61th Fiscal Term

Annual Report

From April 1, 2007 to March 31, 2008

HIROSE ELECTRIC CO., LTD.

HIROSEELECTRICCO.,LTD.

To Our Shareholders

We are pleased to report the results of operations
for fiscal 2007, the year ended March 31, 2008（the61st fiscal term, from April 1, 2007, to March 31,2008）.

President and Representative Director

Tatsuro Nakamura

Business Overview
During the year ended March 31, 2008, the Japanese
economy remained steady in the first half against
the backdrop of strong capital investment andexports despite a slowdown in the U.S. economy.
However, corporate profits weakened mainly due
to the high levels of crude oil prices and the global
effect of the aggravating subprime housing loan
issue in the third quarter. The Japanese economy
leveled off in the fourth quarter considerably
affected by rapid appreciation of the yen.
The electronics industry experienced a severe
operating environment, in which the recovery
trend that started in the summer of 2007 decelerated
and became sluggish in December 2007, reflecting
intensified price competition and a surge inmetallic material prices.
In this business environment, the Hirose
Electric Group reinforced its product development
capability, developed new products and enhanced

Executive Vice President andRepresentative Director

Sakae Kushida

Financial Highlight■ Net sales■ Ordinary income

Millions of yen
120,000

115,485

118,043

104,407

100,000
80,00038,62740,00089,56235,00079,01230,00025,00060,00040,199Millions of yen
25,00020,00030,66425,957

15,00024,176

22,59718,31515,043

10,00015,00010,00020,00022,91337,97620,00040,000

5,000

5,000

002004

1Millions of yen
45,000■ Net income

2005

2006

2007

2008

02004

2005

2006

2007

2008

2004

2005200620072008

product quality in response to sophisticatedcustomer needs. The Group also pushed forwardwith aggressive management initiatives including
cost-cutting measures such as the promotion of
manufacturing efficiency and an expansion inoverseas manufacturing, as well as the exploitationof domestic and overseas sales channels and thereinforcement of selling power.
As a result, consolidated net sales for the year
under review amounted to ¥118,043 million, an
increase of 2.2% from a year earlier, whereas
ordinary income decreased 5.5% year over year to¥37,976 million and net income declined 6.5% to¥22,597 million. In the economic environment inwhich the Group operates, the market is expected
to grow through expansion in the fields ofinformation and communications networks, digital
information, consumer electronics and automotiveelectronics. Meanwhile, the situation will become
increasingly severe, affected by the diversificationof markets; shorter product cycles, which will pose
higher risks in collecting the fruits of ourinvestments; and further intensifying competition.
In this tough business environment, theCompany intends to pursue leading-edge■ Net income per shareyen
700
589.03600

587.36

June 2008

Tatsuro Nakamura
Sakae Kushida■ Equity ratio & Ordinary income ratio to sales■ Net assets per share%
100

yen
6,000

Equity ratio

Ordinary income ratio to sales

90

5,000

70
50

300

200
2004

2005

2006

2007

2008

2007

2008

1,000

10

0

5,017
4,538

2,000

30

100

6,277

3,000

40

200

6,159
5,612

4,000

60

382.26

President and Representative Director

Executive Vice President and Representative Director

80468.46500
400621.08

technologies, conduct more efficient distribution
and concentration of resources and consistently
carry out reforms and innovations. Such aggressive
initiatives also include the reinforcement of productdevelopment capability to meet new needs, thedevelopment of high-value-added products and thepromotion of manufacturing efficiency and further
improvement of product quality, all of which wouldserve to improve our cost competitiveness. At thesame 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.

02004

2005

2006

2007

2008

2004

2005

2006

2

Overview by Product Segment

Multi-Pin Connectors

Our flagship multi-pin connectors include avariety of connector types such as circularand rectangular connectors, connectors forribbon cables, connectors used for printed
circuit boards including FPCs (flexible printed
circuit boards) and PC cards, as well as nylonconnectors.
Major applications of these connectors
include a wide range of industrial fields, suchas computers and peripheral terminals, PCs,
OA equipment, communications equipment,
telephone equipment, measuring and control
equipment, FA equipment, broadcasting
equipment and medical electronics equipment,
digital information consumer electronics andautomotive electronics. Further expansion indemand is expected along with the enhanced
use of electronics and the development of thecontemporary information and communications
society, which is heavily dependent on thesignificant use of computers andcommunications equipment.
As a consequence, consolidated segment
sales for the year under review decreased
0.6% year over year to ¥97,428 million resulting
from declining demand, caused mainly by theslowdown in the US economy, in theinformation and communications fields,
particularly for advanced-function mobile
phones and digital consumer electronics.

