Member, Financial Accounting Standards Foundation

Consolidated Financial Results for the Third Quarter Ended December 31, 2016
February 13, 2017
Listed company name
Funai Electric Co., Ltd.
Stock exchange listing
Tokyo First Section
Securities code
6839
URL http://www.funai.jp/en
Representative
President and CEO
Tetsuhiro Maeda
Inquiries
Officer General Manager
Kazuo Uga
TEL: (072) 870-4395
Scheduled date of Quarterly ReportFebruary 13, 2016
Scheduled date of Commencement of Annual Dividend Payment －Quarterly Financial Results Supplementation
Yes
Quarterly Financial Results SeminarNo
1. Consolidated Financial Results for the Third Quarter Ended December 31, 2016 (April 1, 2016 – December 31, 2016)(1) Consolidated Operating Results(% shows year on year rates)
Net Sales

Net Income(Loss)

OperatingOrdinaryIncome(Loss)

Income(Loss)

Net Assets

Equityattributable to ownersof parent
Million yen %Million yen%
Million yen%
Million yen%nd
103,416 (22.4)(4,609)(4,861)(5,319)－－－3 Quarter FY2016
nd133,325 (22.9)(7,213)(8,471)(9,026)－－－
3 Quarter FY2015rd(Reference) Comprehensive Income 3 Quarter FY 2016 ended December 31, 2016 (3,548) million yen (－%)
nd
3 Quarter FY 2015 ended December 31, 2015 (8,809) million yen(－%)
Net Income(loss)
Net Income(loss) Per SharePer Shareon a Fully Diluted BasisYenYennd(155.91)－
3 Quarter FY2016nd(264.56)－
3 Quarter FY2015(2) Consolidated Financial Position

As of December 31,2016
As of March 31,2016

Total Assets
Million yen
123,238
154,191

Million yen
79,57584,439Equity Ratio

Million yen
78,95983,328

%
64.1
54.0

2. Dividends
Dividend per Sharestnd

1 Quarteryen
Fiscal Year 2015

－Fiscal Year 2016－rd

2 Quarter

3 Quarter

yenYear-End

yen

0.00

Fiscal Year 2016(Forecast)

Annualyenyen－

30.00

30.00

－－－rd(Note) Revision of Annual Dividends Forecast in this 3 Quarter: NoThe dividend for FY 2016 has been undecided. The company’s dividend policy of DOE is unchanged. Because of the highimpact stemmed from the recent fluctuations in exchange rates give to the consolidated net assets, the dividend is to bedisclosed at the time disclosure has become possible to public.

3. Consolidated Financial Forecast for the Fiscal 2016 (April 1, 2016 - March 31, 2017)
OperatingIncome(loss)

Net Sales
Million yen

Full Year%

134,500 (20.9)

Million yen

OrdinaryIncome(loss)% Million yen△6,900 －(Note) Revision to consolidated financial forecast: Yes

1%△7,800 －(% shows year on year rates)
NetNet Income(loss)
Income(loss)
Attributable toowners of parent
Per Share
Million yen %Yen△6,900 －△202.23

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 September 31, 2016
As of March 31, 2016
As of September 31, 2016
As of March 31, 2016
On September 31, 2016
On September 31, 2015

36,130,796
36,130,796
2,011,687
2,011,687
34,119,107
34,119,122

Disclaimer;This document contains forward-looking statements and projections regarding business performance
which are not historical facts. Please note that these statements are based on information relating to factorsthat may impact future business performance that was available for analysis at the time this document wasprinted. These factors include industry trends relating to the business areas of Funai Electric Co., Ltd. or
the Funai Group, such as audio-visual devices and information communication equipment, the economic
conditions of both domestic and international markets, and fluctuations in currency exchange rates. Actual
performance may greatly differ from projections included in this document because of the impacts ofuncertainty in such areas as the competitive conditions of the electronics industry, market trends, currency
exchange rate, introduction and success of new products, and various other global conditions that may
affect the tax system and other systems.

