Member, Financial Accounting Standards Foundation

Consolidated Financial Results for the First Quarter Ended June 30, 2017
August 7, 2017
Listed company name
Funai Electric Co., Ltd.
Stock exchange listing
Tokyo First Section
Securities code
6839
URL http://www2.funai.co.jp/en/index.html
Representative
President and CEO
Hideaki Funakoshi
Inquiries
General Manager
Makoto Ueshima
TEL: (072) 870-4395
Scheduled date of Quarterly ReportAugust 9, 2017
Scheduled date of Commencement of Annual Dividend Payment －Quarterly Financial Results Supplementation
Yes
Quarterly Financial Results SeminarNo
1. Consolidated Financial Results for the First Quarter Ended June 30, 2017 (April 1, 2017 – June 30, 2017)(1) Consolidated Operating Results(% shows year on year rates)
Net Sales

Net Income(Loss)

Operating

Ordinary

Income(Loss)

Income(Loss)

Net Assets

Equityattributable to ownersof parent
Million yen %Million yen%
Million yen%
Million yen%
st32,07127.8(2,328)(2,159)(1,517)－－－
1 Quarter FY2017
st25,090 (33.7)(2,873)(5,859)(5,712)－－－
1 Quarter FY2016
st(Reference) Comprehensive Income 1 Quarter FY 2017 ended June 30, 2017 (1,732) million yen (－%)
st
1 Quarter FY 2016 ended June 30, 2016 (8,027) million yen(－%)
Net Income(loss)
Net Income(loss) Per SharePer Shareon a Fully Diluted Basis
Yen
Yen
st
(44.49)－1 Quarter FY2017
st(167.42)－
1 Quarter FY2016(2) Consolidated Financial Position

As of June 30,2017
As of March 31,2016

Total Assets
Million yen
123,195
108,685

Million yen
74,58476,656Equity Ratio

Million yen
74,43376,507

%
60.4
70.4

2. Dividends
Dividend per Sharestnd

1 Quarteryen
Fiscal Year 2016－

Fiscal Year 2017－rd

2 Quarter

3 Quarteryen

Year-End

yen

0.00

Fiscal Year 2017
(Forecast)

Annual
yen

yen

－

10.00

10.00

－

－

－

st

(Note) Revision of Annual Dividends Forecast in this 1 Quarter: No
The dividend for FY 2017 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 2017 (April 1, 2017 - March 31, 2018)
Net Sales

Six months ended Sep.30.2017

Million yen %81,400 23.1

Full Year

160,000

19.5

Operating
Income(loss)
Million yen

600
600

Ordinary
Income(loss)% Million yen

－
－

700
700

%

－
－

(% shows year on year rates)Net
Net Income(loss)
Income(loss)
Attributable toowners of parent
Per Share
Million yen %
Yen
400
11.72
－
200
5.86
－

(Note) Revision to consolidated financial forecast: No*Note(1) Changes in Consolidated Subsidiaries (Changes in Scope of Consolidation): No
In (Company name: －)Out (Company name: －)(2) Adoption of special accounting methods of Quarterly consolidated financial statements: Yes(3) Changes in accounting policies and estimates
1. Changes in accounting policies from revision of accounting standards: No
2. Changes in accounting policies from other reason: No
3. Changes in accounting estimates: No
4. Restatement: No(4) Number of Shares Outstanding (Ordinary Shares)
1. Number of shares outstanding (including treasury stock)
2. Number of shares of treasury stock
3. The Average number of outstanding shares

As of June 30, 2017
As of March 31, 2017
As of June 30, 2017
As of March 31, 2017
On June 30, 2017
On June 30, 2016

36,130,796
36,130,796
2,011,765
2,011,765
34,119,031
34,119,109* The Recording of Implementation Conditions Regarding Quarterly Review ProceduresThis quarterly financial summary does not fall within the scope of the Quarterly Review Procedures referenced in the
Financial Instruments and Exchange Act. At the time of disclosure of the quarterly financial summary, the Group was in
the process of implementing the quarterly review procedures for its quarterly financial statements.

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 was
printed. 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.

