64th Fiscal Term

Annual Report

From April 1, 2010 to March 31, 2011

HIROSE ELECTRIC CO., LTD.

HIROSEELECTRIC
CO.,LTD.

To Our Shareholders

We are pleased to report the results of operations for fiscal 2010,
the year ended March 31, 2011 (the 64th fiscal term, from April 1,
2010, to March 31, 2011).

President and Representative Director

Tatsuro Nakamura

Business Overview
During the year ended March 31, 2011, despite expectations of anautonomous economic recovery in Japan, supported by improved
corporate profits especially among export-related companies andstable capital investment, a harsh employment situation and a
deflationary trend continued. In addition, economic uncertainty andweakened business activity prevailed after the summer months,
reflecting such negative concerns as slowing overseas economies
and the rapid and lingering appreciation of the yen. Furthermore,with the Great East Japan Earthquake that occurred on March 11,
2011, the production activities of many industries were significantly
hindered as a result of damage to production facilities, the disorderof supply chains and restrictions on power supply following.
In this adverse business environment, the Hirose ElectricGroup continuously reinforced its product development capabilities,
developed new products and enhanced product quality in response
to sophisticated customer needs while streamlining internal
operating systems at the Group companies. The Group also pushedforward with aggressive management initiatives including overall
cost-cutting measures such as improvement of manufacturing
efficiency, an expansion in overseas manufacturing and reductions
in general expenses, as well as the exploitation of domestic andoverseas sales channels and the reinforcement of selling power.
Furthermore, the Group has strengthened its reform initiatives in
the automotive electronics and industrial equipment fields tonurture promising business pillars in addition to the core mobile
phone field and these concerted efforts have gradually yielded goodresults.
In December 2010, the Company increased its investment ratioin HIROSE KOREA CO., LTD., which was then an equity-method
affiliate, from 50% to 75% and converted it into a subsidiary toensure its smoother corporate operation. A series of steps were

Executive Vice President andRepresentative Director

Sakae Kushida

Financial Highlight■ Net sales■ Ordinary income■ Net income

Millions of yen
118,043
120,000 115,485

Millions of yen
45,00040,19937,97640,000Millions of yen
25,000 24,176
22,59735,00020,000100,000

89,872

84,46892,44080,00030,00025,00060,00020,00040,00021,99922,73915,00013,306

13,266

2009

2010

11,71410,00015,00010,00020,000

5,000

5,000

0

0

0
2007

1

20,776

2008

2009

2010

2011

2007

2008

2009

2010

2011

2007

2008

2011

taken to reinforce its sales promotion and exploit the South Koreanconnector market, as well as to develop this new subsidiary as animportant overseas base that will play a key role in the growth of
the global business of the Group. HIROSE KOREA’s businessperformance was included in and reported under the account item
of“Equity in earnings of affiliates”until the third quarter of the
fiscal year ended March 31, 2011. Because of the change in the legal
form of the subsidiary, both net sales and income/loss were
included in the consolidated statement of income for the fourth
quarter of the year under review.
In line with the measure of converting HIROSE KOREA into a
subsidiary by increasing the ratio of investment in HIROSE
KOREA, a ¥1,895 million“Loss on step acquisitions”was reported
as an extraordinary loss.
As for the Great East Japan Earthquake, although direct
damage to the buildings and manufacturing facilities of our three
production subsidiaries in the Tohoku region was relatively minor,
these subsidiaries had to suspend their plant operations for about
10 days due to power failures, a disruption of the water supply, aninterrupted communications network, the shortage of gasoline andother disturbances after the earthquake. Yet, they were gradually
restored to normal operational status. Meanwhile, two of
approximately 70 cooperative companies in the Tohoku region
suffered from the destruction of plant buildings and facilities,
thereby leading to the abolition of all manufacturing equipment lentby the Company and/or inventories stored thereat. Consequently,
the Company reported a ¥360 million“Loss on disaster”for theyear under review.
As a result, consolidated net sales for the year under review
amounted to ¥92,440 million, an increase of 9.4% from a year
earlier. Operating income, ordinary income and net income
increased 7.9% and 3.4%, respectively, year over year to ¥22,026
million and ¥22,739 million, whereas net income decreased 11.7% to¥11,714 million.
The management environment in which the Group operates is
unstable and remains uncertain with such adverse factors as the■ Net income per shareyen
700

