ANNUAL REPORT2015

For the ﬁscal year ended March 31, 2015

Wing TouchTM 20

HSD connectors

Small coaxial camera module

SMK CORPORATION

Financial Highlights

To Our Shareholders
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

Years ended and as of March 31

2015¥ 65,796¥ 66,230

Operating income

2,330

2,113

（9.3）

17,583

Net income

2,541

1,982

（22.0）

16,493¥ 56,235¥ 65,029

15.6

31,47634,187

8.6

Operating Results

March 31, 2015).

Net sales

June 2015
Yasumitsu Ikeda
President and COO

Overview

2015

0.7

%

$551,136

Financial Position
Total assets

During the fiscal year ended March 31, 2015, the global economy achieved moderate growth led by the favorable U.S. economy. As

Thousands of
U.S. dollars

2014Group’s businesses for the 93rd fiscal year (from April 1, 2014, toWe look forward to your continuing support and encouragement.

Percent change
2014/2015

Millions of yen

Total net assets%$ 541,142
284,489

for the Japanese economy, additional monetary easing measures promoted yen depreciation and higher stock prices, providing afoothold, including the recovery of corporate business results, for getting back on a growth path.
The SMK Group enjoyed favorable sales of its products for car electronics and set-top boxes. Products for the ecological market
and the medical and welfare market also achieved steady growth, and the launch of new businesses relating to remote controls andtouch panels contributed to sales expansion. However, sales of products for smartphones and ATMs fell below the previous year.
As a result, the Group achieved a slight increase in consolidated net sales from the previous year, whereas consolidated income
declined year on year.

Outlook for the Next Fiscal Year

The SMK Group will continue to seek share expansion in its core markets, including car electronics and information and

Yen

U.S. dollars

Per Share Data
Net income
Basic¥35.58¥27.61（22.4）%$0.23

Diluted

35.52

27.56

（22.4）

0.23

Cash dividends

10.00

14.00

40.0

0.12

Note: The U.S. dollar amounts represent translations of Japanese yen, for convenience only, at the rate of ¥120.17 = U.S. $1.00.

communications, while focusing on new markets such as ecology, energy and Internet of Things (IoT), and promoting the creation of
new businesses. We will also make continuing efforts to enhance profitability, strengthen our ability to develop products andtechnologies, moreover, reinforce the Group’s CSR and corporate governance activities, thereby improving the corporate structure toenable sustainable growth of the Group.

Net sales

Operating income (loss)

Millions of yen

Millions of yen

90,000

Challenge, Creativity, Solutions

3,000

Millions of yen

2,754

3,000
2,330

The SMK Group celebrated its 90th anniversary in April 2015. The Group’s core technology that has been fostered in the 90 years ofhistory : wireless technology, connection technology such as connectors and input technology including touch panels and switches.

65,796

61,91455,34060,000Net income (loss)

66,23054,475

1,500
1,037
1,000

is expected in the coming years, we are determined to create new added value by connecting creatively people to people, people to30,0000(799)
0

the SMK slogan “Creative Connectivity” that we have set for carrying out our business strategy. Under this slogan, all employees(1,166)
0

1
2
4
5
6
7
8
10
10
11
12
13
28
29
back cover

SMK Philosophy
To Our Shareholders
Financial Highlights
Overview of Consolidated Results by Division
SMK’s New Lineup
FeatureFinancial Section
Financial Review
Consolidated Balance Sheet
Consolidated Statement of Income
Consolidated Statement of Comprehensive Income
Consolidated Statement of Changes in Net Assets
Consolidated Statement of Cash Flows
Notes to Consolidated Financial Statements
Report of Independent Auditors
Officer Introduction
Corporate Information

SMK is committed to the advancement of mankind throughdevelopment of the information society, by integrating its current
technological strengths and creating advanced technology.

2011

2012

2013

2014

2015

Total assets / Total net assets
Millions of yen

Contribute to society with pride and confidence.
Be customer-oriented, with zeal and sincerity.
Challenge courageously for higher goals without fear of failure.
Trust and respect each other for a brighter working atmosphere.
Keep an open mind, and view SMK from a global perspective.

2011

2012

2013

2014

2015

80,00053,88352,498

2012

2013

2014

2015

Cash dividends per share
14.00

12
35.58

65,02960,000 53,059

2011

Yen

45

56,235(1,000)

Basic net income (loss) per share
Yen

Total net assets

Total assets(1,500)

27.61

30

10.00
8

SMK Action Guidelines

1
2
3
4
5

(198)

(853)

share the SMK vision “Challenge, Creativity, Solutions” and make all-out efforts to tackle the challenges ahead.

CONTENTS

1,982
2,000

All these technologies connect people to people, people to products, and products to products. As the advancement of the IoT society
products, and products to products, thereby contributing to the realization of fulfilling future society. Such a resolution is expressed in

2,541

2,113

9.00

14.14
40,00029,862

28,25728,204

31,47634,187

15

6.00
5.00
4

20,0000(2.78)(11.04)

0

2011

2012

2013

2014

2015

(15)

2011

2012

2013

2014

2015

0

2011

2012

2013

2014

2015

ANNUAL REPORT 2015 1

Overview of Consolidated Results by Division(Year ended March 31, 2015)

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 five markets:
Communication Market, Information Market, Home Appliance Market, Car
Electronics Market and Audio Visual Market.
Three divisions, namely the Connection System (CS) Division, theFunctional Components (FC) Division and the Touch Panel (TP) Division, as
well as the Research & Development Center, are responsible for developing
products that continually meet market requirements in the wide range ofmarkets outlined above. The three divisions handle operations ranging fromproduct planning and design to mass production, whereas the Research &Development Center is primarily in charge of designing and developing
products mainly in new fields.
In this section, we present an overview of our results achieved in eachof the three divisions in the fiscal year under review.

Sales by Division
Touch Panel
Division¥ 15,184 Million¥ 25,027 Million

Major Products
RF coaxial connectors
FPC connectors
Board to Board connectors
Jacks

Functional
Components Division¥ 118 Million

0.2%

22.9%
Net sales

Functional
Components
Division

OthersConnection System
Division¥ 66,230
Million

39.1%

37.8%

Connection
SystemDivision¥ 25,901 Million

Major Products
Remote controls
Switches
Wireless devices units
Camera modules

In the car electronics market, sales of connectors for rearview
cameras, collision avoidance systems and other safety driving
functions expanded steadily, centering on the North American market.
In the ecological market, connectors for photovoltaic modules andLED lighting performed strongly. Meanwhile, in the communication
market, which is our mainstay market, sales of products for
smartphones expanded significantly, as customers in China area
increasingly adopted our new products and promoted theemployment of our products as standard components. However, it
was not enough to offset a decline in sales to some customers,
leading to sales below the previous year’s level.
As a result, net sales of the Connection System Division amounted
to \25,901 million, or a 5.5% decrease year on year.

Net sales

Millions of yen

30,00027,41625,49820,00010,000

0

2013

2014

Net sales
Sales of remote controls, our mainstay products, expanded
significantly, reflecting the start of businesses with new customers, inaddition to the continued favorable performance of remote controls
for overseas Internet protocol set-top boxes that offer movies, music
and game playing for U.S. customers. Sales also increased steadily inthe housing equipment sector, including products for photovoltaic
power generation monitors, sanitary equipment and air conditioners,
and the medical and welfare related sector, including products fornursing-care beds. Sales of units for automotive cameras andcommunication modules exceeded the previous year’s level.
As a result, net sales of the Functional Components Division
amounted to \25,027 million, or an 11.5% increase year on year.

25,901

2015

Millions of yen

30,00025,02722,43820,00018,803

10,000

0

2013

2014

2015

Others: businesses of other electronic parts, lease, real-estate rental, factoring and worker dispatchingundertakings.

Sales by Market
Communication¥ 14,957 Million

Others¥ 1,634 Million

2.5%

Audio Visual¥ 15,765 Million

Car Electronics¥ 19,341 Million

22.5%

23.8%

Net sales¥ 66,230
Million

29.2%

8.2%

13.8%

Information¥ 5,400 Million
Home
Appliance¥ 9,131 Million

Others: markets of Medical Equipment, Rehabilitation Equipment, Industrial Robot, NC Machine, Electrical
Measuring Equipment, etc.

2 ANNUAL REPORT 2015

Touch Panel
Division

Major Products
Resistive touch panels
Capacitive touch panels
Optical touch panels

Sales of touch panels for car navigation systems and center consoles
in the car electronics market, which is our mainstay market,
continued to perform favorably, centering on customers in the North
America and China area. However, some customers discontinued the
production of models that had employed our products, which
adversely affected our results, causing sales to remain unchanged
from the previous year’s level. We acquired new orders of touch
panels for industrial machinery and medical equipment, whereas
sales of touch panels for ATMs for the Chinese market declined fromthe previous year due to intensified price competition. In the home
appliances market, for which we recently started businesses, weachieved considerable year on year sales expansion, although theamount of sales was still small.
As a result, net sales of the Touch Panel Division amounted to\15,184 million, or a 3.9% decrease year on year.