21.Qualitative Information(1) Consolidated Financial Results
During the first nine months of the fiscal year ending March 31, 2017 (April 1, 2016 – December 31, 2016), theUnited States, the Company’s main market, saw an improvement in consumer and corporate sentiment due toexpectations toward policies of the Trump administration, amid a gradual expansion of the economy. In Europe, theeconomy has continued to recover, although price rises have put downward pressure on real income. In China,economic indicators such as in production, consumption and investment remained flat in general, due in part to thegovernment’s policy effects.
In Japan, personal consumption is bottoming out amid robust employment. The recovery of manufacturing isbecoming clear on a global basis, with Japan’s industrial production turning to a gradual recovery.
As a result of the above factors, net sales ended at ¥103,416 million, down 22.4% compared to the same quarter ofthe last fiscal year (year on year). Furthermore, the Group posted an operating loss of ¥4,609 million (an operating
loss of ¥7,213 million in the same quarter of the last fiscal year), due to the drop in sales as well as a continued surge
in liquid crystal panel prices, inventory adjustment of old models of LCD-TVs, and tougher price competition inMexico.
Ordinary loss amounted to ¥4,861 million due to foreign exchange losses in accounts receivable from thedepreciation of the Mexican Peso against the U.S. dollar (an ordinary loss of ¥8,471 million in the same quarter ofthe last fiscal year). Net loss attributable to owners of parent ended at ¥5,319 million (a net loss attributable toowners of parent of ¥9,026 million in the same quarter of the last fiscal year).
Results by regioni) Japan
Although BD-recorders and ink cartridges increased due to strong sales, LCD-TVs and electronic reception
devices decreased. As a result, net sales were ¥22,313 million (down 12.7% year on year) and segment loss(operating loss) resulted in ¥4,001 million (the same quarter of the last fiscal year: segment loss of ¥1,582
million).
ii) Americas
Although BD-players and ink cartridges increased due to strong sales, LCD-TVs decreased due to sluggish sales inregional mass merchandisers in the U.S. market and tougher price competition in the Mexican market. As aresult, net sales ended at ¥80,440 million (down 22.9% year on year) and segment loss (operating loss)
amounted to ¥205 million (a segment loss of ¥4,139 million in the same quarter of the last fiscal year).
iii) Asia
Net sales were ¥193 million, down 91.6% year on year due to decrease on ink cartridges. Segment income(operating income) ended at ¥10 million, down 97.6% year on year.
iv) Europe
Ink-jet printers launched in the last quarter increased; however, total sales decreased, due to the end of LCD-TVsales. As a result, net sales dropped to ¥469 million, down 58.4% year on year, while segment loss (operatingloss) ended at ¥19 million (a segment loss of ¥346 million in the same quarter of the last fiscal year).
Results by product Segmenti) Audiovisual Equipment
BD-players increased due to strong sales. However, LCD-TVs decreased due to sluggish sales in regional massmerchandisers in the U.S. market and tougher price competition in the Mexican market. As a result, net sales
ended at ¥89,931 million, down 22.1% year on year).
ii) Information Equipment
Although ink-jet printers increased, total sales decreased since the increase was not enough to make up for thedecline in sales caused by sluggish sales of ink cartridges for OEM. As a result, net sales of informationequipment ended at ¥3,531 million, down 15.4% year on year.
iii) Other Products
Net sales of other products resulted in ¥9,954 million, down 27.6% year on year, due to the end of sales of audioaccessories, whose contract terminated in the last quarter.

3

(2) Consolidated Financial Position
Total assets decreased by ¥30,952 million compared to the end of the last fiscal year. The primary components of thechange were as follows:
Decrease of ¥12,865 million in cash and deposits, ¥6,361 million in notes and accounts receivable, ¥3,387 million inmerchandise and finished goods, and ¥6,718 million in raw materials and supplies.
Total liabilities decreased by ¥26,088 million compared to the end of the last fiscal year. The primary components ofthe change were as follows:
Decrease of ¥1,544 million in note and accounts payable-trade, ¥2,453 million in short-term loans payable,¥23,326
million in accounts payable included in other and ¥2,218 million in long- term loans.
Net assets decreased by ¥4,863 million compared to the end of the last fiscal year. The primary components of thechange were decrease of ¥6,343 million in retained earnings and increase of ¥1,693 million in the foreign currencytranslation adjustment.

