From April 1, 2012
To March 31, 2013

May 7, 2013
Funai Electric Co., Ltd.

Financial Summary for the Period Ending March 2013
1. Summary of Operating Results (Consolidated)(Million yen)
Fiscal Year 2011

Fiscal Year 2012

From April 1, 2011
to March 31, 2012

From April 1, 2012
to March 31, 2013

AmountAmount%%%Net Sales

Rate ofincrease or
decrease%%

246,147100.0

192,008100.0(22.0)

Operating Income (Loss)

461

0.2

(5,273)(2.7)−

Ordinary Income (Loss)

174

0.1

(355)

(0.2)

−

(4,629)(1.9)(8,542)(4.4)−

Net Loss after Tax
Net Loss per Share(135.69)(250.38)

Notes: Includes 18 consolidated subsidiaries, 1 equity method non‐consolidated subsidiary,
1 equity method affiliate company.

2. Summary of Operating Results (Non‐Consolidated)(Million yen)
Fiscal Year 2011

Fiscal Year 2012

From April 1, 2011
to March 31, 2012

From April 1, 2012
to March 31, 2013

Amount%Amount%%Net Sales

Rate ofincrease or
decrease%%

195,880

100.0

157,549100.0(19.6)

Operating Loss

(307)

(0.2)

(5,604)(3.6)−

Ordinary Income

10,165

5.2

19,23512.2

89.2

Net Income after Tax

2,621

1.3

13,1138.3

400.2

Net Income per Share

76.86

384.35

Member, Financial Accounting Standards Foundation

Financial Report for the 12‐Month Period ended March 31, 2013
May 7, 2013

Listed company name:

Funai Electric Co., Ltd.

Securities Code: 6839
Tokyo Stock Exchange
and Osaka Securities Exchange, First Section(URL http://www.funai.jp/ )Representative: President and CEO
Tomonori Hayashi
Inquiries: Associate Officer, Administrative HQ
Hisao Fuke
TEL: (072) 870‐4395
Scheduled date of Annual General Shareholders Meeting; June 21, 2013
Scheduled date of Securities Report to be filed to the Kinki Finance Bureau; June 21, 2013
Scheduled date of Commencement of Annual Dividend Payment; June 10, 2013
Financial Results Supplementation: Yes
Financial Results Seminar: Yes
1. Summary of Consolidated Results for the Fiscal Year ended March 2013 (April 1, 2012 – March 31, 2013)(1) Operating Results (Consolidated)(% denotes year on year)
Net Sales
Million yen%

Operating Income

Ordinary Income

Million yen

Million yen%

192,008 (22.0)(5,273)−
246,147(16.8)
461(40.2)(Note) Comprehensive Income
Fiscal Year ended March 31, 2013
Fiscal Year ended March 31, 2012

Net Income to
Shareholders’Equity

Yen

%

%

−
(7.0)
−
(3.7)
Fiscal Year ended March 31, 2013
Fiscal Year ended March 31, 2012

(0.2)
0.1
(69) million yen(28) million yen%−−(8,542)(4,629)Net Income
Per Shareon a Fully
Diluted Basis

Yen(250.38)
Fiscal Year 2012(135.69)
Fiscal Year 2011
(Reference) Equity in earning of affiliates

Million yen

(355)
−
174
(86.5)(909) million yen (−%)
(6,486) million yen (−%)

Fiscal Year 2012
Fiscal Year 2011

Net Income
Per Share

Net Income%

Ordinary Income Operating Income
to Total Assets
to Net Sales
%

(2.7)
0.2

(2) Consolidated Financial Position
Total Assets
Million yen

Million yen

Fiscal Year 2012
Fiscal Year 2011

194,524
121,398
176,607
123,843(Reference) Shareholders’ Equity
Fiscal Year ended March 31, 2013
Fiscal Year ended March 31, 2012

(3) Consolidated Cash FlowsNet Cash Provided by(Used in) Operating
Activities
Million yen

Fiscal Year 2012
Fiscal Year 2011

(8,022)
16,416

Shareholders’Equity Ratio

Net Assets

%

61.7
69.5
120,103 million yen
122,762 million yen

Net Cash Providedby (Used in)Investing Activities
Million yen

12,863(6,434)

Net Assets
Per Share

Net Cash Providedby (Used in)
Financing Activities
Million yen

5,128(6,717)

Yen

3,520.11
3,598.03

Cash and Cash
Equivalents at theEnd of Period
Million yen

50,23836,567

2. Dividends
Corresponding
Date

1Q Endyen

Dividend per Share
2Q End3Q EndYear‐Endyen

yen

Annualyen

yen

Fiscal Year 2011
Fiscal Year 2012

−
−

0.00
0.00

−
−

50.00
35.00

50.00
35.00

Fiscal Year 2013
(Projection)

−

−

−

−

−

Total
Dividend
Payment

Dividend on
Equity Ratio（Consolidated） (Consolidated）
Pay‐out Ratio

Million yen

%

%

−
−

1,705
1,194

1.3
1.0

−

(Note) 1. Breakdown of dividends for FY 2011: Ordinary dividend, JPY 40 ＋ Commemorative dividend, JPY 10
2. The dividend for FY 2013 has been undecided. The company’s dividend policy of DOE is unchanged.

Because of the high impact stemmed from the recent fluctuations in exchange rates give to the consolidated
net assets, the dividend is to be disclosed at the time of disclosure has become possible to public.

3 Forecast of Consolidated Results for the Fiscal Year ending March 2013 (April 1, 2013 ‐ March 31, 2014)(% denotes year on year)

Net Sales
Six months ending Sep.30.2013

Full Year

Operating Income Ordinary Income

Million yen%

96,000202,000

7.8
5.2

Million yen %

20
200

−
−

Million yen %

300
500

−
−

Net Income

Net Income
Per Share

Million yen %

Yen

10
100

−
−

0.29
2.93

*Note
(1) Changes in Consolidated Subsidiaries (Changes in Scope of Consolidation): No(2) Changes in Accounting Practices, Procedures and Presentation Methods for Consolidated Financial Results
1. Changes arising from revision of accounting standards: Yes
2. Changes arising from other factors: No
3. Changes in accounting estimates: Yes
4. Restatement: No(3) Number of Shares Outstanding (Ordinary Shares)
1. Number of shares outstanding (including treasury stock) as of March 31, 2013; 36,130,796 shares
as of March 31, 2012; 36,130,796shares
2. Number of shares of treasury stock as of March 31, 2013; 2,011,615 shares
as of March 31, 2012; 2,011,607 shares
3. The Average number of outstanding shares on March 31, 2013; 34,119,186 shareson March 31, 2012; 34,114,415 shares

(Reference)
Summary of Non‐consolidated Results for the Fiscal Year ended March 2013 (April 1, 2012– March 31, 2013)(1) Operating Results (Non‐consolidated)
Net Sales

Operating Income

Million yen

Fiscal Year 2012
Fiscal Year 2011

157,549
195,880(% denotes year on year)%(19.6)(21.1)

Million yen

Million yen

19,235
10,165Net Income
%

89.2
71.0

Million yen

13,113
2,621

%

400.2
(58.2)Net Income
Per Shareon a Fully Diluted
Basis

Net Income
Per Share
Yen

Fiscal Year 2012
Fiscal Year 2011%−−

(5,604)(307)

Ordinary Income

Yen

−
76.71

384.3576.86(2) Financial Position(Non‐consolidated)
Total Assets
Million yen

Fiscal Year 2012
Fiscal Year 2011

119,151
112,717(Reference) Shareholders’ Equity

Net Assets
Million yen

89,38577,584
Fiscal Year ended March 31, 2013
Fiscal Year ended March 31, 2012

Shareholders’Equity Ratio

Net Assets
Per Share
%

74.9
68.7
89,263 million yen
77,477 million yen

Yen2,616.22
2,270.78

Note:This document contains forward‐looking statements and projections regarding business performance which are
not historical facts. Please note that these statements are based on the current expectations, assumptions,estimates and projections of the Funai Group in light of the information currently available to it. Actual
performance may materially differ from projections included in this document because of the impacts ofuncertainty in various factors. For the assumptions and other related matters concerning consolidated results
forecast, please refer to “(1)Analysis of Business Performance”of “1 Business Performance.”

