67th Fiscal Term

Annual Report

From April 1, 2013 to March 31, 2014

To Our Shareholders

We are pleased to report the results of operations for fiscal
2013, the year ended March 31, 2014 (the 67th fiscal term, fromApril 1, 2013 to March 31, 2014).

Tatsuro Nakamura Kazunori Ishii Sakae Kushida
Chairman and
Representative Director

President andVice Chairman andRepresentative Director Representative Director

Business Overview
During the fiscal year ended March 31, 2014, the Japanese
economy showed a basic recovery trend. Under thegovernmentʼs economic stimulus measures and the Bank ofJapanʼs monetary policy, the yen depreciated and share pricesrose. Other signs of recovery included improvements incorporate earnings and the employment situation.
On the other hand, it seems that a full-fledged recovery
may require more time. Factors include consumer spending
being affected by price increases due to the yenʼs depreciation
beginning to trickle through to food and daily goods, andconcerns of a temporary slowdown due to the consumption
tax hike.
In such a business environment, the Hirose Electric Group
was active in expanding its global business while enhancing
the alliance with consolidated subsidiary HIROSE KOREA
CO., LTD., in which the Company raised its investment ratio
to 97% in November 2012, in diverse aspects of sales,development and production. We also continued to reinforce
our development and sales systems for high-value-added
products in the pursuit of swifter responses to increasingly

Financial Highlights■ Net sales
Millions of yen
140 000■ Ordinary income■ Net income

Millions of yen

Millions of yen

40 000124 987

25 000100 000

84 46892 44094 79022 43934 747120 000

20 00030 00095 93821 99980 000

22 73920 91922 38615 00013 26620 00060 00012 82413 50865th

66th

10 00040 000

10 0005 000

20 0000ﬁscal term
63rd

111 714

64th

65th

66th

67th

0ﬁscal term
63rd

64th

65th

66th

67th

0

ﬁscal term
63rd

64th

67th

sophisticated market needs. This significant role has been
mainly shouldered at the Yokohama Center in Tsuzukiku,
Yokohama, into which the Product Development, Engineering,
Sales & Marketing Divisions and other functions have been
consolidated.
As a result, consolidated net sales for the year underreview amounted to a record high of ¥124,987 million, anincrease of 30.3% year on year. Operating income increased
57.3% year on year to ¥33,005 million, ordinary income rose
55.2% year on year to ¥34,747 million and net income
advanced 66.1％ year on year to ¥22,439 million.
The management environment in which the Group
operates is expected to shift to a full-fledged recovery,
supported by the effects of the governmentʼs economic
stimulus measures and the Bank of Japanʼs monetary policy.
Nevertheless, there are numerous factors that could cause
concern, including an increase in personnel costs attendant on
the recovery of business results, a rise in raw material costs
due to the yenʼs depreciation, the impact of the consumption
tax hike, and the slowdown in emerging economies. As such,the outlook for the economic environment still allows no roomfor optimism.
The Group expects further sales growth in the automobile
field along with an expansion in automotive electronics, andthe growth of the industrial machinery/equipment andcommunications equipment fields. We also expect to maintainand expand our mass production businesses such as smartphones and tablet PCs, where further price competition isexpected to be driven by consumersʼ preferences for lowerpriced products.
In this business environment, the Group intends to pursue
leading-edge technologies, conduct more efficient distribution
and concentration of resources and consistently carry out
reforms and innovations. Such aggressive initiatives also
include the reinforcement of high-value-added productdevelopment capabilities to meet market needs, the promotionof manufacturing efficiency and further improvement of
product quality, all of which would serve to improve our costcompetitiveness. At the same time, we will work to promote
globalization with an eye to dispersing risk across production
bases and growing and expanding our businesses going
forward, develop domestic and overseas sales channels, andstrengthen our management foundations toward profitable
growth in an effort to improve our corporate value.
We look forward to your continued support andencouragement.
June 2014

Tatsuro Nakamura

Chairman and Representative Director■ Net income per share■ Equity ratio & Ordinary income ratio to net sales

