Member, Financial Accounting Standards Foundation

Consolidated Financial Results for the Fiscal Year Ended March 31, 2018

May 14, 2018

Listed company name
Funai Electric Co., Ltd.
Stock exchange listing
Tokyo first section
Securities code
6839
Representative
President and CEO
Inquiries
Officer General Manager
Annual general shareholders meeting
Filing of securities report
Commencement of annual dividend payments
Financial results supplementation
Financial results meeting

URL http://www2.funai.co.jp/en/
Hideaki Funakoshi
Makoto Ueshima
TEL: +81-72- 870-4395
June 27, 2018
June 27, 2018
Yes
Yes

1. Consolidated Financial Results for the Fiscal Year Ended March 31, 2018 (April 1, 2017 – March 31, 2018)(1) Consolidated Operating Results(% shows year on year rates)
Net Income(loss)
attributableto owners
Net Sales
Operating Income(loss) Ordinary Income(loss)of parent
Million yen%
Million yen%
Million yen%
Million yen%
130,130(10,885)(11,909)(24,709)
(2.8)
－
－
－
Fiscal Year 2017
133,838(6,775)(7,726)(6,745)(21.3)－－－
Fiscal Year 2016
(Note)

Comprehensive Income(25,467)million yen (－%) for the FY2017, (6,098)million yen (－%) for the FY2016

Net Income
Net Income(loss)
Per Share
Per Shareon a Fully Diluted
Basis
Yen
Yen
(724.21)－(197.70)－

Fiscal Year 2017
Fiscal Year 2016
(Reference) Equity in earnings of affiliates

Return on
Shareholders’Equity(38.9)(8.4)- million yen for the FY2017(2) Consolidated Financial Position
Total Assets
Fiscal Year 2017
Fiscal Year 2016
(Reference)

Million yen
80,270108,685

Shareholders’ Equity

Net Assets
Million yen
50,71776,656

50,699 million yen for the FY2017(3) Consolidated Cash FlowsNet Cash Provided by(Used in) Operating
Activities
Million yen(5,369)Fiscal Year 2017(13,329)
Fiscal Year 2016

Net Cash Provided by(Used in) Investing
Activities
Million yen(2,174)
13,266

Ordinary
Income(loss) toTotal Assets

Operating
Income(loss) Ratio%%(12.6)
(8.4)
(5.9)
(5.1)
(2) million yen for the FY2016
Shareholders’Equity Ratio%

Net Assets
Per Share
%

63.2
70.4

Yen
1,485.96
2,242.38

76,507 million yen for the FY2016
Net Cash Provided by(Used in) Financing
Activities
Million yen(584)(11,150)

Cash and Cash
Equivalents at the End
of Period
Million yen
30,65038,971

2. Dividends
1Q End2Q End3Q EndYear-End

Annual

Total
Dividend
Payment

yen

yen

yen

yen

yen

Million yen

－
－

10.00
0.00

10.00
0.00

341
－

－

－

－

Dividend per Share

Fiscal Year 2016
Fiscal Year 2017－－

Fiscal Year 2018
(Forecast)

－

0.00
0.00
－

Pay-out Ratio Dividend on
Equity Ratio
Consolidated Consolidated
%
－
－

%
0.4
－

－

(Note) The dividend forecast for FY 2018 is undetermined; because the high impact stemmed from the recent
fluctuations in exchange rates give to the consolidated net assets. Additionally the company’s dividend policy of DOE is
unchanged. The dividend forecast for FY 2018 will be announced as soon as it is determined.
3 Consolidated Financial Forecast for the Fiscal Year Ended March 31, 2019 (April 1, 2018 - March 31, 2019)(% shows year on year rates)Net
Net Income(loss)
Operating
Ordinary
Income(loss)
Net Sales
attributable to
Income(loss)
Income(loss)
owners of parent
Per Share
Million yen%
Million yen% Million yen% Million yen%
Yen
45,000(37.6)(2,400)(2,500)(2,300)(67.41)－－－The First Half
103,000
400
(600)
(700)
(20.52)(20.8)－－－
Full Year*Note(1) Changes in Consolidated Subsidiaries (Changes in Scope of Consolidation): No(2) Changes in accounting policies and estimates
1. Changes in accounting policies from revision of accounting standards: No
2. Changes in accounting policies from other reason: No
3. Changes in accounting estimates: No
4. Restatement: No(4) Number of Shares Outstanding (Ordinary Shares)
1. Number of shares outstanding (including treasury stock)
2. Number of shares of treasury stock
3. The Average number of outstanding shares

As of March 31, 2017
As of March 31, 2018
As of March 31, 2017
As of March 31, 2018
On March 31, 2017
On March 31, 201836,130,796
36,130,796
2,011,765
2,011,829
34,119,089
34,119,024

(Reference)Non-consolidated Financial Results for the Fiscal Year ended March 31, 2018 (April 1, 2017– March 31, 2018)(1) Non-consolidated Operating Results

Fiscal Year 2017
Fiscal Year 2016

Net Sales
Operating Income(loss)
Million yen%
Million yen%
119,197
14.6(6,594)－
103,982(9,084)(23.1)－Net Income(loss)
Per Share
Yen

