63rd Fiscal Term

Annual Report

From April 1, 2009 to March 31, 2010

HIROSE ELECTRIC CO., LTD.

HIROSEELECTRIC
CO.,LTD.

To Our Shareholders

We are pleased to report the results of operations forfiscal 2009, the year ended March 31, 2010 (the 63rd
fiscal term, from April 1, 2009, to March 31, 2010).

President and Representative Director

Tatsuro Nakamura

Business Overview
During the year ended March 31, 2010, although theyear started with extremely harsh conditions
including a deteriorating consumption environment
seriously affected by the global financial andeconomic crises triggered by the Lehman shock, theJapanese economy showed signs of a gradual
recovery in several business fields fromapproximately the second half of the fiscal year
under review. The recovery was mainly supportedby the favorable effects of economic stimulus
measures and the improvement of exports primarily
bound for Asian economies. However, corporate
production has not yet achieved a full-fledged rally
and the domestic business climate remains difficult
with such adverse factors as a weak employment
situation and a lingering deflationary trend.
In this adverse business environment, the Hirose
Electric Group reinforced its product development
capabilities, developed new products and enhanced
product quality in response to sophisticatedcustomer needs while streamlining internal
operating systems at the Group companies. The
Group also pushed forward with aggressive

Executive Vice President andRepresentative Director

Sakae Kushida

Financial Highlight■ Net sales
Millions of yen
115,485
120,000
104,407
100,000

118,043
89,872

84,46880,000■ Net income

Millions of yen
45,00040,19940,000 38,627

Millions of yen
24,17625,00022,91337,97625,00020,77620,00040,00021,99915,00013,306

13,2662009

2010

10,00015,00010,00020,00022,59720,00035,00030,00060,000

5,000

5,000

0

0

0
2006

1

■ Ordinary income

2007

2008

2009

2010

2006

2007

2008

2009

2010

2006

2007

2008

management initiatives including overall cost-cutting
measures such as improvement of manufacturing
efficiency, an expansion in overseas manufacturing
and reductions in general expenses, as well as the
exploitation of domestic and overseas sales channels
and the reinforcement of selling power.
Furthermore, the Group has strengthened its
reform initiatives in the automotive electronics andindustrial equipment fields to nurture promisingbusiness pillars in addition to the core mobile phonefield and these concerted efforts have gradually
yielded good results.
As a result, consolidated net sales for the year
under review amounted to ¥84,468 million, a declineof 6.0% from a year earlier. Operating income ando r d i n a r y i n c o m e i n c r e a s e d 6.5% a n d 5.9% ,respectively, year over year to ¥20,411 million and¥21,999 million, whereas net income edged down
0.3% to ¥13,266 million.
In the economic environment in which the Group
operates, the quantitative expansion of mobile
phones, smartphones and personal computers;
further growth in automotive electronics; thebottoming of demand for capital investment; and thecreation of a new market for digital consumer
electronics are expected given optimistic
expectations of avoiding a double-dip recession.
Nevertheless, our management environment is■ Net income per share
yen
700
600

589.03621.08f o r eca s t t o r e ma i n s ever e, a f f ect ed by t h ediversification of markets; shorter product cycles,
which will pose higher risks in collecting the fruits of
our investment; and intensifying competition due tocustomers’preference for lower-priced products.
In this tough business environment, the Groupintends to pursue leading-edge technologies, conduct
more efficient distribution and concentration of
resources and consistently carry out reforms andinnovations. Such aggressive initiatives also include
the reinforcement of high-value-added productdevelopment capabilities to meet market needs, andthe promotion of manufacturing efficiency andfurther improvement of product quality, all of which
would serve to improve our cost competitiveness. At
the same time, we are determined to strengthen ourmanagement foundations toward profitable growthand improve our corporate value through efforts topromote globalization and exploit domestic andoverseas sales channels.
We look forward to your continued support andencouragement.
June 2010

Tatsuro Nakamura

Executive Vice President and Representative Director

Sakae Kushida■ Equity ratio & Ordinary income ratio to sales■ Net assets per share