621.08600

feared shortage of the electrical supply in the upcoming summer
months because of the nuclear accident, pollution from radioactive
substances and the frequent occurrence of large aftershocks. Yet,the quantitative expansion of mobile phones, smartphones andtablet PCs; further growth in automotive electronics along with arally in the number of vehicles produced; and the growth of theindustrial machinery and communications markets are anticipated.
Nevertheless, our management environment is forecast to remain
severe, affected by the diversification of markets; shorter productcycles, which will pose higher risks in collecting the fruits of ourinvestment; and intensifying competition due to customers’
preference for lower-priced products.
In this tough business environment, the Group intends topursue leading-edge technologies, conduct more efficient
distribution and concentration of resources and consistently carryout reforms and innovations. Such aggressive initiatives also
include the reinforcement of high-value-added product development
capabilities to meet market needs, and the promotion of
manufacturing efficiency and further improvement of productq ua l i t y, a l l o f w h i c h w o u ld s er ve t o i m pr o ve o ur c o s tcompetitiveness. At the same time, we are determined tostrengthen our management foundations toward profitable growthand improve our corporate value through efforts to promote
globalization, including the initiative to focus on the diversificationof risk at production bases, and exploit domestic and overseas sales
channels.
We look forward to your continued support andencouragement.
June 2011

Tatsuro Nakamura

Executive Vice President and Representative Director

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

%
100

yen
7,000

Equity ratio

Ordinary income ratio to sales

90

587.36

6,000

80

500
400

356.59363.15330.23

300
200

70

5,000

60

4,000

50
40

3,000

30

2,000

20

100

0
2007

2008

2009

2010

2011

6,159

6,277

6,271

6,463

6,649

2007

2008

2009

2010

2011

1,000

10

0

President and Representative Director

0

2007

2008

2009

2010

2011

2

Overview by Product Segment

Multi-Pin Connectors

Our flagship multi-pin connectors include avariety of connector types such as circular andrectangular connectors, connectors for ribbon
cables, connectors used for printed circuitboards including FPCs (flexible printed circuitboards) and nylon connectors. The major
applications of these connectors include a wide
range of fields such as mobile phones andsmartphones, digital information consumer
electronics, PCs, communications equipment
and automotive electronics, as well as industrial

3

fields such as measuring and control equipment,
FA equipment and medical electronics
equipment. Further expansion in demand is
expected along with the further development ofa sophisticated information and communications
networked society and an eco-friendly, energy
conservation-oriented society.
Consolidated segment sales for the year
under review increased 10.3% year over year to¥74,939 million, mainly supported by sales growthin the field of automotive electronics andindustrial equipment.

Coaxial Connectors

Coaxial connectors are a special type of highperformance connector used primarily for
microwave and other high-frequency signals. Theirapplications include microwave communications
devices, satellite communications equipment,
electronic measuring instruments, mobile
phones and smartphones, and switching andtransmission equipment and other electronicequipment. Optical fiber connectors are also
included in this segment.
Consolidated segment sales for the year
under review increased 4.5% year over year to¥12,049 million, despite sluggish demand for apart of digital consumer electronics.

Other Products

The other products segment includes medical
electronics equipment such as interference wave
EMSs; high-frequency devices such as directional
couplers, fixed attenuators and coaxial switches;

micro switches; and instruments for connectors.
Consolidated segment sales for the year
under review increased 9.5% year over year to¥5,452 million.