(3) Consolidated Financial Forecast
The Group has revised consolidated financial results forecast announced on October 17, 2016. For details, pleaserefer to the release announced today (February 13, 2017).
Note: The above forecasts are based on information currently available to the Group and contain risk and uncertainty. Actual
results may differ from these forecasts due to various factors including changes in the economic conditions of overseas markets
such as the United States, and significant fluctuations in product prices and foreign exchange.

2. 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 during the first quarter ended June 30, 2016, events or circumstances that castsignificant 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.
i) Sales expansion
Increase sales and obtain orders for LCD-TVs for the year-end sales season mainly in U.S. market by offering UHD
models and multiple models developed for individual customers. Begin selling a multi-model line of inkjet printersand open up new customers.
ii) Securing of profits from the LCD-TVs business
Reduce inventory through rigorous control of purchasing, sales, and inventories (PSI) between production
subsidiaries, sales subsidiaries, and corporate divisions and reduce expenses through integration of U.S.
subsidiaries.
iii) Improvement of the rate of return from the Information Equipment Business
Improve the rate of return by reducing R&D expenses through selection and concentration in productdevelopment, improve plant utilization rates through sales expansion, and sell high-value-added products.
Accordingly, Funai judges that there is no significant uncertainty related to the going concern assumption as ofDecember 31, 2016 and has omitted the Notes on Going Concern Assumption from the consolidated financial
statements.

4

(Information by Segment)[Segment Information]
I.

Third Quarter of the last fiscal year (April 1, 2015 to December 31, 2015)
Information Regarding Net Sales and Profit/Loss Conditions by Reporting Segment
Europe

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

JapanAmericas

AsiaNet Sales(1) Outside customers(2) Inter-segment sales

25,557
101,888

104,329869

2,308
81,821

1,130-

133,325
184,579－(184,579)

133,325－

Total

127,446

105,198

84,1291,130

317,905(184,579)

133,325

Segment Income (Loss)(1,582)(4,139)

419

(346)

(5,649)(1,564)(7,213)Note:
1. ¥-1,564 million adjustment amount under segment loss includes items such as ¥ 2million relating to thecancellation of inter-segment transactions, ¥ -571 million of overall Group expenses that are not apportioned toeach reporting segment, and ¥ 995 million adjustment relating to inventory assets. Overall Group expenses arecomprised of general administrative expenses that do not belong to a specific reporting segment.
2. Segment loss has been adjusted to operating income noted on the third quarter consolidated income statement.
II.

Third Quarter of this fiscal year (April 1, 2016 to December 31, 2016)
Information Regarding Net Sales and Profit/Loss Conditions by Reporting Segment(Units: Million Yen)
JapanAmericas

AsiaEurope

Total

Adjustments Consolidated(Note 1)
(Note 2)Net Sales(1) Outside customers(2) Inter-segment sales

22,31367,02480,440868

193
68,829469－

103,416
136,722－(136,722)

103,416－

Total

89,33881,30869,022

469

240,138(136,722)

103,416

Segment Income (Loss)(4,001)

(205)

(10)

(19)

(4,216)(392)(4,609)Note:
1. ¥-392 million adjustment amount under segment loss includes items such as the ¥2 million relating to thecancellation of inter-segment transactions, ¥584 million of overall Group expenses that are not apportioned toeach reporting segment, and the ¥195 million adjustments relating to inventory assets. Overall Group expenses
are comprised of general administrative expenses that do not belong to a specific reporting segment.
2. Segment loss has been adjusted to operating income noted on the third quarter consolidated income statement.