1. Business Performance(1) Analysis of Business Performance
1. Summary of the consolidated fiscal year under review(Market environment)
During the fiscal year ended March 31, 2013, the economy of the United States, which is the Funai Group’s principal
market, continued to grow gradually as it benefited from improvements in the housing market and job situation anda recovery in personal consumption. The European economy remained sluggish, as the European Central Bank’s
responses to the debt crisis failed to dispel concerns entirely. Although economic performance in China showed
initial signs of decelerating, the new administration’s economic policies put business conditions back on a positive
track. In Japan, since the Abe administration came into office the economic outlook has brightened as the prospectof monetary easing has prompted corrections to yen appreciation and bolstered stock prices.
Within the consumer electronics industry, in 2012 the monetary value of the digital consumer electronics market
continued the decline that has persisted since the Lehman Brothers collapse. Under these difficult conditions,
global shipments of LCD TVs fell below the previous year’s level for the first time, while demand for smartphones
and tablet devices has grown sharply, in a changing role of the products that are driving the market.
As a result of the above factors, the Funai Group posted net sales of JPY 192,008 million, a 22.0% decrease
compared with the same period last year.
On the profit front, operating loss was JPY 5,273 million (the operating income for the same period last year was JPY
461 million); ordinary loss was JPY 355 million (the ordinary income for the same period last year was JPY 174
million); and a net loss of JPY 8,542 million (the net loss for the same period last year was JPY 4,629 million).
Segment conditions by location were as follows:i) JapanA reduction in printer orders prompted a major revenue falloff in information equipment. Moreover, sales ofBlu‐ray Disc recorders significantly declined year‐over‐year due to weakening demand.
Sales of LCD TVs, antennas and related devices declined year‐over‐year due to reduced demand in the wake ofJapan’s transition to digital terrestrial broadcasting.
As a result, net sales were JPY 51,678 million, a decrease of 53.8% year on year. Our segment loss (operatingloss) was JPY 4,294 million (the operating profit for this segment for the same period last year was JPY 4,690
million).
ii) North America
While sales of Blu‐ray Disc players increased, sales of DVD‐related equipment declined year‐over‐year due tomarket contraction. Meanwhile, sales of LCD TVs increased year‐over‐year due to strong sales competitively
priced products at a major mass retailer in addition to expansion of sales in Mexican market. Additionally, thePhilips branded audio and accessories products that started selling on September 2012 contributed to thesales.
As a result, net sales amounting to JPY 136,165 million, an increase of 9.7% year on year. Our segment profit(operating profit) was JPY 1,528 million (the operating loss for this segment for the same period last year was
JPY 1,343 million).
iii) Asia
Net sales came to JPY 812 million, a decrease of 82.8% year‐on‐year. Our segment loss (operating loss) was JPY
491 million (the operating profit for this segment for the same period last year was JPY 425 million).
iv) Europe
Sales of LCD TVs and DVD‐related products declined due to sluggish market conditions and tough competition.
As a result, net sales down 38.3% year on year, to JPY 3,352 million, and an segment loss (operating loss) of JPY
389 million (operating loss for the same period last year was JPY 1,530 million).

Sales by product segment were as follows:i) Audio‐Visual Equipment
In the audio‐visual equipment sector, the DVD‐related equipment field witnessed a decline in revenue due to
weakness in the domestic Blu‐ray Disc recorder market. Despite extension in the Mexican market, the LCD TV
market experienced an overall decline in the wake of Japan’s transition to digital terrestrial broadcasting.
As a result, net sales of this equipment were JPY 155,686 million, a decrease of 15.2% year on year.
ii) Information Equipment
In the information equipment sector, a decrease in printer orders resulted in net sales of JPY 11,965 million, adecrease of 60.1% year on year.

iii) Other Products
Although the Philips branded audio and accessories products started selling, sales of other products that notincluded in the above categories declined because of the decrease of sales of antennas and related devices fellin the wake of Japan’s transition to digital terrestrial broadcasting.
As a result, net sales were JPY 24,356 million, a decrease of 25.3% year‐over‐year.
2. Outlook for the next consolidated fiscal year
For the fiscal year ending March 31, 2014, the Funai Group expects the operating climate to remain problematic,
plagued by ongoing uncertainty in its operating environment. To this end, we will further cultivate the Funai
Production System (FPS), entrench cost reductions, promote the use of information technologies, improve
operations and reinforce risk management.
The outlook for the next consolidated fiscal year is provided below.
< Consolidated operating results >Net sales
Operating income
Ordinary income
Net income

JPY 202,000 million
200 million
500 million
100 million(5.2% increase year‐on‐year)
( − )
( − )
( − )

For its earnings estimates, the Funai Group has assumed an exchange rate of JPY 96 = US$1.00. The operating
results outlook is a forward‐looking statement about the future performance of the Company and is based on
management’s assumptions and beliefs in light of information currently available, and involves known andunknown risks and uncertainties. Various factors such as changes in economic conditions overseas, especially in themain U.S. market, and severe price fluctuations may cause actual events and results to differ materially from thoseanticipated in these statements.

(2) Analysis of Financial Position
1. Condition of total assets, total liabilities and net assets
Total assets increased by JPY 17,917 million as compared to the end of the previous consolidated fiscal year. This was
mainly due to an increase of JPY 12,160 million, JPY 8,992 million and JPY 4,500 million for merchandise and finishedgoods, raw materials and supplies, securities.
Total liabilities increased by JPY 20,362 million as compared to the end of the previous consolidated fiscal year. Thiswas mainly due to an increase of JPY 9,555 million and JPY 8,398 million for notes and accounts payable‐trade,short‐term loans payable.
Net assets decrease by JPY 2,445 million as compared to the end of the previous consolidated fiscal year. This was
mainly due to a decrease of 10,248 million in the retained earnings. And the foreign currency translation adjustment
account was increased 7,195 million.
2. Condition of cash flow
With regard to consolidated cash flow for the consolidated fiscal year under review, net cash used in operating
activities was JPY 8,022 million. Net cash used in investing activities was JPY 12,863 million. Net cash provided byfinancing activities was JPY 5,128 million. The balance of cash and cash equivalents at end of the consolidated fiscal
year under review was JPY 50,238 million.
The cash flow indicator trends for the Funai Group are provided below.
FY ended
FY ended
FY ended
March 2009
March 2010
March 2011
Shareholders’ equity ratio
67.6
69.6
67.1
Shareholders’ equity ratio on
a market capitalization basis
Ratio of cash flow tointerest‐bearing debt
Interest coverage ratio

FY ended
March 2012
69.5

FY ended
March 2013
61.7

49.1

65.8

43.6

35.8

20.2

一

1.9

一

0.3

一

一

43.7

一

130.5

一

Shareholders’ equity ratio: Equity capital/total assets
Shareholders’ equity ratio on a market capitalization basis: Total market capitalization/Total assets
Ratio of cash flow to interest‐bearing debt: Interest‐bearing debt/Operating cash flow
Interest coverage ratio: Operating cash flow/Interest payments

* All indicators are calculated using financial values on a consolidated basis.
* Total market capitalization is calculated by multiplying the closing share price at the end of the consolidated fiscal
year by the number of shares outstanding (after deducting treasury stock) at the end of the consolidated fiscal year.
* Net cash provided by (used in) operating activities shown on the Consolidated Statements of Cash Flows is used as
operating cash flow. Interest‐bearing liabilities include all liabilities on which the Company pays interest that are
accounted for on the Consolidated Balance Sheets. The amounts shown as interest expense on the Consolidated
Statements of Cash Flows are used as interest payments.
* The ratio of cash flow to interest‐bearing debt and the interest coverage ratio for the fiscal years ended March 2009
and March 2011 have been omitted because cash flow from operating activities was negative.
(3) Basic Policy Concerning Distribution of Earnings and Dividends for the Consolidated Fiscal Year under Review and
Next Fiscal Year
With regard to the distribution of earnings, the Funai Group recognizes the return of earnings to shareholders is an
important management issue, and considers the maintenance of stable dividends while taking steps to strengthen the
Company’s management base to be a fundamental policy. The Funai Group implements a positive dividend policy,
which takes into consideration factors such as the operating environment, based on a dividend ratio of 1.0% ofconsolidated net assets as a specific standard. The Funai Group plans to implement dividend payments as a year‐end
dividend (once a year).
Based on this policy, for the fiscal year ended March 31, 2013, the Company plans to award a year‐end dividend of JPY
35 per share. The dividend of the next fiscal year has been undecided.
(4) Business and Other Risks
Risks that may have a significant impact on the Funai Group’s financial situation and operating results are outlined
below.
(Funai Group management policy)
The Funai Group has adopted a policy of providing high‐quality, low‐cost products to consumers based upon
optimized production and sales systems on a global scale. We manufacture and sell our principal products, such as
audiovisual equipment (DVD‐related products, LCD TVs, etc.) and information equipment (printers, etc.), in addition toother products (antennas and related devices, etc.). Price competition in these product areas is intense. Additionally,
the life cycle of digital products is short and the competition to develop new technologies and functions is also
growing more severe. Accordingly, these factors may affect the Group’s financial situation and operating results.
i) Product cost and market prices
The Funai Group’s primary target is customers of mass merchandisers such as Walmart and therefore we mustdeliver low prices. Consequently, the Funai Group is working to cut costs through measures such as establishingproduction systems in optimal locations, pursuing further application of the Funai Production System (FPS), theunique productivity improvement system developed by Funai, and utilizing internal production of parts andcentralized purchasing. However, competition in the home electronic appliance industry is intense and when thecost of parts and raw materials rise, cost pressures may affect the Funai Group’s financial situation and operating
results regardless of the fact that we have implemented these measures.
ii) New technologies
As the number of digital products in the home electronic appliance industry increases and the needs of the market
become more diverse, Funai must improve the quality, volume and speed of its new product development.
The Funai Group must be able to respond to such issues and we will improve our technical capabilities, primarily inthe digital product area, by collaborating with other companies, industry and academia, and through personnel
training. We also will consider mergers and acquisitions among our options. However, a diversification of market
needs or technological innovation beyond our expectations may affect the Funai Group’s financial situation andoperating results.
iii) Defects relating to products and services
The Funai Group efforts to increase quality are centered on the departments that are responsible for quality
management and technologies. In addition, a service platform consisting of service companies in both domestic
and international markets has been established. However, if there is a defect in a product that requires the Funai
Group to respond by repairing or replacing such product, the impact of the warranty and/or the resultant decreasein corporate reputation may have negative implications for the Funai Group’s financial situation and operating
results.

