Annual Repor t 2002

HIROSE ELECTRIC CO.,LTD.

Profile

HIROSE ELECTRIC is a specialist in industrial-use connectors for electronic equipment, afield in which it has a proud track record of original product development. In recent years, thecompany has been aggressively expanding into consumer electronics and other fields, mobilizing its accumulated expertise to carve out a succession of new markets.
By supplying a broad range of high-quality connectors suitable for every conceivable typeof application, Hirose Electric has won the patronage of leading global companies in the fields
of computer and communications equipment, factory and office automation equipment, instrumentation, amusement devices, and automotive and consumer electronic equipment.
The main product range consists of multi-pin connectors which come in various formats:circular and rectangular, for nylon and ribbon cable, and for printed circuit boards including
FPCs (flexible printed circuit boards) and PC cards. High-performance coaxial and optical fiberconnectors form the second principal product range. They are used in a wide variety of
microwave and other high-frequency signal applications. The company also manufactures
various specialized devices and instruments.

Contents

Financial Highlights ________________________________________ 1
To Our Shareholders ________________________________________ 2
Five-Year Summary ________________________________________ 4
Financial Review __________________________________________ 4
Consolidated Balance Sheets _________________________________ 6
Consolidated Statements of Income ____________________________ 8
Consolidated Statements of Shareholders’ Equity _________________ 9
Consolidated Statements of Cash Flows ________________________ 10
Notes to Consolidated Financial Statements _____________________ 11
Report of Independent Public Accountants ______________________ 18
Directors and Corporate Auditors _____________________________ 19
General Information ________________________________________ 20
Corporate Data ____________________________________________ 21
4

Financial Highlights
Hirose Electric Co., Ltd. and Consolidated Subsidiaries
For the years ended March 31, 2002, 2001 and 2000

Thousands of
U.S. Dollars*Millions of Yen
2002

2001

2000

2002

Net sales: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Domestic market . . . . . . . . . . . . . . . . . . . . . . .
Overseas market . . . . . . . . . . . . . . . . . . . . . . .

¥ 61,144
42,78918,355¥ 83,540
59,18024,360¥ 79,962
57,54022,422$ 458,867
321,118
137,749

Operating income . . . . . . . . . . . . . . . . . . . . . . . .

14,40825,99026,725

108,128

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

8,113

15,90615,14060,886

At year-end:
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . .
Shareholders’ equity . . . . . . . . . . . . . . . . . . . .

¥ 177,876
160,125¥ 175,647
150,321¥158,456
134,253$1,334,904
1,201,689

Per share of common stock:(in yen and dollars)
Net income — Basic . . . . . . . . . . . . . . . . . . . .
— Diluted . . . . . . . . . . . . . . . . . .
Shareholders’ equity . . . . . . . . . . . . . . . . . . . .

¥ 204.4
203.1
4,033.8¥ 400.7
397.8
3,786.1¥ 381.4
378.7
3,381.4$ 1.53
1.52
30.27* U.S. dollar figures have been translated from yen, for convenience only, at the rate of ¥133.25 = U.S.$1.

Net Sales
Millions of Yen
90,000Operating Income
Millions of Yen
30,000Net Income
Millions of Yen
20,00015,00060,00020,00010,00030,00010,0005,000

098 99 00 01 02

0

98 99 00 01 02

0

98 99 00 01 02

1

To Our Shareholders

Many and Diverse Demands for Connectors
In the fiscal year ended March 31, 2002, the Japanese economy was weakened by the U.S. slowdown. Although
there was some improvement from the start of 2002 in production levels and export volumes, personal consumption and capital expenditures stagnated, prolonging the economic malaise.
Amid this environment, Hirose Electric posted lower net sales and net income. Consolidated net sales
decreased year on year by ¥22,396 million, or 26.8%, to ¥61,144 million and net income fell ¥7,793 million, or
49.0%, to ¥8,113 million.
By product area, sales of our flagship multi-pin connectors—which include circular and rectangular connectors, andconnectors for ribbon cables, connectors used for printed circuit boards including FPCs (flexible printed circuit boards)
and PC cards, as well as nylon connectors—declined 27.6% to ¥48,393 million. This was the result of persistently sluggish
demand and reduced production in the IT and communications field, accompanying the U.S. economic downturn.
In coaxial connectors, sales decreased 19.0% to ¥10,127 million due to weak demand for mobile communications equipment and curbs on investments in communications infrastructure. Coaxial connectors are a special
type of high-performance 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, switching and transmission equipment,
other IT and communications network equipment, and digital consumer equipment. Optical fiber connectors arealso included in this sector.
Sales in the Other Products sector decreased 37.4% to ¥2,623 million. This sector includes high-frequency devices
such as directional couplers, non-reflecting terminal equipment, fixed attenuators, circulators and coaxial switches, aswell as low-frequency equipment designed for medical treatment applications and instruments for connectors.

2

Our Management Philosophy
As a specialist manufacturer of connectors, Hirose Electric has been contributing to the development of theelectronics sector for more than half a century. Over the last several decades, we have maintained a fundamental
management concept for the company that emphasizes intelligence over size. It is rooted in the belief that we canmaintain high-quality management in an efficient organization if we humbly recognize our limitations of scale,acquire expertise from outside and combine it with our own intelligence. In this way, we aim to participate in the
rapid growth of the electronics industry.
In this time of economic uncertainty and increasingly borderless economic activity, we must reaffirm our
responsibilities as an electronics component manufacturer, making the Hirose brand synonymous with top-quality products. We believe that our mission is to accurately and dynamically deliver policies that will gain the trustof our customers and fulfill the expectations of our shareholders.