Net sales

Millions of yen

20,00015,80815,00010,00015,184

9,923

5,000

0

2013

2014

2015

ANNUAL REPORT 2015 3

SMK’s New Lineup

FeatureResearch & Development Center“BTS01 Series”
Bluetooth® Smart Module

CS Division
HSD (High-Speed Data) Connectors

We have developed and started taking orders for theHigh-speed data (HSD) connectors are interface

the “BTS01 Series” Bluetooth Smart Module, whichconnectors for high-speed data transmission newly

has a built-in antenna compliant with Bluetooth®

developed to meet the need for connectors that can

Version 4.1 (single mode low energy radio). The

support the increasingly high communication speeds

stand-alone modules have already acquired theof car devices such as car navigation systems, car

Bluetooth SIG and the Radio Act certification, andaudio equipment and automotive cameras.

®

®

are due to acquire FCC and other overseas

The original structure of the HSD connector, which

standards, which will help customers to cut initial

has a shield covering the signal terminal, makes it

costs when they release their products. We will

highly noise-resistant. In the near future, European

continue to promote the development of wirelessautomobiles will come with standard-equipped HSD

modules that meet customers’ demand.

connectors, and expansion of demand is also

90-Year History of SMK and
the Evolution of Its Products
The SMK Group celebrated its 90th anniversary in April 2015.
The history of the SMK Group from its establishment to the90th anniversary

since establishment in April 2015

present is summarized below including the transition of its products.

Transition of SMK Products
1920s● Low-loss tuner

1990s● Card connector● Resistive touch panel

expected in the North American market.

The early 2010s● Connector forphotovoltaic module

1970s● Ultrasonic remote control
1930s● Radio receiver

Applications:
Healthcare devices, sports andfitness devices,
smartphone accessories,
PC peripherals, and various
kinds of remote controls, etc.

FC Division
Capacitive Multi-Touch Pad forAutomobiles

TP Division“Wing Touch® 20”
20-Inch Capacitive Touch Panel

Currently, there is increasing demand for theWe have mainly developed and sold small andoperation console of cars to provide the same level of

medium-sized touch panels, but we have developed

operability as those of smartphones. The capacitivethe 20-inch-sized capacitive touch panel Wing

pad we developed supports two-point touch input

Touch 20 to meet the increasing market demand forand can be operated even with water droplets orlarger touch panels. A capacitive panel has excellent

coins on the panel due to its original algorithm. Also,

operability because it requires only a soft touch tothis touchpad can be operated with gloves on,

operate. We will promote the development of further

because we have overcome the technologicallarger touch panels to meet the market needs on achallenge of increasing the touch sensitivity while

continuous basis.

containing the generation of radiation noise.

2000s● Bluetooth® module

Applications:
Car devices, such as car
navigation systems,
car audio andautomotive cameras

®

Note:
Wing Touch® is a trademark of SMK Corporation registered within Japan.

1980s● Infrared remote control● Keyboard

The late 1940s● Vacuum tube socket● Fuse holder

1960s● Cathode-ray tube socket for color television● Slide switch

Establishedin April 1925

1920

1930

1940

1950

1960

1970

1980

1925
Late Heishiro Ikeda established Ikeda Musen Denki Seisakusho.

4 ANNUAL REPORT 2015

2000

2010

2020

1937
SMK’ s Olympic Model 680 dynamic 4-tube receiver wasawarded a prize as an outstanding product in the First Radio
Exhibition Contest sponsored by the Japan Radio Association.

1985
Company name changed to SMK
Corporation, and the current Head Officebuilding was completed. The first SMK
Technical Exhibition was held.

1963
Toyama Factory(currently Toyama Works) established.

Applications:Remote-control devices andsteering switches

1990

90-Year History of SMK

1947
Started the manufacturing of mechanical parts forelectronic appliances.

Applications:
Industrial devices,
medical devices,
digital signage, etc.

The late 2010s● Wireless LAN module
for IoT

1950s● MT tube socket● Cathode-ray tube socket for black-and-white television

1999
Gate City Office opened in
Osaki, Tokyo.
2015
Established SMK Electronics (Europe) Limited in Ireland.
Opened the second plant of SMK Electronics (Phils.)
Corporation in Philippines.
“SMK TEXPO 2015” will be held on November 4–6, 2015.

1973
Established SMK Electronics Corporation U.S.A. in the United States.
1978
Listed on the first section of the Tokyo Stock Exchange.

ANNUAL REPORT 2015 5

Financial Section

Financial Review
SMK’s net sales for the fiscal year ended March
31, 2015, increased 0.7% year on year to\66,230 million (US$551,136 thousand),Five-Year Summary

Total net assets(As of March 31)

Millions of yen
36,000whereas operating income of \2,113 million(US$17,583 thousand) and net income of

34,18734,000\1,982 million (US$16,493 thousand) were

SMK Corporation and Consolidated Subsidiaries

recorded, on a consolidated basis.

31,47632,00029,862Net Sales
Thousands of
U.S. dollars

Millions of yen
Years ended andas of March 31

2011

2012

2013

2014

2015

2015

Our products for the information and communication market
enjoyed favorable sales owing to the rapid spread of smartphones¥55,340¥54,475¥65,796¥66,230$551,136

Operating income (loss)

2,754(1,166)

(853)

2,330

2,113

17,583

Net income (loss)

1,037

(799)

(198)

2,541

1,982

16,493a result, consolidated net sales were \66,230 million(US$551,136 thousand), up 0.7% year on year.

Operating Income
Consolidated operating income amounted to \2,113 million

2011

2012

2013

2014

2015

Return on equity (ROE)(Years ended March 31)

%
12
8.5
8

(US$17,583 thousand), as a result of efforts to streamline thedesign processes and review the structure of optimally located

4

6.0

3.4

production, as well as continued cost-cutting efforts.

Financial Position

Total net assets

028,204and tablet PCs. Sales of products for the automobile market grew
wearable devices, medical and healthcare, increased steadily. As¥61,914

Total assets

28,257

chiefly in overseas markets. Sales for new markets, including

Operating Results
Net sales

30,000¥53,059¥ 53,883¥ 52,498¥ 56,235¥ 65,029$541,142

29,862

28,25728,204

31,47634,187284,489

Yen

U.S. dollars

Per Share Data

Net Income

0
(0.7)

Although there was foreign exchange gain due to yen
depreciation, impairment loss and other factors led to

(2.8)
(4)

2011

2012

2013

2014

2015

consolidated net income of \1,982 million (US$16,493 thousand).

Return on assets (ROA)

Total Assets / ROA
As of March 31, 2015, total assets were \65,029 million(US$541,142 thousand), with ROA of 3.3%.

(Years ended March 31)

%
6
4.7

Total net assets¥408.12¥392.59¥394.81¥437.84¥475.42$

3.96

As of March 31, 2015, total net assets were \34,187 million

Net income (loss)
Basic
DilutedCash dividends

4(US$284,489 thousand), with ROE of 6.0%.

14.14(11.04)(2.78)

35.58

27.61

0.23

—

—

—

35.52

27.56

0.23

9.00

6.00

5.00

10.00

14.00

Note: The U.S. dollar amounts represent translations of Japanese yen, for convenience only, at the rate of ¥120.17 = U.S. $1.00.
6 ANNUAL REPORT 2015

Total Net Assets / ROE

0.12

3.3

1.9
2

Cash FlowsNet cash provided by operating activities amounted to \4,820
million (US$40,110 thousand), net cash used in investing activities

0

totaled \5,938 million (US$49,413 thousand) and net cash used infinancing activities was \155 million (US$1,290 thousand).

(2)

2011

(1.5)

(0.4)

2012

2013

2014

2015

ANNUAL REPORT 2015 7

Consolidated Balance Sheets

Consolidated Balance SheetSMK Corporation and Consolidated Subsidiaries
As of March 31, 2014 and 2015

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

Assets2014

2015

Liabilities and net assets

2015

Time deposits (Note 16)
Notes and accounts receivable, trade (Note 16)
Allowance for doubtful accounts
Inventories (Note 3)
Deferred tax assets (Note 13)
Other current assets (Note 16 and 21)

2014

2015

¥5,119¥

2015

Current liabilities

Current assets
Cash and cash equivalents (Note 16)

Thousands of
U.S. dollars(Note 2)Millions of yen¥ 11,134

¥

9,999

$ 83,207

93

183

1,523

14,681

16,979141,292

(36)

(44)

(366)

5,904

6,422

53,441

743

551

4,585

2,704

3,241

26,97035,22537,333

310,668

7,605$ 63,285

3,732

4,542

37,796

797

594

4,943

1,068

1,021

8,496

Accrued directorsʼ and officersʼ bonuses

70

70

583

Accounts payable, non-trade (Note 16)

5,927

5,970

49,680

Other current liabilities

1,405

1,448

12,05018,121

21,253

176,858

Long-term debt (Note 5 and 16)

5,447

6,641

55,263

Deferred tax liabilities (Note 13)

673

1,776

14,779Accrued directorsʼ and officersʼ retirement benefits

180

138

1,148

Liability for retirement benefits (Note 6)

36

56

466

Other long-term liabilities

299

976

8,122

6,637

9,589

79,795

7,996

7,996

66,539

Short-term loans payable (Note 5 and 16)
Notes and accounts payable, trade (Note 16)
Accrued income taxes
Accrued bonuses

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

2,656

3,104

25,830Long-term loans receivable

126

108

899

Asset for retirement benefits (Note 6)

511

841

6,998

Other investments (Note 21)

634

654

5,442

Allowance for doubtful accounts

(110)

(108)

(899)

3,818

4,600

38,279Net assets
Shareholdersʼ equity (Note 7)

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

Common stock

Land (Note 4)

