SEMI ANNUAL REPORT2015

For the six months ended September 30, 2015

Connection
SystemDivision

SMB Coaxial Connector(FAKRA)

Functional
Components
Division

Small Coaxial Camera Module

Touch Panel
DivisionFull-Flat Structure Resistive
Touch Panel with Force Feedback

SMK CORPORATION

Financial Highlights

SMK Corporation and Consolidated Subsidiaries

Thousands of
U.S. dollars

Millions of yen
Six months ended September 30
2014

Six months ended September 30
2015

Six months ended September 30
2015¥32,171¥ 39,315$ 327,734

Operating income

1,125

2,572

21,440

Profit attributable toowners of parent

1,678

2,077

17,314

Operating Results
Net sales

As of March 31
2015

As of September 30
2015

As of September 30
2015¥65,029¥ 71,076$ 592,497

34,18734,519287,754

Financial Position
Total assets
Total net assets

Yen
Six months ended September 30
2014

U.S. dollars

Six months ended September 30
2015

Six months ended September 30
2015

Per Share Data
Net income :Basic¥23.38

¥

29.18

$

0.24

Diluted¥23.35

¥

29.13

$

0.24

Note: The U.S. dollar amounts represent translations of Japanese yen, for convenience only, at the rate of ￥119.96 = U.S. $1.00.

Net sales■ Full year

■ ■ First half

Millions of yen■ Full year

■ ■ First half

Millions of yen

3,000

80,00065,79660,000 55,340

2,330

66,2301,988

34,881
28,51526,82932,171

1,125

2013

2014

2015
Mar.

2015
Sep.

(1,500)2012

Basic net income (loss) per share■ Full year

■ First half

yen

(590)

(1,000)

(853)
2013

2014

27.61

30

29.18

■ Full year ■ First half

15

0(2.78)(11.04)2012

2013

1 SEMI ANNUAL REPORT 2015

2014

2015
Mar.

2015
Sep.

2015
Sep.

(2,000)Millions of yen
71,07653,883

2012

52,49856,23530,00020,00010,0002013

2014(1,782)
2013

2015
Mar.

2015
Sep.

2015
Mar.

2015
Sep.

Millions of yen

40,00020,000

2012

2014

(198)

■ Full year ■ First half

40,0000

2,077

Total net assets

65,02960,000

1,982
1,678

(799)

Total assets

35.58

(15)

2015
Mar.

80,000

45

2,541
1,893

0
(327)

(1,166)2012

Millions of yen

1,000

(42)
0

3,000

2,000

39,31520,0000

2,572■ Full year ■ ■ First half

2,113

54,4751,500

40,000

Profit (loss) attributable toowners of parent

Operating income (loss)

028,25728,2042012

2013

31,4762014

34,18734,519

2015
Mar.

2015
Sep.

To Our Shareholders and Investors

We are obliged to you for your continued
support and good patronage.
We would like to report on the outline andresults of the SMK Group’ s businesses for thehalf period of the 94th fiscal year (from April 1,
2015, to September 30, 2015).
We look forward to your continuing supportand encouragement.
November 2015
Yasumitsu Ikeda
President and COO

Performance Overview
During the half period of the 94th fiscal year ended September 30, 2015, the overall global economy
maintained a moderate recovery path, led by the favorable U.S. economy, although the slowdown of theChinese economy became increasingly apparent. As for the Japanese economy, although a moderate
recovery of corporate earnings and improvement in the employment environment were seen, thebusiness sentiment stayed level, affected by the economic slowdown in emerging countries such as
China and sluggish domestic consumer spending.
Under these circumstances, the SMK Group achieved steady expansion of sales of connectors, camera
modules, touch panels and other products in the mainstay car electronics market. In the communication
market, our business grew steadily, resulting from the progress in adopting new products and the salesof standard products. We also strove to aggressively introduce new products, improve pricecompetitiveness, strengthen sales capability and enhance operational efficiency, resulting in year-on-yearincreases both in the SMK Group’ s consolidated net sales and income for the half period of the 94th
fiscal year ended September 30, 2015. Reflecting this growth, we decided to pay an interim dividend of¥6 per share.
The SMK Group strives to increase sales of its mainstay products for automobiles, smartphones, andset top boxes, as well as to explore new markets such as IoT (Internet of Things), HEMS, ecology andenergy, medical and healthcare and wearable devices, aiming to pursue further expansion of our earning
capabilities. We will also further enhance the SMK vision “Challenge, Creativity, Solutions” andcourageously tackle the challenge to solve not only the visible issues but also the latent issues faced bycustomers and society worldwide.
SEMI ANNUAL REPORT 2015 2