3Coaxial Connectors

Coaxial connectors are a special type of highperformance connector used primarily for
microwave and other high-frequency signals.
Their applications include microwave
communications devices, satellite
communications equipment, electronic
measuring instruments, mobile
communications equipment such as mobile
phones and PHSs, and switching andtransmission equipment and other electronicequipment. Optical fiber connectors are also
included in this segment.
Consolidated segment sales for the year
under review increased 22.4% to ¥15,654
million due to a recovery in demand for mobile
communications equipment and investments
in communications infrastructure.
Other Products

The Other Products segment includes highfrequency devices such as directional
couplers, non-reflecting terminal equipment,
fixed attenuators, circulators and coaxialswitches, as well as low-frequency equipment
designed for medical treatment applications
and instruments for connectors.
Consolidated segment sales for the year
under review increased 5.1% to ¥4,960 million.

4Consolidated Financial Statements
Consolidated Balance Sheets
Account item

Consolidated Statements of Income(Millions of yen)

As of March 31, 2008 As of March 31, 2007

Account item

(Assets)
Current assets

188,891

190,420

Fixed assets

79,46981,092

Property, plant and equipment

22,72822,805Intangible assets

2,423

2,188

Investments and other assets
Total assets

54,31756,098268,360

271,513

Current liabilities

27,492

From April 1, 2007 From April 1, 2006
to March 31, 2008 to March 31, 2007

Net sales

118,043

115,485

Cost of sales

64,01858,420Gross profit

54,02557,064

18,57819,029Selling, general and administrative expenses
Operating income

35,44638,035

Other income

2,595

2,227

Other expenses

65

63

37,97640,199Ordinary income(Liabilities)
28,128(Millions of yen)

Special gains

0376

Special losses

667

1,772

Income before income taxes

37,30938,802

Provision for income taxes―Current

13,40915,367

Provision for income taxes―Deferred

1,302

(741)

Net income

22,597

24,176Long-term liabilities

3,597

3,634

Total liabilities

31,09031,762

Shareholders’equity

236,098

234,446

Common stock

9,404

9,404Additional paid-in capital

14,372

14,370Retained earnings

238,826

222,222

Operating activities

35,34826,845

Treasury stock, at cost

(26,504)(11,550)

Investing activities(77,524)(42,248)

1,140

5,304

Financing activities(20,973)(4,454)

Effect of exchange rate change on cash and cash equivalents(1,084)440

Net increase/decrease in cash and cash equivalents(64,234)(19,417)

Cash and cash equivalents, beginning of the year

124,483

143,901

Cash and cash equivalents, end of the year

60,249124,483(Net assets)

Note: Amounts less than ¥1 million are truncated.

Valuation, translation adjustments and others
Stock acquisition rights

30━

Total net assets

237,270

239,750

Total liabilities and net assets

268,360

271,513

Consolidated Statements of Cash Flows (Millions of yen)Account item

From April 1, 2007 From April 1, 2006
to March 31, 2008 to March 31, 2007

Note: Amounts less than ¥1 million are truncated.

Note: Amounts less than ¥1 million are truncated.

Consolidated Statements of Changes in Net Assets（From April 1, 2007 to March 31, 2008）	Balance at March 31, 2007

(Millions of yen)

Shareholders’equity
Valuation, translation Stock acquisitionrightsCommon stock Additional paid-in capital Retained earnings Treasury stock, at cost Total shareholders’equity adjustments and others

Total netassets━

239,750

9,404

14,370222,222(11,550)

234,446

5,304

Amount of changes during the period
Dividends from surplus(5,993)(5,993)━(5,993)

Net income for the period

22,59722,597━22,597(14,988)(14,988)━(14,988)

3436

━
30

Acquisition of treasury stock
Disposition of treasury stock2

Net amount of changes during theperiod other than shareholders’equity━━

2

16,604(14,953)

1,652(4,163)30(2,480)9,404

14,372

238,826(26,504)

236,0981,140

30

237,270

Total amount of changes during the period
Balance at March 31, 2008

Note: Amounts less than ¥1 million are truncated.

536(4,163)(4,133)

Nonconsolidated Financial Statements
Nonconsolidated Balance Sheets
Account item

(Millions of yen)

As of March 31, 2008 As of March 31, 2007

(Assets)
Current assets

128,861

135,928

Fixed assets

41,02543,020Property, plant and equipment

11,386

11,661Intangible assets

1,442

2,111

Investments and other assets

28,19529,247

169,887

178,948

Current liabilities

14,137

16,304Long-term liabilities

1,112

1,054

Total liabilities

15,24917,359Total assets

Nonconsolidated Statements of Income (Millions of yen)
From April 1, 2007
to March 31, 2008

From April 1, 2006
to March 31, 2007

Net sales

112,037

109,438

Cost of sales

73,982

72,648Gross profit

38,05536,79014,906

14,611

23,14822,179Other income

5,300

4,890

Other expenses

2,449

2,039

25,99925,029Special gains━376Special losses

346

4,082

Income before income taxes

25,652

21,323

Provision for income taxes―Current

9,181

9,851

Provision for income taxes―Deferred

1,270(1,347)

Net income

15,201

12,818

Account item

Selling, general and administrative expenses

Operating income(Liabilities)

Ordinary income(Net assets)
Shareholders’equity

152,103

157,847

Common stock

9,404

9,404

Additional paid-in capital

14,372

14,370Retained earnings

154,831

145,623

Treasury stock, at cost

(26,504)(11,550)

Valuation, translation adjustments and others

2,502

3,74230━

Total net assets154,637

161,589

Total liabilities and net assets

169,887

178,948

Stock acquisition rights

Note: Amounts less than ¥1 million are truncated.

