69th Fiscal Term

Annual Report

From April 1, 2015 to March 31, 2016

To Our Shareholders

Kazunori Ishii
President and Representative Director

We are pleased to report the results of operations for fiscal 2015, theyear ended March 31, 2016 (the 69th fiscal term, from April 1, 2015
to March 31, 2016).

Business Overview
During the fiscal year ended March 31, 2016, corporate performanceand employment situation remained on a recovery trend in theJapanese economy, due to the economic measures by thegovernment as well as the Bank of Japan, which, however, turned
uncertain due to the strong yen and weak stock prices since the turnof the year.
Overseas, economic slowdown in China and emerging economies
has become evident, while uncertainty in the global economy has
intensified involving the falling price of crude oil and other resources,
making the future prospect more and more unpredictable.
Under such conditions, the Hirose Electric Group, while expanding
the business globally, chiefly for the smartphone, automobile, andindustrial machinery/equipment markets, proceeded with efforts toreinforce our development, sales and production systems for new
high-value-added products in the pursuit of swifter responses toincreasingly sophisticated market needs. However, due to a decline
in business in the South Korean and Taiwanese smartphone markets
and a slowdown in business for industrial machinery/equipment
market, consolidated net sales for the year under review amounted

Financial Highlights■ Net sales■ Ordinary income

Millions of yen

Millions of yen

140,000

124,987

125,726

120,000
100,000

94,790■ Profit attributable to owners of parent
Millions of yen

40,00034,747120,284

30,51630,00095,93820,91980,00025,00034,96267th

68th

21,104

22,38615,00012,824

13,50865th

66th

10,00040,00010,0005,000

20,0000fiscal term
65th

1

22,94820,00020,00060,00022,439

66th

67th

68th

69th

0

fiscal term
65th

66th

67th

68th

69th

0

fiscal term69th

to ¥120,284 million, a decrease of 4.3% year on year. Operating
income decreased 11.6% year on year to ¥28,794 million, ordinary
income decreased 12.7% year on year to ¥30,516 million and profit
attributable to owners of parent decreased 8.0% year on year to¥21,104 million.
The management environment in which the Group operates is
uncertain whether the recovery trend hitherto can be maintained, as
the government’s economic stimulus measures and the Bank ofJapan’s monetary policy are becoming less effective, while theexchange rate is volatile.
Overseas, as economic slowdown in China and emerging economies
has become evident, while uncertainty in the global economy has
intensified involving the falling price of crude oil and other resources,
we expect the uncertainty to remain for the foreseeable future.
The Group will focus on further sales growth in the automobile
field along with an expansion in automotive electronics, and thegrowth of the industrial machinery/equipment and communications
equipment fields. We will also focus on maintaining and expanding
our mass production businesses for smartphones and tablet PCs, etc.,
where further price competition is expected to be driven by■ Basic earnings per share

%

800

100

June 2016

Kazunori Ishii
President and Representative Director

Equity ratio■ Dividends per share

Ordinary income ratio to net sales

90674.25596.31

600

400

We look forward to your continued support and encouragement.

■ Equity ratio & Ordinary income ratio to net sales

Yen
652.68

consumers’ preferences for lower-priced products.
In this business environment, the Group intends to pursue leadingedge technologies, conduct more efficient distribution andconcentration of resources and consistently carry out reforms andinnovations. Such aggressive initiatives also include the reinforcementof high-value-added product development capabilities to meetmarket needs, the promotion of manufacturing efficiency and further
improvement of product quality, all of which would serve to improve
our cost competitiveness. At the same time, we will work to promote
globalization with an eye to dispersing risk across production bases
and growing and expanding our businesses going forward, develop
domestic and overseas sales channels, and strengthen ourmanagement foundations toward profitable growth in an effort toimprove our corporate value.

70366.11

50

150

40
20
fiscal term
66th

67th

68th

69th

130

140

50

10
65th

240

100

30

0

230
200

200

60

200

300
250

80

390.48Yen

0fiscal term
65th

66th

67th

68th

69th

0

fiscal term
65th

66th

67th

68th

69th

2

Overview by Product Segment

Multi-Pin Connectors
Our flagship multi-pin connectors include a variety of connector types such as circular andrectangular connectors, connectors for ribbon cables, connectors used for printed circuit boards

Sales ratio

including FPCs (flexible printed circuit boards) and nylon connectors.
The major applications of these connectors include a wide range of fields such as
smartphones, tablet PCs, communications equipment and automotive electronics, as well as
81.9%

industrial fields such as measuring and control equipment, FA equipment and medical
electronics equipment. Further expansion in demand is expected along with the further
development of a sophisticated information and communications networked society and an ecofriendly, energy conservation-oriented society.
Consolidated segment net sales for the year under review decreased 2.8% year on year to¥98,555 million and operating income fell 8.3% to ¥25,822 million due to a decline in business in

