68th Fiscal Term

Annual Report

From April 1, 2014 to March 31, 2015

To Our Shareholders

We are pleased to report the results of operations for fiscal
2014, the year ended March 31, 2015 (the 68th fiscal term, fromApril 1, 2014 to March 31, 2015).
Business Overview
During the fiscal year ended March 31, 2015, the Japanese
economy showed an overall moderate recovery trend. Under
the government’s economic stimulus measures and the Bankof Japan’s monetary policy, the correction to the previously
strong yen and the recovery on the Japanese securities markets
proceeded. Other signs of recovery included improvements incorporate earnings and the employment situation.
Overseas, economic growth continued in China, albeit at a
slowing pace, and, although the European economy wasgenerally stagnant, the United States continued on a track ofeconomic recovery.
Under such conditions, the Hirose Electric Group, while
expanding the business globally, chiefly for the smartphone,
automobile, and industrial machinery/equipment markets,proceeded with efforts to reinforce our development, sales andproduction systems for new high-value-added products in thepursuit of swifter responses to increasingly sophisticatedmarket needs.

Kazunori Ishii

President and Representative Director

Financial Highlights■ Net sales
Millions of yen
140 000

124 987■ Ordinary income■ Net income

Millions of yen

Millions of yen

40 000125 726

34 747120 000
100 000

92 44094 79025 00034 96222 73980 000

20 00060 00020 91922 38615 00011 71412 82413 508

65th

66th

67th

68th

10 00040 000

10 0005 000

20 000064th

1

22 94820 00030 00095 93822 439

65th

66th

67th

68th

ﬁscal term

064th

65th

66th

67th

68th

ﬁscal term

064th

ﬁscal termAs a result, consolidated net sales for the year underreview amounted to a new record high of ¥125,726 million, anincrease of 0.6% year on year. Operating income decreased
1.3% year on year to ¥32,588 million, ordinary income rose
0.6% year on year to ¥34,962 million and net income increased
2.3% year on year to ¥22,948 million.
The management environment in which the Group
operates is expected to stay in economic recovery, supportedby the effects of the government’s economic stimulus
measures and the Bank of Japan’s monetary policy.
Overseas, we expect the United States to continue on thetrack of economic recovery, supported by growth in personal
consumption, and although the stagnation is expected tocontinue in Europe, we believe the pace of growth in theChinese economy will be stable.
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 for smartphones
and tablet PCs, etc., where further price competition is
expected to be driven by consumers’ preferences for lowerpriced products.

■ Net income per share

We look forward to your continued support andencouragement.
June 2015

Yen%
100652 68

Equity ratio

Kazunori Ishii

President and Representative Director■ Equity ratio & Ordinary income ratio to net sales

800■ Net assets per share
YenOrdinary income ratio to net sales

10 00090674 25

8 00080600

400

In this business environment, the Group intends to pursue
leading-edge technologies, conduct more efficient distributionand 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.

70
330 23366 1160

390 48

6 649

6 837

64th

65th

7 277

7 865

8 494

6 000

5040

4 000

30200

2 000

20
10064th

65th

66th

67th

68th

ﬁscal term

064th

65th

66th

67th

68th

ﬁscal term

066th

67th

68th

ﬁscal term2Overview by Product Segment

Multi-Pin Connectors■ Sales ratio

80.6％■ Net sales

120 000(Millions of yen)
101 967

101 385

67th

68th

90 00060 00030 00003

Our flagship multi-pin connectors include a variety of connector types such as
circular and rectangular connectors, connectors for ribbon cables, connectors used forprinted circuit boards including FPCs (flexible printed circuit boards) and nylonconnectors.
The major applications of these connectors include a wide range of fields such as
smartphones, tablet PCs, communications equipment and automotive electronics, aswell as industrial fields such as measuring and control equipment, FA equipment andmedical electronics equipment. Further expansion in demand is expected along with thefurther development of a sophisticated information and communications networked
society and an eco-friendly, energy conservation-oriented society.
Consolidated segment net sales for the year under review decreased 0.6% year onyear to ¥101,385 million and operating income fell 0.9% to ¥28,172 million as
businesses in the Chinese smartphone, automobile, and industrial machinery/equipment
markets were unable to supplement a slowdown in business in the South Koreansmartphone market.

Coaxial Connectors
Coaxial connectors are a special type of high-performance connector usedprimarily for microwave and other high-frequency signals. Their applications include
microwave communications devices, satellite communications equipment, electronic
measuring instruments, smartphones, switching and transmission equipment and otherelectronic equipment. Optical fiber connectors and coaxial switches are also included inthis segment.
Consolidated segment net sales for the year under review decreased 3.4% year on
year to ¥16,219 million and operating income decreased 4.2% year on year to ¥4,158
million.