1.Qualitative Information(1) Consolidated Financial Results
In the first quarter of the consolidated fiscal year ended June 30, 2017, the United States, the Company’s mainmarket, saw its economy continue recovering gradually, supported by private demand including personal
consumption. In Europe, both consumer and business sentiment remained strong, leading to the continuation of awell-balanced economic growth, under which consumption, investment, and export expanded at the same time.
Meanwhile in China, the economy continued losing momentum. In Japan, the economy maintained a moderate
recovery, buoyed by the recovery of export, mainly in the IT industry, increased public investment, and robust
consumer spending.
As a result of the above factors, net sales amounted to ¥32,071 million, up 27.8% compared to the same quarter ofthe last fiscal year. Despite an increase in net sales, the Group posted an operating loss of ¥2,328 million (anoperating loss of ¥2,873 million in the same quarter of the last fiscal year), due to high price of components such as
liquid crystal panels and memories, as well as price intense competition in Mexico.
Ordinary loss amounted to ¥2,159 million (an ordinary loss of ¥5,859 million in the same quarter of the last fiscal
year). Quarterly net loss attributable to owners of parent amounted to ¥1,517 million (a quarterly net loss
attributable to owners of parent of ¥5,712 million in the same quarter of the last fiscal year).
Results by regioni) Japan
Electronic reception devices decreased due to excluding the DX Antenna Co., Ltd. from the scope of
consolidation by transfer of this all shares held by the Company. However, LCD TVs and BD-recorder increased
due to strong sales. As a result, net sales amounted to ¥10,413 million, up 49.9% year on year, and segment loss
(operating loss) amounted to ¥137 million (a segment loss of ¥1,234 million in the same quarter of the last fiscal
year).
ii) Americas
DVD players and Ink-jet printers decreased, however LCD TVs and BD-players increased due to good sales. As aresult, net sales amounted to ¥21,570 million, up 20.7% year on year, and segment loss amounted to ¥836
million (a segment loss of ¥1,112 million in the same quarter of the last fiscal year).
iii) Asia
Net sales amounted to ¥71 million, down 29.3% year on year due to decrease on LCD TVs. Segment loss
(operating loss) amounted to ¥1,366 million (a segment loss of ¥630 million in the same quarter of the last fiscal
year).
iv) Europe
Ink-jet printers and ink-cartridge decreased. As a result, net sales amounted ¥16 million, down 90.8% year on
year, and segment loss (operating loss) amounted to ¥21 million, (a segment loss of ¥28 million in the samequarter of the last fiscal year).
Results by product Segmenti) Audiovisual Equipment
DVD-Player and DVD-recorder decreased. However, LCD TVs and BD-recorder increased due to good sales. As aresult net sales amounted to ¥30,548 million, up 47.4% year on year.
ii) Information Equipment
Ink-jet printers decreased. As a result, net sales of information Equipment amounted to ¥740 million, down
22.6% year on year.
iii) Other ProductsElectronic reception devices decreased due to excluding the DX Antenna Co., Ltd. from the scope of
consolidation by transfer of this all shares held by the Company. As a result, net sales of other products
amounted to ¥783 million, down 77.0% year on year.

(2) Consolidated Financial Position
Total assets increased by ¥14,509 million compared to the end of the last fiscal year. The primary components of thechange were as follows: Increase of ¥6,047 million in merchandise and finished goods, and ¥12,082 million in raw materials and supplies.
 Decrease of ¥4,822 million in cash and deposits.
Total liabilities increased by ¥16,581 million compared to the end of the last fiscal year. The primary components ofthe change were as follows: Increase of ¥15,964 million in notes and accounts payable-trade.
Net assets decreased by ¥2,072 million compared to the end of the last fiscal year. The primary components of thechange were decrease of ¥1,859 million in retained earnings and ¥254 million in the foreign currency translation
adjustment.

(3) Consolidated Financial Forecast
There is no change in the consolidated financial results forecast for first half consolidated fiscal year and full year
forecasts announced in "FY2016 Financial Report" on May 15, 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. Consolidated Financial Statements and Notes(1) Consolidated Statement of Financial Position(Units : Million Yen)

Fiscal year 2016
(As of March 31, 2017)

1st Quarter FY2017(As of june 30, 2017)

ASSETS;
Current Assets
Cash and deposits

40,13635,313

Notes and accounts receivable - trade15,571

14,870

Merchandise and finished goods

15,45921,507Work in process

1,149

1,045

Raw materials and supplies

9,644

21,726

Other

4,390

6,578

Allowance for doubtful accounts

(847)

(858)

85,503

100,184

Property, plant and equipment

12,963

12,774

Intangible assets

3,342

3,334

Net defined benefit asset

1,543

1,539

Other

5,583

5,599

Allowance for doubtful accounts

(252)