Net sales

the South Korean and Taiwanese smartphone markets and a slowdown in business for industrial
machinery/equipment market, although business in automobile market continued to grow.
(Millions of yen)

120,000
101,385

98,55568th

69th

90,00060,00030,00003fiscal termCoaxial Connectors
Coaxial connectors are a special type of high-performance connector used primarily for
microwave and other high-frequency signals. Their applications include microwave

Sales ratio

communications devices, satellite communications equipment, electronic measuring instruments,

11.5%

or smartphones, mobile phones, switching and transmission equipment and other electronicequipment. Optical fiber connectors and coaxial switches are also included in this segment.
Consolidated segment net sales for the year under review decreased 14.7% year on year to¥13,829 million and operating income decreased 39.2% year on year to ¥2,529 million.
Net sales(Millions of yen)

20,00016,21915,00013,82910,000
5,000
0

68th

69th

fiscal term

Other Products
Sales ratio
6.6%
The other products segment includes medical electronics and health equipment such as interference wave EMSs, micro switches and instruments
for connectors.
Consolidated segment net sales for the year under review decreased 2.7% year on year to ¥7,900 million and operating income increased
71.5% year on year to ¥442 million.

Sales ratio

Net sales

6.6%(Millions of yen)

10,000
8,121

7,900

68th

69th

7,500
5,000
2,500
0

fiscal term

Net sales(Millions of yen)

10,000
8,121
7,500

7,900

4

Consolidated Financial Statements
Consolidated Balance Sheets
Account item

(Millions of yen)
Current fiscal year

Previous fiscal year

As of March 31, 2016

As of March 31, 2015

(Assets)

Account item

(Millions of yen)

Current fiscal year

Previous fiscal year

From April 1, 2015
to March 31, 2016

From April 1, 2014
to March 31, 2015

Net sales

120,284

125,726

Current assets

235,308

221,405

Cost of sales

65,83969,163

Non-current assets

81,287

98,262Gross profit

54,44456,563

Total assets

316,595

319,667

Selling, general andadministrative expenses

25,65023,974

Operating income

28,79432,588

Ordinary income

30,51634,962

Profit before income taxes

30,527

34,670

Income taxes

9,423

11,603―

118

21,10422,948(Liabilities)
Current liabilities

23,467

24,331

Non-current liabilities

7,298

7,034

Total liabilities

30,76531,365
Profit attributable to noncontrolling interests(Net assets)
Shareholders’ equity

272,599

269,376

Capital stock

9,404

9,404

Capital surplus

11,116

13,552Retained earnings

308,530

311,039

Treasury shares△56,450△64,619

12,85018,695379

Total net assets
Total liabilities and net assets

Accumulated othercomprehensive income

Profit attributable to owners ofparentNote: Amounts less than ¥1 million are truncated.

Consolidated Statements of Cash Flows
Account item

(Millions of yen)

Current fiscal year

Previous fiscal year

From April 1, 2015
to March 31, 2016

From April 1, 2014
to March 31, 2015

Operating activities

36,03731,807229

Investing activities

2,623△16,232

285,830

288,302

Financing activities△17,917△12,433

316,595

319,667

Cash and cash equivalents, endof the year

75,392

56,711

Subscription rights to shares

Note: Amounts less than ¥1 million are truncated.

5

Consolidated Statements of Income

Note: Amounts less than ¥1 million are truncated.

Overview of Consolidated Balance Sheets

(Millions of yen)Previous fiscal year

Current fiscal year

Previous fiscal year

Current fiscal year

As of March 31, 2015

As of March 31, 2016

As of March 31, 2015

As of March 31, 2016

Cash and deposits
147,760

Notes andaccounts
receivable - trade30,558

Total assets

Total assets

319,667

316,595

Current
assets

221,405
Property, plantand equipment
36,339Intangible assets
1,354

Non-current
assetsInvestments andother assets
60,56898,262

Total liabilities
and net assets
Current liabilities
24,331

Cash and deposits
164,746

Non-current
liabilities
7,034

Notes andaccounts
receivable - trade27,343Current
assets235,308

Shareholders’equity269,376

Property, plantand equipment
36,697

Accumulated othercomprehensive
income18,695Intangible assets
1,339

Non-current
assets316,595

Liabilities

Liabilities

31,36530,765

Net assets

Net assets

288,302285,830

Equity ratio
90.1%

Investments andother assets
43,24981,287

319,667

Current fiscal year

From April 1, 2014
to March 31, 2015

From April 1, 2015
to March 31, 2016

Net sales
120,284
Non-operating income
1,821

28,794

Ordinary
income ratio
to net sales

27.8%

Profit attributableto owners of parent
22,948Operating income
32,588

Ordinary income
34,962

Ordinary
income ratio
to net sales

25.4%

Extraordinary income
347
Ordinary income
30,516

Non-operating expenses
99
Operating income

Non-current
liabilities
7,298
Shareholders’equity272,599
Accumulated othercomprehensive
income12,850(Millions of yen)Previous fiscal year