4

Consolidated Financial Statements
Consolidated Balance Sheets
Account item

(Millions of yen)

Consolidated Statements of Income

As of March 31, 2011 As of March 31, 2010

(Assets)
Current assets

167,599

165,198

Fixed assets

92,537

87,69824,464

18,564

Property, plant and equipment

From April 1, 2010 From April 1, 2009
to March 31, 2011 to March 31, 2010

Account item
Net sales

92,44084,468

Cost of sales

52,61547,867Gross profit

39,82536,601

17,79916,190

Selling, general and administrative expenses

22,026

20,411Other income

Operating income

1,560

1,849

Other expenses

846

261

22,73921,999Intangible assets

1,884

2,093

Investments and other assets

66,18767,040Ordinary income

260,136

252,897

Extraordinary Income

234―

Extraordinary Loss

2,501

199
21,799Total assets(Liabilities)

Income before income taxes

20,472Current liabilities

20,47420,929Provision for income taxes―Current

8,506

8,703

Long-term liabilities

2,100

1,555

Provision for income taxes―Deferred

260

△170

Total liabilities

22,574

22,485

Income (loss) before minority interests

11,706―(Net assets)
Shareholders’equity

236,511

232,500

Common stock

9,404

9,404

Additional paid-in capital

14,371

14,371Retained earnings

262,056

255,259

Treasury stock, at cost

△49,321△46,535△8―

11,714

13,266

Minority interest in loss
Net income
Note: Amounts less than ¥1 million are truncated.

Consolidated Statements of Cash Flows (Millions of yen)
From April 1, 2010 From April 1, 2009
to March 31, 2011 to March 31, 2010

Account item
Operating activities

22,19323,394

Investing activities△28,006△6,615△14,055△1,696△2,154

Financing activities△7,58164

66

Effect of exchange rate change on cash and cash equivalents△1,042△65

Minority interests

2,682

―

Net increase/decrease in cash and cash equivalents△14,438

2,657

Total net assets

237,562

230,412

Cash and cash equivalents, beginning of the year

56,83653,763

Increase in cash and cash equivalents from newly consolidated subsidiary

37

414

Total liabilities and net assets

260,136

252,897

Cash and cash equivalents, end of the year

42,43556,836

Accumulated other comprehensive income
Stock acquisition rights

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, 2010 to March 31, 2011)	(Millions of yen)

Shareholders’equity

Balance at March 31, 2010
Amount of changes during the period
Dividends from surplus
Net income for the period
Acquisition of treasury stock
Disposition of treasury stock
Change of scope of consolidation
Net amount of changes during theperiod other than shareholders’equity
Total amount of changes during the period
Balance at March 31, 2011

Accumulated other comprehensive income
Stock
CommonAdditional
Retained
Treasury
Total shareholders’ Valuation difference Foreign currency Total accumulated acquisition
on available-fortranslation
other comprehensive
rightsstock
paid-in capital earnings stock, at costequitysale securities
adjustment
income9,404
14,371
255,259△46,535
232,500
2,351△4,505△2,15466△4,793
11,714
△0

―
9,404

△0
14,371

Note: Amounts less than ¥1 million are truncated.

5(Millions of yen)

△124

6,796
262,056△2,7850△2,785△49,321△4,793
11,714△2,7850△124

Minority
interests

Total net
assets―230,412―――――△4,793
11,714△2,785
0
△124

―

△226

684

458

△2

2,682

3,138

4,011
236,511

△226
2,124

684
△3,820458△1,696

△2
64

2,682
2,682

7,149
237,562

Nonconsolidated Financial Statements
Nonconsolidated Balance Sheets
Account item

(Millions of yen)

As of March 31, 2011 As of March 31, 2010

(Assets)
Current assets

97,870103,079

Fixed assets

55,82051,614

Property, plant and equipment

13,231

11,106

Intangible assets

1,176

1,358

Investments and other assets

41,412

39,149153,691

154,693

Current liabilities

10,212

11,628Long-term liabilities

386

445

10,59912,074

Total assets

Nonconsolidated Statements of Income (Millions of yen)
From April 1, 2010
to March 31, 2011

From April 1, 2009
to March 31, 2010

Net sales

82,632

78,247

Cost of sales

56,58253,523Gross profit

26,05024,72314,005

13,036

12,045

11,686

Other income

4,202

4,914

Other expenses

2,246

1,920

Ordinary income

14,001

14,680Extraordinary Income

234―

Extraordinary Loss

411

119

Income before income taxes

13,824

14,561

Provision for income taxes―Current

5,629

5,910

Provision for income taxes―Deferred

△29

△43

Net income

8,223

8,694

Account item

Selling, general and administrative expenses

Operating income(Liabilities)

Total liabilities(Net assets)
Shareholders’equity

140,918

140,274

Common stock

9,404

9,404

Additional paid-in capital

14,371

14,371Retained earnings

166,463

163,033

Treasury stock, at cost

△49,321△46,535

2,109

2,278

64

66

Total net assets

143,092

142,619

Total liabilities and net assets

153,691

154,693

Valuation, translation adjustments and others
Stock acquisition rights

Note: Amounts less than ¥1 million are truncated.