(238)

Total current assets
Noncurrent Assets

Investments and other assets

Total investments and other assets

6,875

6,901

23,181

23,010108,685

123,195

18,60334,567

Income taxes payable

813

313

Provision

491

710

Other

9,667

10,555

Total current liabilities

29,575

46,147

1,047

1,019

15

6

Other

1,391

1,437

Total noncurrent liabilities

2,453

2,462

32,02848,610Total noncurrent assets
TOTAL ASSETSLIABILITIES;Current Liabilities
Notes and accounts payable - trade

Noncurrent Liabilities
Provision
Net defined benefit liability

TOTAL LIABILITIESFiscal year 2016
(As of March 31, 2017)

1st Quarter FY2017(As of june 30, 2017)

NET ASSETS;
Shareholders' equity
Capital stock

31,30731,307

Capital surplus

33,60333,603Retained earnings

47,02045,161

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

Total shareholders' equity

87,59085,731

11

24(11,206)(11,460)

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

Foreign currency translation adjustment
Remeasurements of defined benefit plans

111

138

(11,082)(11,297)

Subscription rights to shares

149

150

Total net asset
TOTAL LIABILITIES AND NET ASSETS

76,656

74,584

108,685

123,195

Total accumulated other comprehensive income

(2) Consolidated Quarterly Statements of Income and Comprehensive Income(Consolidated Quarterly Statements of Income)(Units : Million Yen)
1st Quarter FY2016

1st Quarter FY2017( from April 1, 2016
to June 30, 2016)
25,090( from April 1, 2017
to June 30, 2017)
32,071

Cost of sales

21,68829,132Gross profit

3,401

2,939

Selling, general and administrative expenses

6,274

5,267

Operating income (loss)(2,873)(2,328)Interest income

56

53

Dividends income

32Foreign exchange gains

－

314

Other

43

36

Total non-operating income

103

406

53

3

Net sales

Non-operating income

Non-operating expenses
Interest expenses

1

－

2,938

－

Compensation expenses

－

225

Other

96

8

Equity in losses of affiliates
Foreign exchange loss

Total non-operating expenses

3,090

237

(5,859)(2,159)Gain on sales of non-current assets

189

2

Gain on sale of investment securities

31

9

Ordinary income (loss)
Extraordinary income

Other

13

1

Total extraordinary income

234

12

Loss on disposal of noncurrent assets－

4

Impairment loss－

Total extraordinary loss－

19

(5,624)(2,166)Extraordinary 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 parent

Notes.1

15

85

(648)

(5,710)(1,517)2－(5,712)(1,517)

(Consolidated Quarterly Statement of Comprehensive Income)

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

1st Quarter FY2016

1st Quarter FY2017( from April 1, 2016
to June 30, 2016)( from April 1, 2017
to June 30, 2017)(5,710)(1,517)(23)

12

Other comprehensive Income
Valuation difference on avaiable-for-sale securities
Foreign currency translation adjustment(2,226)(254)

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

(11)

－

Remeasurements of defined benefit plans, net of tax

(55)

26

(2,316)(214)(8,027)(1,732)Comprehensive income attributable to owners of parent(8,020)(1,732)Comprehensive income attributable to minority interests(6)－

Total other comprehensive Income
Comprehensive income(Comprehensive income attributable to)(3) Consolidated Quarterly Statements of Income(Notes for Continuing Enterprises)
Not Applicable(Notes of remarkable changes in Shareholders Equity)
Not Applicable(Adoption of special accounting methods of Quarterly consolidated financial statements)[Calculate tax expense]
Tax expenses are calculated by multiplying income before income taxes by a reasonably estimated effective tax rate
for income before income taxes after application of deferred tax accounting.
(Additional Information)[About anti-tax haven law]
The Group received a reassessment notice from the Osaka Regional Taxation Bureau on June 29, 2011. The Bureau
determined that our Hong Kong subsidiary does not meet the requirements for exemption under the anti-tax havenrules. In addition, they imposed a tax on us adding up with the Hong Kong subsidiary’s income for the three fiscal
years ended March 31, 2008 through 2010, which deems as our income.
We objected to this reassessment of income taxes, and filed a request for examination to the Osaka National Tax
Tribunal on August 25, 2011. However, we received written verdicts that reject our petition on July18, 2012. The
Group filed a suit for cancellation of reassessment to the Tokyo District Court on January 17, 2013.
The additional tax amount is totally ¥825 million including corporate, enterprise and residence taxes (¥935 million
including incidental taxes). We recorded this additional tax as “prior year’s taxes” in the fiscal year ended March 31,
2012. Also, the financial impact, when applying this tax rules has been recorded in the fiscal year ended March 31,
2011 when tax investigation was completed.
(Consolidated quarterly statements of income)*Notes.1 Impairment loss
The Group recorded losses on impairment in the following asset groups for first quarter of this fiscal year.
In principle, the Group group’s business assets on the basis of legal units that strive to maintain an ongoingunderstanding of income and expenses. The idle assets are grouped by individual asset.
Use