Raising Corporate ValueAs the information society continues to evolve and communications technologies become more diverse and sophisticated, the medium- to long-term growth prospects in our industry are good. Nevertheless, competition between companies is bound to intensify. We intend to meet these challenges by bolstering our ability to develop
products that cater to emerging needs, raising quality, driving improvements in productivity and paring costs. At
the same time, we will respond to the increasing globalization of our markets and increase corporate value by
raising our presence in fields exhibiting strong growth prospects, such as IT, communications, digital AV equipment, home appliances and car electronics.
We will also continue to do our utmost to protect the environment. We have obtained ISO 14001 certification, the international standard for environmental management, at our domestic manufacturing subsidiaries.
Through efforts such as these, we will continue to ensure that all group companies consider the environment in
the course of their business activities.
In closing, we would like to thank all our shareholders for their ongoing support and encouragement.

August 2002

Hideki Sakai

Tatsuro Nakamura

Chairman and Chief Executive Officer

President and Chief Operating Officer3

Five-Year Summary
Hirose Electric Co., Ltd. and Consolidated Subsidiaries
Years ended March 31

Millions of Yen
2002

2001

2000

1999

1998

Net sales . . . . . . . . . . . . . . . . . .
Operating income . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . .

¥ 61,144
14,408
8,113¥ 83,540
25,99015,906¥ 79,962
26,725
15,140¥ 68,570
20,504
10,535¥ 74,832
21,958
10,874

At year-end:
Total assets . . . . . . . . . . . . . .
Shareholders’ equity . . . . . . .

¥177,876
160,125¥175,647
150,321¥158,456
134,253¥145,830
117,150¥136,687
107,392¥ 265.4
263.6
2,951.1¥ 274.3
272.1
2,705.9Yen

Per share of common stock:
Net income —Basic . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . .
Shareholders’ equity . . . . . . .

¥ 204.4
203.1
4,033.8¥ 400.7
397.8
3,786.1¥ 381.4
378.7
3,381.4

2002

2001

2000

1999

1998

Net sales . . . . . . . . . . . . . . . . . .
Operating income . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . .

$ 458,867
108,128
60,886$ 626,942
195,047
119,370$ 600,090
200,563
113,621$ 514,597
153,876
79,062$ 561,591
164,788
81,606

At year-end:
Total assets . . . . . . . . . . . . . .
Shareholders’ equity . . . . . . .

$1,334,904
1,201,689$1,318,176
1,128,113$1,189,163
1,007,527$1,094,409
879,174$1,025,794
805,944$ 1.991.98
22.15$ 2.06
2.04
20.31

Thousands of U.S. Dollars *U.S. Dollars *Per share of common stock:
Net income —Basic . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . .
Shareholders’ equity . . . . . . .

$ 1.531.52
30.27$ 3.01
2.99
28.41$ 2.86
2.84
25.38* U.S. dollar figures have been translated from yen, for convenience only, at the rate of ¥133.25 = U.S.$1.

Financial Review
The Hirose Electric Co., Ltd. group consists of the parent company, Hirose Electric, 14 subsidiaries and 3 affiliates.
Of the subsidiaries, seven are consolidated: Tohoku Hirose Electric Co., Ltd., Koriyama Hirose Electric Co., Ltd.,
Ichinoseki Hirose Electric Co., Ltd., Aomori Denso Co., Ltd., Hirose Electric (U.S.A.), Inc., Hirose Electric GmbHand Hirose Electric UK Ltd. One of the affiliates, Hirose Cherry Precision Co., Ltd., is accounted for by the equity
method.
Operating Environment
In the fiscal year ended March 31, 2002, the Japanese economy was weakened by the U.S. slowdown. Although
there was some improvement from the start of 2002 in production levels and export volumes, personal consumption and capital expenditures stagnated, prolonging the economic malaise.
4

The slowdown in the U.S. economy had repercussions for the electronics industry throughout the world at atime of intense competition between companies. This dampened demand further in the IT and communications
field as a whole, although there was a recovery in some regions.
Net Sales and Net Income
During the year, Hirose Electric took steps to enhance its ability to develop higher-quality products that meet ever
diversifying needs, to develop new products and strengthen product development capabilities, especially in thesphere of industrial-use electronic devices. At the same time, the company implemented wide-ranging management policies to improve production efficiency, cut costs, including overseas, develop new domestic and overseas
sales channels and strengthen marketing.
Despite these efforts, consolidated net sales decreased year on year by 26.8% to ¥61,144 million. Net income
fell 49.0% to ¥8,113 million.
Segment Information
Connector Manufacturing and Sales Business
Hirose Electric’s principal business is manufacturing and selling connectors for electronics devices. These connectors are used to link and separate various functional units and circuits in electrical and electronics equipment. They
are widely used in computers and peripheral equipment, mobile communications devices, office automation equipment, communications equipment, digital information devices for the home and car electronics.
Composition of sales by connector type:
Years ended March 31

2002

2001

Multi-pin connectors . . . . . .
Coaxial connectors . . . . . . . .
Other . . . . . . . . . . . . . . . . . . .

79.1%
16.6%
4.3%

80.0%
15.0%
5.0%

Total . . . . . . . . . . . . . . . . . . .

100.0%

100.0%

Circular, rectangular, printed circuit boards
Coaxial, optical
Coaxial components, crimp contacts, medical equipment, etc.

Overseas Sales
Overseas sales decreased by ¥6,005 million, or 24.7%, to ¥18,355 million (US$137,749 thousand).
Overseas sales by region
Millions of Yen
Overseassales
Years ended March 31

North America . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Share ofconsolidated sales

Overseas
sales

2002

2,497
10,113
4,277
1,468
18,355

Share ofconsolidated sales
2001

4.1%
16.5%
7.0%
2.4%
30.0%

5,714
10,357
6,883
1,406
24,360

6.8%
12.4%
8.2%
1.7%
29.2%

Financial Position
Total assets at the end of the year stood at ¥177,876 million (US$1,334,904 thousand), an increase of 1.3% froma year ago. Current assets increased 0.9% to ¥153,012 million (US$1,148,308 thousand), reflecting an increase in
cash and bank deposits offset by a decrease in marketable securities.
Shareholders’ equity rose by 6.5% to ¥160,125 million (US$1,201,689 thousand). As a result, the equity ratio
increased by 4.4 percentage points to 90.0%. Equity per share rose ¥247.7 to ¥4,033.8 (US$30.27).
Repurchase of Treasury StockOn June 27, 2002, the annual general meeting of shareholders approved the repurchase of up to 2 million shares ofHirose Electric common stock for a maximum amount of ¥20,000 million. This will give the company the flexibility it needs in its capital policy to respond to changes in the operating environment.