Fiscal Year 2017
Fiscal Year 2016

(569.64)
62.69

Net Income
Per Shareon a Fully Diluted BasisYen－－(2) Non-consolidated Financial Position
Total Assets
Fiscal Year 2017
Fiscal Year 2016
(Reference)

Million yen
73,612
91,994

Shareholders’ Equity(% shows year on year rates)
Net Income(loss)
Ordinary Income(loss)
Million yen%
Million yen%(8,414)(19,435)－－(5,315)
2,138－－

Net Assets
Million yen
51,362
71,26951,344 million yen for the FY2017

Shareholders’ Equity
Ratio

Net Assets
Per Share
%

69.7
77.3

Yen
1,504.87
2,084.46

71,119 million yen for the FY2016

Note:
This document contains forward-looking statements and projections regarding business performance which are nothistorical facts. Please note that these statements are based on the current expectations, assumptions, estimates andprojections of the Funai Group in light of the information currently available to it. Actual performance may materiallydiffer from projections included in this document because of the impacts of uncertainty in various factors.

1. Business Performance and Financial Position(1) Overview of Business Performance
1. Business Performance for the Fiscal Year2017
In the United States, the Group’s mainstay market, the economy has slowed down moderately. This was because thegrowth of wages was modest, causing personal consumption to stagnate, although employment in the U.S.
continued to be strong, supported by solid business performance. However, corporate sentiment is expected toremain solid. In Europe, the economic expansion has lost momentum due to the shortage of facilities and labor, witha general weakness in production, export and consumer spending. In China, the economy grew steadily, supportedby the improvement in employment while consumer spending slowed down moderately.
In Japan, the economy continued its modest recovery with strong employment and incomes, while exports andproduction activities declined.
Under these circumstances, the Group reported net sales of ¥130,130 million, a 2.8% decrease from the previous
year. This was attributable to the following reasons: (i) sales of LCD TVs substantially fell short of its initial budget
because demand for LCD TVs in the U.S. decreased from the previous year, which resulted in an oversupply causing
further cut-throat competition with the decline in sales prices and the sales volume; (ii) sales of DVD-related
products fell from the previous year due to the shrinkage of the market; and (iii) sales of the electronic reception
devices of DX Antenna Co., Ltd. were not included in the consolidated sales results of the current year as the Grouptransferred all shares in DX Antenna, which was a consolidated subsidiary of the Group in the previous year, to
ELECOM Co., Ltd. The Group reported an operating loss of ¥10,885 million (operating loss of ¥6,775 million in theprevious year). This was due to the following reasons: (i) sales of LCD TVs decreased; (ii) sales promotion expenses
increased to sell away inventory of LCD panels procured for the year-end sales season before their prices declined
and LCD TVs produced by using these LCD panels; (iii) we failed to provide price-competitive products to the market
in a timely manner at a time when LCD panel prices were declining; and (iv) component prices, including memory,
remained at a high level.
Ordinary loss amounted to ¥11,909 million due to foreign exchange losses in accounts receivable from theappreciation of the Japanese Yen against the U.S. dollar. (an ordinary loss of ¥7,726 million in the previous fiscal
year). Net loss attributable to owners of parent ended at ¥24,709 million due to accounting for impairment loss (anet loss attributable to owners of parent of ¥6,745 million in the previous fiscal year).
Results by regioni) Japan
Electronic reception devices decreased due to excluding the DX Antenna Co., Ltd. from the scope of consolidation
by transfer of this all shares held by the Company. However, LCD TVs and BD-recorder increased due to good sales.
As a result, net sales were ¥36,199 million (up 16.0% year on year) and segment loss (operating loss) resulted in¥5,634 million (segment loss of ¥8,219 million in the previous fiscal year).
ii) Americas
LCD TVs and DVD related products decreased. As a result, net sales amounted to ¥92,949 million, down 8.7% year
on year, and segment loss amounted to ¥965 million (a segment loss of ¥131 million in the same quarter of thelast fiscal year).
iii) Asia
Net sales amounted to ¥853 million, up 211.5% year on year due to increase on LCD TVs and other parts. Segment
loss (operating loss) amounted to ¥3,948 million (a segment loss of ¥630 million in the same quarter of the last
fiscal year).
iv) Europe
Ink-jet printers and ink-cartridge decreased. As a result, net sales dropped to ¥127 million, down 79.3% year on
year, while segment loss (operating loss) ended at ¥83 million (a segment profit of ¥45 million in the previous
fiscal year).
Results by product segmenti) Audiovisual Equipment
DVD related products decreased. However, LCD TVs and BD-recorder increased due to good sales. As a result, net
sales ended at ¥122,569 million, up 6.3% year on year.
ii) Information Equipment
Ink-jet printers and ink-cartridge decreased. As a result, net sales amounted to ¥3,334 million, down 34.3% year
on year.