5

3. Consolidated Financial Statements(1) Consolidated Statement of Financial Position(Units : Million Yen)
Fiscal year 2015
(As of March 31, 2016)

3rd Quarter FY2016(As of December 31, 2016)

ASSETS;
Current Assets
Cash and deposits

57,60944,743

Notes and accounts receivable - trade

24,092

17,730

Merchandise and finished goods

22,76819,381Work in process

1,196

1,005

Raw materials and supplies

13,212

6,493

Other

4,735

4,698

Allowance for doubtful accounts

(400)

(831)

123,214

93,222

Property, plant and equipment

18,203

17,958Intangible assets

4,860

4,050

Net defined benefit asset

1,555

1,551

Other

6,627

6,791

Allowance for doubtful accounts

(271)

(334)

Total current assets
Noncurrent AssetsInvestments and other assets

Total investments and other assets

7,912

8,008

30,97630,016

154,191

123,238

Notes and accounts payable - trade

15,604

17,149

Short-term loans payable

5,118

2,664

Accounts payable included in other34,14910,823

Income taxes payable

783

1,180

Provision

925

864

Total noncurrent assets
TOTAL ASSETSLIABILITIES;Current Liabilities

Other

3,241

3,468

Total current liabilities

59,82336,150Long-term loans payable

6,009

3,790

Provision

1,106

1,077

Noncurrent Liabilities

Net defined benefit liability395447

Other

2,416

2,197

Total noncurrent liabilities

9,927

7,512

69,751

43,662TOTAL LIABILITIES

6Fiscal year 2015
(As of March 31, 2016)

3rd Quarter FY2016(As of December 31, 2016)

NET ASSETS;
Shareholders' equity
Capital stock

31,30731,307

Capital surplus

33,30133,603Retained earnings

54,78948,446

Treasury shares(24,341)(24,341)

Total shareholders' equity

95,05889,016160

134

Foreign currency translation adjustment(12,204)(10,511)

Remeasurements of defined benefit plans

314

320

(11,729)(10,056)

Subscription rights to shares

145

146

Minority interests

965

469

84,43979,575

154,191

123,238

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

Total accumulated other comprehensive income

Total net asset
TOTAL LIABILITIES AND NET ASSETS

7

(2) Consolidated Quarterly Statements of Income(Units : Million Yen)

3rd Quarter FY2015

3rd Quarter FY2016( from April 1, 2015
to December 31, 2015)
133,325( from April 1, 2016
to December 31, 2016)
103,416

Cost of sales

111,140

87,514Gross profit

22,185

15,901

Selling, general and administrative expenses

29,39920,511

Operating income (loss)(7,213)(4,609)Interest income

165

155

Dividends income

23

18

Fixed assets rent income

164

92

Gain on investments in partnership

218－

Other

2649

Total non-operating income

599

316

208

124

3

1

1,391

361

252

82

1,856

568

(8,471)(4,861)Gain on sale of fixed assets－

217

Gain on sale of investment securities

95

127

Settlement received

902－

Other

163

28

1,161

372

349

47－

60

Expenses incurred on business restructuring

434－

Other

14－

Total extraordinary loss

797

107

(8,107)(4,595)937

721(9,044)(5,316)(17)

3(9,026)(5,319)Net sales

Non-operating income

Non-operating expenses
Interest expenses
Equity in losses of affiliates
Foreign exchange loss
Other
Total non-operating expenses
Ordinary income (loss)
Extraordinary income

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

Income (loss) before income taxes
Income taxes
Income (loss) before minority interests
Minority interests in income (loss)
Net income (loss) attributable to owners of parent8(3) Consolidated Quarterly Statement of Comprehensive Income

Income (loss) before minority interest adjustment(Units : Million Yen)

3rd Quarter FY2015

3rd Quarter FY2016( from April 1, 2015
to December 31, 2015)( from April 1, 2016
to December 31, 2016)(9,044)(5,316)

Valuation difference on avaiable-for-sale securities

(195)

(25)

Foreign currency translation adjustment

416

1,821

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

340Remeasurements of defined benefit plans, net of tax

(20)

(27)

Total other comprehensive Income234

1,767(8,809)(3,548)Comprehensive income attributable to owners of parent(8,794)(3,645)Comprehensive income attributable to minority interests

(15)

97

Other comprehensive Income

Comprehensive income(Comprehensive income attributable to)9