Overview of Consolidated Results by Division(April 1, 2015 to September 30, 2015)

Touch Panel Division

Others¥7,356 Million
18.7%¥54 Million
0.1%

Net sales¥ 39,315
MillionConnection System
Division¥14,118 Million
36.0%

Functional Components
Division¥17,787 Million
45.2%

Connection System Division
Although sales of our products for photovoltaic power generation
declined significantly due to changes in Japanese market conditions,sales of products for other markets progressed steadily. In theinformation and communication market, which is our mainstay
market, sales of our products were favorable as customers in North
FPC to Board Connector(FB-7 Series)
Applications:
Smartphone, Tablet PC,
Mobile Phone

America and China increasingly adopted our new products although
there were differences in sales levels among the customers. In the
car electronics market, in which we are injecting our focused effort,
demand for parts and components for safe driving expanded,pushed by the enactment of related laws and regulations. Also,

Major Products● Coaxial Connectors● Board to Board Connectors● FPC Connectors● Jacks

3 SEMI ANNUAL REPORT 2015

sales of our products for healthcare and video games advanced
significantly due to customers newly adopting our products. Goingforward, we will continue to promote the development of new
products toward growth markets by fully utilizing our high-speedtransmission and miniaturization technologies.

Functional Components Division
Sales of main products of remote control grew significantly due tocustomers in China increasingly adopting our products in addition
to remote control for set top boxes in Europe and the U.S.
markets. Sales of our products for home appliances and sanitary
goods expanded for customers in Japan and the U.S. With regard
Standard RF Remote Control using
Bluetooth® 4.0 LE Protocol
Application:
TV, Set Top Box,
Home Network Related Devices

to the car electronics market, sales of camera modules andcapacitive touch pads progressed steadily. In the information andcommunication market, our small switches were adopted for new
smartphones, which contributed to sales. Going forward, we will
strengthen product development and sales expansion by

Major Products

positioning the wearable devices and HEMS as new markets.

● Remote Control Units● Wireless Device Units● Switches● Camera Modules

Touch Panel Division
Sales of our products for the car electronics markets in the U.S.
and China progressed as planned, whereas in other countries’
markets some customers’ sluggish sales performance adversely
affected our sales. However, mass production of our new
capacitive touch panels commenced, and further sales growth ispredicted going forward. For the industrial machinery market,
Capacitive Touch Panel for
Polarized Sunglasses
Application:
Car Navigation ,Automotive Center Console, etc.

although we struggled because of the fierce price competition insome markets, we launched new businesses in the fields of
medical equipment, machining tools and office equipment. We will
also aggressively expand sales in new fields with a high potential
for sales increases, such as home appliances and wearable

Major Products

devices.

● Resistive Touch Panels● Capacitive Touch Panels● Optical Touch Panels

SEMI ANNUAL REPORT 2015 4

Special Feature

90 Years History of SMK Reflected in its Mainstay
Ninety years ago, when radio broadcasting began in Japan, SMK launched its operations. Adhering to thefounding spirit of “Good parts create good final products,” we will continuously contribute to therealization of a more fulfilling and progressive future society.

1920–early 1940s

1980s–1990s

Mainstay Products:
Radios, Radio Components

Mainstay Products:
Computing and Information Components

Representative Product ❶Olympic Power Trans
This product was registered in 1929 with thetrademark “Olympic,” which embodied theidea that “Radio will connect the world. We
will cultivate a company filled with thecapability and youth found in the Olympic
Games, and in the future expand our market
around the globe.”

Keyboard for POS

Representative Product ❷CRT Socket

Olympic Model 680 Receiver
In 1937, SMK’ s Olympic Model 680
receiver was chosen to receive an award
as a superior product from among 107
models at the First Radio Exhibition
Contest sponsored by the Japan Radio
Association. This was an outstandingachievement for a corporation only in theirfifth year as a manufacturer of receivers.