4,253

7,449

61,987

Buildings

17,337

20,824

173,288

Machinery and vehicles

18,27621,158176,067

Capital surplus

12,326

12,325102,563

Tooling and office furniture

21,75323,058

191,878

Retained earnings

15,981

16,537

137,613

245

438

3,645

Treasury stock(3,433)(3,417)(28,435)

61,86572,928606,874

32,87133,442

278,289(45,035)(50,394)(419,356)

16,83022,534

187,518

274

608

5,059

(2,171)(697)(5,800)

Deferred tax assets (Note 13)

166

242

2,014

462

798

6,641

Intangible assets (Note 12)

195

318

2,646

(1,434)

709

5,900

362

561

4,668

39

35

291

31,47634,187284,489¥56,235¥65,029$541,142¥56,235¥65,029$541,142

Construction in progressLess-accumulated depreciation
Other assets

Total assets

Authorized: 195,961,274 shares

Issued and outstanding : 79,000,000 shares

Accumulated other comprehensive income
Net unrealized gains (losses) on other securities
Foreign currency translation adjustments
Retirement benefits asset and liability adjustments
Subscription rights to shares (Note 8)

Total liabilities and net assets

See accompanying notes to consolidated financial statements.
8 ANNUAL REPORT 2015

ANNUAL REPORT 2015 9

Consolidated Statement of Income

Consolidated Statement of Changes in Net Assets

Years ended March 31, 2014 and 2015

Years ended March 31, 2014 and 2015

SMK Corporation and Consolidated Subsidiaries

SMK Corporation and Consolidated Subsidiaries

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

2014

2015

¥ 65,796
54,3889,077
2,330$ 551,136
455,42178,123
17,583

89
742
1,420
44
224
199
2,720

106
953
2,199
101
90
292
3,744

882
7,930
18,299
840
749
2,430
31,156

Other expenses
Interest expense
Rent expense
Loss on disposal of fixed assets (Note 11)
Loss on impairment of fixed assets (Note 12)
Other
Total other expenses

106
266
280
613
190
1,456

124
460
82
1,361
170
2,199

1,032
3,828
682
11,326
1,415
18,2993,594

3,65830,440

1,041
12
2,541
2,541

1,098
578
1,982
1,982

9,137
4,810
16,493$16,493¥¥

U.S. dollars(Note 2)Yen

Per share data (Note 15)
Total net assets
Net income
Basic
DilutedCash dividends

Shareholdersʼ equity

2015¥ 66,230
54,7289,388
2,113

Other income
Interest and dividend income
Rent income
Foreign exchange gain, net
Gain on sales of fixed assets (Note 11)
Gain on sales of investment securities (Note 17)
Other
Total other income

Income before income taxes and minority interests
Income taxes (Note 13)
Current
DeferredIncome before minority interests
Net income

Millions of yen

Thousands of
U.S. dollars(Note 2)Millions of yen¥437.84¥475.42$3.96

35.58
35.52
10.00

27.61
27.56
14.00

0.23
0.23
0.12

Number ofshares ofcommonstock

Balance at April 1, 2013 79,000,000
Cash dividends paid
Net income
Acquisition of treasury stock
Disposition of treasury stock
Net changes in items otherthan shareholdersʼ equity
Total changes—
Balance at March 31, 2014 79,000,000
Balance at April 1, 2014 79,000,000
Cumulative effect of changein accounting principle
Restated balance at April 1, 2014
Cash dividends paid
Change in the scope of
consolidation
Net income
Acquisition of treasury stock
Disposition of treasury stock
Net changes in items otherthan shareholdersʼ equity
Total changes—
Balance at March 31, 2015 79,000,000

Commonstock

CapitalsurplusRetainedearnings¥7,996¥12,345¥14,154
(714)
2,541

(18)
—
7,996
7,996
7,996

Years ended March 31, 2014 and 2015

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

Income before minority interests
Other comprehensive income (Note 14)
Net unrealized gains (losses) on other securities
Foreign currency translation adjustments
Retirement benefits asset and liability adjustments
Total other comprehensive income
Comprehensive income
Total comprehensive income attributable to:Shareholders of the Company

2014¥2,541

2015

2015

¥1,982$16,493

204
570
—
775
¥3,316

334
1,473
335
2,143
¥4,125

2,779
12,2582,788
17,833$34,326¥3,316¥4,125$34,326

Total
Retirement accumulated
Foreignothercurrency benefits asset
and liability comprehensive
translation
incomeadjustments adjustments¥(3,698)

(21)
285
264
(3,433)(3,433)

12,326

15,285
(719)
1,982

(1)
—
¥7,996(1)¥12,325

1,252¥16,537

Subscription
rights toshares(3,433)(7)
23
16¥(3,417)

Total net
assets¥30,798
(714)
2,541
(21)
267

¥69

¥(2,742)¥—¥(2,672)
—
—
—
—

¥78

¥28,204
(714)
2,541
(21)
267

—

204

570

462

1,238

(38)

1,199

2,073
32,87132,871

204
274
274

570
(2,171)(2,171)

462
462
462

1,238
(1,434)(1,434)

(38)
39
39

3,272
31,476
31,476

(696)

(10)

32,175
(719)

(696)
274

(2,171)462(1,434)—39

30,780
(719)

(10)

—

(10)

1,982
(7)
22

—
—
—

1,982
(7)
22

—

334

1,473

335

2,143

(4)

2,139

1,267
¥33,442

334
¥608

1,473
¥ (697)

335
¥798

2,143
¥ 709

(4)
¥35

3,406
¥34,187

Subscription
rights tosharesTotal net
assetsThousands of U.S. dollars (Note 2)

Shareholdersʼ equity

Commonstock

SMK Corporation and Consolidated Subsidiaries

1,827
15,981
15,981

Net unrealized
Total gains (losses)
Treasury shareholdersʼon otherstock
equitysecurities(696)

See accompanying notes to consolidated financial statements.

Consolidated Statement of Comprehensive Income(18)
12,326
12,326

Accumulated other comprehensive income

Balance at April 1, 2014
Cumulative effect of changein accounting principle
Restated balance at April 1, 2014
Cash dividends paid
Change in the scope of
consolidation
Net income
Acquisition of treasury stock
Disposition of treasury stock
Net changes in items otherthan shareholdersʼ equity
Total changes
Balance at March 31, 2015

CapitalsurplusRetainedearnings

Accumulated other comprehensive income
Net unrealized
Total gains (losses)
Treasury shareholdersʼon otherstock
equitysecurities$66,539 $102,571 $132,987$(28,568) $273,537(5,792)(5,792)

66,539102,571

127,195(5,983)(28,568)

267,746(5,983)$2,2802,280

Total
Retirement accumulated
Foreignothercurrency benefits asset
and liability comprehensive
translation
incomeadjustments adjustments$(18,066)(18,066)$3,845
3,845$(11,933)$325 $261,929—(5,792)(11,933)—

325

256,137(5,983)

(83)

(83)

—

(83)

16,493

16,493
(58)
183

—
—
—

16,493
(58)
183

(8)
—
(8) 10,419$66,539 $102,563 $137,613

(58)
191

—

2,779

12,2582,788

17,833(33)

17,800133
10,543$(28,435) $278,289

2,779$5,05912,258$(5,800)

2,788$6,641

17,833$5,900(33) 28,343$291 $284,489

See accompanying notes to consolidated financial statements.
10 ANNUAL REPORT 2015

ANNUAL REPORT 2015 11

Consolidated Statement of Cash Flows

Notes to Consolidated Financial Statements

SMK Corporation and Consolidated Subsidiaries

SMK Corporation and Consolidated Subsidiaries

Years ended March 31, 2014 and 2015

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

Cash flows from operating activities
Income before income taxes and minority interests
Depreciation and amortization
Loss on impairment of fixed assets
Amortization of goodwill
Increase (decrease) in accrued bonuses
Increase (decrease) in accrued directorsʼ and officersʼ retirement benefits
Increase (decrease) in accrued employeesʼ retirement benefits
Increase (decrease) in liability for 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
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 sales of fixed assets
Purchases of intangible fixed assets
Purchases of investment securities
Proceeds from sales of investment securities
Purchase of subsidiariesʼ shares resulting in changes in scope of consolidation
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 sales of treasury stock
Dividends paid
Other
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
Increase in cash and cash equivalents from newly consolidated subsidiaries
Cash and cash equivalents at end of the year
12 ANNUAL REPORT 2015

2014

2015

2015

¥ 3,594
3,377
613
61
590
37
(162)
247
(89)
106
280
1,239
(50)
(1,072)
(847)
421
8,347
101
(108)
(655)
(40)
7,645

¥ 3,658
3,669
1,361
—
(55)
(42)
—
(537)
(106)
124
82
258
163
(1,952)
(56)
(589)
5,978
128
(127)
(1,151)(7)4,820$ 30,440
30,532
11,326
—
(458)
(350)
—
(4,469)
(882)
1,032
682
2,147
1,356
(16,244)(466)(4,901)49,746
1,065(1,057)(9,578)(58)
40,110(81)
78(3,797)
200
(91)
(490)
745
—
(135)
165
(14)
(3,420)(163)
158(4,086)
184
(187)
—
125
(1,991)(46)
70(4)(5,938)(1,356)
1,315(34,002)
1,531(1,556)—
1,040(16,568)
(383)
583
(33)
(49,413)