5Consolidated Balance Sheets
Hirose Electric Co., Ltd. and Consolidated Subsidiaries
As of March 31, 2002 and 2001

Thousands of
U.S. Dollars(Note 2)Millions of Yen
2002

2001

2002

Cash and bank deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥ 122,870¥ 77,526$ 922,101Marketable securities (Notes 1(d) and 4) . . . . . . . . . . . . . . . .

1,258

32,7849,441

Trade notes and accounts receivable (Note 3) . . . . . . . . . . . .

19,91029,486

149,418

Allowance for doubtful receivables . . . . . . . . . . . . . . . . . . . .

(55)

(65)

(413)

Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5,030

7,622

37,749Deferred income taxes (Note 9) . . . . . . . . . . . . . . . . . . . . . . .

1,004

1,408

7,535

Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2,995

2,848

22,477

Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . .

153,012

151,609

1,148,308

Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,848

1,821

13,869Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6,411

6,333

48,112

Machinery and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . .

44,58843,099334,619

Construction in progress . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

220

219

1,651

53,06751,472398,251

Less accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . .

(39,370)(36,213)(295,460)

Property, plant and equipment, net . . . . . . . . . . . . . .

13,697

15,259102,791

Investment securities (Notes 1(d) and 4) . . . . . . . . . . . . . . . .

6,297

3,677

47,257

Investment in affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2,167

2,140

16,263

Deferred income taxes (Note 9) . . . . . . . . . . . . . . . . . . . . . . .

101

349

758

Intangible and other assets . . . . . . . . . . . . . . . . . . . . . . . . . . .

2,602

2,613

19,527

Total investments and other assets . . . . . . . . . . . . . . .

11,167

8,779

83,805

Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥177,876¥175,647$1,334,904

ASSETS
Current assets:

Property, plant and equipment:

Investments and other assets:6

Thousands of
U.S. Dollars(Note 2)Millions of Yen
2002

LIABILITIES AND SHAREHOLDERS’ EQUITYCurrent liabilities:
Trade notes and accounts payable . . . . . . . . . . . . . . . . . . . . .
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued bonuses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred income taxes (Note 9) . . . . . . . . . . . . . . . . . . . . . . .
Other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term liabilities:
Convertible bonds (Note 7) . . . . . . . . . . . . . . . . . . . . . . . . . .
Employees’ retirement
and severance benefits (Notes 1 (i) and 8) . . . . . . . . . . . . . .
Directors’ and Corporate Auditors’ retirement
and severance benefits (Note 1 (i)) . . . . . . . . . . . . . . . . . . . .
Deferred income taxes (Note 9) . . . . . . . . . . . . . . . . . . . . . . .
Other long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total long-term liabilities . . . . . . . . . . . . . . . . . . . . . . .

¥

2001

2002

7,386
1,193
2,608
1,025
10
1,101

¥ 11,710
2,262
6,008
1,117
–
1,341

$

55,4308,953
19,572
7,692
75
8,263

13,32322,43899,985

1,534

1,543

11,512

549

328

4,120

623
1,343
379

630
–
387

4,675
10,079
2,844

4,428

2,888

33,2308,645
11,249137,871

8,641
11,244130,609

64,87884,4201,034,679

2,288
154

–
(172)

17,171
1,156

Contingent liabilities (Note 12)
Shareholders’ equity (Note 10):
Common stock
Authorized — 80,000,000 shares
Issued 2001 — 39,703,539 shares
2002 — 39,705,407 shares . . . . . . . . . . . . . . . . . . .
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated other comprehensive income –Unrealized gain on available-for-sale securities (Note 1(d)) . . .
Foreign currency translation adjustments . . . . . . . . . . . . . . .

160,207150,322

1,202,304

Less— Cost of common stock in treasury
9,200 shares in 2002 and 122 shares in 2001 . . . . . . . . . . . .

(82)

(1)

(615)

Total shareholders’ equity . . . . . . . . . . . . . . . . . . . . . .

160,125

150,3211,201,689

Total liabilities and shareholders’ equity . . . . . . . . . .

¥177,876¥175,647$1,334,904

The accompanying notes to consolidated financial statements are an integral part of these balance sheets.

7

Consolidated Statements of Income
Hirose Electric Co., Ltd. and Consolidated Subsidiaries
For the years ended March 31, 2002 and 2001

Thousands of
U.S. Dollars(Note 2)Millions of Yen
2002

2001

2002

Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥61,144
35,188¥83,540
44,427$458,867
264,075

Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Selling, general and administrative expenses (Note 6) . . . . . . .

25,956
11,548

39,113
13,123

194,792
86,664

Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

14,40825,990108,128

299
27
(31)
73
(106)
(11)
(674)
(376)

729
95
(39)
(190)
1,789
(88)
(520)
(128)

2,244
203
(233)
548
(795)
(83)
(5,058)(2,822)

–

(383)

–

–
241

(593)
568

–
1,808

(558)

1,240

(4,188)

Income before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . .

13,85027,230103,940

Provision for income taxes — Current . . . . . . . . . . . . . . . . . . . .
— Deferred . . . . . . . . . . . . . . . . . . .

5,379
358

11,850(526)

40,367
2,687

5,737

11,32443,054¥ 8,113¥15,906$ 60,886

Other income (expenses):
Interest and dividend income . . . . . . . . . . . . . . . . . . . . . . . . .
Equity in earnings of affiliates . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign exchange gain (loss), net . . . . . . . . . . . . . . . . . . . . . .
Gain on sales of investment securities, net . . . . . . . . . . . . . . .
Impairment loss on investment securities . . . . . . . . . . . . . . . .
Loss on disposal of inventories . . . . . . . . . . . . . . . . . . . . . . .
Loss on disposal of plant and equipment, net . . . . . . . . . . . . .
Net transition obligation on employees’
retirement benefits (Note 1 (i)) . . . . . . . . . . . . . . . . . . . . . . .
Prior service cost for directors’ andcorporate auditors’ retirement benefits (Note 1 (i)) . . . . . . .
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

U.S. Dollars(Note 2)Yen

Per share of common stock (Note 11):Net income — Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
— Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash dividends, applicable to the year . . . . . . . . . . . . . . . . . .