iii) Other ProductsElectronic reception devices decreased due to excluding the DX Antenna Co., Ltd. from the scope of consolidation
by transfer of this all shares held by the Company. As a result, net sales of other products amounted to ¥4,225
million, down 68.7% year on year.
2. Consolidated Financial Forecast for the Fiscal Year 2018
As environment surrounding the Display business and Digital Media business, especially in the U.S. market, still
remain unclear, we forecast net sales of these businesses to decrease by ¥27,100 million owing to the intensificationof competition and discontinuation of loss-making products. Shipments of FUNAI brand products to Japan, which theGroup started from this fiscal year, have been growing steadily. Management has decided to concentrate the Group’s
resources on the development of FUNAI brand products including OEM products targeted at the Japanese market,
since their sales are expected to grow further in the future. Net sales and operating profit of the Office Solutions
business and new businesses have been on the decline because it took long years to develop technology. The Group
expects net sales and operating profit of these businesses to increase in the next fiscal year, since it has carried out
measures with selection and concentration to turn these businesses into a profit center and steadily cultivated newcustomers in new business fields.
To increase operating profit, the Group will not only strive to promote sales of higher gross profit margin products
but also meticulously procure materials according to customers’ actual sales with the aim to restrain valuation loss
on inventory of products and raw materials including components. The Group estimates that gross profit margin will
improve by 11%. This is because: (i) the Group recorded impairment loss for business assets of ¥12,500 million by
the Display business, Digital Media business and Office Solutions business as extraordinary loss in fiscal year 2017.
This has resulted in a decline in depreciation of non-current assets that is included in the cost of sales for fiscal year
2018; and (ii) prices of LCD panels have stabilized. Meanwhile, the Group plans to reduce selling, general andadministrative expenses to less than ¥17,900 million yen by cutting back on fixed costs, such as personnel cost, andslashing royalty, etc. by ¥1,400 million. The Group will focus on the basic policy mentioned below to improve net
sales and operating profit.
(a) Display business (LCD-TV business): Sales forecast of ¥81,000 million (down 22.2% from the previous year)- Expect sales to decrease by US$207 million due to intensifying competition and reduction of unprofitableproducts in the U.S. market- Project sales to existing customers (large mass merchandisers) in the U.S. market to increase by US$13 million
due to the acquisition of SKU- Expect sales to increase by ¥500 million by concentrating management resources on the development of FUNAI
brand products and OEM products in the Japanese market(b) Digital Media business (DVD and BD businesses): Sales forecast of ¥15,000 million (down 18.9% from theprevious year)- Expect sales to decrease by US$31 million due to intensifying competition and reduction of unprofitableproducts in the U.S. market- Acquire market share by implementing a niche strategy focusing on products (DVD players, etc.) from which
competitors withdraw in the U.S. market(c) Office Solutions business (information equipment-related business): Sales forecast of ¥5,000 million (up 51.5%
from the previous year)- Improve profitability by expanding sales of high value-added printers- Implement a derivative business by making use of microfluidics (micro fluid control technology)(d) New businesses: Sales forecast of ¥2,000 million (down 52.4% from the previous year)- Project sales to decrease by US$20 million due to the shrinkage of markets of existing products- Expand sales by developing and releasing new products related to healthcare, medical and in-vehicle devices
The forecast of business results for the year ending March 2019 is as follows:< Consolidated Operating Forecast >Net sales
Operating income
Ordinary loss
Net loss attributable to owners ofparent¥ 103,000 million
400 million
600 million
700 million( 20.8 % decrease year-on-year)(Last fiscal year operating loss 10,885 million)(Last fiscal year ordinary loss 11,909 million)(Last fiscal year net loss 24,709 million)

For the forecast of business results, the Group’s assumed exchange rate (average during the period) is ¥105 per US$.
The year-end exchange rate is ¥100 per US$.
The operating forecast is a forward-looking statement about the future performance of the Company and is basedon management’s assumptions and beliefs in light of information currently available, and involves risks anduncertainties. Various factors such as changes in economic conditions overseas, especially in the U.S. market, andsevere price fluctuations may cause actual results to differ from this forecast.

(2) Overview of Financial Position
1. Balance Sheet
Total assets decreased by ¥28,414 million compared to the end of the last fiscal year. The primary components ofthe change were as follows: Decrease of ¥7,745 million in cash and deposits, ¥5,617 million in notes and accounts receivable - trade, ¥2,208
million in merchandise and finished goods, ¥4,770 million in property, plant and equipment, ¥3,248 million in
intangible assets and ¥2,117 million in long-term prepaid expenses included in others in investment and otherassets.
Total liabilities decreased by ¥2,475 million compared to the end of the last fiscal year. The primary components ofthe change were as follows: Increase of ¥3,091 million in accounts payable-other.
 Decrease of ¥6,794 million in notes and accounts payable-trade.
Net assets decreased by ¥25,939 million compared to the end of the last fiscal year. The primary components of thechange were decrease of ¥25,050 million in retained earnings and ¥1,099 million in the foreign currency translation
adjustment.
2. Cash Flow
An analysis of consolidated cash flows shows that net cash used in operating activities amounted to ¥5,369 million.
Net cash provided by investing activities was ¥2,174 million, and net cash provided by financing activities was ¥584
million. The balance of cash and cash equivalent as of March 31, 2018 was ¥30,650 million. The trends of the cash
flow indicators of the Group are as follows.
Cash flow ratios
FY 2013

FY 2014

FY 2015

FY 2016

FY 2017

Shareholders’ equity ratio (%)

62.8

64.6

54.0

70.4

63.2

Shareholders’ equity ratio at market value (%)

19.3

25.0

21.8

29.7

32.3

Ratio of cash flow to interest-bearing debt(year)