%
100

yen
7,000

Equity ratio

Ordinary income ratio to sales

90

587.36

6,000

80

500
400

356.59363.15President and Representative Director

70

5,000

60

4,000

50

300

40

3,000

200

30

2,000

100

10

20

2006

2007

2008

2009

2010

6,277

6,271

6,463

2007

2008

2009

2010

1,000

0

0

6,159
5,612

0

2006

2007

2008

2009

2010

2006

2

Overview by Product Segment

Multi-Pin Connectors

Our flagship multi-pin connectors include avariety of connector types such as circular andrectangular connectors, connectors for ribbon
cables, connectors used for printed circuitboards including FPCs (flexible printed circuitboards) and nylon connectors.
The major applications of these connectors
include a wide range of fields such as mobile
phones and smartphones, digital information
consumer electronics, PCs, communications
equipment and automotive electronics, as wellas industrial fields such as measuring andcontrol equipment, FA equipment and medical
electronics equipment. Further expansion indemand is expected along with the further
development of a sophisticated information andcommunications networked society and an ecofriendly, energy conservation-oriented society.
Consolidated segment sales for the year
under review decreased 5.9% year over year to¥68,147 million, reflecting sluggish demand,
mainly caused by the deteriorated consumption
environment after the Lehman shock,particularly for mobile phones and digital
information consumer electronics, althoughsales increased in the field of automotive
electronics.

3

Coaxial Connectors

Coaxial connectors are a special type of highperformance connector used primarily for
microwave and other high-frequency signals. Theirapplications include microwave communications
devices, satellite communications equipment,
electronic measuring instruments, mobile phones
and smartphones, and switching andtransmission equipment and other electronicequipment. Optical fiber connectors are also
included in this segment.
Consolidated segment sales for the year
under review decreased 16.0% year over year to¥11,287 million, mainly due to weak investments
in communications infrastructure and sluggish
demand in the mobile phone field.

Other Products

The other products segment includes medical
electronics equipment such as interference wave
EMSs; high-frequency devices such as directional
couplers, fixed attenuators and coaxial switches;
micro switches; and instruments for connectors.
Consolidated segment sales for the year underreview increased 24.1% year over year to ¥5,032
million, partly due to the new consolidation of HST
Co., Ltd., a subsidiary engaged in thedevelopment, manufacture and sales of micro
switches.

4Consolidated Financial Statements
Consolidated Balance Sheets
Account item

Consolidated Statements of Income(Millions of yen)

As of March 31, 2010 As of March 31, 2009

Current assets

165,198

167,516

Fixed assets

87,69877,686

Property, plant and equipment

18,56418,859Intangible assets

2,093

2,436

Investments and other assets
Total assets

67,04056,390252,897245,20384,46889,872

Cost of sales

47,86753,073Gross profit

36,601

36,79916,19017,629Operating income

20,411

19,169Other income

1,849

2,086

Other expenses

261

478

21,99920,776

Ordinary income
Special losses
Income before income taxes

Current liabilities

20,92913,574Long-term liabilities

1,555

1,419

Total liabilities

22,485

14,993

232,500

233,289

Common stock

9,404

9,404

Additional paid-in capital

14,371

14,371Retained earnings

255,259

246,039

Treasury stock, at cost

△46,535△36,526△2,154△3,13966

59

Total net assets

230,412230,209

Total liabilities and net assets

252,897245,203

Stock acquisition rights

199

966

21,79919,810

Provision for income taxes―Current

8,703

8,209

Provision for income taxes―Deferred△170△1,706

Net income

13,266

13,306

Note: Amounts less than ¥1 million are truncated.

(Net assets)

Valuation, translation adjustments and others

Net sales

Selling, general and administrative expenses(Liabilities)

Shareholders’equity

From April 1, 2009 From April 1, 2008
to March 31, 2010 to March 31, 2009

Account item

(Assets)

Consolidated Statements of Cash Flows (Millions of yen)
From April 1, 2009 From April 1, 2008
to March 31, 2010 to March 31, 2009

Account item

Note: Amounts less than ¥1 million are truncated.

