representative Director
Executive Vice President and Representative Director
Managing Director
Director
Director
Outside Director
Full-time Corporate Auditor
Corporate Auditor
Outside Corporate Auditor
Outside Corporate Auditor

Tatsuro Nakamura
Sakae Kushida
Mitsugu Sugino
Izumi Morimoto
Yoshikazu Yoshimura
Masashi Kojima
Toshio Matsubara
Masao Hirohashi
Hidesato Sekine
Takashi Higa

Notes:
1.	D irector Masashi Kojima is the outside director as
stipulated in Article 2, Item 15, of the Corporation Law.
2.	Corporate Auditor Hidesato Sekine and Takashi Higaare outside corporate auditors as stipulated in Article
2, Item 16, of the Corporation Law.

Accounting auditor



KPMG AZSA & Co.

Stock Information（As of March 31, 2007）
Total number of shares issued
38,926,757 shares（Excluding 1,093,979 shares of treasury stock）
Number of shareholders

6,279

Major shareholders（Top 10）
Name

Number of shares held

State Street Bank and Trust Company
HIROSE INTERNATIONAL SCHOLARSHIP FOUNDATIONThe Chase Manhattan Bank N.A. London
Japan Trustee Services Bank, Ltd. (Trust account No. 4)
Kosho Sangyo Co., Ltd.
Japan Trustee Services Bank, Ltd. (Trust account)
The Master Trust Bank of Japan, Ltd. (Trust account)
The Chase Manhattan Bank 385036
Japan Trustee Services Bank, Ltd. (Re-trust account of The
Sumitomo Trust & Banking Co., Ltd., and the retirement
benefit trust account of Sumitomo Mitsui Banking Corporation)

hundred shares

37,831
28,55027,932
20,812
13,941
12,97912,402
10,0008,162

Setsuko Hirose
7,948
Note: In addition to the 10 major shareholders above, the Company owns
10,939 hundred shares of treasury stock.

Distribution of shares by shareholder type
Individuals, etc.
64,824 hundred shares (16.19%)

Financial institutions
97,553 hundred shares (24.37%)
Securities companies
5,370 hundred shares(1.34%)

Foreign corporations, etc.
173,923 hundred shares (43.47%)

Other corporations
58,535 hundred shares (14.63%)

Shareholder information
Fiscal term

April 1 of a calendar year to March 31 of the next calendar year

Ordinary General
Meeting of Shareholders

June every year

Record dateOrdinary General Meeting of Shareholders: March 31 every year
Year-end dividend: March 31 every year
Interim dividend: September 30 every year
(As required, another record date may be
decided with prior public notice.)

Number of sharesin one voting unit

100 shares

Method of public notice

The Company’s Web site below shall be used for its public notices.
〈http://www.hirose.co.jp/investor/index.htm〉
If an electronic public notice should fail due to accident
or any other unavoidable circumstances, the Company
shall post a public notice in the Nihon Keizai Shimbun.

Shareholders’
The Sumitomo Trust & Banking Co., Ltd.
register manager 5-33, Kitahama 4-chome, Chuo-ku, Osaka
Paperwork
processing office

The Sumitomo Trust & Banking Co., Ltd.
Securities Agency Department
4-4, Marunouchi 1-chome, Chiyoda-ku, Tokyo

Mailing address andtelephone referral

The Sumitomo Trust & Banking Co., Ltd.
Securities Agency Department
1-10, Nikko-cho, Fuchu-shi, Tokyo 183-8701（Requests for address change form, etc.）
Phone: 0120-175-417 (Toll-free)（Other reference）
Phone: 0120-176-417 (Toll-free)

Web site

URL: http://www.sumitomotrust.co.jp/STA/retail/service/daiko/index.html

Agency offices

Head office and branches nationwide of The Sumitomo Trust & Banking Co., Ltd.

Web site

http://www.hirose.co.jp

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