-

0.6

-

-

-

Interest coverage ratio (%)

-

89.6

-

-

-

Shareholders’ equity ratio
Shareholders’ equity ratio at market value
Ratio of cash flow to interest-bearing debt
Interest coverage ratio: Equity capital / Total assets: Market capitalization / Total assets: Interest-bearing debt / Operating cash flow
: Operating cash flows / Interest payments*All ratios are calculated based on consolidated financial statements.
*Market value is calculated by at price of shares at the end of the consolidated fiscal year×Number of shares
outstanding (after deducting treasury stock)*Operating cash flows represent the cash flows from net cash provided by (used in) operating activities on theConsolidated Statements of Cash Flows. Interest-bearing debt represents debt stated on the Consolidated Balance
Sheets for which interest is paid. Interest paid represents corresponding amount stated on the Consolidated
Statements of Cash Flows.
*The ratio of cash flow to interest-bearing debt and the interest coverage ratio for the fiscal year 2013, 2015, 2016
and 2017 have been omitted because cash flow from operating activities was negative.
(3) Dividend Policy
The Company regards returning profits to shareholders as one of its most important key issues, and basicallyprovides stable dividends while strengthening its management base. The dividend policy is based on dividend on
equity ratio (DOE) of 1% under the consideration of business conditions. Basically the Company plans to implement
dividend payments once a year. When the Company pays an interim dividend, it makes a public announcement inadvance.
Management intends to cancel payment of dividends on common stock for the fiscal year ended March 31, 2018
following the previous fiscal year, considering the posting of loss attributable to owners of parent of ¥24,709 million(loss attributable to owners of parent of ¥6,745 million in the previous year) and business environment surrounding
the Group. The dividend plan for the fiscal year 2018 is currently undecided.

(4) Important Information about Going Concern Assumption
Since the Group recorded a significant operating loss, ordinary loss, net loss attributable to owners of the parent,
and negative operating cash flow in the previous consolidated fiscal year and the fiscal year 2017, events orcircumstances that cast significant doubt on the going concern assumption exist now.
Since the Group’s balance of cash and deposits is sufficient to cover working capital, repayment of borrowings, andother requirements for some time, there is no significant concern about fundraising.
Since the Group is already implementing the following countermeasures in stages, the Group believes that a
resolution of the matter can be achieved.
(a) Display Business (LCD-TV business)
・Increase sales at existing customers in the North American market and develop new customers.
・Concentration of management resources in developing FUNAI brand products and OEM products in theJapanese market.
(b) Digital Media Business (DVD, BD business)・Development of product-focused niche strategy in the North American market.
・Enhancement of FUNAI brand products and development of new OEMs in the Japanese market.
(c) Office Solution Business (information equipment-related business)
・Improve profit margin by increasing sales of high value-added printer products.
・Development of derivative business utilizing of microfluidic control technology.
(d) New Business・Increase sales by developing and launching new products related to health care, medical, and the automotive
market.
Accordingly, Funai judges that there is no significant uncertainty related to the going concern assumption as ofMarch 31, 2018 and has omitted the Notes on Going Concern Assumption from the consolidated financial
statements.

2. Basic Rationale on Selection of Accounting Standards
The Group applies Japanese accounting standards. We have not set a definite timetable for the adoption ofinternational financial reporting standards (IFRS), but we will consider taking this step based on the situation ofanother companies in the same business.

3. Consolidated Financial Statements and Notes(1) Consolidated Statement of Financial Position(Units : Million Yen)

Fiscal year 2016
(As of March 31, 2017)

Fiscal year 2017
(As of March 31, 2018)ASSETS;
Current Assets
Cash and deposits

40,13632,390Notes and accounts receivable - trade15,571

9,953

Merchandise and finished goods

15,45913,251Work in process

1,149

516

Raw materials and supplies

9,644

9,841

489

468

Other

3,900

2,379

Allowance for doubtful accounts(847)(1,021)85,50367,77914,83213,012

Accumulated depreciation(8,691)(8,606)

Buildings and structures, net

6,140

4,406

Machinery, equipment and vehicles

8,748

7,132

Accumulated depreciation(7,354)(7,130)Machinery, equipment and vehicles, net

1,394

1

Tools, furniture and fixtures

19,455

14,860

Accumulated depreciation(18,173)(14,835)

1,281

25

3,592

3,479

597

595

Accumulated depreciation

(230)

(331)

Lease assets, net

367

263

187

17

12,963

8,193

2,576

-

765

93

3,342

93

Investment securities

1,425

1,285

Deferred tax assets

454

225

Net defined benefit asset

1,543

1,840

Other

3,703

1,090

Allowance for doubtful accounts

(252)

(239)

Deferred tax assets

Total current assets
Noncurrent Assets
Property, plant and equipment
Buildings and structures

Tools, furniture and fixtures, net
Land
Lease assets

Other, net
Total Property, plant and equipment
Intangible assets
Patent right
Other
Total Intangible assets
Investments and other assets

Total investments and other assets
Total noncurrent assets
TOTAL ASSETS

6,875

4,203

23,181

12,491

108,685

80,270(Units : Million Yen)
Fiscal year 2016
(As of March 31, 2017)