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
typical of our recent introductions.
BM10 Series

The BM10 Series connectors were developed for use ininternal connections of small devices such as mobilephones and digital still cameras (DSCs). To meet the risingneed for further thinness of assembly sets, we were thefirst in the industry to realize an ultra-low, mated height of
0.8 mm.

MS-156C Series

The MS-156 series connectors are used and highly evaluatedin the mobile phone market as coaxial switches. We
developed the MS-156C series as a new solution of morecompactness and lower height available in compliance withthe existing devices (MS156 plugs).
7DM3 Series

The DM3 series card connectors are adopted by major
mobile phone manufacturers as micro SD card connectors.
We have newly added the DM3C (hinged type) and DM3D(push-pull type) series to the DM3 family.

POD (F) Series

The POD (F) series substrate-to-substrate-type coaxial
connectors have the world’s first floating structure thatenables a cable-less connection at mobile phone stations.
Their unique structure serves to save space for the wholeassembly set, improves the ease of assembly and reduces
the number of components used.

Group Network■ Overseas bases(Branches, manufacturing subsidiaries,sales subsidiaries and affiliates)■ Overseas agencies■ Major exporting destinations● HIROSE ELECTRIC
MALAYSIA Sdn.
Bhd. (Malaysia)● Head office● YokohamaEngineering 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 achikawa Sales Office, Osaka
TBranch, Nagoya Sales OfficeHong Kong Branch, 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(DONG GUAN) 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 (DONG GUAN) CO., LTD. (Dong Guan, China)
HIROSE ELECTRIC (SHANGHAI) CO., LTD. (Shanghai, China)
HIROSE KOREA CO., LTD. (South Korea)
WEI-HAI HIROSE KOREA ELECTRIC CO., LTD. (Weihai, China)
8Corporate Data

Corporate Data (As of March 31, 2008)
Trade name

HIROSE ELECTRIC CO., LTD.

Date of incorporation

June 15, 1948

Number of employees

789 (excluding part-timers)

Paid-in capital¥9,404,379,401

Directors and Corporate Auditors (As of June 27, 2008)
President and Representative Director
Executive Vice President and Representative Director
Managing Director
Director
Director
Outside Director
Full-time Corporate Auditor
Outside Corporate Auditor
Outside Corporate Auditor
Outside Corporate Auditor

Tatsuro Nakamura
Sakae Kushida
Mitsugu Sugino
Izumi Morimoto
Yoshikazu Yoshimura
Masashi Kojima
Toshio Matsubara
Hidesato Sekine
Takashi HigaTerukazu 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, 2008)
Total number of shares issued
37,789,227 shares(Excluding 2,231,509 shares of treasury stock)
Number of shareholders

5,410

Major shareholders (Top 10)
Name

Number of shares held

State Street Bank and Trust Company
HIROSE INTERNATIONAL SCHOLARSHIP FOUNDATION
JPMorgan Chase Bank 380055
Japan Trustee Services Bank, Ltd. (Trust account No. 4)
Kosho Sangyo Co., Ltd.

Hundred shares

73,54028,55025,496
18,915
13,941

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)

8,162

Setsuko Hirose
Michiko Hirose
The Master Trust Bank of Japan, Ltd. (Trust account)
HS Kikaku Co.,Ltd.

7,948
7,897
7,676
7,600

Note: In addition to the 10 major shareholders above, the Company owns
22,315 hundred shares of treasury stock.

Distribution of shares by shareholder type
Individuals, etc.
69,215 hundred shares(17.30%)Foreign corporations, etc.
182,180 hundred shares(45.52%)Financial institutions
85,079 hundred shares (21.25%)
Securities companies
5,028 hundred shares(1.26%)
Other corporations
58,703 hundred shares (14.67%)

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 bedecided with prior public notice.)

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’
The Sumitomo Trust & Banking Co., Ltd.
register manager 5-33, Kitahama 4-chome, Chuo-ku, Osaka
Paperwork
processing office

The Sumitomo Trust & Banking Co., Ltd.
Securities Agency Department
4-4, Marunouchi 1-chome, Chiyoda-ku, Tokyo

Mailing address andtelephone referral

The Sumitomo Trust & Banking Co., Ltd.
Securities Agency Department
1-10, Nikko-cho, Fuchu-shi, Tokyo 183-8701(Requests for address change form, etc.)
Phone: 0120-175-417 (Toll-free)(Other reference)
Phone: 0120-176-417 (Toll-free)

Web site

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

Agency offices

Head office and branches nationwide of The Sumitomo Trust & Banking Co., Ltd.

Web site

http://www.hirose.co.jp10venictrosCreatiecs to World EnklLi