(600)
1,790
(2,200)
(19)
218
(709)
—
(1,521)
(199)
2,503
8,630
—
¥11,134

909
3,200(3,487)
(6)
13
(716)
(68)
(155)
125
(1,148)
11,13414¥ 9,999

7,564
26,629(29,017)(50)
108(5,958)(566)(1,290)1,040(9,553)92,652117$ 83,207

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 areprepared on the basis of accounting principles generally accepted in Japan, which are different in certain respects as to theapplication 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 theprior yearʼs consolidated financial statements to conform to the current yearʼs 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 subsidiariesʼ fiscal period ends on December 31, which differs from the year-end date of the Company;
however, the accounts of these companies were tentatively closed as of March 31 and the necessary adjustments forconsolidation 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 net income includes the Companyʼs equity in the current net income or loss of suchcompanies, after the elimination of unrealized intercompany profits.
			All assets and liabilities of the Companyʼs 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: 30			From the year ended March 31, 2015, SMK Career Service Co., Ltd. and SMK Eletronica Brasil Ltda were newly included in
the scope of consolidation due to increases in materiality.
			The Company acquired shares of KOSCO Co., Ltd. in October 2014 and established SMK Electronics (Europe) Ltd. in March
2015, which were newly included in the scope of consolidation.
( d ) Application of equity method of accounting			Number of affiliated companies accounted for by the equity method: 1( e ) Translation of foreign currencies
			All asset and liability accounts of foreign subsidiaries and affiliates are translated into Japanese yen at the appropriate
year-end exchange rates. Shareholdersʼ equity, which is translated at rates of exchange prevailing at the time thetransactions occurred. Revenue and expense accounts are translated at the average rates of exchange prevailing during theyear. Differences arising from the translation are presented as translation adjustments in the consolidated financial
statements.
( f ) Cash and cash equivalents			Cash and cash equivalents are composed of cash and time deposits all of which are low-risk, short-term financial instruments
readily convertible into cash.
( 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 andmanufacturing 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.

ANNUAL REPORT 2015 13

( i ) Derivatives( t ) Per share information

			 Derivatives are stated at fair value.

			Basic net income per share is computed based on the net income available for distribution to shareholders of common stock( j ) Property, plant and equipment and depreciation

and weighted-average number of shares of common stock outstanding during the year. Diluted net income per share is			Property, plant and equipment are stated at cost. Depreciation of property, plant and equipment is calculated principally bycomputed based on the net income available for distribution to shareholders and weighted-average number of shares ofthe declining-balance method for the Company and its domestic subsidiaries, and by the straight-line method mainly forcommon stock outstanding during each year after giving effect to the dilutive potential of shares of common stock to beforeign subsidiaries. Certain buildings of the Company and its domestic subsidiaries acquired on or after April 1, 1998 areissued upon the conversion of convertible bonds.

depreciated by the straight-line method.

			Net assets per share is computed based on the net assets available for distribution to shareholders of common stock and the			 The estimated useful lives of the assets are as follows:

number of shares of common stock outstanding at the balance sheet date. Cash dividends per share shown for each period

			 Buildings:

10 to 50 years

in the consolidated statement of income represent the dividends applicable to the respective period.

			 Machinery and vehicles:

4 to 10 years( u ) Consumption taxes

			 Tooling and office furniture:

2 to 6 years

			Transactions subject to consumption taxes are recorded at amounts exclusive of consumption taxes. Nondeductible			The residual values of the property, plant and equipment acquired on or before March 31, 2007 are depreciated equally overconsumption taxes are expensed in the consolidated financial statements.

a period of 5 years starting from the year following the year in which they have been depreciated up to their depreciable( v ) Standards issued but not yet effective

limit or 5% of the acquisition cost.

			
Accounting standards for business combinations( k ) Intangible assets
			Amortization of intangible assets is calculated by the straight-line method. Software for own use is amortized based on theutilizable period (5 years).

			On September 13, 2013, the Accounting Standards Board of Japan (ASBJ) issued “Revised Accounting Standard for Business
Combinations” (ASBJ Statement No.21), “Revised Accounting Standard for Consolidated Financial Statements” (ASBJ
Statement No.22), “Revised Accounting Standard for Business Divestitures” (ASBJ Statement No.7), “Revised Accounting			Goodwill is amortized by the straight-line method mainly over 5 years.

Standard for Earnings Per Share” (ASBJ Statement No.2), “Revised Guidance on Accounting Standard for Business( l ) Leases

Combinations and Accounting Standard for Business Divestitures” (ASBJ Guidance No.10), and “Revised Guidance on			Finance leases which are deemed to transfer the ownership of the leased assets to the lessee are capitalized and depreciatedAccounting Standard for Earnings Per Share” (ASBJ Guidance No.4).

over their lease term with no residual value.
(m ) Allowance for doubtful accounts
			The allowance for doubtful accounts is provided at the amount of estimated uncollectable accounts, based on individualcollectability with respect to identified doubtful receivables and past experience of doubtful receivables.
( n ) 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.
( o ) Accrued directorsʼ and officersʼ bonuses			Accrued directorsʼ and officersʼ bonuses are provided on the estimate of the amounts to be paid subsequent to the balance
sheet date.
( p ) Accrued directorsʼ and officersʼ retirement benefits			Accrued directorsʼ and officersʼ retirement benefits have been provided at an amount equal to 100% of the amount which
would be required to be paid based on the Companyʼs bylaws if all directors and officers resigned from the Company on thebalance sheet date.
( q ) Retirement benefits			Asset for retirement benefits and liability for retirement benefits for employees are recorded mainly at the amount calculated
based on the retirement 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 the(1 ) Overview
			Under these revised accounting standards, the accounting treatment for any changes in a parentʼs ownership interest ina subsidiary when the parent retains control over the subsidiary and the corresponding accounting for acquisition-related
costs were revised. In addition, the presentation method of net income was amended, the reference to “minority
interests” was changed to “non-controlling interests,” and accounting treatment for adjustments to provisional amounts
during measurement period was also changed.
(2 ) Scheduled date of adoption			The Company expects to adopt these revised accounting standards and guidance from the beginning of the fiscal year
ending March 31, 2016.
(3 ) Impact of adopting revised accounting standards and guidance			The Company is currently evaluating the effect of adopting these revised standards on its consolidated financial
statements.
			
Revised Practical Solution on Accounting for Unification of Accounting Policies Applied to Foreign Subsidiaries for
Consolidated Financial Statements			On March 26, 2015, the ASBJ issued the “Revised Practical Solution on Accounting for Unification of Accounting Policies
Applied to Foreign Subsidiaries for Consolidated Financial Statements” (PITF No. 18).
(1 ) Overview
			This revision was made to reflect the change in the accounting treatment of goodwill under U.S. GAAP in January 2014

estimated years of service of the eligible employees. Actuarial gain or loss is amortized in the year following the year inand the revision of the “Accounting Standard for Consolidated Financial Statements” (ASBJ Statement No. 22) inwhich the gain or loss is recognized primarily by the straight-line method over a period of 5 years, which is within the

September 2013, as well as to clarify the method of amortization of actuarial gain or loss in accounting for retirement

estimated average remaining years of service of employees.

benefits.

( r ) Hedge accounting(1) Method of hedge accounting			The exceptional method of hedge accounting is applied for the transactions of interest rate swaps, in cases meetingcertain conditions.
(2) Hedge instrument and hedged item
			 Hedge instrument: interest rate swap(2 ) Scheduled date of adoption			The Company expects to adopt these revised accounting standards and guidance from the beginning of the fiscal year
ending March 31, 2016.
(3) Impact of adopting revised accounting standards and guidance			The Company is currently evaluating the effect of adopting these revised standards on its consolidated financial
statements.

			 Hedged item: interest rate for long-term debt subject to interest rate fluctuations.

( w ) Change in method of accounting(3 ) Hedge policy			The Company adopted Section 35 of “Accounting Standard for Retirement Benefits” (ASBJ Statement No. 26 of May 17,			The Company uses interest rate swaps to avoid risks from interest rate fluctuations on borrowings, only when approvedby the management.

2012) and the main clause of Section 67 of “Guidance on Accounting Standard for Retirement Benefits” (ASBJ Guidance
No.25 of May 17, 2012) effective from April 1, 2014. As a result, the methods for calculating the retirement benefit(4) Assessment of hedge effectivenessobligation and service cost have been revised in the following respects: the method for attributing projected benefits to each			 As the exceptional method is applied for interest rate swap, the assessment of hedge effectiveness is omitted.

period has been changed from the straight-line method to the benefit formula method, and the method for determining the( s ) Income taxes

discount rate has been changed to use a single weighted-average discount rate reflecting the expected timing and amount of			Deferred income taxes are recognized based on the differences between financial reporting and the tax bases of the assets

benefit payments. The cumulative effect of changing the method for calculating the retirement benefit obligation and service

and liabilities and are calculated using the enacted tax rates and laws which will be in effect when the differences arecost was recognized by adjusting retained earnings at April 1, 2014, in accordance with the transitional treatment provided

expected to reverse.

in Paragraph 37 of Accounting Standard for Retirement Benefits. As a result, the liability for retirement benefits increased by¥184 million ($1,531 thousand), the asset for retirement benefits decreased by ¥511 million ($4,252 thousand), and retained
earnings decreased by ¥696 ($5,792 thousand) at April 1, 2014. Also, net assets per share at March 31, 2015 decreased by\9.69 ($0.08).

14 ANNUAL REPORT 2015

ANNUAL REPORT 2015 15Note 2. U.S. dollar amounts

Note 6. Retirement benefits plans

The U.S. dollar amounts are stated solely for the convenience of the reader at the rate of U.S.$1.00 = ¥120.17, the approximate
rate of exchange at March 31, 2015. The translation should not be construed as a representation that the Japanese yen amounts
actually represent, have been or could be converted into U.S. dollars at that or any other rate.