Note: Amounts less than ¥1 million are truncated.

6

Introduction of Our New ProductsNew
products

The Company launches many new products every year into the market. The following product series are
typical of our recent introductions.
EV1 Series
The EV1 Series connectors were developed as waterproof connectors
compliant with high voltage and high current for use in power supplies for
HEVs and EVs. The series connectors feature excellent vibration resistanceand a robust configuration by taking into account the use for vehicles thathave no suspension structure. To raise and ensure the safety level, theconnectors adopt a finger protection mechanism that does not allow users
to touch the contact terminals with their fingers to prevent electrical shock.

DF59 Series
The DF59 Series connectors were developed for use in strip-light
LEDs. The substrate side connector is standardized for theconnection with coupler plugs, cable plugs and short pins. The
coupler plug has realized a three-axial floating function by adopting athree-piece configuration to absorb the position dislocation between
substrates. The unique stress-free contact configuration of theseries reduces the concentration of stress on the contact points.

7

EX10 Series

The EX10 Series connectors are multi-pin rectangular connectors with
280 pins developed for applications in medical electronics and industrial
equipment. They meet the customers’need for space saving and low
height and have become user-friendly multi-pin products that retain theinsertion/pull-out property with less force by adopting a four-step
sequence configuration. The series lineup includes two types ofreceptacles: right angle and vertical.

MS-180 Series
The MS-180 Series connectors are the world’s smallest coaxial products,of which the Hirose Electric Group boasts the top-rated market share in
the world. The dimensions of the series connectors are 1.8 mm (W) × 1.8
mm (D) × 0.85 mm (H), and they are compatible with a frequency range of
DC to 11-GHz high bandwidth. The series connectors can be used as highperformance coaxial switches available for the use of shipment inspection
for smartphones, tablet PCs and various kinds of wireless modules.

Group Network■ Overseas bases(Branches, manufacturing subsidiaries
and sales subsidiaries)■ Overseas agencies■ Major exporting destinations● Head office● HIROSE ELECTRIC
MALAYSIA SDN.
BHD. (Malaysia)● Yokohama
Engineering Center● Head office● Sales & Marketing
Division
Domestic sales offices● Engineering Division
Yokohama
Engineering Center
Separate Office ofEngineering Center● Production Division
Separate Office of Yokohama
Engineering Center● Sales & Marketing
Division● P.T. HIROSE
ELECTRIC INDONESIA(Indonesia)

5-23, Osaki 5-chome, Shinagawa-ku, Tokyo● Subsidiaries

1-11, Osaki 5-chome, Shinagawa-ku, Tokyo
Tachikawa Sales Office, Osaka
Branch, Nagoya Sales Office
3-13, Kikuna 7-chome,
Kohoku-ku, Yokohama
8-11, Shin-Yokohama 3-chome,
Kohoku-ku, Yokohama
15-10, Shin-Yokohama 2-chome,
Kohoku-ku, Yokohama● H IROSE ELECTRIC(DONGGUAN) CO.,LTD. (China)(Domestic)