Location

Type

Business Assets

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

Software

The Group reduced the carrying amount to the recoverable value of business assets whose profitability has
markedly decreased, and recorded such reduction (15 million yen) as impairment loss for the First Quarter ofthis fiscal year.
The recoverable amount of the asset is measured based on the net selling price and the net selling price iscalculated as zero.
(Segment Information)
I.

First Quarter of the last fiscal year (April 1, 2016 to June 30, 2016)
Information Regarding Net Sales and Profit/Loss Conditions by Reporting Segment
Japan

Americas

Asia

Europe

Total(Units: Million Yen)
Adjustments Consolidated(Note 1)
(Note 2)Net Sales(1) Outside customers(2) Inter-segment sales

6,947
13,784

17,864304

101
14,548

176-

25,09028,637－(28,637)

25,090－Total

20,732

18,168

14,649176

53,727(28,637)

25,090

Segment Income (Loss)(1,234)(1,112)

(630)

(28)

(3,005)132(2,873)Note:
1. ¥132 million adjustment amount under segment income includes items such as ¥ 24 million relating to thecancellation of inter-segment transactions, ¥ -219 million of overall Group expenses that are not apportioned toeach reporting segment, and ¥ 327 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 income has been adjusted to operating income noted on the third quarter consolidated income
statement.

II.

First Quarter of this fiscal year (April 1, 2017 to June 30, 2017)
Information Regarding Net Sales and Profit/Loss Conditions by Reporting Segment(Units: Million Yen)
Japan

Americas

Asia

Europe

Total

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

10,41323,312

21,570368

71
28,597

16－

32,071
52,278－(52,278)

32,071－

Total

33,72521,93928,66916

84,350(52,278)

32,071

(137)

(836)

(1,366)(21)(2,362)33(2,328)Segment Income (Loss)Note:
1. ¥33 million adjustment amount under segment income includes items such as the ¥2 million relating to thecancellation of inter-segment transactions, ¥-212 million of overall Group expenses that are not apportioned toeach reporting segment, and the ¥243 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 income has been adjusted to operating income noted on the third quarter consolidated income
statement.

3. Others(Important Information about Going Concern Assumption)
Since the Group recorded a significant operating loss, ordinary loss, net loss attributable to owners of the parent,
and negative operating cash flow in the previous consolidated fiscal year and the first quarter of this fiscal year,
events or circumstances that cast significant doubt on the going concern assumption exist now.
Since the Group’s balance of cash and deposits is sufficient to cover working capital and other requirements forsome time, there is no significant concern about fundraising.
Since the Group is formulated "FY2017-FY2019 New policy and strategy" in the previous consolidated fiscal year andalready implementing the following countermeasures in stages based on this policy, the Group believes that a
resolution of the matter can be achieved.
①

Display Business (LCD-TV business)②

・Increase sales in the U.S. market: Increase sales with existing customers and open up new customers byintroducing multiple models for large UHD.
・Enter the Japanese market: Increase share in the Japanese market through exclusive business with Yamada
Denki Co., Ltd.
Digital Media Business (DVD, BD business)③

・Increase sales of UHD-BD players in the U.S. market.
・Enter the Japanese market: Increase share in the Japanese market through exclusive business with Yamada
Denki Co., Ltd.
Office Solution Business (information equipment-related business)④

・Improve profit margin by increasing sales of high value-added printer products.
・Review the investment in microfluidic control technology.
New Business・Increase sales by developing and launching new products related to health care, medical, and theautomotive market.
Accordingly, Funai judges that there is no significant uncertainty related to the going concern assumption as ofMarch 31, 2018 and has omitted the Notes on Going Concern Assumption from the consolidated financial
statements.