Fiscal year 2017
(As of March 31, 2018)

LIABILITIES;Current Liabilities
Notes and accounts payable - trade18,603

11,808

Accounts payable included in other

7,280

10,372

Lease obligations

242

236

Income taxes payable

813

664

Provision for product warranties

481

981

Other

2,154

2,780

Total current liabilities

29,575

26,842

Lease obligations

514

282

Deferred tax liabilities

595

655

Noncurrent Liabilities

1,047

1,025

Net defined benefit liability

Provision for directors' retirement benefits

15

3

Other

281

744

2,453

2,711

32,02829,553

Capital stock

31,30731,307

Capital surplus

33,60333,603Retained earnings

47,02021,970Treasury shares(24,341)(24,341)

Total shareholders' equity

87,59062,53911

13(11,206)(12,305)

Total noncurrent liabilities
TOTAL LIABILITIESNET ASSETS;
Shareholders' equity

Accumulated other comprehensive income
Valuation difference on available-for-sale securities

Foreign currency translation adjustment
Remeasurements of defined benefit plans

111

451

(11,082)(11,840)

Subscription rights to shares

149

17

Total net asset
TOTAL LIABILITIES AND NET ASSETS

76,65650,717

108,685

80,270Total accumulated other comprehensive income

(2) Consolidated Statements of Income and Comprehensive Income(Consolidated Statements of Income)(Units : Million Yen)
Fiscal year 2016

Fiscal year 2017

( from April 1, 2016
to March 31, 2017)
133,838( from April 1, 2017
to March 31, 2018)
130,130

Cost of sales

114,795

121,529

Gross profit

19,043

8,600

Selling, general and administrative expenses

25,81819,485

Operating income (loss)(6,775)(10,885)

Interest income

230

245

Dividends income

23

2

Rent income on noncurrent assets

119

62

Other

146

196

Total non-operating income

519

506

152

67

2

-

Foreign exchange losses

1,122

1,107

Compensation expenses

-

225

193

130

1,470

1,530

(7,726)(11,909)1,436

2

Gain on sales of subsidiaries and affiliates' stocks

127

29

Gain on reversal of subscription rights to shares

0

146

Other

13

-

1,578

178

57

17

339

Notes.1 12,586

Loss on sales of stocks of subsidiaries and affiliates

704

－

Other

57

－

1,158

12,604(7,307)(24,335)

Income taxes-current

67

257

Income taxes-deferred

(632)

116

Income taxes

(565)

373

(6,742)(24,709)3-(6,745)(24,709)

Net sales

Non-operating income

Non-operating expenses
Interest expenses
Equity in losses of affiliates

Other
Total non-operating expenses
Ordinary income (loss)
Extraordinary income
Gain on sales of non-current assets

Total extraordinary income
Extraordinary loss
Loss on disposal of noncurrent assets
Impairment loss

Total extraordinary loss
Income (loss) before income taxes

Income (loss) before minority interests
Minority interests in income (loss)
Net income (loss) attributable to owners of parent

Notes.1

(Consolidated Statement of Comprehensive Income)(Units : Million Yen)
Fiscal year 2016

Fiscal year 2017

( from April 1, 2016
to March 31, 2017)( from April 1, 2017
to March 31, 2018)

Income (loss) before minority interest adjustment(6,742)(24,709)

Valuation difference on avaiable-for-sale securities

(148)

1

Foreign currency translation adjustment

954(1,099)Remeasurements of defined benefit plans, net of tax

(207)

340

44

-

Other comprehensive Income

Share of other comprehensive income of entities
accounted for using equity method
Total other comprehensive Income
Comprehensive income

Notes.1

643

Notes.1(757)(6,098)(25,467)

Comprehensive income attributable to owners of parent(6,098)(25,467)

Comprehensive income attributable to minority interests(0)-(Comprehensive income attributable to)(3) Consolidated Statements of Changes in Shareholders' Equity
Fiscal year 2016 (April 1, 2016 - March 31, 2017)(Million Yen)
Shareholders' equity
Capital stock

Capitalsurplus31,307

Beginning balance

Retainedearnings

Treasury
stock

Total
shareholders'equity54,789(24,341)

95,05833,301

Changes of items during the period
Dividends from surplus(1,023)(1,023)

Income (loss) attributable to owners of parent(6,745)(6,745)(0)Purchase of treasury stock
Change in treasury shares of parent arising fromtransactions with non-controlling shareholders
Net changes of items other than shareholders'equityTotal changes of items during the period

(0)

301

301
33,603－31,307

Ending balance

301(7,768)47,020(0)(24,341)(7,467)87,590

Accumulated other comprehensive income

Beginning balance
Changes of items during theperiodUnrealized
holding
gains/losses
on securities

Foreigncurrencytranslation
adjustment

Remeasurements ofdefinedbenefit
plans

Total
accumulated othercomprehensive income

Subscriptio
n rights tosharesNon-controlling
interests

Total net
assets160(12,204)314(11,729)145

965

84,439Dividends from surplus(1,023)

Income (loss) attributableto owners of parent(6,745)Purchase of treasury stock(0)

Change in treasury sharesof parent arising fromtransactions
with
non-controllingshare
holders301

Net changes of items otherthan shareholders' equity

(149)

998

(202)