TOHOKU HIROSE ELECTRIC CO., LTD. (Miyako, Iwate)
KORIYAMA HIROSE ELECTRIC CO., LTD. (Koriyama, Fukushima)
ICHINOSEKI HIROSE ELECTRIC CO., LTD. (Ichinoseki, Iwate)
HST CO., LTD. (Yokohama, Kanagawa)(Overseas)
HIROSE ELECTRIC (U.S.A.), INC. (U.S.A.)HIROSE ELECTRIC EUROPE B.V. (The Netherlands)
HIROSE ELECTRIC UK LTD. (U.K.)
HIROSE ELECTRIC MALAYSIA SDN. BHD. (Malaysia)
HIROSE KOREA CO., LTD. (South Korea)
HIROSE ELECTRIC (TAIWAN) CO., LTD. (Taiwan)
P.T. HIROSE ELECTRIC INDONESIA (Indonesia)
HIROSE ELECTRIC SINGAPORE PTE. LTD. (Singapore)
HIROSE ELECTRIC HONG KONG CO., LTD. (Hong Kong)
HIROSE ELECTRIC HONG KONG TRADING CO., LTD. (Hong Kong)
HIROSE ELECTRIC (DONGGUAN) CO., LTD. (Dongguan, China)
HIROSE ELECTRIC TRADING (SHANGHAI) CO., LTD. (Shanghai, China)
HIROSE ELECTRIC (SUZHOU) CO., LTD. (Suzhou, China)
HST (HONG KONG) LTD. (Hong Kong)
HIROSE ELECTRIC TECHNOLOGIES (SHENZHEN) CO., LTD. (Shenzhen, China)
WEIHAI HIROSEKOREA ELECTRIC CO., LTD. (Weihai, China)
WEIHAI HIROSE TRADING CO., LTD. (Weihai, China)
8

Corporate Data

Corporate Data (As of March 31, 2011)
Trade name

HIROSE ELECTRIC CO., LTD.

Date of incorporation

June 15, 1948

Number of employees

777 (excluding part-timers)

Paid-in capital￥9,404,379,401

Directors and Corporate Auditors (As of June 29, 2011)
President and Representative Director
Executive Vice President and Representative Director
Senior Managing Director
Managing Director
Director
Director
Director
Director
Outside Director
Full-time Corporate Auditor
Outside Corporate Auditor
Outside Corporate Auditor
Outside Corporate Auditor

Tatsuro Nakamura
Sakae Kushida
Kazunori Ishii
Yoshikazu Yoshimura
Kazuhisa Nikaido
Kazuyuki Iizuka
Makoto Kondo
Mitsuo Nakamura
Kensuke Hotta
Toshio Matsubara
Hidesato Sekine
Takashi Higa
Terukazu Sugishima

Notes:
1.	Director Kensuke Hotta is the outside director as
stipulated in Article 2, Item 15, of the Corporation Law.
2.	Corporate Auditors 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 LLC

Stock Information (As of March 31, 2011)
Total number of shares issued
35,313,977 shares(Excluding 4,706,759 shares of treasury stock)
Number of shareholders

5,339

Major shareholders (Top 10)
Number of
Ratio ofshares held shareholding

NameHundred shares％

State Street Bank and Trust Company
Japan Trustee Services Bank, Ltd. (Trust account)

34,10428,55017,716
16,761
12,593
9,981
9,257

9.66
8.08
5.02
4.75
3.57
2.83
2.62

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

2.31

Mizuho Trust & Banking Co., Ltd. 0700016
Mizuho Trust & Banking Co., Ltd. Trust account 0700017

7,898
7,847

2.24
2.22

State Street Bank and Trust Company
Hirose International Scholarship Foundation
Japan Trustee Services Bank, Ltd. (Trust account No. 4)
JPMorgan Chase Bank 380055
State Street Bank and Trust Company 505223

Note: In addition to the 10 major shareholders above, the Company owns
47,067 hundred shares of treasury stock. The ratio of shareholding is
calculated after excluding the shares of treasury stock.

Distribution of shares by shareholder type
Individuals, etc./4,720 persons
75,586 hundred shares(18.89%)Government and local public entities/
1person3 hundred shares (0.00%)
Financial institutions/63 persons
101,521 hundred shares(25.37%)

Foreign corporations, etc./302 persons
167,017 hundred shares (41.73%)

Securities companies/
40 persons
4,781 hundred shares(1.19%)
Other corporations/213 persons
51,297 hundred shares(12.82%)

Shareholder information
Fiscal term

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

Ordinary General
Meeting of Shareholders

June every year

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

100 shares

Method of public notice

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

Shareholders’register manager andaccount management
institution for special
accounts

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

Paperwork
processing officeof shareholders’register manager

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

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

Web site

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

The Company’s Web site

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

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