Yen%800100Yen

Ordinary income ratio to net sales

10 00090652 6880600400

Equity ratio■ Net assets per share

8 000

70363 15330 23366 1160

390 48

6 463

6 649

6 837

63rd

64th

65th

7 277

7 865

6 000

50
40

4 000

30200

20

2 000

100ﬁscal term
63rd

64th

65th

66th

67th

0ﬁscal term
63rd

64th

65th

66th

67th

0ﬁscal term
66th

67th

2

Overview by Product Segment

Multi-Pin Connectors

Our flagship multi-pin connectors include a variety ofconnector types such as circular and rectangular connectors,
connectors for ribbon cables, connectors used for printed
circuit boards including FPCs (flexible printed circuit boards)
and nylon connectors.
The major applications of these connectors include a wide
range of fields such as smartphones and mobile phones, tablet
PCs and Ebook readers, communications equipment andautomotive electronics, as well as industrial fields such asmeasuring and control equipment, FA equipment and medical
electronics equipment. Further expansion in demand is3

expected along with the further development of a sophisticatedinformation and communications networked society and an
eco-friendly, energy conservation-oriented society.
Consolidated segment net sales for the year under review
increased 32.2％ year over year to ¥101,967 million andoperating income rose 62.2％ to ¥28,435 million due to
steady orders and sales, primarily for the South Korean andChinese smartphone and mobile phone markets, and for theautomobile market, accompanied by a recovery in business in
the industrial machinery/equipment market.

Coaxial Connectors

Coaxial connectors are a special type of high-performanceconnector used primarily for microwave and other highfrequency signals. Their applications include microwave
communications devices, satellite communications equipment,
electronic measuring instruments, smartphones and mobilephones, and switching and transmission equipment and otherelectronic equipment. Optical fiber connectors and coaxial
switches are also included in this segment.
Consolidated segment net sales for the year under review
increased 21.8％ year over year to ¥16,794 million andoperating income increased 36.6％ year over year to ¥4,339
million.

Other Products

The other products segment includes medical electronics and health equipment
such as interference wave EMSs, micro switches and instruments for connectors.
Consolidated segment net sales for the year under review increased 24.4％ year
over year to ¥6,226 million and operating income decreased 16.3％ year over year to¥230 million.

4Consolidated Financial Statements(Millions of yen)

Consolidated Balance Sheets

Current fiscal year Previous fiscal year

Account item

As of March 31, 2014

(Assets)
200,930

180,817

Non-current assets

99,82097,063

Property, plant and equipment

31,69731,022Intangible assets

1,345

1,191

Investments and other assets

66,77764,850300,751

277,881

Total assets

Current fiscal year Previous fiscal yearAccount item

From April 1, 2013
to March 31, 2014

From April 1, 2012
to March 31, 2013

Net sales

124,987

95,938

Cost of sales

69,06155,451Gross profit

55,92540,48622,92019,501

Operating income

33,00520,985Non-operating income

1,823

1,507

As of March 31, 2013

Current assets(Millions of yen)

Consolidated Statements of Income

Selling, general and administrative expenses

Non-operating expenses

81106

34,74722,386Extraordinary income―138

Extraordinary losses

253

327

Income before income taxes and minority interests

34,49322,197
7,468

Ordinary income(Liabilities)
Current liabilities

26,031

21,730

Income taxes‒current

11,577

Non-current liabilities

5,554

4,084

Income taxes‒deferred

253

692

22,662

14,035

Total liabilities

31,586

Income before minority interests

25,815

Minority interest in income(Net assets)

Net income

223

526

22,43913,508257,805

247,310

Capital stock

9,404

9,404

Capital surplus

14,441

14,365Retained earnings

295,725

278,804

Treasury shares△61,766△55,263

Operating activities

34,606

26,37010,4904,152

Investing activities△18,820△19,677

6374Financing activities

Shareholdersʼ equity

Accumulated other comprehensive income
Subscription rights to shares
Minority interests

804529Total net assets

269,164

252,066

Total liabilities and net assets

300,751

277,881Note: Amounts less than ¥1 million are truncated.

Consolidated Statements of Cash Flows
Account item

From April 1, 2013
to March 31, 2014

△12,028△4,994

Effect of exchange rate change on cash and cash equivalents

1,615

1,861

Net increase/decrease in cash and cash equivalents

5,372

3,559

Cash and cash equivalents, beginning of the year

45,55141,992

Cash and cash equivalents, end of the year

50,92445,551(Millions of yen)

Consolidated Statement of Changes in Equity (From April 1, 2013 to March 31, 2014)
Shareholdersʼ equity
Capitalstock

Capitalsurplus

Retainedearnings

Balance at beginning of current period
Changes of items during period
Dividends of surplus
Net income
Purchase of treasury shares
Disposal of treasury shares
Net changes of items otherthan shareholdersʼ equity
Total changes of items during period
Balance at end of current period

9,404

14,365

278,804 △55,263

247,310△5,51722,439△5,51722,439△6,813386

76
14,441

Note: Amounts less than ¥1 million are truncated.