iv) Intellectual Property Rights
Recent years have seen an increase in activity by so‐called “patent trolls.” These are entities that sell no products of
their own, but that attempt to generate income from patent royalties by filing lawsuits using intellectual property
rights acquired from third parties. This is a worrisome trend for all companies involved in manufacturing and sales.
In the United States, legislation to limit trolls’ activities has been submitted and is under deliberation. However, asa result of this trend we could be compelled to make high compensation payments that may affect the Group’s
financial situation and operating results.
ⅴ) Corporate Acquisitions and Business Alliances
The Funai Group pursues corporate acquisitions and business alliances as ways to improve its business portfolio
and efficiently bolster sales and profits. However in the event that, for various reasons, the synergies that areachieved fall short of initial expectations and affiliate relationships cannot be maintained, this may affect the Funai
Group’s financial situation and operating results, as well as growth forecasts.
(Impact of overseas market trends)i) Dependence on the North American market
A large portion of the Group’s net sales originates in overseas markets. The North American market in particular
accounted for 69.4% of net sales in the current consolidated fiscal year.
Should the North American economy rapidly enter a recession, this may affect the Group’s financial situation andoperating results.
ii) Dependence on Chinese production
The Funai Group is working to improve the cost competitiveness of its products by concentrating production inpositive cost‐benefit regions and purchasing parts in bulk. In the current consolidated fiscal year 98.4% of our
products were produced overseas, with 70.3% produced under consignment fabrication in China. Changes in the
Chinese government, the outbreak of conflict or natural disasters or other unforeseen circumstances may affect
the Group’s financial situation and operating results.
iii) Foreign currency risk
The Funai Group selects production sites for its principal products after giving consideration to optimal production
sites and sales systems. DVD‐related products, LCD TVs, and printers are produced in China, LCD TVs are producedin Poland and Thailand.
The Funai Group purchases products from overseas subsidiaries in these countries and sells them in overseas
markets, particularly North America, either through Funai’s overseas sales subsidiaries or through direct sales to
OEM supply partners. Domestic sales are also conducted through direct sales and sales subsidiaries.
Purchases from overseas subsidiaries in these countries accounted for 85.0% of gross purchases during the current
consolidated fiscal year. Likewise, overseas net sales accounted for 81.3% of net sales. The majority of ourpurchasing and sales are conducted in U.S. dollars. We believe this reduces the risks that accompany currency
fluctuations. However, it is impossible to completely eliminate foreign currency risk, and large currency
fluctuations may affect the Group’s financial situation and operating results.
(Other Risks)i) Statutory Regulations
The Funai Group conducts business in accordance with the laws and regulations of Japan and other countries. Theselaws and regulations pertain to areas such as commercial transactions, antitrust, intellectual property, productliability, environmental protection, consumer protection and financial transactions, and legislation related tocorporate taxation. Increasingly stringent legislation or the stricter interpretation of existing legislation could affect
the Funai Group’s financial situation and operating results.
ii) Management of Information
The Funai Group has in place internal systems to prevent information leaks and protect itself against viruses.
However, factors such as operational mistakes and the advent of new virus strains may preclude efforts to avoid
information leaks and system shutdowns altogether. Such events could affect the Funai Group’s financial situationand operating results.
iii) Retirement Benefit Obligations
The Funai Group and its consolidated domestic subsidiaries have in place defined benefit corporate pension
systems, and retirement benefit obligations are based on actuarial assumptions on pension assets, such as rates ofreturn and discount rates. The Funai Group’s financial situation and operating results could be affected if changes inthese assumptions become necessary, if a deterioration in the investment environment results causes pension
assets to decrease, or if changes in the pension system cause future retirement benefit expenses to increase.

iv) Tax Assets Carried Forward
The Funai Group bases its decisions on the recoverability of deferred tax assets on various forecasts andassumptions related to future taxable earnings. If these forecasts and assumptions about future taxable earnings
change or if the Group determines that part or all of its deferred tax assets cannot be recovered, subsequent
reductions in deferred tax assets could affect the Funai Group’s financial situation and operating results.
2. Current Conditions of the Company’s GroupThe Funai Group has omitted disclosure of this item because there are no material changes from the information
reported in “Diagram of Operating Business Relationships (Business Contents)” and “Affiliated Companies” in the mostrecent financial statements (submitted on June 22, 2013).
3. Management Policies(1) Basic Management Policy of the Company
As its basic management policy, the Funai Group will pursue its business activities by building strong trust and seeking
the mutual prosperity of all parties related to the Company as its basic policy, by creating the most efficientdevelopment, manufacturing and sales organization possible and stably supplying high quality and fairly priced
products to global markets, based on a corporate creed of continual product improvements, promotion of deeper
trust and further harmony and mutual prosperity.
(2) Management Indicators Established as Objectives
As a management indicator for the Funai Group, the Company places the greatest emphasis on operating income
margin, and will seek to achieve an operating income margin of at least 5% at all companies over the medium term.
(3) Medium to Long‐term Management Strategy and Issues to be addressed
The consumer electronics market is globalizing with unprecedented speed. Amid such changes as businessrestructuring efforts that transcend traditional business borders, Internet proliferation and a growing societal focus
on environmental issues, leading companies are undergoing a process of selection and focus, posting net losses ornear‐losses on an annual basis as the industry undergoes major structural reforms.
Operating in this difficult environment, the Funai Group faces such issues as raising management speed while
ensuring quality and price levels to predominate against rival firms and at the same time expanding sales andrecovering profitability by offering products that will sell.
We will also embark on the development of new businesses, centered on eco‐products, which have a bright future.
In this environment, we will endeavor to enhance the Group’s corporate value by implementing the policies outlined
below.
i) Increasing net sales and returning to profitability
The Funai Group has positioned the increase of net sales and improvement of earnings as its highest priority issue.
(Product strategy)
During the fiscal year under review, in the audio‐visual equipment segment the Funai Group’s sales of LCD TVs
declined, owing to lackluster Japanese market demand in the wake of the transition to digital terrestrial
broadcasting. In products related to Blu‐ray Discs, domestic sales of recorders dropped precipitously, as thesedevices are typically purchased at the same time as LCD TVs. In information equipment as well, orders ofconventional products from OEM customers were down, lowering revenues. Consequently, segment sales andprofits were down year on year for these mainstay products.
For this reason, the Funai Group is enhancing its PSI management (PSI standing for “purchase, sales and inventory”).
Through this approach, we will continue to make our products more competitive pricewise through redesigns andby restructuring our component sourcing system, with a view to augmenting sales and profitability.
With regard to product development in new business areas, during the year we introduced LED lamps into theChinese market, and these went on sale in Japan in October 2012. In July 2012, we concluded an exclusive
agreement with Royal Philips Electronics (hereinafter, “PHILIPS”) involving the sale in the United States, Canada and
Mexico of PHILIPS‐brand audio accessories and other lifestyle entertainment products. Sales commenced under thisagreement in September 2012. In January 2013, we reached an agreement to acquire all shares in a new company
that will assume operations involving these products, and we intend to expand the business on a global scale going
forward. In April 2013, we reached an agreement with Lexmark International, Inc., to acquire its inkjet‐related
technology and assets. This acquisition will enable Funai to start and grow its own inkjet business (including
lucrative supplies), rather than operating as a contract manufacturer of inkjet printer products.
Furthermore, in February 2013 we entered an alliance with KDDI Corporation to offer a service linking smartphones
and televisions provided via a stick‐type compact set‐top box (STB), and we began offering these products for sale.