¥204.4203.1
18.5

The accompanying notes to consolidated financial statements are an integral part of these statements.

8¥400.7
397.8
19.0

$1.53
1.52
0.14

Consolidated Statements of Shareholders’ Equity
Hirose Electric Co., Ltd. and Consolidated Subsidiaries
For the years ended March 31, 2002 and 2001

Thousands of
U.S. Dollars(Note 2)Millions of Yen
2002

2001

2002

Common stock:
Balance at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . .
Conversion of bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥

8,641
4

¥

8,640
1

$

64,84830

Balance at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥

8,645

¥

8,641

$

64,878Additional paid-in capital:
Balance at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . .
Conversion of bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥ 11,2445¥ 11,2431$

84,383
37

Balance at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥ 11,249¥ 11,244$

84,420Retained earnings:
Balance at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Effect of change in scope of consolidation . . . . . . . . . . . . . . .
Cash dividends paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bonuses to directors and corporate auditors . . . . . . . . . . . . . .

¥130,609
8,113
–
(754)
(97)

¥114,370
15,906
1,282
(853)
(96)

$ 980,180
60,886–(5,659)(728)

Balance at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥137,871¥130,609$1,034,679

Accumulated other comprehensive income:Unrealized gain on available-for-sale securities . . . . . . . . . . .
Foreign currency translation adjustments . . . . . . . . . . . . . . . .

¥

2,288
154

¥

–
(172)

$

17,171
1,156

Total accumulated other comprehensive income, net . . . .

¥

2,442

¥

(172)

$

18,327

Treasury stock, at cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2001: 122 shares
2002: 9,200 shares

(82)

(1)

(615)

Total shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥160,125¥150,321$1,201,689

The accompanying notes to consolidated financial statements are an integral part of these statements.

9Consolidated Statements of Cash Flows
Hirose Electric Co., Ltd. and Consolidated Subsidiaries
For the years ended March 31, 2002 and 2001

Thousands of
U.S. Dollars(Note 2)Millions of Yen
2002

2001

2002

¥ 13,850¥ 27,230$103,940

5,313
(27)
–
(8,783)
(97)

5,112
(95)
(1,789)(11,972)(96)

39,872(203)–(65,913)
(728)

9,630
2,619
(4,139)193(1,629)
(431)
(909)
479

72,27019,655(31,062)
1,448

Net cash provided by operating activities . . . . . . . . . . .

18,55915,900139,279

Investing activities:
Proceeds from sales of marketable securities . . . . . . . . . . . . .
Proceeds from sales of property . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from sales of investment securities . . . . . . . . . . . . .
Purchases of marketable securities . . . . . . . . . . . . . . . . . . . . .
Purchases of property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3,104
345
–
–
(5,624)(58)

41,216407
2,383(38,378)(6,646)(1,433)23,294
2,589––(42,206)(435)

Net cash used in investing activities . . . . . . . . . . . . . . . .

(2,233)(2,451)(16,758)

Financing activities:
Dividends paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(754)
(81)

(853)
(1)

(5,659)(607)

Net cash used in financing activities . . . . . . . . . . . . . . .

(835)

(854)

(6,266)

Effect of exchange rate change on cash and cash equivalents . . .

166

135

1,246

Net increase in cash and cash equivalents . . . . . . . . . . . . . . . . .
Cash and cash equivalents, beginning of year . . . . . . . . . . . . . .
Increase of cash and cash equivalents due to certain
subsidiaries consolidated commencing in fiscal 2001 . . . . . . .

15,657
107,213

12,73093,305

117,501
804,600

–

1,178

–

Cash and cash equivalents, end of year . . . . . . . . . . . . . . . . . . .

¥122,870¥107,213$922,101¥¥$

Operating activities:
Income before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustments to reconcile income before income taxes to
net cash provided by operating activities —Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . .
Equity in earnings of affiliates . . . . . . . . . . . . . . . . . . . . . .
Loss on sales of investment securities . . . . . . . . . . . . . . . .
Income taxes paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bonus paid to directors . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Changes in assets and liabilities —(Increase) decrease in trade notes and accounts receivable . . .
(Increase) decrease in inventories . . . . . . . . . . . . . . . . . . . . .
Decrease in trade notes and accounts payable . . . . . . . . . . . .
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Supplemental disclosures of cash flow information:
Cash paid for interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-cash investing and financing activities —Issuance of common stock with conversionof convertible bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Assets and liabilities of the subsidiaries consolidated
commencing in fiscal 2001 (Note1 (b)) —Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

31

233

9

2

68

–
–

2,228
734

–
–

The accompanying notes to consolidated financial statements are an integral part of these statements.

1039Notes to Consolidated Financial Statements
Hirose Electric Co., Ltd. and Consolidated Subsidiaries

1. SIGNIFICANT ACCOUNTING AND REPORTING POLICIES(a) Basis of presenting consolidated financial statements
Hirose Electric Co., Ltd. (the “Company”) and its consolidated domestic subsidiaries maintain their accounts and recordsin accordance with the provisions set forth in the Japanese Commercial Code (the “Code”) and the Securities and Exchange
Law and in conformity with accounting principles and practices generally accepted in Japan (“Japanese GAAP”). The
accounts of overseas consolidated subsidiaries are based on their accounting records maintained in conformity with generally accepted accounting principles and practices prevailing in the respective countries of domicile. Certain accounting
principles and practices generally accepted in Japan are different from International Accounting Standards and standards inother countries in certain respects as to application and disclosure requirements. Accordingly, the accompanying financial
statements are intended for use by those who are informed about Japanese accounting principles and practices.
The accompanying consolidated financial statements have been restructured and translated into English (with some
expanded descriptions and the inclusions of statements of shareholders’ equity) from the consolidated financial statementsof the Company prepared in accordance with Japanese GAAP and filed with the appropriate Local Finance Bureau of the
Ministry of Finance as required by the Securities and Exchange Law. Some supplementary information included in thestatutory Japanese language consolidated financial statements, but not required for fair presentation is not presented in theaccompanying financial statements.
In preparing the accompanying consolidated financial statements, certain reclassifications have been made in the consolidated financial statements issued domestically in order to present them in a form which is more familiar to readers
outside Japan.