Note 3. Inventories
Inventories as of March 31, 2014 and 2015 consisted of the following:
Finished products
Work in process
Raw materials and supplies
Total

2014

Millions of yen¥3,188725
1,990¥5,9042015¥3,161955
2,306¥6,422

Thousands of U.S. dollars
2015$26,304
7,947
19,189$53,441

The write-downs of inventories resulting from decreased profitability for the years ended March 31, 2014 and 2015 were as
follows:
Millions of yen

Cost of sales

2014

Thousands of U.S. dollars
2015

¥227

¥193

2015

$1,606

Note 4. Reduction entries
Reduction entries due to acceptance of prefectural governmentʼs grants relating to property, plant and equipment as of March 31,
2014 and 2015 were as follows:
Land

2014

Millions of yen

¥101

2015

¥101

Thousands of U.S. dollars
2015

$840

Note 5. Short-term loans payable and long-term debt

Short-term loans payable and long-term debt as of March 31, 2014 and 2015 consisted of the following:
Millions of yen
Short-term loans payable

Average interest rates on short-term loans payable, principally from banks, is 0.55%
SecuredUnsecured
Total

2014

¥1,1173,311¥4,429

Long-term debt
Average interest rates on long-term debt, principally from banks, is 1.07%
SecuredUnsecured
Less: portion due within one year
Total

2015

2014

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

36
(511)
¥(474)¥ 1,303
209
75
256¥ 1,845¥ 1,220296
80
256¥ 1,854$10,152
2,463
666
2,130
$15,428482
563¥ 1,047¥$ 3,853
4,685$ 8,546

463
563¥ 1,027

Funded retirement benefit obligation
Plan assets at fair value

2014$28,485
43,472(16,685)$55,263

2015

Millions of yen

2015

Thousands of U.S. dollars
2015¥7,960
214
700
522
(429)
¥8,968$62,287
5,792
68,079
2,846
416
300
(3,603)50$68,104$66,239
1,781
5,825
4,344
(3,570)$74,628

The funded status of the plans and the amounts recognized in the consolidated balance sheet as of March 31, 2014 and 2015
were as follows:¥3,423
5,224(2,005)¥6,6412015

Thousands of U.S. dollars
2015¥7,485
696
8,181
342
50
36
(433)
6
¥8,184¥7,274
196
413
536
(460)
¥7,960

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

The aggregate annual maturities of long-term debt (including current portion) outstanding as of March 31, 2015 weresummarized as follows:
Millions of yen
Thousands of U.S. dollars
Year ending March 31,
2016¥2,005$16,685
2017
1,982
16,493
2018
1,772
14,7462019
2,246
18,6902020 and thereafter
640
5,326
Total
¥8,647$71,956

16 ANNUAL REPORT 2015

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

2014

Thousands of U.S. dollars
2015

2014

2015

The changes in plan assets during the years ended March 31, 2014 and 2015 were as follows:

2015

Thousands of U.S. dollars

Millions of yen¥7,623
—
7,623
326
152
(152)
(464)
0
¥7,485¥7,448(7,960)
(511)
36
(474)

Millions of yen¥Balance at the beginning of the year
Cumulative effect of change in accounting principle
Restated 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 year2014

$19,140
27,461$46,601

The assets pledged as collateral for short-term and long-term debt as of March 31, 2014 and 2015 were summarized as follows:(1) Factory foundation
Buildings
Machinery and vehicles
Tooling and office furniture
Land
Total
(2) Other
Buildings
Land
Total

The changes in the retirement benefit obligation during the years ended March 31, 2014 and 2015 were as follows:¥2,300
3,300¥5,600
Millions of yen¥3,9312,206(690)¥5,447

Thousands of U.S. dollars
2015

The Company and certain of its domestic consolidated subsidiaries have either funded or unfunded defined benefit pension plansand 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 a plan
participantʼs account based on the points according to the employeeʼs years of service and job performance and the points arecalculated with an interest credit that reflects changes in market interest rates.
Certain subsidiaries have unfunded lump-sum payment plans and defined contribution pension plans. The simplified method isapplied for the calculation of liability for retirement benefits and retirement benefit expense of certain domestic subsidiaries.

Millions of yen

2015¥8,127(8,968)
(841)
56
(784)

Thousands of U.S. dollars
2015

56
(841)
¥(784)466(6,998)$(6,524)

The components of retirement benefit expense for the years ended March 31, 2014 and 2015 were as follows:
Service cost
Interest cost
Expected return on plan assets
Amortization of actuarial gain and loss
Retirement benefit expense

2014

Millions of yen

¥326
152
(196)
345
¥627

2015

¥342
50
(214)
(198)
¥(20)$67,629(74,628)(6,998)466(6,524)

Thousands of U.S. dollars
2015$2,846416(1,781)(1,648)$(166)The components of retirement benefits asset and liability adjustments included in other comprehensive income (before tax
effect) for the years ended March 31, 2014 and 2015 were as follows:
Actuarial gain and loss

2014

Millions of yen

¥—

2015

¥463

Thousands of U.S. dollars
2015$3,853

The components of retirement benefits asset and liability adjustments included in accumulated other comprehensive income(before tax effect) as of March 31, 2014 and 2015 were as follows:
Unrecognized actuarial gain and loss

2014

¥743

Millions of yen

2015¥1,187

Thousands of U.S. dollars
2015$9,878

ANNUAL REPORT 2015 17

The fair value of plan assets, by major category, as a percentage of total plan assets as of March 31, 2014 and 2015 were as
follows:
2014

Bonds
StocksLife insurances
Funds
Other
Total

2015

4.0%
35.2
42.1
14.6
4.1
100.0%

Resolution

4.2%
41.2
39.0
13.4
2.2
100.0%

359

5

Effective date

March 31, 2014

June 25, 2014

2015

Assumptions to calculate the actuarial present value of the benefit obligation and the expected return on plan assets as of March
31, 2014 and 2015 were as follows:
2015

2.0%
1.71%
3.0%

Retainedearnings

Cut-off date

Dividends with the cut-off date in the year ended March 31, 2015 and the effective date in the year ending March 31, 2016

The required contributions to the defined contribution plans by the Company and its consolidated subsidiaries for the year ended
March 31, 2014 and 2015 amounted to ¥78 million and ¥81 million ($674 thousand), respectively.

2014

2014

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

ShareholdersʼCommonmeeting on
stock
June 24, 2014

total plan assets include retirement benefit trusts which constitute 12.4% for the year ended March 31, 2014 and 13.4%‌
1. Thefor the year ended March 31, 2015.
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.

Discount rate
Re-evaluation rate
Expected rates of return on plan assets(2) Dividends with the cut-off date in the year ended March 31, 2014 and the effective date in the year ending March 31, 2015

0.6%
1.55%
3.0%

Resolution

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

ShareholdersʼCommonmeeting on
stock
June 23, 2015

Retainedearnings

647

9

Cut-off date

Effective date

March 31, 2015

June 24, 2015

1. The account and the amount of stock options charged as expenses
2014

Cost of sales
Selling, general and administrative expenses

Category and number of grantees

Number ofshares at
April 1, 20132014

Increase

Decrease

Number ofshares at
March 31, 2014

Number ofshares at
April 1, 20142015

Increase

Decrease

Number ofshares at
March 31, 2015

2014

79,000,000——

79,000,000

Vesting period
Exercise period

7,760,765

44,680606,626

7,198,819

7,198,819

16,32350,9507,164,192

4. Change in stock options
Stock option activity during the year ended March 31, 2015 was as follows:

Number of shares

13,027—3,296

2. Details of the decrease are as follows:
Decrease due to exercising stock options
Decrease due to sales of shares of less than standard unit

606,000
626

50,000950

2. Share subscription rights
2014

Description

Share subscription rights as stock options
granted during the year ended March 31, 2011

Millions of yen

2015

Thousands of U.S. dollars
2015

39

35

291

39

35

291

2015

―
―

Millions of yen

2015

―

Type of shares

Shareholdersʼ meeting on Common
June 21, 2013
stock
Board of Directorsʼ
meeting on October 24, Common
stock
2013

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

Cut-off date

Effective date356

5

March 31, 2013

June 24, 2013357

5September 30,
2013

November 20,
2013

Shareholdersʼ meeting on Common
June 24, 2014
stock
Board of Directorsʼ
Commonmeeting on October 23,
stock
2014

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

―
―
―
―
―
491,000―
50,000―441,000¥
360 ($3.00)¥
80.5 ($0.67)

2014

2015

Type of shares

Share subscription rights which are not yet vested
Outstanding as of March 31, 2014
GrantedForfeited
VestedOutstanding as of March 31, 2015
Share subscription rights which have already been vested
Outstanding as of March 31, 2014
VestedExercised
Forfeited
Outstanding as of March 31, 2015
Exercise price
The fair value of stock options when granted

5. Estimation of the number of stock options vested
Because it is difficult to reasonably estimate the number of unexercised stock options in the future, the actual number of
unexercised stock options is presented.