Operating activities

23,394

23,411

Investing activities△6,615△12,369

Financing activities△14,055△16,032

Effect of exchange rate change on cash and cash equivalents△65△1,494

Net increase/decrease in cash and cash equivalents

2,657△6,485

Cash and cash equivalents, beginning of the year
Increase in cash and cash equivalents fromnewly consolidated subsidiary

53,76360,249414―

Cash and cash equivalents, end of the year

56,83653,763

Note: Amounts less than ¥1 million are truncated.

Consolidated Statements of Changes in Net Assets (From April 1, 2009 to March 31, 2010)	

Balance at March 31, 2009
Amount of changes during the period
Dividends from surplus
Net income for the period
Acquisition of treasury stock
Disposition of treasury stock
Change of scope of consolidation
Net amount of changes during theperiod other than shareholders’equity
Total amount of changes during the period
Balance at March 31, 2010

(Millions of yen)

Shareholders’equity
Valuation, translation adjustments and others
Stock
Total net
Additional
Retained
Treasury
Total shareholders’ Valuation difference Foreign currency Total valuation acquisition
Commonassetson available-for-saletranslationand translationrightspaid-in capital earnings stock, at costequitystock
securities
adjustment
adjustments
9,404
14,371
246,039
233,2891,900
59
230,209△36,526△5,039△3,139△4,02013,266△0―9,404

Note: Amounts less than ¥1 million are truncated.

5(Millions of yen)

△0
14,371△26

9,219
255,259△10,0101△10,009△46,535△4,02013,266△10,010
1
△26

―
―
―
―
―

△4,02013,266△10,010
1
△26

―

450

534

984

7

992

△789
232,500

450
2,351

534
△4,505984△2,154

7
66

202
230,412

Nonconsolidated Financial Statements
Nonconsolidated Balance Sheets
Account item

(Millions of yen)

As of March 31, 2010 As of March 31, 2009

(Assets)
Current assets

103,079

113,575

Fixed assets

51,614

43,239Property, plant and equipment

11,106

9,763

Intangible assets

1,358

1,563

Investments and other assets

39,14931,912

154,693

156,814

Total assets

11,628

8,945

445

381

12,074

9,327

Shareholders’equity

140,274

145,609

Common stock

9,404

9,404

Additional paid-in capital

14,371

14,371Retained earnings

163,033

158,359

Treasury stock, at cost

△46,535△36,526

2,278

1,818

66

59

Total net assets

142,619

147,486

Total liabilities and net assets

154,693

156,814Long-term liabilities
Total liabilities

From April 1, 2009
to March 31, 2010

From April 1, 2008
to March 31, 2009

Net sales

78,247

86,206

Cost of sales

53,523

57,915Gross profit

24,72328,29013,036

14,499

11,686

13,791Other income

4,914

5,191

Other expenses

1,920

2,413

14,68016,569119

742

Income before income taxes

14,561

15,827

Provision for income taxes―Current

5,910

6,506

Provision for income taxes―Deferred

△43

△213

Net income

8,694

9,534

Account item

Selling, general and administrative expenses

Operating income(Liabilities)
Current liabilities

Nonconsolidated Statements of Income (Millions of yen)

(Net assets)

Valuation, translation adjustments and others
Stock acquisition rights

Note: Amounts less than ¥1 million are truncated.

Ordinary income

Special losses

Note: Amounts less than ¥1 million are truncated.

6

Introduction of Our New ProductsNew
products

The Company launches many new products every year into the market. The following product series are
typical of our recent introductions.
ＦＨ４3 ＢThe FH43B Series connectors were developed as connectors featuring an
ultra-narrow pitch (0.2 mm) for use in compactness-compliant FPCs, in
anticipation of the space-saving need that is expected to increase in themarket for small devices such as mobile phones/smartphones and digital
cameras. The series features an ultra-compact design with high operability
and ease of assembly. The general specifications of the series fit well withthose of the FPCs so that FPC manufacturers can easily assemble the sets.

ＤＦ５４
The DF54 Series coaxial connectors were developed for use in verticalfitting-type, thin-wire coaxial cables, which are compliant with high-speedtransmission and built-in, rotary hinges inside equipment such as mobile
phones and digital cameras. To satisfy the need for more compact andthinner devices, our connectors with an ultralow height of up to 1 mm
realized the industry’s lowest height for assembly sets and high-density
mounting at a 0.35 mm pitch.