5Accumulated other comprehensive income
Total shareholdersʼ Valuation difference Foreign currency Remeasurements Total accumulated
on available-for-saletranslationof defined benefit other comprehensive
equitysecurities
adjustment
plansincome

Item―
9,404

From April 1, 2012
to March 31, 2013

Note: Amounts less than ¥1 million are truncated.

Note: Amounts less than ¥1 million are truncated.

76(Millions of yen)

Current fiscal year Previous fiscal year

Treasuryshares△6,813310

16,921△6,502295,725 △61,766

3,384

767

―

4,152

Subscription
Minority Total net
rights tointerests assets
shares
74529

―
―
―
―

252,066△5,51722,439△6,813
386

―

1,365

4,952

19

6,338

△10275

6,603

10,494
257,805

1,365
4,750

4,952
5,720

19
19

6,338
10,490△1063275804

17,098269,164

Non-consolidated Financial Statements(Millions of yen)

Non-consolidated Balance Sheets
Account item

Current fiscal year Previous fiscal year
As of March 31, 2014

As of March 31, 2013Current assets

102,050

98,388Non-current assets

58,03859,268Property, plant and equipment

13,497

15,642Intangible assets

1,156

933

Investments and other assets

43,38442,691160,088

157,657(Assets)

Total assets(Liabilities)
Current liabilities

13,071

11,355

Non-current liabilities

2,337

1,410

Total liabilities

15,40912,765

139,885

141,451

Capital stock

9,404

9,404

Capital surplus

14,441

14,365Retained earnings

177,805

172,944

Treasury shares△61,766△55,263

4,730

3,366

6374

Total net assets

144,679

144,891

Total liabilities and net assets

160,088

157,657

Non-consolidated Statements of Income
Account item

(Millions of yen)

Current fiscal year Previous fiscal year
From April 1, 2013
to March 31, 2014

From April 1, 2012
to March 31, 2013

Net sales

86,21270,825

Cost of sales

59,60547,796Gross profit

26,60623,02815,536

13,864

Operating income

11,0709,164

Non-operating income

6,420

5,045

Non-operating expenses

1,095

1,224

16,394

12,985

197

286

Income before income taxes

16,197

12,698

Income taxes-current

5,875

4,648

Income taxes-deferred

△56

122

10,378

7,927

Selling, general andadministrative expenses(Net assets)
Ordinary income
Shareholdersʼ equity

Valuation, translation
adjustments and others
Subscription rights to shares

Note: Amounts less than ¥1 million are truncated.

Extraordinary losses

Net income

Note: Amounts less than ¥1 million are truncated.

6

Introduction of Our New Products

Newproducts

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

DF81 Series
A space-saving, low height, board-to-micro-coaxial cable connector withoutstanding high speed signal transmission performance. Meets theneeds for higher signal transmission speeds and higher component
density in the notebook PC and tablet PC market with high speedtransmission standard USB 3.1 (10Gbps) and Embedded DisplayPort 1.4(5.4 Gbps). The DF81 series also realizes the worldʼs lowest height andsmallest mounting area. In addition, multiple grounding points provide
enhanced noise resistance during high speed signal transmission.

GT36 Series
A power and coaxial combined micro connector developed for automobile
roof antennas. Previously the main method was to connect the coaxial line
directly to the substrate; however, using the GT36 as a connector enables
a simplified mounting process and quality stability. The GT36 series
features a right-angle connector for the cable side connector to enable a
space-saving wiring arrangement on the vehicle body. The power supply
section uses AWG#20-22 with a 1 A amperage rating and the coaxial
section is compliant with DC to 2.5 GHz, 1.5 C-2V, 1.5 D-2V, 2.5 D-2V.

7FH53 Series

A back-flip connector for FPC developed to meet the needs for asmaller footprint on the board to support further sophisticationof small devices such as smartphones, tablet PCs, and digital
cameras.
The FH53 series achieves high density with pitch 0.2 mm,
depth 3.2 mm, and height 0.65 mm, while providing excellent
operability and high FPC retention force due to a proprietary
FPC retaining structure.

PQ50WT Series
The PQ50WT series connectors were developed as a power and signal
connector for industrial equipment such as robots or mounters. Inaddition to handling high voltages and large currents, they use die-castcovers for durability in harsh environments, and are specified to satisfy
requirements for toughness and water resistance.
They can be used in combination of various types of housing andterminals depending on their application, and enable current to be split
at the connector section by using Hiroseʼs original split crimp terminal.