(Market strategy)
The Funai Group faces the challenges of reducing the risk of overemphasizing the US market, mitigating the effects
of seasonality by smoothing production and sales throughout the year, and increasing sales. To address these issues,
we are considering ways to develop our business in expansionary emerging markets in the ASEAN, Near and Middle
East regions, Mexico and other Latin American countries, as well as in our existing markets in Europe, Japan. In
February 2012, the Funai Group established Funai India Private Limited in Mumbai, India and started selling at thissubsidiary in the upcoming fiscal year. In addition, we started selling the LCD TVs in Thailand.
Through the steady implementation of the above‐mentioned strategies, we plan to minimize the time lags between
product planning, development, material procurement, production and sales, enabling us to provide products in atimely manner that meet market needs precisely.
ii) Reinforcing manufacturing and development systems
The Funai Group’s manufacturing structure is highly dependent on China, and we recognize this as a risk that must
be mitigated. Accordingly, during the year we augmented FUNAI (THAILAND) CO., LTD. a production base that will
become core to our provision of products in the Indian market. We acquired land in Philippines and plan to build theplant.
To increase groupwide development efficiency, we moved forward with efforts to expand our development facilities
in Asian countries, establishing a development facility in China during the year.
iii) Training and appointment of human resources
The Company recognizes that improving each employee’s capabilities and being able to link this to bolstering thestrength of the Funai Group will be critical for ensuring the Funai Group stays in the lead in the new era of global
competition and implementing the Group’s medium to long‐term business strategy. Therefore the Company’s policy
is to actively train and assign employees, without regard to whether they are younger employees or mid‐career staff,
by strengthening and expanding its internal or external training systems.

4. Consolidated Financial Statements(1) Consolidated Balance Sheets(Million Yen)
Fiscal year 2011
(As of March 31, 2012)

Fiscal year 2012
(As of March 31, 2013)ASSETS;
Current Assets
Cash and deposits

68,146

67,813

Notes and accounts receivable‐trade32,29633,193

Securities

4,500

−

Merchandise and finished goods

22,38734,547Work in process

1,570

2,095

Raw materials and supplies

10,00518,997

Deferred tax assets

2,915

2,886

Other

3,989

5,445

Allowance for doubtful accounts

(120)

(178)

145,689

164,802

Buildings and structures

12,741

12,332

Depreciation and amortization(7,335)(6,783)

Buildings and structures (net)

5,406

5,548

Machinery,equipment and motor vehicles

10,8509,219

Depreciation and amortization(9,101)(7,582)

Machinery,equipment and motor vehicles (net)

1,749

1,637

Tools,furniture and fixtures

21,241

21,558Depreciation and amortization(19,215)(19,571)

Tools,furniture and fixtures (net)

2,025

1,986

Lands

5,170

6,169

Lease assets

773

697

Depreciation and amortization

(420)

(464)

Lease assets (net)

352

233

Other

80

1,099

14,785

16,675

3,813

2,078

982

1,028

4,795

3,107

Investment securities

4,641

4,973

Deferred tax assets

3,661

436

Other

3,331

4,720

Allowance for doubtful accounts

(297)

(192)

Total investments and other assets

11,336

9,938

30,917

29,721

176,607

194,524

Total current assets
Noncurrent assets
Tangible fixed assets

Total tangible fixed assets
Intangible assets
Patent right
Other
Total intangible fixed assets
Investment and other assets

Total noncurrent assets
TOTAL ASSETS

(Million Yen)
Fiscal year 2011
(As of March 31, 2012)

Fiscal year 2012
(As of March 31, 2013)

LIABILITIES;Current Liabilities
Notes and accounts payable‐trade29,62339,178

Short‐term loans payable

4,583

12,981

Accounts payables

11,158

11,124lease liabilities

224

163

Income taxes payable

325

1,690

1

1

248

241

Deferred tax liabilities
Allowance for bonus
Reserve for products guarantee

798

927

Other

3,091

3,143

Total current liabilities

50,05469,452

281

147

4

1,168

Revalued deferred tax liabilities

226

226

Reserve for retirement benefits

1,038

927

Allowance for officers' retirement gratuities

1,069

1,081

87

121

2,708

3,672

52,76373,125

Noncurrent liabilities
lease liabilities
Deferred tax liabilities

Other
Total noncurrent liabilities
TOTAL LIABILITIESNET ASSETS;
Shareholders' equity
Capital stock

31,30731,307

Capital surplus

33,27233,272Retained earnings

111,384

101,135

Treasury stock(24,341)(24,341)

Total shareholders' equity

151,623

141,37456451

Foreign currency translation adjustment(28,917)(21,722)

Total accumulated other comprehensive income(28,861)(21,271)

Subscription right to shares

106

122

Minority interests

974

1,173

123,843

121,398

176,607

194,524

Accumulated other comprehensive income
Valuation difference on avaiable‐for‐sale securities

Total net asset
TOTAL LIABILITIES AND NET ASSETS

(2) Consolidated Statements of Income and Consolidated Statement of Comprehensive Income(Consolidated Statements of Income)(Million Yen)
Fiscal year 2011

Net sales

Fiscal year 2012

( from April 1, 2011
to March 31, 2012 )
246,147( from April 1, 2012
to March 31, 2013 )192,008

Cost of sales

208,779

163,340

Gross profit

37,36828,667

Selling, general and administrative expenses

36,90633,940461(5,273)

Interest income

240

280

Dividends income

9439

Foreign exchange gains

−
233

4,691

Other
Total non‐operating income

567

5,338

Interest expenses

126

111

Equity in losses of affiliates

28

69
−
70

Operating income (loss)
Non‐operating income

326

Non‐operating expenses

Foreign exchange losses

378

Penalty
Loss on investments in partnership−
141

Syndicated loan fee
Other

50
128

58

Total non‐operating expenses

854

420

174

(355)

Ordinary income (loss)

57
52

Extraordinary income
Gain on sales of noncurrent assets

9423

Gain on sales of investment securities

3

Other

−
12

−
2
425

30

89

Total extraordinary income
Extraordinary loss
Loss on disposal of noncurrent assets
Loss on sales of investment securities
Loss on impairment

0
※1

413
※1

−
320

Integration expenses of consignment production base
Other
Total extraordinary loss
Income (loss) before income taxes
Income taxes
Income taxes for prior periods

396

343
120

748

2,581

(560)

(2,511)

1,385
※2

1,614

935

725
※2

966

Income Tax Adjustments

1,617

4,325

Total income taxes

3,939

6,017

Income (loss) before minority interests(4,500)(8,528)129

13(4,629)(8,542)

Minority interests in income
Net income (loss)(Consolidated Statement of Comprehensive Income)(Million Yen)
Fiscal year 2011

Loss before minority interest adjustment

Fiscal year 2012

( from April 1, 2011
to March 31, 2012 )(4,500)( from April 1, 2012
to March 31, 2013 )(8,528)Other comprehensive Income
Valuation difference on avaiable‐for‐sale securities

(555)

396

Foreign currency translation adjestment
Share of other comprehensive income of associates
accounted for using equity method
Total other comprehensive Income(1,417)

7,190

(13)

32

(1,986)

7,619(6,486)(909)

Comprehensive income attributable to owners of parent(6,616)(952)

Comprehensive income attributable to minority interests

129

43

Comprehensive income(Breakdown)(3) Consolidated Statements of Changes in Shareholders' Equity(Million Yen)
Fiscal year 2011

Fiscal year 2012

( from April 1, 2011
to March 31, 2012 )( from April 1, 2012
to March 31, 2013)

Shareholders' equity
Capital stock
Balance at the end of previous period

31,30031,307

7−

Changes of items during the period
New issue of stock

7−

31,30731,30733,26533,272

New issue of stock

7−

Total changes of items during the period

7−33,27233,272

116,738

111,384

Dividends from surplus(1,364)(1,705)

Net income (loss)
Increase due to merger of a non‐consolidated subsidiary by aconsolidated subsidiary
Total changes of items during the period(4,629)(8,542)639−(5,354)(10,248)111,384

101,135(24,341)(24,341)

Purchase of treasury stock−(0)

Total changes of items during the period−(0)(24,341)(24,341)

156,962

151,623

14−

Dividends from surplus(1,364)(1,705)

Net income (loss)(4,629)(8,542)

−

(0)

639

−

(5,339)(10,248)

151,623

141,374

Total changes of items during the period
Balance at the end of current period
Capital surplus
Balance at the end of previous period
Changes of items during the period

Balance at the end of current period
Retained earnings
Balance at the end of previous period
Changes of items during the period

Balance at the end of current period
Treasury stock
Balance at the end of previous period
Changes of items during the period

Balance at the end of current period
Total shareholders' equity
Balance at the end of previous period
Changes of items during the period
New issue of stock

Purchase of treasury stock
Increase due to merger of a non‐consolidated subsidiary by aconsolidated subsidiary
Total changes of items during the period
Balance at the end of current period

(Million Yen)
Fiscal year 2011

Fiscal year 2012

( from April 1, 2011
to March 31, 2012 )( from April 1, 2012
to March 31, 2013)

Accumulated other comprehensive income
Valuation difference on available‐for‐sale securities
Balance at the end of previous period

612

56

Net changes of items other than shareholders' equity

(555)

394

Total changes of items during the period

(555)

394

56

451

(27,486)(28,917)(1,430)