Late 1940s–1960s
Mainstay Products:
TV Components

2000s–early 2010s

Vacuum Socket for ST Tube
Cathode-ray Tube Sockets for black-andwhite television and color television

Mainstay Products:
Communication and
Car Electronics Components

1970s

Mainstay Products:
Video Tape Recorder (VTR) Components

Large Phone Jack
5 SEMI ANNUAL REPORT 2015

Slide Switch

BluetoothⓇ Audio Module

Automotive
Camera Module

Products and Future High-Potential Markets

Representative ProductStandard Infrared Remote Control Units
SMK launched standard infrared
remote control units one after anotherfor TVs, videos and audio equipment.
Developing products that meet eachcustomer’ s needs, SMK gained a solid
reputation: “For a remote control units
go to SMK.”

2015–2020s
SMK will continue to address customer needs that are
constantly evolving on a global scale, fully utilizing its
advanced technologies nurtured through its long history
and leading-edge innovations.
Optical Module Connector(10 Gbps)

Representative Product ❶microSIM Card Connector

Integrated Wireless
LAN Module Ideal for
IoT connectivity

Capacitive Glass/
Glass Touch Panel

SMK’ s microSIM card connectors that draw on its
miniaturization and lightness technologies were adopted forsmartphones, mobile phones and tablet PCs, etc.
Medical and Healthcare

Car Electronics
Markets
withHigh Future Potential

IoT“Internet of Things”

Representative Product ❷Capacitive OGS Touch Panel for Automobile
High durability is required for touch panels for automobiles,
SMK products meet the strict standards required in
automobile components and have gained a high reputation as
the interface between humans and electronic equipment.

Wearable Devices

Renewable Energy andEcology

HEMS and Smart HouseDC Power
2P Connector

Capacitive Transparent
Touch Switch

ECHONET Lite WiredLAN Adapter

SEMI ANNUAL REPORT 2015 6

Consolidated Balance Sheets

SMK Corporation and Consolidated Subsidiaries
Thousands of
U.S. dollars

Millions of yen
As of March 31

As of September 30

As of September 30¥ 9,999¥ 12,505$104,243

183

108

900

16,97918,858157,202

(44)

(49)

(408)

6,422

7,212

60,120

Deferred tax assets

551

512

4,268

Other current assets

3,241

4,275

35,63737,33343,423361,979

3,104

2,789

23,249Long-term loans receivable

108

105

875

Asset for retirement benefits

841

1,034

8,620

Other investments

654

688

5,735

Allowance for doubtful accounts

(108)

(108)

(900)

4,600

4,509

37,588

Land

7,449

7,431

61,946

Buildings

20,82420,875174,016

Machinery and vehicles

21,15821,026

175,275

Tooling and office furniture

23,05823,517

196,040

438

349

2,909

72,92873,199610,195(50,394)(50,925)(424,517)

22,534

22,273

185,670

Deferred tax assets

242

248

2,067

Intangible assets

318

621

5,177

561

869

7,244

¥65,029¥71,076$592,497

Assets

2015

2015

2015

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

Investments and long-term loans
Investment securities

Property, plant and equipment

Construction in progressLess-accumulated depreciation

Other assets

Total assets

Note: The U.S. dollar amounts represent translations of Japanese yen, for convenience only, at the rate of ￥119.96 = U.S. $1.00.
7 SEMI ANNUAL REPORT 2015

Thousands of
U.S. dollars

Millions of yen
As of March 31

As of September 30

As of September 30¥ 7,605¥12,707$105,927

4,542

5,450

45,432

594

564

4,702

Accrued bonus

1,021

901

7,511

Accounts payable, non-trade

5,970

6,240

52,017

Other current liabilities

1,518

1,987

16,564

21,25327,851

232,169

6,641

5,847

48,741

Accrued directors' and officers' retirement benefits

138

157

1,309

Liability for retirement benefits

56

39

325

2,752

2,660

22,174

9,589

8,704

72,558Issued and outstanding :79,000,000shares

7,996

7,996

66,656

Capital surplus

12,325

12,311

102,626

Retained earnings

16,537

17,966

149,767

Treasury stock(3,417)(4,377)(36,487)

33,44233,898282,578

Net unrealized gains (losses) on other securities

608

411

3,426

Foreign currency translation adjustments

(697)

(886)

(7,386)Retirement benefits asset and liability adjustments

798

735

6,127

709

260

2,167

Subscription rights to shares

35

32

267

Minority interests

ー

329

2,743

34,18734,519287,754¥ 65,029¥71,076$592,497

Liabilities and net assets

2015

2015

2015

Current liabilities
Short-term loans payable
Notes and accounts payable, trade
Accrued income taxes