(b) Principles of consolidation
The consolidated financial statements include the accounts of the Company and the following seven subsidiaries wholly
owned by the Company:
Tohoku Hirose Electric Co., Ltd.
Koriyama Hirose Electric Co., Ltd.
Ichinoseki Hirose Electric Co., Ltd.
Aomori Denso Co., Ltd.
Hirose Electric (U.S.A.), Inc.
Hirose Electric GmbH
Hirose Electric UK Ltd.
From the year ended March 31, 2001, the Company increased the scope of consolidation by the accounts of Hirose
Electric GmbH and Hirose Electric UK Ltd., 100% subsidiaries of the Company, due to their increased materiality.
All significant intercompany balances, transactions and profits have been eliminated in consolidation.
Hirose Cherry Precision Co., Ltd., of which the Company owns 50% of equity, is accounted for by the equity method.
Hirose Cherry Precision Co., Ltd. has changed its closing date from February 28 to March 31, and the consolidated
financial statements include the 13-month period ending March 31, 2001.

(c) Cash equivalents
For the purpose of the statement of cash flows, the Company and its consolidated subsidiaries consider all short-term,
highly liquid instruments with a maturity of three months or less to be cash equivalents.
Cash and cash equivalents at March 31, 2002 and March 31, 2001 were as follows:
Thousands of
U.S. Dollars

Millions of Yen

Cash and bank deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash equivalents included in marketable securities . . . . . .

2002

2001

2002

¥122,870–¥ 77,526
29,687$922,101–¥122,870¥107,213$922,10111

(d) Marketable securities and investment securities
Prior to April 1, 2000, securities of the Company and its consolidated subsidiaries were stated at moving-average cost.
Effective April 1, 2000, based on the adoption of new accounting standard for financial instruments, all companies are
required to examine the intent of holding each security and classify those securities as (a) securities held for trading
purposes (hereafter, “trading securities”), (b) debt securities intended to be held to maturity (hereafter, “held-to-maturity
debt securities”), (c) equity securities issued by subsidiaries and affiliated companies, and (d) for all other securities thatare not classified in any of the above categories (hereafter, “available-for-sale securities”).
The Company and its subsidiaries had no trading securities, held-to-maturity debt securities. Equity securities issued bysubsidiaries and affiliated companies which are not consolidated or accounted for using the equity method are stated at costbased on the moving average method. Available-for-sale securities were stated at cost based on the moving-average method
for the year ended March 31, 2001. Effective April 1, 2001, available-for-sale securities with fair market value are required
to be stated at fair market value as of balance sheet date. Unrealized gains and losses on these securities are reported, net of
applicable income taxes, as a separate component of the shareholders’ equity. The cost of securities sold is determinedprimarily by the moving-average method.
As a result of adopting the new accounting standard for available-for-sale securities, unrealized gain on securities
increased by ¥2,288 million ($17,171 thousand) and deferred income tax liabilities increased by¥1,644 million ($12,337 thousand).

(e) Inventories
Finished goods and work in process are stated at cost, being determined by the gross-average method. Raw material isstated at cost, being determined by the moving-average method.

(f) Property, plant and equipment
Property, plant and equipment are stated at cost. Depreciation of property, plant and equipment held by the Company and its
domestic subsidiaries is primarily computed by using the declining balance method over estimated useful lives, except for thebuildings acquired after March 31, 1998 to which straight-line method is applied.
Depreciation of property, plant and equipment held by foreign subsidiaries is computed on the straight-line method overestimated useful lives.

(g) Software
Cost of software included in intangible and other assets are amortized over the estimated useful lives (five years) by thestraight-line method.

(h) Allowance for doubtful receivables
The allowance for doubtful accounts is provided in an amount sufficient to cover possible losses on collection by estimating
individually uncollectible amounts and applying a percentage based on collection experience to the remaining accounts.

(i) Retirement and severance benefits and pension costs(1) Employees’ severance and retirement benefits:
Effective April 1, 2000, the Company and its domestic subsidiaries adopted the new accounting standard, “Opinion on
Setting Accounting Standard for Employees’ Severance and Pension Benefits,” issued by the Business Accounting Deliberation Council on June 16, 1998 (the “New Accounting Standard”).
The Company and its consolidated domestic subsidiaries provided allowance for employees’ retirement and severance
benefits at the balance sheet dates based on the estimated amounts of projected benefit obligation and the fair value of theplan assets at that date.
The excess of the projected benefit obligation over the total of the fair value of pension assets as of April 1, 2000 and theliabilities for severance and retirement benefits recorded as of April 1, 2000 (the “net transition obligation”) amounted to¥383 million. The net transition obligation was charged to other expenses in the consolidated statements of income for theyear ended March 31, 2001. Actuarial gains or losses incurred during the year are recognized in the following year.
As a result of the adoption of the new accounting standard, in the year ended March 31, 2001, severance and retirement
benefit expenses increased by ¥328 million, operating income increased by ¥54 million and income before income taxes
decreased by ¥328 million compared with what would have been recorded under the previous accounting standard.
(2) Directors’ and corporate auditors’ retirement and severance benefits:
Effective April 1, 2000, the Company has provided for directors’ and corporate auditors’ retirement and severance benefit
liabilities if all such individuals retired at the balance sheet date.
The directors’ and corporate auditors’ retirement and severance benefit costs incurred for the period ended March 31,
2001 was ¥37 million and was charged to selling, general and administrative expenses. The cumulative effect of thischange in accounting policy was ¥593 million and was charged to other expenses. As a result, at March 31, 2001, operating
income decreased by ¥37 million and net income before income tax decreased by ¥630 million by the same amountcompared with what would have been reported under the previous accounting policy.