3. Dividends(1) Dividends paid

18 ANNUAL REPORT 2015

Exercise condition

79,000,000

18,182
22,587
3,911

Resolution

Number of stock options
Grant date

—

2015

Resolution

Millions of yen

269 employees of the Company, and a director and 35 employees of
its subsidiaries
1,141,000 common shares
August 11, 2011
Subscription holders shall remain employees, directors or auditors of
the Company or its subsidiaries at the time of exercise
From August 11, 2011 to August 11, 2013
From August 12, 2013 to August 11, 2016

—

2014

Total

5

79,000,000

1. Details of the increase are as follows:
Increase due to purchase of shares of less than standard unit
Increase due to purchase of shares of untraceable shareholders
Increase in shares held by affiliates accounted for by the equity method

Parent company

0.07

3. Description of stock options

Information regarding changes in net assets for the years ended March 31, 2014 and 2015 were as follows:
1. Shares issued and outstanding / Treasury stock

Company

5,384

9
6

2. The amount of stock options charged as income due to their forfeiture resulting from nonuse

Note 7. Net asset

Shares issued:
Common stock
Tresury stock:
Common stock

Dividends per share(U.S. dollars)Note 8. Stock options

Gain on reversal of share subscription rights

Types of shares

2015

Total dividends(Thousands of
U.S. dollars)2015

Cut-off date

Effective date

Total dividends(Thousands of
U.S. dollars)

Dividends per share(U.S. dollars)359

5

March 31, 2014

June 25, 2014

2,987

0.04

359

5

September 30,
2014

November 19,
2014

2,987

0.04

ANNUAL REPORT 2015 19

Note 9. Research and development costs

Millions of yen
2015

Research and development costs included in cost of sales and selling, general and administrative expenses for the years ended
March 31, 2014 and 2015 amounted to ¥3,302 million and ¥3,472 million ($ 28,892 thousand), respectively.

Note 10. Selling, general and administrative expenses
Major elements of selling, general and administrative expenses for the years ended March 31, 2014 and 2015 were as follows:
Millions of yen

2014

Salaries and wages of employees
Provision for bonus
Provision for directorsʼ and officersʼ bonus
Retirement benefit cost
Provision for directorsʼ and officersʼ retirement benefits¥3,928
445
70
242
37

Thousands of U.S. dollars
2015

2015

¥4,286
444
70
47
50

$35,666
3,695
583
391
416

The components of gains and losses of fixed assets for the year ended March 31, 2014 and 2015 were as follows:
Gain on sales of fixed assets
Buildings
Machinery and vehicles
Tooling and office furniture
Land
Intangible asset
Total

¥

Millions of yen

—
12
21
1
8
¥44

Loss on disposal of fixed assets

Millions of yen

2014

Buildings
Machinery and vehicles
Tooling and office furniture
Intangible asset
Total

2015

Thousands of U.S. dollars
2015

2015

Thousands of U.S. dollars
2015

¥28
17
23
28
2
¥101

¥31
234
13
0
¥280

$233
141
191
233
17
$840

¥6
66
8
0
¥82

Location

Connection System

Japan

FunctionalJapan
components
KOSCO Tatebayashi
Japanand others
Total

Use

Connectors/Jack production
facilities
Remote controls/Switch/Unit
production facilities

Land

Software

Goodwill

—

9

358

76

—

—

444

—

—

37

51

10

—

98

—

818

—

—

—

—

818

¥—

¥827

¥396

¥127

¥10

—

¥1,361

Buildings

Buildings

¥

Total

Thousands of U.S. dollars
2015

Note 11. Gains and losses of fixed assets

2014

Asset group

Machinery
Toolingandand officevehiclesfurniture

$50
549
67
0
$682

Asset group

Location

Connection System

Japan

FunctionalJapan
components
KOSCO Tatebayashi
Japanand others
Total

Use

Connectors/Jack production
facilities
Remote controls/Switch/Unit
production facilities

Land

Buildings

Machinery
Toolingandand officevehiclesfurniture

Software

Goodwill

Total

—

75

2,979

632

—

—

3,695

—

—

308

424

83

—

816

—

6,807

—

—

—

—

6,807

$— $6,882$3,287$1,057$83

Buildings— $11,326

The Companyʼs assets for business operations are categorized into groups on a division-by-division basis and the Companyʼsrental property on an individual basis, whereas consolidated subsidiariesʼ assets for business operations are categorized into
groups on a subsidiary-by-subsidiary basis and their rental property on an individual basis. Of the above asset groups, because
the Connection System Division and the Functional Components Division suffered declining trend in net sales and income due tointense price competition in the market, future cash flows from their asset groups were estimated after reviewing their businessplans. As a result, it was found that they could not generate sufficient earnings to recover the value of the respective asset
groups, therefore their book value was reduced to the recoverable amounts. For KOSCO Tatebayashi and others, the fair value
thereof declined below the book value, which was therefore reduced to the recoverable amount.
The recoverable amount of the asset group of the Connection System Division was measured at value in use, which was
calculated by discounting future cash flows at 6.6%. The recoverable amount of the asset group of the Functional Components
Division was measured at value in use, and since no future cash flows are expected, the book value thereof in the second quarterof the fiscal year ended March 31, 2015 was entirely recognized as impairment loss. The recoverable amount of the assets of
KOSCO Tatebayashi and others were measured at net realizable value, which was calculated based on valuations by external
independent real estate appraisers.

Note 13. Income taxes
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, 2014 and 2015 impairment losses were recognized for the following assets.
Millions of yen
2014

Asset group

Toyama works
Functional
components
SMK Electronics(Dongguan) Co.,Ltd.
SMK-Link
Electronics
Corporation
Total

Location

Japan

Japan
China
U.S.A.

Use

Unutilized assets
Remote controls/Switch/Unit
production facilities
Connector, Remote controls/
Switch/Unit, Touch panel
production facilities
Other

Land

¥123

Buildings¥19

Machinery
Toolingandand officevehiclesfurniture

¥—

¥—

Software

Goodwill

Total

¥—

¥—

¥142

—

—

8

8

2

—

19

—

—

256

81

—

—

337

—

—

—

—

—

113

113

¥123

¥19

¥264

¥89

¥2

¥113

¥613

The Companyʼs assets for business operations are categorized into groups on a division-by-division basis and the Companyʼsrental property on an individual basis, whereas consolidated subsidiariesʼ assets for business operations are categorized into
groups on a subsidiary-by-subsidiary basis. Of the above asset groups, Toyama Works was recognized as an idle asset for the
fiscal year under review, and since it has no plan for future utilization, its book value was reduced to the recoverable amount. For
the other asset groups, as net sales and income were on a declining trend due to intense price competition in the market, weestimated future cash flows from these asset groups after reviewing the business plans. As a result, it was found that they could
not produce enough earnings to recover the value of the respective asset groups, therefore their book value was reduced to therecoverable amounts.
The recoverable amount of idle assets was measured by the net realizable value. For the recoverable amount of the asset groupsof the Functional Components Division and SMK-Link Electronics Corporation, the book value was entirely recognized as
impairment loss because no future cash flows are expected. The recoverable amount of the asset group of SMK Electronics(Dongguan) Co., Ltd. was measured by value in use, which was calculated by discounting future cash flows at 6.4%.

20 ANNUAL REPORT 2015

Income taxes applicable to the Company and its domestic subsidiaries comprised corporation, inhabitantsʼ and enterprise taxes
which, in the aggregate, resulted in statutory tax rates of approximately 37.9% and 35.5% for the years ended March 31, 2014
and 2015, respectively.
A reconciliation between the statutory tax rate and the effective tax rate for the years ended March 31, 2014 and 2015 was asfollows:
Statutory tax rate
Items such as entertainment expenses permanently nondeductible 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
Decrease of tax assets at fiscal year-end by the change of tax rate
Income taxes current for prior years
Other
Effective tax rate

2014

37.9%

2015

35.5%

1.2

0.9

(13.9)
4.0
(3.6)
1.5
0.6
(22.5)
14.0
6.6
1.2
—
2.3
29.3%

(20.4)
13.4
(1.4)
2.9
0.6
(20.0)
20.1
5.8
1.5
6.0
0.9
45.8%

ANNUAL REPORT 2015 21

The significant components of deferred tax assets and liabilities at March 31, 2014 and 2015 were as follows:
Deferred tax assets:
Inventory write-down disallowed
Accrued bonuses disallowed
Intercompany profit on inventory
Liability for retirement benefits
Allowance for doubtful accounts
Impairment loss
Operating loss carryforwards for tax purposes
Other
Valuation allowance
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

Millions of yen

2014

¥51
358
81
411
42
284
559
655
(1,487)
956

—
(94)
(74)
(0)
(136)
(406)
—
(24)
(737)
¥219

2015

Thousands of U.S. dollars
2015

¥28
310
79
—
38
569
539
681
(1,425)
820

$233
2,580
657
—
316
4,735
4,485
5,667
(11,858)$6,824

(216)
(86)
(62)
(31)
(261)
(620)
(369)
(166)
(1,815)¥(994)(1,797)
(716)
(516)
(258)
(2,172)(5,159)(3,071)(1,381)(15,104)$(8,272)

The “Act for Partial Amendment of the Income Tax Act, etc.” (Act No. 9 of 2015) and the “Act for Partial Amendment of the Local
Tax Act, etc.” (Act No. 2 of 2015) were promulgated on March 31, 2015. As a result, the effective statutory tax rate used tomeasure the Companyʼs deferred tax assets and liabilities was changed from 35.5% to 32.9% and 32.2% for the temporary
differences expected to be realized or settled in the year beginning April 1, 2015 and for the temporary differences expected to berealized or settled from April 1, 2016, respectively.