7,195

Changes of items during the period

Balance at the end of current period
Foreign currency translation adjustment
Balance at the end of previous period
Changes of items during the period
Net changes of items other than shareholders' equity
Total changes of items during the period(1,430)

7,195

Balance at the end of current period(28,917)(21,722)(26,874)(28,861)(1,986)

7,589

Total accumulated other comprehensive income
Balance at the end of previous period
Changes of items during the period
Net changes of items other than shareholders' equity
Total changes of items during the period(1,986)

7,589

Balance at the end of current period(28,861)(21,271)

87

106

Subscription rights to shares
Balance at the end of previous period
Changes of items during the period
Net changes of items other than shareholders' equity

19

15

Total changes of items during the period

19

15

Balance at the end of current period

106

122

1,052

974

Net changes of items other than shareholders' equity

(77)

198

Total changes of items during the period

(77)

198

Balance at the end of current period

974

1,173

131,228

123,843

14−

Dividends from surplus(1,364)(1,705)

Net income (loss)(4,629)(8,542)

−

(0)

639

−

(2,045)

7,803

Minority interests
Balance at the end of previous period
Changes of items during the period

Total net assets
Balance at the end of previous period
Changes of items during the period
New issue of stock

Purchase of treasury stock
Increase due to merger of a non‐consolidated subsidiary by aconsolidated subsidiary
Net changes of items other than shareholders' equity
Total changes of items during the period
Balance at the end of current period(7,384)(2,445)

123,843

121,398

(4) Consolidated quartely statements of cash flows(Million Yen)
Fiscal year 2011

Fiscal year 2012

( from April 1, 2011
to March 31, 2012)( from April 1, 2012
to March 31, 2013)

Net cash provided by (used in) operating activities
Income before income taxes and minority interests(560)(2,511)

Depreciation and amortization

6,547

5,264

Loss on impairment

396

1,614

Increase(decrease) in allowance for doubtful accounts

(69)

(66)

Increase(decrease)in provision for retirement benefits

(315)

(111)

Interest and dividends income

(334)

(320)

Interest expenses

126

111

Equity in (earnings) losses of affiliates

28

69

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

(7)

(421)

310

92

Loss (gain) on sales of investment securities
Loss (gain) on valuation of investment securities

0413

Decrease (increase) in trade receivables

3,472

4,388

Decrease (increase) in inventories

9,097(15,193)

Increase (decrease) in trade payables

1,087

1,328

Other, net(394)(2,601)

Subtotal

19,384(7,944)

Interest and dividends income received

317

363

Interest expenses paid

(125)

(115)

Income taxes paid

(3,577)(1,010)

Income taxes refund

1,353

684

(935)

−

16,416(8,022)

Payments into time deposits(96,743)(59,777)

Repayments from time deposits

96,37280,150Purchase of property, plant and equipment(3,607)(5,384)102

497(2,678)(415)

Purchase of investment securities

(290)

(702)

Proceeds from sales of investment securities

485

356

Payment of partial purchase of shares of consolidated subsidiarie

(196)

−

Payments for loan receivables(3)(1,073)

Collection of loan receivables

1085

Other, net

114

(872)

(6,434)

12,863

Net cash provided by (used in) operating activities
Net cash provided by (used in) investment activities

Proceeds from sales of property, plant and equipment
Purchase of intangible assets

Net cash provided by (used in) investment activities

(Million Yen)
Fiscal year 2011

Fiscal year 2012

( from April 1, 2011
to March 31, 2012)( from April 1, 2012
to March 31, 2013)

Net cash provided by (used in) financing activities
Net increase (decrease) in short‐term loans payable(5,068)

6,900

Repayment of long‐term loans payable

(33)

−

Proceeds from issue of stock option

11−

Purchase of fractional shares−(0)(1,364)(1,705)

(263)

(65)

(6,717)

5,128

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

227

3,667

Net increase (decrease) in cash and cash equivalents

3,490

13,637

Cash and cash equivalents at beginning of period

33,74536,567

Increase in cash and cash equivalents from newly consolidated
subsidiaries−

33

Decrease in cash and cash equivalents resulting from exclusionof subsidiaries from consolidation

(669)

−

36,56750,238Cash and cash equivalents at end of period

(5) Notes on Consolidated Financial Statements(Fundamental important matters for preparation of consolidated financial statements)
1. The matter regarding consolidation scope
The number of consolidated subsidiaries : 18
The major consolidated subsidiaries are FUNAI CORPORATION, INC., FUNAI ELECTRIC (H.K.), LTD. and DX ANTENNA
CO., LTD.
Funai India Private Limited took on increased importance in the current consolidated fiscal year, so it has been
included within the scope of consolidation. The newly‐established Zhong Shan Funai Electron Co., FUNAI CMET
Optical Electronics Co., Ltd., FEP REAL DSTATE, INC. and HIGH DEFINITION COMMERCIAL SOLUTIONS have also been
included within the scope of consolidation in the fiscal year.
2. The matter regarding application of the equity method
The number of equity method affiliate company : 18
It is CMET FUNAI Optical Electronics Co., Ltd.
CMET FUNAI Optical Electronics Co., Ltd. took on increased importance in the fiscal year, so it has been included
within the scope of equity method.
(Change in Accounting Policy)
Switch to the method of depreciation
In accordance with revisions to the corporate tax code, beginning in the first quarter of the current fiscal term theCompany and its consolidated subsidiaries in Japan will switch to the method of depreciation called for in the revised
tax code for tangible fixed assets acquired on or after April 1, 2012.
The resultant impact on operating loss, ordinary loss and net loss before taxes and other adjustments is minor.
(Additional Information)
About Anti‐Tax Haven Law
1. The Funai Group received a rectification notices from the Osaka Regional Taxation Bureau on June 28, 2005, andJune 16, 2008. The Bureau determined that our Hong Kong subsidiary does not meet the requirements for
exclusion under the anti‐tax haven system and the Hong Kong subsidiary’s income for the three fiscal years ended
March 31, 2002 through 2004, and the three years from March 31, 2005 through 2007, will be considered, andtaxed as, our income. We objected to this supplementary tax assessment, and filed petitions seeking a review ofthe decision with the Osaka Regional Tax Tribunal on July 25, 2006, and August 6, 2008. On July 3, 2008, and July23, 2009, we received written verdicts on this case from the Administrative Review Office of the Osaka Regional
Taxation Bureau, which indicated that our assertions had been dismissed. On November 16, 2006 and November
14, 2008, the Company filed suits in the Osaka District Court to overturn the supplementary tax assessment orders,and a hearing for consolidation of those actions was filed on November 26, 2008. The court dismissed the claimsof our Company on June 24, 2011. As the Company is unable to accept the Osaka District Court’s judgment, wefiled a notice of appeal at the Osaka Superior Court on July 7, 2011. With respect to this action, on July 20, 2012,
the court dismissed the claims of the Company. In response to this judgment, the company will promptly examine
the contents of the judgment. We intend to appeal this matter with the High Court.
The additional taxes of JPY 16,651 million (JPY 19,184 million including incidental taxes) and JPY 15,038 million(JPY 16,838 million including incidental taxes) include corporate, enterprise and residence taxes. In accordancewith the “Accounting Practices, Disclosure and Audit Treatment for Various Taxes” (Japanese Institute of Certified
Public Accountants, Auditing and Assurance Practice Committee, Audit Committee Report No. 63) we charged thetax assessments to income as “prior year’s taxes” in the fiscal year ended March 31, 2007, and the fiscal year
ended March 31, 2009.
2.

The Funai Group received a rectification 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 exclusion under theanti‐tax haven system and the Hong Kong subsidiary’s income for the three fiscal years ended March 31, 2008
through 2010, will be considered, and taxed as our income. We objected to these supplementary tax assessments,and filed a petition with the Osaka Regional Tax Tribunal on August 25, 2011, to overturn the supplementary tax
assessment order. Thereafter, we received written verdicts on this case on July 24, 2012 indicating that ourassertions had been dismissed. We will continue to assert the validity of its arguments in the future.
The additional tax of JPY 825 million (JPY 935 million including incidental taxes) includes corporate, enterpriseand residence taxes. We charged the tax assessments to income as “prior year’s taxes” in the fiscal year ended
March 31, 2012.

3.

With regard to the actions The Funai Group filed with the Osaka District Court on June 28, 2005, and June 16,
2008, seeking the rescission of supplementary tax assessments, on June 24, 2011, a decision was reached in which
the court dismissed the claims of the Company. Accordingly, we treated this amount as an expense during the
fiscal year under review, which is the fiscal year ended March 31, 2012 following the year to which the assessment
was applied.