12(j) Income taxes
Income taxes in the accompanying statements of income comprise corporation tax, inhabitant taxes and enterprise tax.
Deferred income taxes are recorded to reflect the impact of temporary differences between assets and liabilities recognized for financial reporting purposes and such amounts recognized for tax purposes. These deferred taxes are measured byapplying currently enacted tax laws to the temporary differences.

(k) Translation of foreign currencies
All monetary assets and liabilities denominated in foreign currencies are translated at the current exchange rates at thebalance sheet date, and the translation gains and losses are charged to income.
Balance sheets of consolidated overseas subsidiaries are translated into Japanese yen at the year-end rate except forshareholders’ equity accounts, which are translated at the historical rates. Statements of income of consolidated overseas
subsidiaries are translated at average rates.

(l) Accounting for leases
All leases are accounted for as operating leases. Under Japanese accounting standards for leases, finance leases that are
deemed to transfer ownership of the leased property to the lessee are to be capitalized, while other finance leases are
permitted to be accounted for as operating lease transactions if certain “as if capitalized” information is disclosed in thenotes to the lessee’s financial statements.

2. U.S. DOLLAR AMOUNTS
The translation of the Japanese yen amounts into U.S. dollars are included solely for the convenience of the reader, using
the prevailing exchange rate at March 29, 2002, which was ¥133.25 to U.S.$1.00. The convenience translations should not
be construed as representations that the Japanese yen amounts have been, could have been, or could in the future be,converted into U.S. dollars at this or any other rate of exchange.

3. EFFECT OF BANK HOLIDAY ON MARCH 31, 2002 and 2001
As financial institutions in Japan were closed on March 31, 2002 and 2001, ¥217 million ($ 1,629 thousand) and ¥498
million of trade notes receivable maturing on the above dates were settled on the following business day, April 1, 2002 andApril 2, 2001, respectively, and accounted for accordingly.

4. SECURITIESThe following tables summarize acquisition costs, gross unrealized holding gains and losses and fair value of securities
with available fair values as of March 31, 2002:
Millions of Yen
March 31, 2002
Cost/
Amortized
cost

Gross
Gross
unrealized
unrealized
holding gains holding losses

Fair value

Available-for-sale securities
Equity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥ 433
2,886

¥3,656338¥24
1¥4,065
3,223

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥3,319¥3,994¥25¥7,288

Thousands of U.S. Dollars
March 31, 2002
Cost/
Amortized
cost

Gross
Gross
unrealized
unrealized
holding gains holding losses

Fair value

Equity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 3,250
21,658$27,437
2,537

$180
8

$30,507
24,187

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$24,908$29,974$188$54,694

13

The following tables summarize book values of securities with no available fair values as of March 31, 2002:
Millions of Yen

Thousands of
U.S. Dollars

2002

Investments in affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Available-for-sale securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥2,167267$16,263
2,004

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥2,434$18,267

Maturities of debt securities classified as available-for-sale at March 31, 2002 are as follows:
Millions of Yen
2002
Withinone year

Government bonds . . . . . . . . . . . . . . . . . . . . . . . . . .
Corporate bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

¥1,000125
133¥1,258Over one year
but within
five years

Over five years
but within
ten yearsOverten years

¥

¥ –
–
–
¥ –

¥ –
–
–
¥ –

–
1,868
364
¥2,232Thousands of U.S. Dollars
2002

Government bonds . . . . . . . . . . . . . . . . . . . . . . . . . .
Corporate bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Withinone yearOver one year
but within
five years

Over five years
but within
ten yearsOverten years$7,505938
998$9,441$–
14,0192,731$16,750

$ –
–
–
$ –

$ –
–
–
$ –

5. LEASES
Total finance lease payments under finance lease arrangements that do not transfer ownership of the leased property to theCompanies were ¥20 million ($ 150 thousand) and ¥56 million for the years ended March 31, 2002 and 2001, respectively.
Pro forma information of leased property such as acquisition cost, accumulated depreciation, obligations under financeleases and depreciation expense of finance leases that do not transfer ownership of the leased property to the Companies forthe years ended March 31, 2002 and 2001 are as follows:
Millions of Yen

Equipment
Cost and depreciation:
Acquisition cost .................................................................................
Accumulated depreciation .................................................................

2002

2001

2002

¥139
139

¥236
216

$1,043
1,043

Net leased property ................................................................................

¥

–

¥ 20

$

–

Obligations under finance leases:
Due within one year ...............................................................................
Due after one year ..................................................................................

¥

–
–

¥ 20
–

$

–
–

Total ...................................................................................................

¥

–

¥ 20

$

–

¥ 20

¥ 56

$ 150

Depreciation expense: ....................................................................................

14

Thousands of
U.S. Dollars

The amount of obligations and depreciation under finance leases is calculated including the imputed interest portion.
Leased properties are depreciated over their lease terms with the residual values zero.
The minimum rental commitments under non-cancellable operating leases were as follows:
Millions of Yen

Thousands of
U.S. Dollars

2002

2001

2002

Due within one year .......................................................................................
Due after one year ..........................................................................................

¥ 29
108

¥ 37
159

$ 218
810

Total ...................................................................................................

¥137

¥196

$1,028

6. RESEARCH AND DEVELOPMENT EXPENSE
Research and development expenses are charged to income as incurred. Such amounts charged to income for the years ended
March 31, 2002 and 2001 were ¥3,442 million ($25,831 thousand) and ¥3,818 million, respectively.

7. CONVERTIBLE BONDS

Convertible bonds –1.7% convertible unsecured bonds payable, due on
September 30, 2003 .......................................................

Thousands of
U.S. Dollars

Conversion
Price(per share)

Millions of Yen
2002

2001

2002

¥4,813.80¥1,534¥1,543$11,512¥1,534¥1,543$11,512The convertible bonds are convertible into common stock at the option of the holders currently at applicable conversion
prices per share as listed in the above table.