647

3

(965)

(314)

Total changes of items during
the period

(149)

998

(202)

647

3

(965)

(7,782)

11(11,206)

111(11,082)

149‐

76,656

Ending balanceFiscal year 2017 (April 1, 2017 - March 31, 2018)(Million Yen)
Shareholders' equity
Capital stock

31,307

Beginning balance
Changes of items during the period

Capitalsurplus33,603

Dividends from surplus
Income (loss) attributable to owners of parent

Retainedearnings

Treasury
stock

Total
shareholders'equity47,020(24,341)

87,590

(341)

(341)

(24,709)(24,709)

Purchase of treasury stock

(0)

(0)

(0)
(24,341)(25,050)
62,539Net changes of items other than shareholders'equityTotal changes of items during the periodEnding balance－
31,307(25,050)
21,970－33,603

Accumulated other comprehensive income

Beginning balance
Changes of items during theperiodUnrealized
holding
gains/losses
on securities

Foreigncurrencytranslation
adjustment

Remeasurements ofdefinedbenefit plans

Total
accumulated
othercomprehensi
ve income

Subscription
rights toshares11(11,206)

111(11,082)

149

Total net
assets76,656(341)

Dividends from surplus
Income (loss) attributableto owners of parent(24,709)

Purchase of treasury stock(0)

Net changes of items otherthan shareholders' equity
Total changes of items during
the periodEnding balance

1(1,099)

340

(757)

(131)

(889)

1

(1,099)

340

(757)

(131)

(25,939)

13(12,305)451(11,840)17

50,717

(4) Consolidated statements of cash flows(Million Yen)
Fiscal year 2016

Fiscal year 2017

( from April 1, 2016
to March 31, 2017)( from April 1, 2017
to March 31, 2018)

Cash flows from operating activities
Income (Loss) before income taxes and minority interests(7,307)(24,335)

Depreciation

4,098

2,258

Impairment loss

339

12,586

Increase (decrease) in allowance for doubtful accounts

451

212

Increase (decrease) in net defined benefit liability

(117)

18

Interest and dividend income

(253)

(248)

Interest expenses

152

67

Share of (profit) loss of entities accounted for using equity method2-

Loss on retirement of property, plant and equipment

57

5

Loss (gain) on sales of property, plant and equipment(1,382)

3

(127)

(29)

Loss (gain) on sales of investment securities

704-

Decrease (increase) in notes and accounts receivable - trade

4,601

5,386

Decrease (increase) in inventories

8,379

1,421

Increase (decrease) in notes and accounts payable - trade

3,470(6,214)

Increase (decrease) in notes and accounts payable - other(25,539)

3,368

Loss (gain) on sale of shares of affiliates

Other, net

(944)

(143)

Subtotal(13,414)(5,640)Interest and dividend income received

256

245

Interest expenses paid

(151)

(65)

Income taxes paid

(69)

(320)

Income taxes refund

49

411

(13,329)(5,369)Payments into time deposits(6,205)(1,364)

Proceeds from withdrawal of time deposits

10,392

737

Purchase of property, plant and equipment(3,042)(2,100)

Proceeds from sales of property, plant and equipment

3,977

167

Purchase of intangible assets

(117)

(299)

Purchase of investment securities

(10)

(210)

Proceeds from sales of investment securities
Proceeds from sales of shares of subsidiaries with change in scope of
consolidation
Payment for loans

178

389

7,899

-

(4)

(0)

25

568

Net cash provided by (used in) operating activities
Cash flows from investing activities

Proceeds from collection of loans
Other, net
Net cash provided by (used in) investment activities

174

(61)

13,266(2,174)

(Million Yen)
Fiscal year 2016

Fiscal year 2017

( from April 1, 2016
to March 31, 2017)( from April 1, 2017
to March 31, 2018)

Cash flows from financing activities
Net increase (decrease) in short-term loans payable(6,510)

Repayment of long-term loans payable(3,192)

-

(0)

(0)

(1,023)

(341)

(424)

(243)

(11,150)

(584)

3,069

(192)

Purchase of treasury shares
Cash dividends paid
Other, net
Net cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalents-

Net increase (decrease) in cash and cash equivalents(8,145)(8,320)Cash and cash equivalents at beginning of period