(Takeover of a company by share acquisition)
The Funai Group reached an agreement with Royal Philips Electronics (headquarters, the Netherlands; NYSE: PHG;
AEX: PHIA, hereinafter, “PHILIPS”) to acquire all shares (hereinafter, the “Transaction”) in the company (hereinafter,
the “New Company”) assuming operations (hereinafter, the “Operation”) of PHILIPS’ Lifestyle Entertainment Business(Note) in January 29, 2013.
(Note) The Lifestyle Entertainment Business involves the development and design, sales and (partial) manufacture of the following
PHILIPS‐brand products.
(Audio Video Multimedia products)
Home Audio, Headphone, Speaker, In‐car Audio, Video related products, Portable Audio, Portable Video Player,Home Media Player etc.
(Home Communication products) DECT Phone(Accessories products) Batteries, Cables/Connectors, Storage Products, Power Solutions, Portable Chargers for Cell‐phone, Antennas etc.

The Transaction does not include the acquisition of business related to general‐purpose remote control equipment within
the Lifestyle Entertainment Business. In addition, as part of the Transaction, it has been agreed that the Optical Video
Business will transfer in 2017.

1. Reasons for acquiring the shares
In September 2008, the Funai Group entered into a brand licensing agreement maintaining responsibility for thesourcing, distribution, marketing and sales activities of PHILIPS consumer televisions in the United States andCanada. Following this, in July 2012 the Funai Group entered an agreement with PHILIPS involving the sale in the
United States, Canada and Mexico of products that PHILIPS designed and developed through the Operation.
We have positioned the “strengthening and expanding existing businesses,” “making forays into new markets” and“developing new businesses” as the three pillars of its growth strategy. To achieve this growth strategy, in addition
to reinforcing existing management resources we have searched for growth opportunities through businessalliances and M&A activities with other companies such as those outlined above.
The Transaction to assume the Operation will enable the Funai Group to expand the lineup of products that it
handles and expand its sales region to include Asia, South America and other emerging markets, as well as
advanced countries in Europe. We decided to acquire shares in the New Company, based on the belief that theacquisition would foster sustained growth of the Funai Group’s business.
2. Name of counterparty to the share acquisition
Royal Philips Electronics
3. Name of the new company (Note)i) Name : Not yet determined (Note)ii) Location : Not yet determined (Note)iii) Name and Position of Representative : Not yet determinediv) Capital : Not yet determined (Note)ⅴ) Businesses : Development, design, selling, and (partial) involvement in manufacturing of products of the
Operation(Note) As the New Company is to be established in the first half of FY 2013, these decisions are not in place at present.

4. Schedulei) Conclusion of Share Transaction Agreementii) Expected Date of Share T r a n s f e r

January 29, 2013
Within 2013 (Note)(Note) The share transfer date is expected to be during 2013, after conforming items related to competition laws in various
regions, including most probably the United States, Germany, Ukraine, Russia, Poland, Turkey, and Taiwan.

5. Number of shares acquired, acquisition price and status of held shares before and after acquisitioni) Ratio of the number of shares held to the number of
0.0%
shares issued p r i o r t o t r a n s f e r(Ratio of voting rights: ― %)ii) Ratio of the number of shares acquired to the number 100%of shares issued
Shares of the New Company’s stock JPY 17,250 millioniii) Acquisition Price(Note 1,2)
Advisory fees, etc. (approximate amount) JPY 830 million(Note 1,3)
Total (approximate amount) JPY 18,080 millioniv)Ratio of the number of shares held to the number ofshares issued a f t e r t r a n s f e r

100.0%(Ratio of voting rights: 100.0%)

(Note 1) These calculations assume an exchange rate of JPY 115 to the euro.
(Note 2) The acquisition price of the New Company’s shares is expected to be as indicated above.
However, this figure is expected to be adjusted based on the Operation’s cash and deposits, interest‐bearing liabilities,
tangible fixed assets, working capital as of the share transfer date.
(Note 3) Advisory fees, etc., are approximations. This total includes amounts for the payment of advisory fees for the services offinancial advisors, legal advisors, accounting advisors and tax advisors, as well as other costs related to the acquisition of
the New Company’s shares.

6. Method of procuring funds
Costs for this acquisition are all to be funded through resources on hand.
(Consolidated statement of income)Fiscal Year 2011
(From April 1, 2011 to March 31, 2012)*1. Impairment losses
During the fiscal year under review, the Funai ElectricGroup recorded losses on impairment in the following
asset groups.

Fiscal Year 2012
(From April 1, 2012 to March 31, 2013)*1. Impairment losses
During the fiscal year under review, the Funai ElectricGroup recorded losses on impairment in the following
asset groups.

Use

Location

Type

Use

Location

Type

Business
AssetsDX Antenna Co., Ltd.
(Hyogo‐ku, Kobe City)

Buildings andstructures

Idle assets

Business
AssetsDX Antenna Co., Ltd.
(Ono City, Hyogo Pref.)Long‐term
prepaid
expenses, etc.

Research
Facility

DX Antenna Co., Ltd..
(Tarumi‐ku, kobe City)

Buildings andstructures
Buildings andstructures ,Lands

Funai Electric Co., Ltd.
(Daito, Osaka)

In principle, the Funai Group groups business assets on
the basis of legal units, while idle assets are grouped byindividual asset.
During the fiscal year under review, we reduced the bookvalues of structures earmarked for demolition and landscheduled for sale to their recoverable values. These
reductions, along with estimated removal costs associatedwith demolition, were recorded as a loss on impairment(JPY 396 million) and posted as an extraordinary loss. This
loss breaks down into JPY 353 million on buildings andstructures, and JPY 43 million on land.
We reduced to zero the recoverable value of those assetsthat are slated for demolition. For assets scheduled for
sale, we reduced their recoverable value to their net salevalue, based on real estate appraisal values.
*2. Supplementary tax assessment(Corrective action implemented based on the applicationof the Anti‐Tax Haven Law)
On June 29, 2011 we received a notice from the Osaka
Regional Taxation Bureau indicating their decision toincorporate the income generated by our subsidiary inHong Kong into the income of our company for theduration of three years, from April 1, 2007, to March 31,
2010, for taxation purposes.
Because the Funai Group objected to this corrective
action, we applied for assessments by the Administrative
Review Office of the Osaka Regional Taxation Bureau on
August 25, 2011.
The additional tax, including corporate, residential, andbusiness taxes, amounts to JPY 825 million (JPY 935
million including incidental taxes). This amount has beenprocessed as expenses under the category of “income
taxes for prior periods” in this fiscal year.

In principle, the Funai Group groups business assets on
the basis of legal units that strive to maintain an
ongoing understanding of income and expenses. The
idle assets are grouped by individual asset.
During the fiscal year, the Company revised its
production model in line with decreasing global
demand. As a result, the Funai Group revalued its
licensing of patents based on their expected future
degree of use, thereby reducing the expected amountcollectible for these assets by JPY 1,614 million. This
impairment loss was recorded as an extraordinary loss.
As the recoverable value of these assets is estimated as
their value in use and no future cash flows can be
expected, their value in use has been reduced to zero.

* 2. Supplementary tax assessment
A consolidated subsidiary, FUNAI EUROPE GmbH, isunder investigation by the German tax authorities withregard to transfer pricing taxation on transactions withFUNAI ELECTRIC EUROPE Sp.z o.o., which is also a
consolidated subsidiary.
During the fiscal year, the Funai Group posted a“supplementary tax assessment” based on the
anticipated additional tax amount, based on the belief
that a request for correction by the German tax
authorities was increasingly likely under the transfer
pricing taxation scheme.

(Consolidated statement of comprehensive income)Fiscal Year 2011
(From April 1, 2011 to March 31, 2012)*1. Reclassification adjustment and tax effect amountinvolved in other comprehensive income(Million Yen)
Fiscal Year 2012
(From April 1, 2012 to March 31, 2013)*1. Reclassification adjustment and tax effect amountinvolved in other comprehensive income

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:
Accrued amount on the current term
Reclassification adjustment amountPre‐adjustment of tax effectTax effect amount

Valuation difference on available‐for‐sale securities(1,388)
445
(942)
387
(555)

Foreign currency translation adjustment:
Accrued amount on the current term
Share of other comprehensive income ofassociates accounted for using equity method:
Accrued amount on the current term
Total other comprehensive Income

Valuation difference on available‐for‐sale securities

201
413
614
(218)
396

Foreign currency translation adjustment:(1,417)(13)(1,986)

Accrued amount on the current term
Share of other comprehensive income ofassociates accounted for using equity method:
Accrued amount on the current term
Total other comprehensive Income