7

ＸＧ１

The XG1 Series are the most advanced board-to-board connectors that weredeveloped to allow high-speed transmission at the rate of 10 Gbps or more tocomply with the need for applications inside communications equipment andPC servers. The original blade configuration allows the series connectors toappropriately process two kinds of characteristic impedance (100 Ω and 85
Ω). In addition, the power connection terminals of these high-performance
hybrid-type connectors can be integrated into a connector.

ＰＱ
The PQ Series rectangular connectors with 20 electrodes were developedfor use as the power supply for industrial equipment such as robots andmounters. Hirose endeavors to develop diversified types of connectors bytaking into account the convenience for wiring among devices andequipment. The series features a die-cast robust configuration compliant
with high-voltage and high-current specifications as well as capable ofenduring a harsh environment for actual use.

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

5-23, Osaki 5-chome, Shinagawa-ku, Tokyo●P
 .T. HIROSE
ELECTRIC INDONESIA(Indonesia)● Subsidiaries

1-11, Osaki 5-chome, Shinagawa-ku, Tokyo
Tachikawa Sales Office, Osaka
Branch, Nagoya Sales Office
Singapore Branch, Shenzhen
Representative Office, Beijing
Representative Office● Engineering Division
Yokohama
Engineering Center
Separate Office ofEngineering Center● Production Division
Separate Office of Yokohama
Engineering Center

3-13, Kikuna 7-chome, Kohokuku, Yokohama
8-11, Shin-Yokohama 3-chome,
Kohoku-ku, Yokohama
15-10, Shin-Yokohama 2-chome,
Kohoku-ku, Yokohama● Affiliates● H IROSE ELECTRIC(DONGGUAN) CO.,LTD. (China)(Domestic)
TOHOKU HIROSE ELECTRIC CO., LTD. (Miyako, Iwate)
KORIYAMA HIROSE ELECTRIC CO., LTD. (Koriyama, Fukushima)
ICHINOSEKI HIROSE ELECTRIC CO., LTD. (Ichinoseki, Iwate)
HST CO., LTD. (Yokohama, Kanagawa)(Overseas)
HIROSE ELECTRIC (U.S.A.), INC. (U.S.A.)HIROSE ELECTRIC GmbH (Germany)
HIROSE ELECTRIC UK LTD. (U.K.)
HIROSE ELECTRIC EUROPE B.V. (The Netherlands)
HIROSE ELECTRIC MALAYSIA Sdn. Bhd. (Malaysia)
HIROSE ELECTRIC (TAIWAN) CO., LTD. (Taiwan)
P.T. HIROSE ELECTRIC INDONESIA (Indonesia)
HIROSE ELECTRIC HONG KONG CO., LTD. (Hong Kong)
HIROSE ELECTRIC HONG KONG TRADING CO., LTD. (Hong Kong)
HIROSE ELECTRIC (DONGGUAN) CO., LTD. (Dongguan, China)
HIROSE ELECTRIC TRADING (SHANGHAI) CO., LTD. (Shanghai, China)
HIROSE ELECTRIC (SUZHOU) CO., LTD. (Suzhou, China)
HST (HONG KONG) LIMITED (Hong Kong)
HIROSE KOREA CO., LTD. (South Korea)
WEIHAI HIROSEKOREA ELECTRIC CO., LTD. (Weihai, China)
WEIHAI HIROSE TRADING CO., LTD. (Weihai, China)

8

Corporate Data

Corporate Data (As of March 31, 2010)
Trade name

HIROSE ELECTRIC CO., LTD.

Date of incorporation

June 15, 1948

Number of employees

802 (excluding part-timers)

Paid-in capital￥9,404,379,401

Directors and Corporate Auditors (As of June 29, 2010)
President and Representative Director
Executive Vice President and Representative Director
Managing Director
Managing Director
Director
Director
Director
Director
Director
Outside Director
Full-time Corporate Auditor
Outside Corporate Auditor
Outside Corporate Auditor
Outside Corporate Auditor

Tatsuro Nakamura
Sakae Kushida
Mitsugu Sugino
Yoshikazu Yoshimura
Kazuhisa Nikaido
Kazunori Ishii
Kazuyuki Iizuka
Makoto Kondo
Mitsuo Nakamura
Masashi Kojima
Toshio Matsubara
Hidesato Sekine
Takashi Higa
Terukazu Sugishima

Notes:
1.	Director Masashi Kojima is the outside director as
stipulated in Article 2, Item 15, of the Corporation Law.
2.	Corporate Auditor Hidesato Sekine, Takashi Higa, andTerukazu Sugishima are outside corporate auditors as
stipulated in Article 2, Item 16, of the Corporation Law.