8. EMPLOYEES’ SEVERANCE AND PENSION BENEFITSAs explained in Note 1 (i) (1), effective April 1, 2000, the Companies adopted the new accounting standard for employees’
severance and retirement benefits, under which the liabilities and expenses for severance and retirement benefits are determined based on the amounts obtained by actuarial calculations.
The liabilities for severance and retirement benefits included in the liability section of the consolidated balance sheet asof March 31, 2002 and 2001 consist of the following:
Millions of Yen

Thousands of
U.S. Dollars

2002

2001

2002

Projected benefit obligation ....................................................................
Less fair value of pension assets .............................................................
Unrecognized prior service costs ............................................................
Unrecognized actuarial differences ........................................................

¥2,687(1,916)771(222)¥2,569(1,954)615(287)$20,165(14,379)
5,786(1,666)

Liability for retirement and severance benefits ..................................

¥ 549

¥ 328

$ 4,120

15

Included in the consolidated statements of income for the years ended March 31, 2002 and 2001 are severance andretirement benefit expenses comprised of the following:
Millions of Yen

Thousands of
U.S. Dollars

2002

2001

2002

Service costs – benefits earned during the year ......................................
Interest cost on projected benefit obligation ...........................................
Expected return on plan assets ................................................................
Amortization of prior service costs .........................................................
Amortization of actuarial differences .....................................................
Temporary retirement and severance benefit expenses ..........................

¥392
90
(68)
–
287
78

¥383
82
(68)
383
–
30

$2,942
75
(510)
–
2,154
585

Retirement and severance benefit expenses .......................................

¥779

¥810

$5,846

2002

2001

2.5 %
3.5 %

3.5 %
3.5 %

Discount rate ..............................................................................................................
Rate of expected return ..............................................................................................
9. INCOME TAXESThe Company and its domestic subsidiaries are subject to several taxes based on income which, in the aggregate, indicate
statutory rates in Japan of approximately 42% for the years ended March 31, 2002 and 2001.
Variance from the normal tax rate is mainly due to certain permanently nondeductible expenses.
Significant components of the Company’s deferred tax assets and liabilities as of March 31, 2002 and 2001 were as follows:
Millions of Yen
2002

Deferred tax assets:
Accrued bonuses disallowed....................................................................
Directors’ and corporate auditors’ retirement benefits accrued ..............
Devaluation of inventories .......................................................................
Employees’ retirement benefits accrued disallowed ...............................
Accrued enterprise taxes ..........................................................................
Unrealized loss on inventories .................................................................
Other ........................................................................................................
Total deferred tax assets ..................................................................

¥

2000

Thousands of
U.S. Dollars
2002

298 ¥ 222
260
263
256
251
229
137
223
526
159
316
189
242
1,614 1,957$ 2,236
1,951
1,921
1,719
1,674
1,193
1,418
12,112

Deferred tax liabilities:
Unrealized gain on available-for-sale securities ......................................
Tax incentive depreciation .......................................................................
Other ........................................................................................................

(1,644)
(188)
(30)

–
(188)
(12)

(12,337)(1,411)(225)

Total deferred tax liabilities .............................................................

(1,862)(200)(13,973)

Net ....................................................................................................

¥ (248) ¥1,757$ (1,861)

10. SHAREHOLDERS’ EQUITY
Under the Code, at least 50% of the issue price of new shares is required to be designated as stated capital. The portion
which is not transferred to stated capital is determined by resolution of the Board of Directors. Proceeds not transferred tostated capital are credited to additional paid-in capital.
Under the Code, certain amounts of retained earnings equal to at least 10% of cash dividends and bonuses to directors andcorporate auditors must be set aside as a legal reserve, until the total amount of the reserve and additional paid-in capital equals
25% of common stock. The legal reserve and additional paid-in capital may be used to eliminate or reduce a deficit by resolutionof the shareholders or may be capitalized by resolution of the Board of Directors. On condition that the total amount of legal
reserve and additional paid-in capital is equal to or exceeds 25% of common stock, they are available for distribution by the16resolution of shareholders’ meeting. Legal reserve is included in retained earnings in the accompanying financial statements.
The maximum amount that the Company can distribute as dividends is calculated based on the unconsolidated financial
statements of the Company in accordance with the Code.
Semiannual cash dividends may be approved by the shareholders after the end of each fiscal period or declared by the
Board of Directors after the end of each interim six-month period. Such dividends are payable to shareholders of record at
the end of each fiscal or interim six-month period. In accordance with the Code, the declaration of these dividends and therelated appropriations of retained earnings have not been reflected in the financial statements at the end of such fiscal orinterim six-month periods. In June 2002, the shareholders approved the declaration of a cash dividend and bonuses todirectors and corporate auditors applicable to the year ended March 31, 2002, totaling ¥377 million ($2,829 thousand) and¥84 million ($630 thousand), respectively. In conformity with the Code, this declaration of a cash dividend is not reflectedin the consolidated financial statements as of March 31, 2002.

11. PER SHARE DATADividends per share shown in the consolidated statements of income have been presented on the accrual basis and include,in each fiscal period, dividends approved after each balance sheet date, but applicable to the fiscal period then ended.
Net income per share is based on the weighted average number of shares of common stock and common stock equivalents.
The 1.7% convertible bonds were considered as common stock equivalents. In computing net income per share, net income isadjusted, net of income taxes, by interest expense when the inclusions are dilutive.

12. CONTINGENT LIABILITIESThe Company is contingently liable as guarantors of indebtedness of unconsolidated subsidiaries aggregating to ¥364
million ($2,732 thousand) at March 31, 2002.

13. SUBSEQUENT EVENT
General Meeting of Shareholders held on June 27, 2002 approved an acquisition of treasury stock of the Company, in
accordance with the provisions set forth in the Code, to the extent of 2,000,000 shares of common stock and amount of¥20,000 million ($150,094 thousand) by the next General Meeting of Shareholders.