7,190

32
7,619

[Segment Information]
1. Summary of Reporting Segments
The Group’s reporting segments are based on those units within the Group where separate financial information isavailable and where the Chief Executive Officer (Representative Director, President and Executive Officer) of theGroup periodically deliberates over matters such as the distribution of management resources and financial
performance of such segments. The Group’s main business is to manufacture and sell electrical equipment anddevices. Within Japan, such functions are the responsibility of DX Antenna Co., Ltd. Overseas, the areas of theUnited States, Asia and Europe are managed by Funai Corporation, Inc. (North America), P&F USA, Inc. (North
America), Funai Electric (H.K.) Ltd. (Asia), FUNAI ELECTRIC EUROPE Sp.z o.o (Europe), and other locally domiciled
entities. Each locally domiciled entity is an independently managed unit that engages in business activities after
formulating comprehensive strategies on the products to carry in the region.
Consequently, the Group is comprised of location‐specific segments that are based on its manufacturing and sales
structure and have established “Japan”, “North America”, “Asia” and “Europe” as its four reporting segments.
2. Measurement of the amount of 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.
(Switch to the method of depreciation)
In accordance with revisions to the corporate tax code, beginning in the first quarter of the current fiscal term theCompany and its consolidated subsidiaries in Japan will switch to the method of depreciation called for in therevised tax code for tangible fixed assets acquired on or after April 1, 2012.
The resultant impact on segment loss is minor.
3. Information of the amount of sales, income/loss, assets, liabilities and other in each reporting segment
Fiscal year 2011 (April 1, 2011 ‐ March 31, 2012)(Units: Million Yen)
Adjustments Consolidated
Japan
N. America
Asia
EuropeTotal(Note 1)
(Note 2)Net Sales(1) Sales to outside customers
111,870
124,126
4,717
5,432
246,147−
246,147(2) Inter‐segment sales
112,132
0160,757
4
272,895 (272,895)−
Total
Segment Income (Loss)
Segment Assets
Other
Depreciation and amortization
Amortization of goodwill

224,003
4,690
111,956

124,127(1,343)35,895

165,475
425
77,704

5,437(1,530)4,285

519,0432,241
229,842(272,895)(1,780)(53,234)

246,147461
176,607

2,420
20

109
−

3,913
−

106
−

6,550
20

(2)
−

6,547
20

Investment amount to equity
method affiliate

−

−

231

−

231

−

231

Increase in tangible fixed
assets and intangible assets

3,522

23

3,170

20

6,737

(128)

6,608

Fiscal year 2012 (April 1, 2012 ‐ March 31, 2013)
Japan

N. America

Asia

51,678120,863

136,165
0812
133,491

3,352
0

192,008
254,355−(254,355)

192,008−

172,541(4,294)
108,875

136,165
1,528
55,361

134,303(491)
66,696

3,352
(389)
4,382

446,363(3,647)
235,316(254,355)(1,626)(40,792)

192,008(5,273)
194,524

1,797
9

86
−

3,319
−

61
−

5,264
9

−
−

5,264
9

Investment amount to equity
method affiliate

71

−

221

−

293

−

293

Increase in tangible fixed
assets and intangible assets

1,317

37

4,373

5

5,733

(4)

5,729

Net Sales(1) Sales to outside customers(2) Inter‐segment sales
Total
Segment Income (Loss)
Segment Assets
Other
Depreciation and amortization
Amortization of goodwill

Europe

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

(Note) 1. Adjustments were as follows.
Segment Income
10
(948)
(841)

(Units: Million Yen)
Fiscal year 2012
(0)
(885)
(739)

(1,780)(1,626)

Fiscal year 2011
Eliminations
Corporate expenses *Inventories
Total* Corporate expenses that are categorized under adjustments are within segment income mainly comprise
general & administration expenses that do not correspond to the reporting segments
Segment Assets
Total assets *Adjustments of inventories
Eliminations

27,148(958)(79,424)(Units: Million Yen)
Fiscal year 2012
37,615(1,697)(76,709)

Total(53,234)(40,792)

Fiscal year 2011

*Total assets that are categorized under adjustments within segment assets mainly comprise excess
cash/deposits, long term securities for investment that do not correspond to the reporting segments.
(Note) 2. Segment income and loss are adjusted with the operating income reported in the consolidated statements
of income and loss.
[Related Information]
Fiscal year 2011 (April 1, 2011‐ March 31, 2012)
1. Information every product and service
Audiovisual
Equipment
Sales to outside customers
183,507(Units: Million Yen)
Information
Equipment
30,013

Other Equipment
32,627

2. Information every area
(1) Sales
U.S.

81,290246,147(Units: Million Yen)
N. America

Japan

Total

Asia

Other

127,989

6,122

Europe

9,290

Other

12,592

Total

8,862

246,147(Note) Geographical sales are groupings of nations and regions based on geographical location of customers.
(2) Tangible fixed assets(Units: Million Yen)
Asia

Japan

N. America
9,472

3.

105

China

Thailand

2,569

1,203

Information every main customer
Name of the customer
WAL‐MART STORES, INC.

Europe

Total
1,433

14,785(Units: Million Yen)

Sales

Fiscal year 2012 (April 1, 2012‐ March 31, 2013)
1. Information every product and service
Audiovisual
Equipment
Sales to outside customers
155,686

82,791

Associated segment
N. America(Units: Million Yen)
Information
Equipment
11,965

Other Equipment
24,356

Total
192,008

2. Information every area
(1) Sales(Units: Million Yen)
N. America

Japan

U.S.

35,865

Asia

Other

127,327

5,982

Europe

3,541

Other

6,200

Total

13,090

192,008(Note) Geographical sales are groupings of nations and regions based on geographical location of customers.
(2) Tangible fixed assets(Units: Million Yen)
Asia

Japan

N. America

9,693
3.

China

95

EuropeThailand

1,965

Other

2,439

1,032

Information every main customer
Sales

N. America

Asia

−

396

−

(Units: Million Yen)
All of thecompanies
Total
Elimination
−
396

−

(Units: Million Yen)
All of thecompanies
Total
Elimination−
1,614(Units: Million Yen)
All of the
Total
companies
Elimination−
20

Europe−Fiscal year 2012 (April 1, 2012 ‐ March 31, 2013)
Japan
Impairment loss

N. America

Asia

−

1,614

Europe−[Information of goodwill in each reporting segments]
Fiscal year 2011 (April 1, 2011 ‐ March 31, 2012)
Japan
Amortization ofcurrent year
Balance at the endof current year

N. America

Asia

Europe

20

−

−

−

13

−

−

−

Fiscal year 2012 (April 1, 2012 ‐ March 31, 2013)
Japan
Amortization ofcurrent year
Balance at the endof current year

16,675

Associated segment
N. America

93,918[Information of impairment loss in each reporting segments]
Fiscal year 2011 (April 1, 2011 ‐ March 31, 2012)

Impairment loss

1,448

(Units: Million Yen)

Name of the customer
WAL‐MART STORES, INC.

Japan

Total

N. America

Asia

Europe

9

−

−

−

4

−

−

−

[Information of amortization of negative goodwill in each reporting segments]
No Applicable−

13(Units: Million Yen)
All of the
Total
companies
Elimination
−
9
−

4

(Significant subsequent event)Acquisition of inkjet‐related technology and assets
The Funai Group executed an agreement to acquire the inkjet‐related (IJ) technology and assets of Lexmark
International, Inc. (Lexington, Kentucky; hereinafter, “Lexmark”) in April 2, 2013.
1. Strategic rationale for the acquisition
As a contract manufacturer, the Funai Group has supplied inkjet hardware to Lexmark since July of 1997. The Grouphas worked closely with Lexmark for around 16 years in developing printer hardware and has established a strong
relationship with Lexmark.
The acquisition of the IJ technology and assets enables the Funai Group to start and grow our own inkjet business,
not as a contract manufacturer of printer products (excluding lucrative supplies) any longer, with the inkjet patents,
manufacturing facilities and comprehensive R&D capabilities for the products (including supplies) related to inkjet
printers, the strong inkjet business platform which Lexmark has established for years. As a result, the Funai Group
believes it will be able to expand its business going forward sustainably.
2. Name of the counterparty
Lexmark International, INC.
3. The assets to be transferred(1) The Details of Assets①i) Inkjet patents②ii) IJ R&D resources in the U.S.
③iii) All of outstanding shares of IJ manufacturing affiliate of Lexmark in Philippines(Including land, building, equipment and staff)④iv) Other IJ technologies and assets(2) Assets to be transferred in amount
Acquisition price is JPY 9,500 million (assuming an exchange rate of JPY 95 to the U.S. Dollar), and costs for thisacquisition are all to be funded through resources on hand. The details of assets and liabilities to be transferred andtheir amount are under review.
4. The legal form of corporate combination
Acquisition of patents, development facility and manufacturing affiliate shares
5. Schedulei) Conclusion of Share Transaction Agreementii) Expected Date of Share Transfer

April 2, 2013
Within the first half of 2013

from 2012.4.1
to2013.3.31
Page
1. Summary of Full Year Financial Statements（Consolidated）(1) Operating Results, Financial Conditions ･･･････････････････････････ １(2) Profitability and Per Share Data etc. ･･････････････････････････････ １(3) Capital Expenditures, Depreciation, R&D Expenses ･･･････････････ １(4) Cash Flow ･･･････････････････････････････････････････････････････ ２

2. Operating Activities (Consolidated)(1) Slaes by Equipment ･･･････････････････････････････････････････････ ２(2) Sales by Area in Equipment ･･･････････････････････････････････････ ３(3) Sales by Equipment in Areas ･･････････････････････････････････････ ３