■ Sales ratio
12.9％■ Net sales
20 000(Millions of yen)
16 79416 21967th

68th

15 000
10 0005 0000■ Sales ratio
6.5％

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 30.4% year on year to ¥8,121 million and operating income
increased 11.8% year on year to ¥257 million.
■ Net sales■ Sales ratio
6.5％(Millions of yen)

10 000
7 500

8 121
6 226

5 000
2 5000■ Net sales
10 000(Millions of yen)

67th

68th4

Consolidated Financial Statements
Consolidated Balance Sheets
Account item

(Millions of yen)

Current fiscal year Previous fiscal year
As of March 31, 2015

As of March 31, 2014

(Assets)

Account item

(Millions of yen)

Current fiscal year Previous fiscal year
From April 1, 2014
to March 31, 2015

From April 1, 2013
to March 31, 2014

Net sales

125,726

124,987

Cost of sales

69,16369,061Gross profit

56,56355,92523,97422,920Operating income

32,58833,005Current assets

221,405

200,930

Non-current assets

98,262

99,820Property, plant and equipment

36,33931,697

Intangible assets

1,354

1,345

Non-operating income

2,475

1,823

Investments and other assets

60,56866,777

Non-operating expenses

101

81

319,667

300,751

34,962

34,747

292

253

Income before income taxes and minority interests

34,67034,493

Income taxes–current

10,659

11,577944

253

23,066

22,662

118

223

22,94822,439Total assets

Selling, general and administrative expenses

Ordinary income
Extraordinary losses(Liabilities)
Current liabilities

24,331

26,031

Non-current liabilities

7,034

5,554

Income taxes–deferred

Total liabilities

31,36531,586

Income before minority interests
Minority interest in income(Net assets)
Shareholders’ equity

269,376

257,805Capital stock

9,404

9,404

Capital surplus

13,552

14,441Retained earnings

311,039295,725

Treasury shares△64,619△61,766

18,695

10,490229

63

Minority interests―

804

Total net assets

288,302269,164

Total liabilities and net assets

319,667

300,751

Accumulated other comprehensive income
Subscription rights to shares

Note: Amounts less than ¥1 million are truncated.

5

Consolidated Statements of Income

Net income

Note: Amounts less than ¥1 million are truncated.

Consolidated Statements of Cash Flows
Account item

(Millions of yen)

Current fiscal year Previous fiscal year
From April 1, 2014
to March 31, 2015

From April 1, 2013
to March 31, 2014

Operating activities

31,80734,606

Investing activities△16,232△18,820

Financing activities△12,433△12,028

Effect of exchange rate change on cash and cash equivalents

2,645

1,615

Net increase/decrease in cash and cash equivalents

5,787

5,372

Cash and cash equivalents, beginning of the year

50,92445,551

Cash and cash equivalents, end of the year

56,71150,924

Note: Amounts less than ¥1 million are truncated.

Non-consolidated Financial StatementsNon-consolidated Balance Sheets
Account item

(Millions of yen)

Current fiscal year Previous fiscal year
As of March 31, 2015

As of March 31, 2014

Current assets

106,496

102,050

Non-current assets

59,05358,038Property, plant and equipment

13,176

13,497

Intangible assets

1,221

1,156

Investments and other assets

44,65543,384

165,549

160,088(Assets)

Total assets(Liabilities)
Current liabilities

13,245

13,071

Non-current liabilities

3,260

2,337

Total liabilities

16,506

15,409141,859

139,885

Capital stock

9,404

9,404

Capital surplus14,444

14,441Retained earnings

182,630

177,805

Treasury shares△64,619△61,766

6,953

4,730

229

63

Total net assets

149,043

144,679

Total liabilities and net assets

165,549

160,088

Non-consolidated Statements of Income
Account item

(Millions of yen)

Current fiscal year Previous fiscal year
From April 1, 2014
to March 31, 2015

From April 1, 2013
to March 31, 2014

Net sales

90,62086,212

Cost of sales

61,16959,605Gross profit

29,451

26,606

15,872

15,536

Operating income

13,57911,070Non-operating income

6,216

6,420

Non-operating expenses

683

1,095

19,111

16,394200

197

Income before income taxes

18,911

16,197

Income taxes-current

6,132

5,875

Income taxes-deferred329△5612,448

10,378Selling, general andadministrative expenses(Net assets)
Shareholders’ equity

Valuation, translation
adjustments and others
Subscription rights to shares

Note: Amounts less than ¥1 million are truncated.

Ordinary income

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:DF40G Series
A board connector compatible with boards developed to meet the needs of higher
component density, high speed transmission performance and noise resistance
performance to support further sophistication of small devices such as notebook
PCs, tablet PCs, and camera modules. A space-saving shield structure with multiple
grounding point connection is adopted to realize the world’s smallest footprint on theboard in the H = 1.5-3 mm fitted height class while improving noise resistance
performance. Moreover, due to a proprietary terminal structure, a definite click feelingis effected when fitting the connector, so that in addition to supporting high speedtransmission standard USB 3.0 (5 Gbps), it also provides excellent operability.