Note 14. Other comprehensive income
The following table present reclassification adjustments and tax effects allocated to each component of other comprehensive
income for the years ended March 31, 2014 and 2015.
Net unrealized gains (losses) on other securities:
Amount arising during the year
Reclassification adjustments for gains and losses included in net
incomeAmount before tax effectTax effectNet unrealized gains (losses) on other securities
Foreign currency translation adjustments:
Amount arising during the year
Reclassification adjustments for gains and losses included in net
incomeAmount 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 net
incomeAmount before tax effectTax effect
Retirement benefits asset and liability adjustments
Total other comprehensive income

22 ANNUAL REPORT 2015

Millions of yen

2014

¥528

2015

Thousands of U.S. dollars
2015

¥563

$4,685

(224)

(90)

(749)

304
(99)
204

472
(138)
334

3,936
(1,148)
2,779

570

1,473

12,258

—

—

—

570
—
570

1,473
—
1,473

12,258—12,258

—

662

5,509

—

(198)

(1,648)

—
—
—
¥775

463
(128)
335
¥ 2,143

3,853(1,065)2,788$17,833

Note 15. Amounts per share
1. Net income per share of common stock is based on the following information

Millions of yen

2014

Basic net income per share:
Net income
Net income not attributable to common stockholders
Net income attributable to common stock¥2,541
—
2,541
2014

Average number of shares of common stock outstanding during the year

2015

Thousands of U.S. dollars
2015¥1,982—
1,982$16,493—
16,493Thousands of shares

71,442

2015

71,807

2. Diluted net income per share of common stock is based on the following information

Millions of yen

2014

Diluted net income per share:
Adjustments

¥—
2014

Increase in number of shares of common stock(share subscription rights)
Description of dilutive securities which were not included in thecalculation of diluted net income per share of common stock asthey have no dilutive effects

2015

Thousands of U.S. dollars
2015

¥—

$—

Number of shares

115,099(115,009)
Number of sharesubscription rights
as stock options
granted during theyear ended March
31, 2009 : 16

2015

106,546(106,546)—

Note 16. Financial instruments(1 ) Policy for financial instruments			‌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.
(2 ) Types of financial instruments and related risk			‌Trade receivables—trade notes and accounts receivable—are exposed to credit risk in relation to customers. Regarding thisrisk, 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 four years from the balance sheet date. Long-term debt with variable interest rates is exposed to interest rate
fluctuation risk. However, to reduce such risk 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 fair value of financial instruments at March 31, 2014 and 2015 was summarized as follows:

Cash and cash equivalents
Time deposits
Notes and accounts receivable,
trade
Investment securities
Notes and accounts payable, trade
Short-term loans payable
Accounts payable, non-tradeLong-term debt
Derivatives

2014

Millions of yen

2015

Thousands of U.S. dollars
2015Book value

Fair value

DifferenceBook value

Fair value

DifferenceBook value

Fair value

Difference

14,681

14,681—

16,97916,979―141,292

141,292

―

2,436
3,732
4,429
5,927
6,137
(1)

2,436
3,732
4,429
5,927
6,104
(1)

—
—
—
—
(32)
—

2,874
4,542
5,600
5,970
8,647
(11)

2,874
4,542
5,600
5,970
8,581
(11)

―
―
―
―
(66)
―

23,916
37,796
46,601
49,68071,956(92)

23,916
37,796
46,601
49,68071,407
(92)

―
―
―
―
(549)
―

¥11,13493¥11,13493——¥9,999183¥9,999183

—―$83,207
1,523$83,207
1,523

$

―
―

Investment securities include securities recorded as other current assets in the consolidated balance sheets.
Long-term debt includes current portion of long-term debt recorded as short-term loans payable in the consolidated balance
sheets.

ANNUAL REPORT 2015 23

Note 18. Derivatives

1.	Methods to determine the estimated fair value of financial instruments and other matters related to securities and derivativetransactions
		Cash and cash equivalents, time deposits, and notes and accounts receivable, trade		Since these items are settled in a short period of time, their carrying value approximates fair value.
		Investment securities
		The fair value of stocks is based on quoted market prices.
		Short-term loans payable, notes and accounts payable, trade and accounts payable, non-trade		Since these items are settled in a short period of time, their carrying value approximates fair value.
		Long-term debt
		‌The fair value of long-term debt is based on the present value of the total of principal and interest discounted by the interest
rate to be applied if similar new loans were entered into.
		Derivatives
		Please refer to Note 18 Derivatives of the notes to the consolidated financial statements.
2. Financial instruments whose fair value is extremely difficult to determine

Millions of yen

2014

Unlisted securities¥219

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 Companyʼs 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 amountThousands of U.S. dollars
2015

2015

¥230

$1,914

Unlisted securities are not included in the investment securities because there were no quoted market prices available and the fairvalue is extremely difficult to determine.
3. The schedules for redemption of monetary assets and securities with maturities
Millions of yen

2014

Cash equivalents and time deposits
Notes and accounts receivable,
trade
Investment securities (other)
Total

Due within
one year¥11,125

Due after
one yearthroughfive years

¥—

2015

Due after
five years
throughten years

Due within
one year¥—¥9,987

Due after
one yearthroughfive years¥—

Thousands of U.S. dollars
2015

Due after
five years
throughten years

Due within
one year¥—$83,107

Due after
one yearthroughfive years$—

Due after
five years
throughten years$—

14,681——

16,979——141,292———¥25,806

53
¥53

—
¥—

―
¥26,966

61
¥61

—
¥—

―
$224,399

508
$508

—
$—

2014
Forward foreign exchange contracts:
Sell:
US$
¥371
MXN
5
Total
¥376

2014

Millions of yen

2015

Fair value

Cost

Unrealized
gain (loss)¥1,984
53
2,037¥1,503
21
1,525

¥480
31
511

¥2,40761
2,469¥1,472
21
1,494

¥935
39
974

$20,030
508
20,546$12,249
175
12,432$7,781
333
8,114

398
398
¥2,436500
500¥2,025

(101)
404
(101)
404
¥410 ¥2,874

527
527¥2,022

(123)
3,362
(123)
3,362
¥851 $23,916

4,385
4,385
$16,826(1,023)(1,023)$7,082

Fair value

Cost

Unrealized
gain (loss)

Fair value

Cost

Unrealized
gain (loss)

2015

2014

2015

2015

¥(1) ¥(11) ¥(1) ¥(11) $6,399
(0)
—
(0)
—
—
¥(1) ¥(11) ¥(1) ¥(11) $6,399

Fair value
2015

Unrealized
gain (loss)
2015$(92) $(92)——$(92) $(92)Interest rate swaps

2014¥3,606

Due after one year2015

¥6,4302014¥3,2302015¥4,714

Contract
amountDue after
one year$53,508$39,228

2015

2015

Since exceptional treatment is applied to interest rate swaps transactions, they are accounted for as if they were an integral partof the hedged long-term debt, and their fair value is included in the fair value of long-term debt in Note 16.

Note 19. Investment and rental property

Millions of yen

2014Book value Book value
beginning end of theof the year
year

¥4,057¥3,873

Fair value¥10,053

Thousands of U.S. dollars
2015

2015

Book value Book value
beginning end of theof the yearyear

¥3,873

Fair value¥9,019¥15,116

Book value Book value
beginning end of theof the yearyear$32,229

Fair value$75,052 $125,788

1. The fair value represents the acquisition cost less accumulated depreciation.
2. The fair value is mainly based upon the amount appraised by outside independent real estate appraisers.

Note 20. Segment information

Investment securities in unconsolidated subsidiaries and affiliates were as follows:
2014

Millions of yen

¥188

2015

¥200

Information regarding sales of securities for the years ended March 31, 2014 and 2015 were as follows:

24 ANNUAL REPORT 2015

¥769
—
¥769

Contract amountThousands of U.S. dollars
2015

Unlisted stocks of ¥31 million at March 31, 2014 and ¥30 million ($250 thousand) at March 31, 2015 are not included in theabove table because there were no quoted market prices available and the fair value is extremely difficult to determine.

Proceeds from sales of securities
StocksOthersGains on sales
StocksOthers2014

Contract
amount(1 ) Calculation of fair value
			 The fair value is calculated by the forward exchange rate.
(2 ) Derivative transactions to which hedge accounting was applied are excluded from the above table.
Millions of yen
Thousands of U.S. dollars(Interest related)

Information regarding securities classified as other securities at March 31, 2014 and 2015 was summarized as follows:

Investment securities

2015

Unrealized gain (loss)

The profit of investment and rental property for the years ended March 31, 2014 and 2015 amounted to ¥476 million and ¥492
million ($4,094 thousand), respectively.
Information on the fair value of investment and rental property at March 31, 2014 and 2015 was summarized as follows:

Note 17. Securities

Securities whose fair value exceeds
their cost
StocksOthersSubtotal
Securities whose cost exceeds theirfair value
StocksSubtotal
Total

Fair value

2014

¥289
289
—
224
224
—

Millions of yen

2015

¥125
125
—
90
90
—

Thousands of U.S. dollars
2015$1,664

Thousands of U.S. dollars
2015$1,040
1,040
－
749
749
－

(Overview)
The reportable 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.
FC (Functional Components) Division: The division produces and sells switches, units, remote controls and camera modules.
TP (Touch Panel) Division: The division produces and sells touch panels.
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.
1. Business segment information