3. Summary of 4Q (January-March) Financial Statements(Consolidated)(1) Operating Results ･･････････････････････････････････････････････････ 4(2) Sales by Equipment ････････････････････････････････････････････････ 4

１．Summary of Full Year Financial Statements (Consolidated)(1) Operating Results, Financial Conditions
FY2011%

Amount（Units : 100 million yen, %）FY2013 (Projection)

FY2012
ChangeAmount%ChangeAmount%Change

2461

100.0

(16.8)

1920

100.0

(22.0)

2020

100.0

5.2

Operating Income (Loss)4

0.2(40.2)

(52)

(2.7)

−

2

0.1

−

Ordinary Income (Loss)1

0.1(86.5)

(3)

(0.2)

−

5

0.2

−

Net Income (Loss) after Tax

(46)

(1.9)

−

(85)

(4.4)

−

1

0.0

−

Total Assets

1,766

−

−

1,945

−

−

−

−

−

Net Assets

1,238

−

−

1,213

−

−

−

−

−

Net Sales（※） Yen‐Dollars / Exchange rate
FY2011FY2012Average Rate in each Period

83.32

78.81

（Units : Yen / Dollars）
FY2013 (Projection)
96.00(2) Profitability and Per Share Data etc.
FY2011FY2013 (Projection)

FY2012

（％）

15.2

14.9

17.1

Operating Income Ratio （％）

0.2

(2.7)

0.1

Ordinary Income Ratio （％）

0.1

(0.2)

0.2

Shareholders' Equity Ratio （％）

69.5

61.7

−

Gross Profit Ratio

Net Assets Per Share（yen）

3598.033520.11−Net Income Per Share（yen）(135.69)(250.38)

2.93

Return on Assets

（％）

(2.5)

(4.6)

−

Return on Shareholders' Equity （％）

(3.7)

(7.0)

−

Numberof
Total
Employees

3,990

4,776

−

(3) Capital Expenditures, Depreciation, R&D Expenses
FY2011
AmountChange40

Capital Expenditures

Amount(33.3)

Depreciation Expenses
R&D

%

49

2.0

105

4.3

Change53

FY2011
Amount（Units : 100 million yen, %）FY2013 (Projection)

FY2012%

ChangeAmount

2.1

40

2.1

93

4.8

(18.6)

−1−

5.7

56

32.5

FY2012

ChangeAmount

FY2013 (Projection)%

ChangeAmount(18.4)

61

3.0

52.5

103

5.1

10.8

(11.4)

Change(4) CashFlow

Cash flows provided by operating activities

164

(80)

（Units : 100 million yen）
FY2013 (Projection)−

Income Before Income Taxes

(5)

(25)

−

Depreciation Expenses

65

52

−

Others

104

(107)

−

Cash flows used in investing activities

(64)

128

−

Free cash flows

100

48

−

Cash flows provided by financing activities

(67)

51

−

2

36

−

28

136

−

FY2011

Effect of exchange rate changes oncash and cash equivalents
Net increase in cash and cash
equivalents

FY2012

2．Operating Activities (Consolidated)(1) Sales by Equipment
FY2011
AmountAudio Visual Equipment%（Units : 100 million yen, %）FY2013 (Projection)

FY2012
ChangeAmount%ChangeAmount%Change

1,835

74.5

(7.6)

1,557

81.1

(15.2)

1,587

78.6

1.9

DVD

219

8.9

(18.6)

184

9.6(16.0)

123

6.1(33.2)

BD

380

15.4

7.6

141

7.3

(62.9)

159

7.9

12.8

LCD TV

1,209

49.1

(9.1)

1,199

62.5

(0.8)

1,261

62.4

5.2

Others27

1.1(20.6)

33

1.7

22.2

44

2.2

33.3

Information Equipment

300

12.2

(46.8)

119

6.2(60.1)

142

7.0

19.3

Others326

13.3(20.3)

244

12.7(25.3)

291

14.4

19.3

Total

2,461

100.0

(16.8)

1,920

100.0

(22.0)

2,020

100.0

5.2

−2−

(2) Sales by Areas in Equipment

FY2012FY2011
AmountAudio Visual Equipment%（Units : 100 million yen, %）FY2013 (Projection)

ChangeAmount%ChangeAmount%Change

1,835

74.5

(7.6)

1,557

81.1

(15.2)

1,587

78.6

1.9

1,222

49.7

(5.2)

1,213

63.2

(0.7)

1,161

57.5

(4.3)

Europe67

2.7(19.3)

43

2.2(35.8)

54

2.7

25.6

Asia and Others

43

1.7

13.2

117

6.1

172.1

197

9.7

68.4

Japan

503

20.4

(12.7)

184

9.6(63.4)

175

8.7

(4.9)

300

12.2

(46.8)

119

6.2(60.1)

142

7.0

19.3

North America

103

4.2

(51.9)

53

2.8(48.5)

69

3.4

30.2

Europe592.4(61.7)

19

1.0(67.8)

36

1.8

89.5

Asia and Others

131

5.3

(26.8)

42

2.2(67.9)

36

1.8(14.3)

Japan

7

0.3

(58.8)

5

0.2(28.6)

1

0.0(80.0)

Others326

13.3(20.3)

244

12.7(25.3)

291

14.4

19.3

Total

2,461

100.0

(16.8)

1,920

100.0

(22.0)

2,020

100.0

5.2

North America

Information Equipment(3) Sales by Equipment in Areas

FY2011
AmountNorth America%（Units : 100 million yen, %）FY2013 (Projection)

FY2012
ChangeAmount%ChangeAmount%Change

1,341

54.5

(13.9)

1,333

69.4

(0.6)

1,368

67.7

2.6

1,222

49.6

(5.2)

1,213

63.2

(0.7)

1,161

57.5

(4.3)

103

4.2

53

2.8

(48.5)

69

3.4

30.2

16

0.7

67

3.4

138

6.8

106.0

126

5.1

62

3.2

90

4.5

45.2

67

2.7

43

2.2

54

2.7

25.6

59

2.4

(61.7)

19

1.0(67.8)

36

1.8

89.5

0

0.0

−

0

0.0

−

0

0.0

−

181

7.4

166

8.7

246

12.2

48.2

43

1.8

117

6.1

197

9.7

68.4

131

5.3

42

2.2

(67.9)

36

1.8(14.3)

7

0.3

7

0.4

−

13

0.7

85.7

813

33.0

359

18.7

316

15.6

(12.0)

Audio Visual Equipment

503

20.4

(12.7)

184

9.6(63.4)

175

8.7

(4.9)

Information Equipment

7

0.3(58.8)

5

0.2(28.6)

1

0.0(80.0)

303

12.3(13.2)

170

8.9(43.9)

140

6.9(17.6)

2,461

100.0

(16.8)

1,920

100.0

(22.0)

2,020

100.0

5.2

Audio Visual Equipment
Information Equipment
OthersEuropeAudio Visual Equipment
Information Equipment
OthersAsia and Others
Audio Visual Equipment
Information Equipment
OthersJapan

OthersTotal(51.9)(70.9)(47.2)(19.3)(18.1)
13.2(26.8)
75.0(13.7)−3−318.8(50.8)(35.8)

(8.3)
172.1

(55.9)

3．Summary of 4Q (January to March) Financial Statements (Consolidated)(1) Operating Results（Units : 100 million yen, %）FY2011FY20124Q (Jan.‐Mar.)

4Q (Jan.‐Mar.)%

Amount%AmountChangeChangeNet Sales

427

100.0

(35.2)

450

100.0

5.4

Operating Loss

(24)

(5.8)

−

(34)

(7.6)

−

Ordinary Loss

(12)

(2.9)

−

(4)

(1.1)

−

Net Loss after Tax

(10)

(2.4)

−

(62)

(13.9)−（※） Yen‐Dollars / Exchange rate
（Units : Yen / Dollars）

Average Rate in each Period

FY2011FY20124Q (Jan.‐Mar.)

4Q (Jan.‐Mar.)

79.75

92.56

(2) Sales by Equipment（Units : 100 million yen, %）FY2012FY2011
4Q (Jan.‐Mar.)%

Amount4Q (Jan.‐Mar.)
Change%AmountChange324

75.9(31.6)

346

76.9

6.8

DVD

34

8.0

(46.9)

41

9.1

20.6

BD

66

15.4

(38.3)

34

7.6(48.5)LCD TV

219

51.3(27.0)

265

58.9

21.0

Others

5

1.2

66.7

6

1.3

20.0

49

11.5

(38.0)

44

9.8(10.2)

Audio Visual Equipment

Information Equipment
Others54

12.6(49.1)

60

13.3

11.1

Total

427

100.0

(35.2)

450

100.0

5.4

−4−

（Company）

FUNAI ELECTRIC CO., LTD.
INVESTOR / RELATIONSDEPARTMENT
7-7-1 Nakagaito Daito-city, Osaka 574-0013, JapanTEL 81-72-870-4395 ･ FAX 81-72-870-4613