125,726

Current liabilities
23,467

Equity ratio
90.2%

Overview of Consolidated Statements of IncomeNet sales

Total liabilities
and net assets

Income taxes–current 8,934
Income taxes–deferred 488

Extraordinary losses
337

Profit attributableto owners of parent
21,104
Profit before income taxes
30,527

6

Introduction of Our New ProductsNew
products

The Company launches many new products every year into the market. The following product series are part of our recent introductions:

CX70M Series
A USB Type-C receptacle connector in conformity to USB 3.1 standard. USB
Type-C is reversible and can mate on both sides, enhancing user-friendlinesscompared with the conventional micro USB. USB Type-C, with its superiorfeatures including its capability to support high speed transmission and large
current, is expected to gain popularity as interface for various equipment.
CX70M is a mid-mount type product which, with reduced depth due to its
structure design unique to the Company, is most suitable for mobile devices
such as smartphone and tablet PC. Additional variation of this series including
onboard type and vertical type are scheduled to be released, in response todiversified needs.

BF4-IFC Series
Medical electronics equipment and FA equipment markets pose increasingneeds for optical transmission, for handling high speed and long distance datatransmission necessitated by the advent of the era of high definition vision. To
meet such needs, the Company developed an external interface type opticalactive connector BF4-IFC. BF4-IFC, with optoelectric conversion module
mounted inside the cable side plug connector, enables optical transmission
between devices, while maintaining the same level of handling ability as theconventional electric external interface connector. It is another user-friendly
product capable to handle bi-directional transmission up to 6.25 Gbps, while
taking combined cable with power line, enabling power supply between devices.

7

IX Series

A compact interface connector for high speed signal transmission targeting
industrial machinery/equipment market, which takes 70% less space comparedwith RJ-45 commonly used in this particular market, and is smaller than otherstandard connectors such as IEEE1394. This connector is suitable for the
purpose of downsizing the whole set, realizing mounting at an unprecedented
10 mm narrow pitch when multiple units are used as I/O for daisy chain
connection. As for plugs, right-angle type is available in addition to straight
type, contributing to the space saving in the cases involving cable pulling andtwisting in the panel.

GT36 Series
The Company is investing resources in the ever-increasing automobile market
and engaged in the development of new product from time to time. The
Company already released GT36 series, connector for automobile roof shark fin
antenna, which, due to its coaxial multiple-core collective fitting connection,
can be assembled with far reduced number of processes. Now, in order to meetthe diversified market/customer needs, another type featuring coaxial singlecore combined with power line single-core has been additionally released. The
Company will, through expanding this series, gain share in the shark fin
antenna market with further potential for growth, thereby achieving further
expansion of automobile business.

Group Network◎Domestic bases
TOHOKU HIROSE ELECTRIC CO., LTD.

Head Office

ICHINOSEKI HIROSE ELECTRIC CO., LTD.
Kikuna Office

KORIYAMA HIROSE ELECTRIC CO., LTD.
Yokohama Center
Kansai Branch
Chubu Sales Office

Kitakanto Sales Office◎Overseas bases
HIROSE ELECTRIC EUROPE B.V.
HIROSE ELECTRIC (SHANGHAI) CO., LTD.
HIROSE ELECTRIC (SUZHOU) CO., LTD.

HIROSE KOREA CO., LTD.

HIROSE ELECTRIC (DONGGUAN) CO., LTD.
HIROSE ELECTRIC (U.S.A.), INC.

HIROSE ELECTRIC TECHNOLOGIES (SHENZHEN) CO., LTD.
HIROSE ELECTRIC MALAYSIA SDN. BHD.

HIROSE ELECTRIC TAIWAN CO., LTD.
HIROSE ELECTRIC SINGAPORE PTE. LTD.

HIROSE ELECTRIC HONG KONG CO., LTD.
P.T. HIROSE ELECTRIC INDONESIAHIROSE ELECTRIC HONG KONG TRADING CO., LTD.

8

Corporate Data

Company Profile (As of March 31, 2016)

Stock Information (As of March 31, 2016)

Trade name

HIROSE ELECTRIC CO., LTD.

