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HIROSE ELECTRIC CO.,LTD.
HIROSE ELECTRIC CO.,LTD.
A n nu a l R e p o r t
2 0 0 5 HIROSE ELECTRIC
is a specialist in industrial-use connectors for electronic equipment, a
field in which it has a proud track record of original product development. In recent years, the
company has been aggressively expanding into consumer electronics and other fields, mobiliz-
ing its accumulated expertise to carve out a succession of new markets.
By supplying a broad range of high-quality connectors suitable for every conceivable type
of application, Hirose Electric has won the patronage of leading global companies in the fields of
computer and communications equipment, factory and office automation equipment, instrumen-
tation, 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 fiber
connectors 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.
Profile
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
Independent Auditors Report ________________________________ 19
General Information ________________________________________ 20
Directors and Corporate Auditors / Corporate Data ________________ 21
Contents 1
0
90,000
60,000
30,000
Millions of Yen
Millions of Yen
Millions of Yen
01 02
0
30,000
0
20,000
20,000
15,000
10,000
10,000
5,000
03
01 02 03
01 02 03
04
04
04
05
05
05
Net Sales
Operating Income
Net Income
Financial Highlights
Hirose Electric Co., Ltd. and Consolidated Subsidiaries
For the years ended March 31, 2005, 2004 and 2003
Thousands of
Millions of Yen
U.S. Dollars*
2005
2004
2003
2005
Net Sales: .............................................................
¥ 89,562
¥ 79,012
¥ 67,890
$ 833,988
Domestic market ..............................................
52,580
49,818
45,965
489,617
Overseas market ..............................................
36,982
29,194
21,925
344,371
Operating Income ................................................
29,665
26,044
20,138
276,236
Net Income ..........................................................
18,315
15,043
11,398
170,547
At year-end:
Total assets ......................................................
¥ 221,682
¥ 202,873
¥ 192,802
$2,064,270
Shareholders equity ........................................
194,992
176,672
169,787
1,815,737
Per share of common stock:
(in yen and dollars)
Net income Basic ........................................
¥ 468.46
¥ 382.26
¥ 284.87
$ 4.36
Diluted ..................................... 381.15
282.94 Shareholders equity ........................................
5,017.74
4,538.25
4,276.05
46.72
* U.S. dollar figures have been translated from yen, for convenience only, at the rate of ¥107.39 = U.S.$1. 2
To Our Shareholders
Sales and Income Hit Record Highs
In the fiscal year ended March 31, 2005, the Japanese economy was supported until the summer by the strength of
the U.S. and Chinese economies, which led to increases in exports and capital investment that resulted in a trend
toward economic recovery. However, the subsequent rise in oil prices resulted in slowdowns in the U.S. and
Chinese economies, and the Japanese economy entered an adjustment phase.
Amid this environment, Hirose Electric succeeded in posting net sales and net income that hit record highs.
Consolidated net sales increased year on year by ¥10,550 million, or 13.4%, to ¥89,562 million and net income
rose ¥3,272 million, or 21.8%, to ¥18,315 million.
By product area, sales of our flagship multi-pin connectorswhich include circular and rectangular connec-
tors, and connectors for ribbon cables, connectors used for printed circuit boards including FPCs (flexible printed
circuit boards) and PC cards, as well as nylon connectorsincreased 15.2% to ¥74,419 million. This was mainly
the result of demand in the IT and communications fields, particularly for advanced-function mobile phones and
digital consumer electronics.
In coaxial connectors, sales decreased 2.5% to ¥10,474 million due to a slump in demand for mobile com-
munications equipment and investments in communications infrastructure. Coaxial connectors are a special type
of high-performance connector used primarily for microwave and other high-frequency signals. Their applica-
tions include microwave communications devices, satellite communications equipment, electronic measuring in-
struments, mobile communications equipment such as mobile phones, and switching and transmission equipment
and other electronic equipment. Optical fiber connectors are also included in this sector.
Sales in the Other Products sector increased 27.3% to ¥4,667 million. This sector includes high-frequency devices
such as directional couplers, non-reflecting terminal equipment, fixed attenuators, circulators and coaxial switches, as
well as low-frequency equipment designed for medical treatment applications and instruments for connectors. 3
Our Management Philosophy
As a specialist manufacturer of connectors, Hirose Electric has been contributing to the development of the
electronics 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. This concept is rooted in the belief
that we can maintain high-quality management in an efficient organization if we humbly recognize our limita-
tions 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
trust of our customers and fulfill the expectations of our shareholders.
Raising Corporate Value
Our increasingly severe operating environment seems set to continue. As a result of expansion in such fields as IT
and communications networks, digital consumer equipment and car electronics, market growth prospects in our
industry are good. However, increasing diversification of the market and shorter lifecycles of products mean
growing investment return risks and intensified competition between companies.
We intend to meet these challenges by constantly pursuing state-of-the-art technology, devising more effi-
cient allocation and concentration of resources, persevering in implementing reforms and innovations, bolstering
our ability to develop products that cater to emerging needs and increasing high value-added products, driving
improvements in productivity, and increasing cost competitiveness by raising quality and taking other measures.
At the same time, we will advance globalization and develop sales routes in Japan and overseas, strive for profit-
able growth to strengthen our business foundation, and increase corporate value.
We will also continue to do our utmost to protect the environment. We have obtained ISO 14001 certifica-
tion, 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 2005
Hideki Sakai
Tatsuro Nakamura
Chairman and Chief Executive Officer
President and Chief Operating Officer 4
Financial Review
The Hirose Electric Co., Ltd. group consists of the parent company, Hirose Electric, 17 subsidiaries and 2 affiliates.
Of the subsidiaries, fourteen are consolidated. Thirteen of these consolidated subsidiaries were in existence last
fiscal year: Tohoku Hirose Electric Co., Ltd., Koriyama Hirose Electri