14. SEGMENT INFORMATION(a) Business segment information
The Company and its consolidated subsidiaries primarily operate in one business segment of sales and manufacturing
connectors for electronic equipment.

(b) Geographic segment information
The Company and consolidated subsidiaries primarily operate their business in Japan.

(c) Overseas sales information
The following is a breakdown of net sales:
Millions of Yen

Net sales:
2001 ..................................
2002 ..................................
(1)
(2)
(3)
(4)

Japan

North
America

Asia

EuropeOther

Consolidated¥59,180
42,789¥5,714
2,497¥10,357
10,113¥6,883
4,277¥1,406
1,468¥83,540
61,144

The area of North Americas includes the United States of America.
The area of Asia includes Korea, Taiwan and Republic of China.
The area of Europe includes England and Germany.
The area of Other includes Australia and Brazil.

17

Report of Independent Public Accountants

To the Board of Directors of Hirose Electric Co., Ltd.:We have audited the accompanying consolidated balance sheets of Hirose Electric Co., Ltd. (a Japanese
corporation) and consolidated subsidiaries as of March 31, 2002 and 2001, and the related consolidated
statements of income, shareholders’ equity and cash flows for the years then ended, expressed in Japaneseyen. Our audits were made in accordance with generally accepted auditing standards in Japan and,accordingly, included such tests of the accounting records and such other auditing procedures as we
considered necessary in the circumstances.
In our opinion, the financial statements referred to above present fairly the consolidated financial
position of Hirose Electric Co., Ltd. and consolidated subsidiaries as of March 31, 2002 and 2001,
and the consolidated results of their operations and their cash flows for the years then ended inconformity with accounting principles generally accepted in Japan (see Note 1) applied on a consistent basis during the periods, except as noted in the following paragraph.
As explained in Notes 1(d) and 1(i) (1) Hirose Electric Co., Ltd. and consolidated subsidiaries prospectively adopted new Japanese accounting standards for financial instruments and employees’
severance and retirement benefits in the year ended March 31, 2001, and new Japanese accounting
standards for available-for-sale securities in the year ended March 31, 2002. Also, Hirose ElectricCo., Ltd. changed its accounting for directors’ and corporate auditors’ retirement and severance
benefits, effective April 1, 2000, as referred to in Note 1 (i) (2), with which we concur.
Also, in our opinion, the translated amounts in the accompanying consolidated financial statements
translated into U.S. dollars have been computed on the basis set forth in Note 2.

Asahi & Co.
Tokyo, Japan
June 27, 200218

Directors and Corporate Auditors(As of June 27, 2002)

Representative Director

HIDEKI SAKAI
Chairman and Chief Executive Officer

Representative Director

TATSURO NAKAMURA
President and Chief Operating Officer

Managing Director

KUNIO YONEBAYASHI
Director, General Manager of Sales Division

Directors

IZUMI MORIMOTO
Director, General Manager of Production Division
MITSUYOSHI YAMAMOTO
Director, General Manager of Engineering Division;
General Manager of SB Department
SAKAE KUSHIDA
Director, General Manager of Administrative Division;
General Manager of Corporate Planning Department
and Accounting Department

Corporate Auditors

MASAO HIROHASHI*HIDESATO SEKINE*TAKASHI HIGA

* Special external company auditor, as stipulated in the Commercial Code of Japan,
Section 18, Article 1.

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General Information

R&D Facilities
Yokohama Engineering Center
Domestic Manufacturing Subsidiaries
TOHOKU HIROSE ELECTRIC CO., LTD.
KORIYAMA HIROSE ELECTRIC CO., LTD.
ICHINOSEKI HIROSE ELECTRIC CO., LTD.
Overseas Manufacturing Subsidiaries
HIROSE ELECTRIC (TAIWAN) CO., LTD. (Taiwan)
HIROSE ELECTRIC MALAYSIA, SDN. BHD. (Malaysia)
P.T. HIROSE ELECTRIC INDONESIA (Indonesia)
HIROSE ELECTRIC HONG KONG CO., LTD. (Hong Kong)
HIROSE ELECTRIC (DONG GUAN) CO., LTD. (China)
Domestic Sales Offices and Overseas Sales Offices
Tachikawa Sales OfficeKita-Kanto Sales OfficeOsaka Sales Office
Nagoya Sales OfficeHong Kong Branch Office
Singapore Branch Office
Europe Branch Office (The Netherlands)
Shanghai Office (China)
Overseas Sales Subsidiaries and Joint Ventures
HIROSE ELECTRIC (U.S.A.), INC.
HIROSE ELECTRIC GmbH (Stuttgart, Germany)
HIROSE ELECTRIC UK LTD. (Milton Keynes, England)
HIROSE KOREA CO., LTD. (joint venture with Dae Duck Industries)
Hirose Cherry Precision Co., Ltd. (Japan) (joint venture with The Cherry Corporation)
Shareholder Information
Hirose Electric common stock is listed on the First Section of the Tokyo Stock Exchange under the
securities code number 6806. As of March 31, 2002, approximately 39.71 million outstanding shares were
held by 6,759 investors.
Foreign investors held 33.77% of shares outstanding.
Main Bank References
Sumitomo Mitsui Banking Corporation
Shinsei Bank, Ltd.
The Sumitomo Trust & Banking Co., Ltd.

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Corporate Data

Date of Incorporation
June, 1948
Head Office
5-23, Osaki 5-chome, Shinagawa-ku, Tokyo 141-8587, Japan
Telephone: +81(3) 3491-5300
Facsimile: +81(3) 3495-5230
Stock Exchange Listings
Tokyo Stock Exchange, First Section
Transfer Agent
The Sumitomo Trust & Banking Co., Ltd.
4-4, Marunouchi 1-chome, Chiyoda-ku, Tokyo 100-8233, Japan

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5

HIROSE ELECTRIC CO.,LTD.
5-23, Osaki 5-chome, Shinagawa-ku, Tokyo 141-8587, Japan
Telephone: +81(3) 3491-5300 Facsimile: +81(3) 3495-5230

Printed in Japan