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

Head Office

ICHINOSEKI HIROSE ELECTRIC CO., LTD.
Kikuna Office

KORIYAMA HIROSE ELECTRIC CO., LTD.
Yokohama Center
Kansai Branch
Chubu Sales Office◎Overseas basesHIROSE ELECTRIC EUROPE B.V.
HIROSE ELECTRIC (SHANGHAI) CO., LTD.
HIROSE ELECTRIC(SUZHOU)CO., LTD.

HIROSE KOREA CO., LTD.

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

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

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

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

8Corporate DataCompany Profile (As of March 31, 2014)
Trade name

HIROSE ELECTRIC CO., LTD.

Date of incorporation

June 15, 1948

Number of employees

708(excluding part-timers)

Capital stock¥9,404,379,401

Directors and Corporate Auditors (As of June 27, 2014)
Chairman and Representative Director
Vice Chairman and Representative Director
President and Representative Director
Senior Managing Director
Director
Director
Director
Director
Outside Director(Standing)Audit & Supervisory Board Member
Audit & Supervisory Board Member
Outside Audit & Supervisory Board Member
Outside Audit & Supervisory Board Member
Outside Audit & Supervisory Board Member

Tatsuro Nakamura
Sakae Kushida
Kazunori IshiiYoshikazu Yoshimura
Kazuhisa Nikaido
Kazuyuki Iizuka
Makoto Kondo
Mitsuo Nakamura
Kensuke Hotta
Yoshikazu Chiba
Toshio Matsubara
Terukazu Sugishima
Akira Seshimo
Kentaro Miura

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

Accounting Auditor

9KPMG AZSA LLC

Stock Information(As of March 31, 2014)
Total number of shares issued

34,109,871 shares(Excluding 5,910,865 shares of treasury shares)

Number of shareholders

3,969

Major Shareholders(Top 10)
Number ofRatio ofshares held shareholding

Name of shareholder

Hundreds of shares
34,43628,55019,796
17,969
9,129
8,816

%
10.10
8.37
5.80
5.27
2.68
2.58

Japan Trustee Services Bank, Ltd. (Re-trust account of The Sumitomo Mitsui Trust & Banking
Co., Ltd., and the retirement benefit trust account of Sumitomo Mitsui Banking Corporation）

8,162

2.39

Mizuho Trust & Banking Co., Ltd. Trust Account 0700028
Mizuho Trust & Banking Co., Ltd. Trust Account 0700029
HS Kikaku Co., Ltd.

7,898
7,847
7,600

2.32
2.30
2.23

State Street Bank and Trust Company
Hirose International Scholarship Foundation
State Street Bank and Trust Company 505223
Japan Trustee Services Bank, Ltd. (Trust Account No. 4）
The Master Trust Bank of Japan, Ltd.（Trust account）
Japan Trustee Services Bank, Ltd. (Trust account）

Note: In addition to the 10 major shareholders above, the Company owns 59,108 hundred sharesof treasury shares. The ratio of shareholding is calculated after excluding treasury shares.

Distribution of Shares
Distribution of Shares by Shareholder Type
Individuals, etc./3,330 persons
77,564 hundred shares(19.38％)Financial institutions/58 persons
104,894 hundred shares(26.21％)
Securities companies/33 persons
2,628 hundred shares(0.66％)

Foreign corporations, etc./363 persons
162,293 hundred shares(40.55％)
Other corporations/185 persons
52,826 hundred shares(13.20％)Shareholder information
Fiscal term

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

Ordinary General
June every year
Meeting of Shareholders
Record dateOrdinary General Meeting of Shareholders: March 31 every year
Year-end dividend: March 31 every year
Interim dividend: September 30 every year
(As required, another record date may be
decided with prior public notice.）[Share-related notifications and inquiries regarding change of address, etc.]
Shareholders who have accounts at securities companies are requested
to direct their notifications and inquiries regarding change of address,etc., to their respective securities companies where shareholders havetheir accounts. Shareholders who do not have accounts at securities
companies are requested to call the telephone number as stated below.
Number of shares 100
in one voting unit
Method of public notices 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.

The Companyʼs Web site

http://www.hirose.co.jp

Shareholdersʼ
Sumitomo Mitsui Trust Bank, Limited
register manager and 4-1, Marunouchi 1-chome, Chiyoda-ku, Tokyoaccount management
institution for special
accounts
Handling office Securities Agency Department,of shareholdersʼ Sumitomo Mitsui Trust Bank, Limited
registry
4-1, Marunouchi 1-chome, Chiyoda-ku, Tokyoadministrator(Mailing address） Securities Agency Department,
Sumitomo Mitsui Trust Bank, Limited
8-4, Izumi 2-chome, Suginami-ku, Tokyo 168-0063
Phone:
0120‑782‑031(Toll free, available only in Japan)
URL:

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

10