PS3C Series
The PS3C Series connectors were developed as a 150 A compatible power
connector used for storage battery systems. By providing a finger protective
structure where the operator does not touch the power terminal due to theadoption of a one-touch lock where the lock is completed simply by the connector
being inserted, it realizes greater efficiency of connection operations andimproved operator safety. Moreover, as the plugs can be fitted even when turned
around at 180 degrees, there is greater freedom of cable pulling and twisting,and as they support a wide range of cables (14-50 sq. mm), it is possible tosupport a variety of usage methods of storage battery systems.

7DF52 Series

A board-to-cable connector developed for internal connection in small devices
such as digital cameras, smartphones and wearable devices. It supports amaximum amperage rating of 2.5 A with extremely small pitch of 0.8 mm, enabling
usage for not only signal connection purposes but also battery connection
purposes. By adopting a proprietary terminal structure, it has a structure resilient
against cable pulling and twisting, and by preventing connector damage causedby such abrupt external force, we expect it to contribute to improving operating
efficiency in assembly processes. It can support a variety of purposes due to awide assortment of variation in the number of poles from 2 cores to 20 cores.

GT28WS Series
The GT28WS Series is a series of connectors developed for sets—chiefly inverters, DC-DC
converters and on-board charging devices—for green vehicles such as electric vehicles, hybrid
vehicles and plug-in hybrid vehicles, which are expected to achieve remarkable growth in thefuture. Recently, countries around the world are prescribing CO2 emission limits, and to clear
these, there have been increasing demands for smaller and lighter equipment. We released highly
reliable on-board connectors that support not only smaller equipment, but also high voltages, highcurrents, complete waterproof, and EMI shield cables, as demanded by green vehicles, and that
also come with mechanisms to prevent half-fitted connections and electrical detection circuits tocheck the connections are properly fitted, developed through our proprietary technology.

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 bases
HIROSE ELECTRIC EUROPE B.V.
HIROSE ELECTRIC(SUZHOU)CO., LTD.

HIROSE ELECTRIC (SHANGHAI) 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 Data

Company Profile (As of March 31, 2015)
Trade name

HIROSE ELECTRIC CO., LTD.

Date of incorporation

June 15, 1948

Number of employees

722(excluding part-timers)

Capital stock¥9,404,379,401

Directors and Audit & Supervisory Board Members (As of June 26, 2015)
Director and Supreme Advisor

President and Representative Director
Managing Director
Managing Director
DirectorDirectorDirector
Outside Director(Standing) Audit & Supervisory Board Member
Outside Audit & Supervisory Board Member
Outside Audit & Supervisory Board Member
Outside Audit & Supervisory Board Member

Tatsuro Nakamura
Kazunori Ishii
Mitsuo Nakamura
Makoto Kondo
Kazuhisa Nikaido
Kazuyuki Iizuka
Hiroaki Okano
Kensuke Hotta
Yoshikazu ChibaTerukazu 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 audit & supervisory board
members as stipulated in Article 2, Item 16, of the Companies
Act.

Accounting Auditor

9

KPMG AZSA LLC

Stock Information(As of March 31, 2015)
Total number of shares issued

33,913,025 shares(Excluding 6,107,711 shares of treasury shares)

Number of shareholders

3,668

Major Shareholders(Top 10)
Number ofRatio ofshares held shareholding

Name of shareholder

Hundreds of shares
32,97531,45828,55017,673
8,346

%
9.72
9.28
8.42
5.21
2.46

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

8,162

2.41

Mizuho Trust & Banking Co., Ltd. Trust Account 0700046
Mizuho Trust & Banking Co., Ltd. Trust Account 0700047
HS Kikaku Co., Ltd.
Kosho Sangyo Co., Ltd.

7,898
7,847
7,600
6,800

2.33
2.31
2.24
2.01

State Street Bank and Trust Company
State Street Bank and Trust Company 505223
Hirose International Scholarship Foundation
Japan Trustee Services Bank, Ltd. (Trust Account No. 4)
The Master Trust Bank of Japan, Ltd. (Trust Account)Note: In addition to the 10 major shareholders above, the Company owns 61,077 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./3,033 persons
78,541 hundred shares(19.63％)Financial institutions/47 persons
101,872 hundred shares(25.45％)
Securities companies/26 persons
3,255 hundred shares(0.81％)

Foreign corporations, etc./386 persons
164,682 hundred shares(41.15％)
Other corporations/176 persons
51,857 hundred shares(12.96％)

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 Company’s Web site

http://www.hirose.co.jp

Shareholders’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 shareholders’ 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 Sumitomo Mitsui Trust Bank, Limited, as mentioned above, which
serves as the shareholders’ 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