Long-term liabilities
Long-term debt

Other long-term liabilities

Net assets
Shareholders' equity
Common stock
Authorized :

195,961,274 shares

Accumulated other comprehensive income

Total liabilities and net assets

SEMI ANNUAL REPORT 2015 8

Consolidated Statements of Income
SMK Corporation and Consolidated Subsidiaries

Thousands of
U.S. dollars

Millions of yen
Six months ended
September 30

Six months ended
September 30

Six months ended
September 30¥32,171
26,5544,492
1,125¥39,315
31,585
5,157
2,572$327,734
263,296
42,98921,440

55
370
979
20
90
142
1,656

55
633
ー
112
107
161
1,070

458
5,277
ー
934
892
1,342
8,920

47
144
ー
10
99
ー
51
351

53
283
95
182
ー
191
91
897

442
2,359
792
1,517
ー
1,592
759
7,477

2,431

2,745

22,883

358
394
1,678
ー
¥ 1,678

628
64
2,053
(23)
¥ 2,077

5,235
534
17,114(192)$ 17,314

2014

Net sales
Cost of sales
Selling, general and administrative expenses
Operating income
Other income
Interest and dividend income
Rent income
Foreign exchange gain, net
Gain on sales of fixed assets
Gain on sales of investment securities
Other
Total other income
Other expenses
Interest expense
Rent expense
Foreign exchange loss, net
Loss on disposal of fixed assets
Loss on impairment of fixed assets
Loss on liquidation of subsidiaries and affiliates
Other
Total other expenses
Income before income taxes
Income taxes
Current
DeferredProfitLoss attributable to non-controlling interests
Profit attributable to owners of parent

2015

2015

Yen

Per share data
Net income
Basic
Diluted¥ 23.38
23.35

U.S. dollars¥ 29.18¥ 29.13

$
$

0.24
0.24

Note: The U.S. dollar amounts represent translations of Japanese yen, for convenience only, at the rate of ￥119.96 = U.S. $1.00.

Consolidated Statements of Comprehensive Income
SMK Corporation and Consolidated Subsidiaries

Millions of yen
Six months ended
September 30

Six months ended
September 30

Six months ended
September 30¥1,678¥ 2,053$ 17,114

154
533
(64)
623
¥2,301

(197)
(188)
(63)
(448)
¥ 1,604(1,642)(1,567)(525)(3,735)$ 13,371¥2,301¥ 1,628(23)$ 13,571
(192)

2014

ProfitOther comprehensive income
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:Comprehensive income attributable to non-controlling interests
Comprehensive income attributable to owners of parent
9 SEMI ANNUAL REPORT 2015

Thousands of
U.S. dollars

ー

2015

2015

Consolidated Statements of Cash FlowsSMK Corporation and Consolidated Subsidiaries

Thousands of
U.S. dollars

Millions of yen
Six months ended
September 30

Six months ended
September 30

Six months ended
September 30¥ 2,431
1,609
99
ー
(324)
(68)
(278)
(55)
47
10
ー
(391)
215
(906)
(533)
989
(122)
2,723
79
(50)
(815)
1,937

¥ 2,745
1,847
ー
32
(116)
19
(307)
(55)
53
182
191
(2,248)
(891)
1,364
9
110
74
3,012
47
(49)
(559)
2,451

$ 22,883
15,397
ー
267
(967)
158
(2,559)
(458)
442
1,517
1,592
(18,740)(7,427)
11,37075
917
617
25,108392(408)(4,660)20,432(43)
43(1,961)
60
(93)
126
(39)
45
(1,862)(48)
120(1,744)145(1,467)123(65)
27(2,908)

(400)
1,000
(14,538)1,209(12,229)
1,025
(542)
225
(24,241)