Date of incorporation

June 15, 1948

Number of employees

4‚190 (excluding part-timers)

Capital stock¥9‚404‚379‚401

Kazunori Ishii
Managing Director
Mitsuo Nakamura
Managing Director
Makoto Kondo
Director
Kazuyuki Iizuka
Director
Hiroaki Okano
Director
Yukio Kiriya
Outside Director
Kensuke Hotta(Standing) Audit & Supervisory Board Member Yoshikazu Chiba
Outside Audit & Supervisory Board Member
Terukazu Sugishima
Outside Audit & Supervisory Board Member
Akira Seshimo
Outside Audit & Supervisory Board Member
Kentaro Miura
President and Representative Director

Notes:
1. ‌Director Kensuke Hotta is an outside director as stipulated in Article 2, Item
15, of the Companies Act.
2. ‌Audit & Supervisory Board Members Terukazu Sugishima, Akira Seshimo
and Kentaro Miura are outside audit & supervisory board members as
stipulated in Article 2, Item 16, of the Companies Act.

Number of shareholders

3‚774

Major Shareholders (Top 10)
Name of shareholder
State Street Bank and Trust Company

Number ofshares held

Ratio ofshareholding

Hundreds of shares%

35,514

10.15

State Street Bank and Trust Company 505223

32,433

9.27

Hirose International Scholarship Foundation

29,977

8.57

Japan Trustee Services Bank, Ltd. (Trust Account No. 4)

18,731

5.35

HS Kikaku Co., Ltd.

11,633

3.32

Japan Trustee Services Bank, Ltd. (Trust Account)

10,201

2.91

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

8,853

2.53

Mizuho Trust & Banking Co., Ltd. Trust Account 0700046

8,292

2.37

Mizuho Trust & Banking Co., Ltd. Trust Account 0700047

8,240

2.35

Japan Trustee Services Bank, Ltd. (Trust Account No. 9)

7,567

2.16

Note: ‌In addition to the 10 major shareholders above, the Company owns 50,504 hundred
shares of treasury shares. The ratio of shareholding is calculated after excluding treasury
shares.

Distribution of Shares
Distribution of Shares by Shareholder Type
Individuals, etc./3,130 persons
68,592 hundred shares (17.14%)

Financial institutions/45 persons
104,683 hundred shares (26.16%)

Securities companies/28 persons
2,368 hundred shares (0.59%)

KPMG AZSA LLC
Foreign corporations, etc./403 persons
170,382 hundred shares (42.57%)

934‚970‚307 shares(Excluding 5‚050‚429 shares of treasury shares)

Directors and Audit & Supervisory Board Members (As of June 22, 2016)

Accounting Auditor

Total number of shares issued

Other corporations/168 persons
54,182 hundred shares (13.54%)

Shareholder information
Fiscal term

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

Ordinary General
June every year
Meeting of Shareholders
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.)[Share-related notifications and inquiries regarding change of address, etc.]
Shareholders who have accounts at securities companies are requested to direct their notifications
and inquiries regarding change of address, etc., to their respective securities companies where
shareholders have their accounts. Shareholders who do not have accounts at securities companies
are requested to call the telephone number as stated below.

The Company’s Web site

https://www.hirose.com/jp/

Number of shares in one 100
voting unit
Method of public notices The Company’s Web site below shall be used for its public notices.
〈https://www.hirose.com/jp/ir/〉
If an electronic public notice should fail due to accident or any otherunavoidable circumstances, the Company shall post a public notice in
the Nihon Keizai Shimbun.
Shareholders’ registermanager and accountmanagement institution
for special accounts

Sumitomo Mitsui Trust Bank, Limited
4-1, Marunouchi 1-chome, Chiyoda-ku, Tokyo

Handling office ofshareholders’ registryadministrator

Securities Agency Department,
Sumitomo Mitsui Trust Bank, Limited
4-1, Marunouchi 1-chome, Chiyoda-ku, Tokyo(Mailing address)

Phone:

Securities Agency Department,
Sumitomo Mitsui Trust Bank, Limited
8-4, Izumi 2-chome, Suginami-ku, Tokyo 168-0063
0120-782-031 (Toll free, available only in Japan)

URL:

http://www.smtb.jp/personal/agency/index.html[Special accounts]
For shareholders who was yet to have used JASDEC (Japan Securities Depository Center, Inc.) by theshare certificate dematerialization date, the Company opened a transfer account (hereinafter “special
account”) at Sumitomo Mitsui Trust Bank, Limited, as mentioned above, which serves as theshareholders’ registry administrator. You are requested to use the above telephone number when
making inquiries about the special account and notifications of matters such as change of address.

10