47,11638,971

Cash and cash equivalents at end of period

38,97130,650(5) Notes on Consolidated Financial Statements(Notes on Going Concern Assumption)
Not Applicable(Basis of presenting consolidated financial statements)
The matter regarding consolidation scope
The number of consolidated subsidiaries: 20
Principal consolidated subsidiaries are FUNAI CORPORATION, INC., Funai Electric (H.K.), Ltd., and FUNAI(THAILAND) CO., LTD.
(Additional Information)[About anti-tax haven law]
The Group received a reassessment notice from the Osaka Regional Taxation Bureau on June 29, 2011. The Bureau
determined that our Hong Kong subsidiary does not meet the requirements for exemption under the anti-tax havenrules. In addition, they imposed a tax on us adding up with the Hong Kong subsidiary’s income for the three fiscal
years ended March 31, 2008 through 2010, which deems as our income.
We objected to this reassessment of income taxes, and filed a request for examination to the Osaka National Tax
Tribunal on August 25, 2011. However, we received written verdicts that reject our petition on July18, 2012. The
Group filed a suit for cancellation of reassessment to the Tokyo District Court on January 17, 2013, but on
September 28, 2016 a ruling to dismiss our request was made. The Group appealed to the Tokyo High Court on
October 12, 2016, because we cannot accept the decision, but we received a ruling to dismiss our request on
October 26, 2017. In response to this decision, the Group did not file a final appeal and a petition for accepting thefinal appeal, so the appeal trial judgment was finalized on November 10, 2017.
The additional tax amount is totally ¥825 million including corporate, enterprise and residence taxes (¥935 million
including incidental taxes). We recorded this additional tax as “prior year’s taxes” in the fiscal year ended March 31,
2012. Also, the financial impact, when applying this tax rules has been recorded in the fiscal year ended March 31,
2011 when tax investigation was completed.
(Consolidated statements of income)*Notes.1 Impairment loss
The Group recorded losses on impairment in the following asset groups.
In principle, the Group group’s business assets on the basis of legal units that strive to maintain an ongoingunderstanding of income and expenses. The idle assets are grouped by individual asset.
Fiscal year 2016 (April 1, 2016 to March 31, 2017)
Use
Location
Type
Machinery,
Assets scheduled for
Funai Electric Cebu, Inc.
equipment andretirement
vehiclesSince acquiring the shares of the manufacturing subsidiary (now Funai Electric Cebu, Inc.) from Lexmark
International, Inc., the company has undertaken the production of ink cartridges from the company. However,as production ends for some models, the Group reduced the carrying amount to the recoverable value of
assets scheduled for retirement, which were previously grouped as assets for business use, and recorded such
reduction (339 million yen) as impairment loss.
The recoverable value of the asset is calculated based on the net selling price based on the disposal price.

The Group group’s business assets on the basis in management accounting of consolidated group. The idle
assets are grouped by individual asset.
Fiscal year 2017 (April 1, 2017 to March 31, 2018)
Use
Location

Business Assets

Business Assets

Business Assets

Business Assets

Business Assets

Business Assets

Business Assets

Business Assets

Business Assets

Funai Electric Co., Ltd.

FUNAI ELECTRIC (H.K.), LTD.

FUNAI (THAILAND) CO., LTD.

Funai Electric Philippines Inc.

Funai Electric Cebu, Inc.

FEP REAL ESTATE, INC.

FUNAI CORPORATION, INC.

Funai Trading Corp.

Funai Lexington Technology
Corporation

Type

Impairment loss
(million yen)Tools, furniture andfixtures

148

Lease assets (fixed)

4

Patent right
Software
Long-term prepaid
expenses
Buildings and structures
Machinery, equipment
and vehicles
Tools, furniture andfixtures
Buildings and structures
Machinery, equipment
and vehicles
Tools, furniture andfixtures
Land

2,451
75

Software
Buildings and structures
Machinery, equipment
and vehicles
Tools, furniture andfixtures
Software

4,883
42
37
613
596
181
413
56
1
474
331
218
34

Buildings and structures
Machinery, equipment
and vehicles
Tools, furniture andfixtures
Software

539

Land

42

Buildings and structures
Machinery, equipment
and vehicles
Tools, furniture andfixtures
Lease assets (tangible)
Buildings and structures
Machinery, equipment
and vehicles
Tools, furniture andfixtures
Software8

Buildings and structures
Machinery, equipment
and vehicles
Tools, furniture andfixtures
Software

594
67
33

2
3
293
5
27
33
55
59
136
66
3

Use

Business Assets

Business Assets

Location

Funai Manufacturing, S.A. DE C.V.

P&F MEXICANA, S.A. DE C.V.

Type

Impairment loss
(million yen)

Buildings and structures
Machinery, equipment
and vehicles
Tools, furniture andfixtures
SoftwareMachinery, equipment
and vehicles
Tools, furniture andfixtures
Software

13

Total

5
4
8
3
1
13
12,586

The Group reduced the carrying amount to the recoverable value of business assets whose profitability has
markedly decreased, and recorded such reduction (12,586 million yen) as impairment loss for fiscal year 2017.
The recoverable value of the asset is measured based on the net selling price for buildings and structures andland, and the net selling price based on the valuation calculated rationally by a real estate appraiser etc. is used,
assets other than those mentioned above are measured based on the net selling price and the net selling priceis calculated as zero.
(Consolidated statement of comprehensive income)* 1. Reclassification adjustment and tax effect amount involved in other comprehensive income
Fiscal year 2016
( from April 1, 2016
to March 31, 2017 )(Million Yen)

Fiscal year 2017
( from April 1, 2017
to March 31, 2018 )Valuation difference on available-for-sale securities:
Accrued amount on the current term
Reclassification adjustment amountPre-adjustment of tax effectTax effect amount

Valuation difference on available-for-sale securities
Foreign currency translation adjustment:
Accrued amount on the current term
Reclassification adjustment amountPre-adjustment of tax effectTax effect amount

Valuation difference on available-for-sale securities
Remeasurements of defined benefit plans:
Accrued amount on the current term
Reclassification adjustment amountPre-adjustment of tax effectTax effect amountForeign currency translation adjustment
Share of other comprehensive income of entities
accounted for using equity method:
Accrued amount on the current term
Reclassification adjustment amount