(100)
ー
(344)
(3)
8
ー
(359)
(799)
(39)
(763)
11,13414¥10,386

5,100
600(1,392)
(998)
25
352
(645)
3,041
(79)
2,505
9,999
ー
¥12,505

42,514
5,002(11,604)(8,319)208
2,934(5,377)25,350(659)
20,882
83,353ー$104,243

2014

Cash flows from operating activities
Income before income taxes
Depreciation and amortization
Loss on impairment of fixed assets
Amortization of goodwill
Increase (decrease) in accrued bonus
Increase (decrease) in accrued directors' and officers' retirement benefits
Increase (decrease) in asset and liability for retirement benefits
Interest and dividend income
Interest expense
Loss on disposal of fixed assets
Loss on liquidation of subsidiaries and affiliates(Increase) decrease in notes and accounts receivable, trade(Increase) decrease in inventories
Increase (decrease) in notes and accounts payable, trade
Increase (decrease) in accounts receivable, non-trade
Increase (decrease) in accounts payable, non-trade
Other
SubtotalInterest and dividends received
Interest paid
Income taxes paid
Net cash provided by (used in) operating activities
Cash flows from investing activities
Payments into time deposits
Proceeds from time deposits
Purchases of fixed assets
Proceeds from sale of fixed assets
Purchases of intangible fixed assets
Proceeds from sale of investment securities
Payment for execution of loans
Collection of loans receivable
Net cash provided by (used in) investing activities
Cash flows from financing activities
Increase (decrease) in short-term loans payable
Proceeds from long-term debt
Payments of long-term debt
Purchases of treasury stock
Proceeds from sale of treasury stock
Proceeds from share issuance to non-controlling shareholders
Dividends paid
Net cash provided by (used in) financing activities
Effect of exchange rate changes on cash and cash equivalents
Increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of the year
Increase in cash and cash equivalents from newly consolidated subsidiary
Cash and cash equivalents at end of six months and the year

2015

2015

Note: The U.S. dollar amounts represent translations of Japanese yen, for convenience only, at the rate of ￥119.96 = U.S. $1.00.
SEMI ANNUAL REPORT 2015 10

Corporate Information(As of September 30, 2015)

Corporate Data
Name

Shares and Shareholders
SMK Corporation

Established

April 3, 1925

Registered

January 15, 1929

Primary business

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

Total number of Authorized shares

195,961,274

Total number of Issued shares

79,000,000

Number of shareholders
Major shareholders (top ten)

7,632
Shares owned
Percentage(1,000 shares) of shares (%)

Mizuho Bank, Ltd.

3,527

5.02

Nippon Life Insurance Company

3,241

4.62

Dai Nippon Printing Co., Ltd.

3,200

4.56

Capital¥7,996,828,021

Stock exchange listing

Tokyo Stock Exchange

SMK Cooperating Company Share
Holding Association

2,960

4.22

Administrator ofshareholders register

Mitsubishi UFJ Trust and Banking
Corporation

Japan Trustee Services Bank, Ltd.
(Trust Account)

2,672

3.80

Independent auditors

Ernst & Young ShinNihon LLC
Tokyo, JapanThe Master Trust Bank of Japan, Ltd.
(Trust Account)

2,524

3.59

Employees (SMK-Group)

6,024

The Bank of Tokyo-Mitsubishi UFJ, Ltd.

2,508

3.57

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

Mitsubishi UFJ Trust and Banking
Corporation

1,800

2.56

SMK Employees Share Holding
Association

1,763

2.51

The Showa Ikeda Memorial Foundation

1,500

2.13

Note: SMK holds 8,865 thousand shares of treasury stock, but these areexcluded from the above list. Figures for percentage of shares arecalculated excluding the treasury stock.

Officer Introduction
Corporate Executive Officers

Directors
President and COO

Yasumitsu Ikeda

Executive Vice President

Paul Evans

Director,
Executive Deputy President, Chief Information Officer
Director,
Executive Vice President, Chief Technology Officer
Director,
Executive Vice President

Yoshio Sakurai

Executive Vice President, Chief Financial Officer

Kohei Ohgaki

Yoshiyuki Kaku

Vice President

Hideo Matsumoto

Mikio Wakabayashi

Vice President

Tsutomu Isoda

Director

Yuji Tanahashi

Vice President

Hiroshi Miyakawa

Vice President

Shigechika Yanagi

Vice President

Takemi Ishibashi

Auditors
Chairman of Auditors Meeting

Terutaka Ikeda

Vice President

Harutaka Seki

Auditor

Tetsuya Nakamura

Vice President

Masanobu Ikeo

Statutory Auditor

Naru Nakashima

Vice President

Mitsuhiko Goto

Statutory Auditor

Ichiro Shimizu

Vice President

Tetsuo Hara

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/