2014

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

Connection
SystemDivision

Reportable Segments
Functional
Components Touch Panel
Division
Division

Millions of yen

Subtotal

Total

Adjustment

Consolidated

134
―
134
24
4,132

¥65,796―
65,7962,330
37,575¥————18,660¥65,796―
65,796¥2,33056,235Other¥27,416―
27,416
1,403
15,702¥22,438―
22,438(963)
9,876¥15,808―
15,8081,866
7,863¥65,662―
65,662
2,306
33,442

¥

2,311

445

523

3,281

4

3,285

—

3,285

2,648

427

933

4,009

42

4,052

—

4,052

ANNUAL REPORT 2015 25

2015

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

2015

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

5. Information about the amortization of goodwill and the balance of goodwill

Millions of yen

Connection
SystemDivision

Reportable Segments
Functional
Components Touch Panel
Division
Division

Subtotal¥ 25,901―
25,901921
16,072¥ 25,027 ¥ 15,184――
25,027
15,184(723)
1,909
12,7687,756¥ 66,112―
66,112
2,107
36,597

Other

¥

Total

118
―
118
6
9,613

¥66,230―
66,2302,113
46,210Adjustment

Consolidated

￥

―
―
―
―
18,819¥ 66,230―
66,2302,113
65,029

2,355

490

647

3,493

1

3,495

―

3,495

2,221

991

438

3,651

164

3,816

―

3,816

Connection
SystemDivision

Reportable Segments
Functional
Components Touch Panel
Division
Division$215,536―
215,536
7,664
133,744$208,263 $126,354――
208,263
126,354(6,016)
15,886106,249
64,542$550,154―
550,154
17,533
304,544

Other

$

Total

982
―
982
50
79,995$551,136―
551,136
17,583
384,539

Adjustment

Consolidated

$

―
―
―
―
156,603$551,136―
551,136
17,583541,142

19,597

4,078

5,384

29,067

8

29,084―29,084

18,482

8,247

3,645

30,382

1,365

31,755―31,755

2. Geographical information(1 ) Net sales
Net sales
2015

Net sales
2015

Net salesJapan¥ 13,877Japan¥12,168
Japan

Millions of yen

Asia¥ 28,664

Fixed assets

2015

Fixed assets

2015

Fixed assets¥ 21,153

Asia¥27,548

North America¥24,375$ 229,242

Asia

North America

Japan

Asia

North AmericaJapan¥ 14,699
Japan$122,318¥¥$ 202,838

Millions of yen

5,993

¥

287

Millions of yen

Asia

7,071

Asia

Other

Consolidated

Other

Consolidated

EuropeOther areas

Consolidated

EuropeConsolidated

EuropeConsolidated

EuropeConsolidated

2,066

Europe¥2,115

Thousands of U.S. dollars$ 101,257¥ 10,045

Europe¥Millions of yen(2 ) Fixed assets
2014

North America

North America

¥

303

Thousands of U.S. dollars$58,842

North America$2,521$ 17,600

¥
¥

504
460

$3,828¥34¥65,796¥21¥66,230$175$ 551,136¥ 16,830¥ 22,534

¥61
—

¥—
—

Thousands of U.S. dollars
2015

Functional Components
Division$——

Note 21. Related party transactions
Significant transactions with related parties for the years ended March 31, 2014 and 2015 were as follows:
Millions of yen

2014

Terutaka Ikeda
Subtotal

2015

Functional Components
Division

Amortization
BalanceThousands of U.S. dollars

Other is business segments not included in the reportable segments. It includes other parts, leasing, property rental, factoring
and worker dispatch businesses.
Adjustment includes corporate assets which are not allocable to the reportable segments.

2014

Millions of yen

2014

Transactions
Guaranty
money
deposited
Rent

—

¥13

BalancesOthercurrent
Other
assetsinvestments

¥14

¥1

Millions of yen

2015

Terutaka Ikeda

Transactions
Guaranty
money
deposited
Rent

—

¥13

BalancesOthercurrent
Other
assetsinvestments

¥14

¥1

Thousands of U.S. dollars

2015

Terutaka Ikeda

Transactions
Guaranty
money
deposited
Rent

—

$108

Balances
Other
Other
current
investments
assets$117$8Note 22. Subsequent events
1.	The Company approved a resolution at the Board of Directorsʼ meeting held on April 27, 2015 to establish a joint venture with
Logomotion, s.r.o. (based in the Slovak Republic) to expand the near field communication business. The related joint venturecontract was concluded on April 30, 2015, and the joint venture was established as of May 7, 2015.
		The venture paid ¥1,071 million (US$8,912 thousand) to Logomotion, s.r.o., as part of the consideration for acquiring patentrights for the purpose of future business development.
Company Name: SMK-LOGOMOTION Corporation
Representative: Yoshiyuki Kaku
Location: 17-14 Togoshi 5-chome, Shinagawa-ku, Tokyo
Capital: ¥480 million ($3,994 thousand)Ownership ratio: SMK Corporation: Logomotion, s.r.o. = 51% : 49%
2.	The Company resolved to acquire treasury stock in accordance with Article 165 (3) of the Companies Act at the Board of
Directorsʼ meeting held on May 22, 2015.
Objective: To enable flexible management in response to changes in the business environment
Class of treasury stock: Common stock
Total treasury stock the Company may acquire: 1,000,000 shares, at maximum
Total acquisition amount: ¥500 million ($4,160 thousand), at maximum
Acquisition period: From May 25, 2015 to July 9, 2015
Method of acquisition: Market transactions on the Tokyo Stock Exchange$187,518

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
Connection System Division
Functional Components Division
Touch Panel Division
Subtotal
Other
Adjustments and eliminations
Consolidated

26 ANNUAL REPORT 2015

¥

¥

2014

181
278
11
470
―
142
613

Millions of yen

¥

2015

444
98
―
543
818
―
¥ 1,361

Thousands of U.S. dollars
2015$ 3,695
816
―
4,511
6,807
―
$11,326

ANNUAL REPORT 2015 27

Report of Independent Auditors
SMK Corporation and Consolidated Subsidiaries

Officer Introduction(As of June 23, 2015)

Directors

Yasumitsu Ikeda
President and COO

Yoshio Sakurai

Director,
Executive Deputy President,
Chief Information Officer

Yoshiyuki Kaku

Director,
Executive Vice President,
Chief Technology Officer

Mikio Wakabayashi
Director,
Executive Vice President

Yuji Tanahashi
Director

Auditors

Terutaka Ikeda
Chairman ofAuditors Meeting

Tetsuya Nakamura

Naru Nakashima

Ichiro Shimizu

Auditor

Statutory Auditor

Statutory Auditor

Corporate
Executive
Officers

Executive Vice President

Paul Evans

Executive Vice President,
Chief Financial Officer

Kohei Ohgaki

Hideo Matsumoto

Tsutomu Isoda

Hiroshi Miyakawa

Shigechika Yanagi

Takemi Ishibashi

Harutaka Seki

Masanobu Ikeo

Mitsuhiko Goto

Tetsuo Hara

Vice President

Vice President

28 ANNUAL REPORT 2015

Vice President

Vice President

Vice President

Vice President

Vice President

Vice President

Vice President

ANNUAL REPORT 2015 29

Corporate Information(As of March 31, 2015)

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 (SMK-Group)

5,772

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

Global Network
Domestic Bases

Gate City Ohsaki, Toyama,
Hitachi, Osaka, Nagoya, Ibaraki,
Hokuriku and Fukuoka

Overseas Bases

Taiwan, Hong Kong, China,
Singapore, Thailand, Malaysia,
Philippines, Korea, Belgium, U.K.,
France, Germany, Hungary,
U.S.A., Mexico
and Brazil

Authorized shares

195,961,274

Issued shares

79,000,000

Number of shareholders
Major Shareholders (top ten)

8,735
Shares Owned(1,000 shares)

Percentageof Shares (%)

Mizuho Bank, Ltd.

3,531

4.91

Nippon Life Insurance Company

3,241

4.50

Dai Nippon Printing Co., Ltd.

3,200

4.45

SMK Cooperating Company
Share Holding Association

2,919

4.06

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

2,823

3.92

The Bank of Tokyo-Mitsubishi UFJ, Ltd.

2,508

3.48

Japan Trustee Services Bank, Ltd.
(Trust Account)

2,241

3.11

Mitsubishi UFJ Trust and Banking Corporation

1,800

2.50

SMK Employees Share Holding Association

1,702

2.36

The Showa Ikeda Memorial Foundation

1,500

2.08

Note:SMK holds 7,017 thousand shares of treasury stock, but theseare excluded from the above list. Figures for percentage ofshares are calculated excluding the treasury stock.

Share ownership by number
1 - 999 shares

1,880 (21.52%)

1,000 - 9,999 shares

6,211 (71.11%)

10,000 - 99,999 shares

561 ( 6.42%)

100,000 - 499,999 shares

61 ( 0.70%)

500,000 shares -

22 ( 0.25%)

Share ownership by shareholder type (unit : share)
Financial institutions

24,510,685 (31.03%)

Financial instruments dealers

1,737,781 ( 2.20%)

Companies and other entities

10,953,689 (13.87%)

Foreign entities, etc.

6,757,075 ( 8.55%)

Individuals and others

35,040,770 (44.35%)

Please see our website for detailed IR information.
The IR Information section of SMK’ s website includes
annual reports and presentation materials. The website

Head Officealso carries information about SMK’ s products, corporate
data, CSR initiatives, and commitment to the environment.

WebsiteGate City Office

SMK CORPORATION
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/

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