Accounting auditor

9

KPMG AZSA & Co.

Stock Information (As of March 31, 2010)
Total number of shares issued
35,638,659 shares(Excluding 4,382,077 shares of treasury stock)
Number of shareholders

5,175

Major shareholders (Top 10)
Number of
Ratio ofshares held share holding

Name
State Street Bank and Trust Company
HIROSE INTERNATIONAL SCHOLARSHIP FOUNDATION
JPMorgan Chase Bank 380055
Japan Trustee Services Bank, Ltd. (Trust account No. 4)
Japan Trustee Services Bank, Ltd. (Trust account)
Japan Trustee Services Bank, Ltd. (Re-trust account of The
Sumitomo Trust & Banking Co., Ltd., and the retirement benefit
trust account of Sumitomo Mitsui Banking Corporation)
Mizuho Trust & Banking Co., Ltd. 0700016
Mizuho Trust & Banking Co., Ltd. Trust account 0700017
HS Planning Limited
Japan Trustee Services Bank, Ltd. (Retirement benefit
trust account of Sumitomo Trust & Banking Co., Ltd.)

Hundred shares%

49,68628,55024,042
17,48810,659

13.94
8.01
6.74
4.90
2.99

8,162

2.29

7,898
7,847
7,600

2.21
2.20
2.13

7,354

2.06

Note: In addition to the 10 major shareholders above, the Company owns
43,820 hundred shares of treasury stock.

Distribution of shares by shareholder type
Individuals, etc./4,560 persons
73,526 hundred shares(18.37%)

Government and local public entities/
1person3 hundred shares (0.00%)
Financial institutions/67 persons
104,447 hundred shares(26.10%)Foreign corporations, etc./296 persons
165,758 hundred shares (41.42%)

Securities companies/
39 persons
5,291 hundred shares(1.32%)
Other corporations/212 persons
51,180 hundred shares(12.79%)

Shareholder information
Fiscal term

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

Ordinary General
Meeting of Shareholders

June every year

Record dateOrdinary General Meeting of Shareholders: March 31 every year
Year-end dividend:
March 31 every year
Interim dividend: September 30 every year
(As required, another record date may be
decided with prior public notice.)[Share-related notifications and inquiries regarding change of address, etc.]
Shareholders who have accounts at securities companies are requested todirect their notifications and inquiries regarding change of address, etc. totheir respective securities companies where shareholders have theiraccounts. Shareholders who do not have accounts at securities companies
are requested to call the telephone referral line as stated below.
Number of sharesin one voting unit

100 shares

Method of public notice

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

Shareholders’register manager andaccount management
institution for special
accounts

The Sumitomo Trust & Banking Co., Ltd.
5-33, Kitahama 4-chome, Chuo-ku, Osaka

Paperwork
processing officeof shareholders’register manager

The Sumitomo Trust & Banking Co., Ltd.
Securities Agency Department
3-1, Yaesu 2-chome, Chuo-ku, Tokyo(Mailing address)(Telephone referral)

The Sumitomo Trust & Banking Co., Ltd.
Securities Agency Department
1-10, Nikko-cho, Fuchu-shi, Tokyo 183-8701
Phone: 0120-176-417 (Toll-free)

Web site

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

Web site

http://www.hirose.co.jp[Special accounts]
The Company has opened accounts (special accounts) at The Sumitomo
Trust & Banking Co., Ltd., the shareholders’register manager stated above,
for shareholders who did not use JASDEC (Japan Securities Depository
Center, Inc.) prior to the transition to the electronic share certificate
system. Shareholders who have inquiries about the special accounts andnotifications regarding change of address, etc. are requested to call thetelephone referral line as stated above.
10

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