Share of other comprehensive income of entities
accounted for using equity method:
Total other comprehensive income

93
(255)
(162)
13
(148)

1
1
1

971
(16)
954
954

(1,099)(1,099)(1,099)

(50)
(290)
(340)
133
(207)

334
162
496
(156)
340

(6)
50

-

44

-

643

(757)

(Segment Information)
1. Summary of Reporting Segments
The reporting segments of the Group are components for which discrete financial information is available andwhose operating results are regularly reviewed by the board of directors to make decision about resource allocationand to assess their performance.
Businesses of the Group are to manufacture and sell electrical equipment and devices. In Japan, such functions are
the responsibility of the Company. In the areas of the United States, Asia and Europe such functions are managed by
Funai Corporation, Inc. (Americas), P&F USA, Inc. (Americas), Funai Electric (H.K.) Ltd. (Asia), FUNAI (THAILAND)
CO.,LTD. (Asia), FUNAI ELECTRIC EUROPE Sp.z o.o (Europe), and other local corporations. They are independent eachother and plan comprehensive strategies on the products to carry in the region on their own.
Consequently, the Group is comprised of location-specific segments that are based on its manufacturing and sales
structure and has “Japan”, “Americas”, “Asia” and “Europe” as its four reporting segments.
2. Measurement of the amount of net sales, income/loss, assets and liabilities and other in each reporting segment
The accounting policies of the reporting segment are the same as “Basis of presenting consolidated financial
statements”. Net sales of intersegment are based on sales price to outside customers.
3. Net sales, income/loss, assets, liabilities and other by reporting segments
Fiscal year 2016 (April 1, 2016 - March 31, 2017)

Net Sales(1) Sales to outside customers(2) Inter-segment sales
Total
Segment Income (Loss)
Segment Assets
Other
Depreciation and amortization
Increase in tangible fixed
assets and intangible assets

Europe

Total

Japan

AmericasAsia

31,20083,776

101,751
1,194

274
87,607612-

133,838
172,577(172,577)

133,838-

114,977(8,219)88,400102,945(131)
34,976

87,881(630)
42,110

612
45
1,868

306,416(8,935)
167,355(172,577)
2,160(58,669)

133,838(6,775)
108,685

1,589

171

2,337

0

4,098

-

4,098

654

332

2,250

-

3,237

(0)

3,237

Fiscal year 2017 (April 1, 2017 - March 31, 2018)
Japan
Net Sales(1) Sales to outside customers(2) Inter-segment sales
Total
Segment Income (Loss)
Segment Assets
Other
Depreciation and amortization
Increase in tangible fixed
assets and intangible assets(Note)(Million Yen)
Adjustments Consolidated(Note 1)
(Note 2)

Americas

Asia

Europe

Total(Million Yen)
Adjustments Consolidated(Note 1)
(Note 2)

36,19983,38992,9492,293

853
98,355

127－

130,130
184,038－(184,038)

130,130－

119,589(5,634)76,263

95,243(965)
24,892

99,209(3,948)28,038

127
(83)
1,407

314,169(10,631)130,600(184,038)(253)(50,330)130,130(10,885)
80,270

706

110

1,442

－

2,258

－

2,258

815

164

1,445

－

2,425

(16)

2,408

1. Adjustments were as follows.
Segment Income(loss)(Million Yen)
Fiscal year 2017
Eliminations
2,705
(735)
Corporate expenses *
(767)
(772)
Inventories
222
1,254
Total
2,160
(253)
* Corporate expenses are general & administration expenses that do not correspond to the reporting
Segments
Fiscal year 2016

Segment Assets(Million Yen)
Fiscal year 2017
Total assets *22,762
20,635Adjustments of inventories(1,298)(44)
Eliminations(80,133)(70,921)
Total(58,669)(50,330)*Total assets are mainly excess cash/deposits and long term securities for investment that do not correspondto the reporting segments.
Fiscal year 2016

2. Segment income and loss are adjusted with the operating income reported in the consolidated statements
of income and loss.

(Information per share)
Fiscal year 2016
(April l,2016 – March 31,2017)
Book Value per share
2,242.38
Net loss per share
197.70Fiscal year 2017
(April l,2017 – March 31,2018)
Book Value per share
1,485.96
Net loss per share724.21(Note)
1. Net loss per share after dilution is not shown because there are no issuable shares with a dilutive effect.
2. The basis for the calculation of net income or net loss per share is as follows.
Fiscal year 2016
(April 1, 2016 – March 31,2017)

Fiscal year 2017
(April 1, 2017 – March 31,2018)

Net income (loss) per share
Net income (loss) attributable to owners of(6,745)(24,709)

Amount not attributable to owners of theparent (million yen)－－

Net income (loss) attributable to owners ofparent available to common shares (million yen)

(6,745)(24,709)

The average number of outstanding shares for theperiod（Thousands of shares）

34,11934,119parentOverview of potentially dilutive common shares not Three types of stock acquisition Three types of stock acquisition
included in computation of net income per share rights (number of stock acquisition rights (number of stock acquisition
after dilution because of their anti-dilutive effectrights: 4,290) have been excluded.
rights: 3,091) have been excluded.

(Events after the reporting period)
Not applicable