From April 1, 2013
To March 31, 2014

May 12, 2014
Funai Electric Co., Ltd.

Financial Summary for the Period Ending March 2014
1. Summary of Operating Results (Consolidated)(Million yen)
Fiscal Year 2012

Fiscal Year 2013

From April 1, 2012
to March 31, 2013

From April 1, 2013
to March 31, 2014

AmountAmount%%%Net Sales

Rate ofincrease or
decrease%%

192,008

100.0

234,042

100.0

21.9

Operating Loss

(5,273)(2.7)(5,465)(2.3)－

Ordinary Loss

(355)

(0.2)

(2,253)(1.0)－(8,542)(4.4)(6,745)(2.9)－

Net Loss after Tax
Net Loss per Share(250.38)(197.70)

Notes: Includes 21 consolidated subsidiaries, 1 equity method non‐consolidated subsidiary,
1 equity method affiliate company.

2. Summary of Operating Results (Non‐Consolidated)(Million yen)
Fiscal Year 2012

Fiscal Year 2013

From April 1, 2012
to March 31, 2013

From April 1, 2013
to March 31, 2014

Amount%Amount%%Net Sales

Rate ofincrease or
decrease%

157,549

100.0

177,848

100.0

12.9

Operating Loss

(5,604)(3.6)(2,823)(1.6)－

Ordinary Income (Loss)

19,235

12.2

(991)

(0.6)

－

Net Income (Loss) after Tax

13,113

8.3(5,232)(2.9)－

Net Income (Loss) per Share384.35(153.37)

Member, Financial Accounting Standards Foundation

Financial Report for the 12-Month Period ended March 31, 2014

May 12, 2014

Listed company name: Funai Electric Co., Ltd. Securities Code: 6839 Tokyo Stock Exchange, First Section(URL http://www.funai.jp/ )Representative: President and CEO
Yoshikazu Uemura
Inquiries: General Manager, Accounting Department
Keichi Ikegami
TEL: (072) 870-4395
Scheduled date of Annual General Shareholders Meeting; June 20, 2014
Scheduled date of Securities Report to be filed to the Kinki Finance Bureau; June 20, 2014
Scheduled date of Commencement of Annual Dividend Payment; June 9, 2014
Financial Results Supplementation: Yes
Financial Results Seminar: Yes
1. Summary of Consolidated Results for the Fiscal Year ended March 2014 (April 1, 2013 – March 31, 2014)(1) Operating Results (Consolidated)(% denotes year on year)
Net Sales
Fiscal Year 2013
Fiscal Year 2012
(Note)

Million yen%

234,042
192,008

21.9(22.0)

Comprehensive Income

Operating Income

Ordinary Income

Million yen

Million yen%(5,465)(5,273)(2,253)(355)－－

Fiscal Year ended March 31, 2014
Fiscal Year ended March 31, 2013

Net Income
Per Shareon a Fully
Diluted BasisNet Income
Per Share
Yen(197.70)
Fiscal Year 2013(250.38)
Fiscal Year 2012
(Reference) Equity in earning of affiliates

Yen(2) Consolidated Financial Position
Million yen

Fiscal Year 2013
Fiscal Year 2012
(Reference)

Shareholders’ Equity

181,341
194,524(3) Consolidated Cash FlowsNet Cash Provided by(Used in) Operating
Activities
Million yen

Fiscal Year 2013
Fiscal Year 2012

(1,251)(8,022)

117,684
121,398

%

(2.3)
(2.7)

(125) million yen(69) million yen

Net Assets
Per Share
%

64.2
61.7

Yen

3,414.77
3,520.11

116,509 million yen
120,103 million yen

Million yen(2,730)12,863

%

(1.2)
(0.2)

Million yen

Net Cash Providedby (Used in)Investing Activities%－－

Ordinary Income Operating Income
to Total Assets
Ratio

Shareholders’Equity Ratio

Net Assets

Fiscal Year ended March 31, 2014
Fiscal Year ended March 31, 2013

(6,745)(8,542)

－
－

%

(5.7)
(7.0)

Fiscal Year ended March 31, 2014
Fiscal Year ended March 31, 2013

Total Assets

Million yen(2,122) million yen (－%)
(909) million yen (－%)

Return on
Shareholders’Equity－－Net Income%

Net Cash Providedby (Used in)
Financing Activities

Cash and Cash
Equivalents at theEnd of Period(4,676)
5,128

43,61250,238Million yen

Million yen

2. Dividends
Corresponding
Date

1Q Endyen

Dividend per Share
2Q End3Q EndYear-Endyen

yen

Annualyen

yen

Fiscal Year 2012
Fiscal Year 2013

－
－

0.00
0.00

－
－

35.00
35.00

35.00
35.00

Fiscal Year 2014
(Projection)

－

－

－

－

－

(Note)

Total
Dividend
Payment

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

Million yen

%

%

－
－

1,194
1,194

1.0
1.0

－

1. The dividend for FY 2013 is JPY 35.
2. The dividend for FY 2014 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 2015 (April 1, 2014 - March 31, 2015)(% denotes year on year)

Net Sales
Million yen
Six months ending Sep.30.2014

Full Year

Operating Income Ordinary Income%

93,700 (22.3)
200,000 (14.5)

Million yen

500
500

%

Million yen(11.9)
－

400
400

%

(81.5)－Net Income
Million yen

200
10

Net Income
Per Share%(67.4)
－

Yen
5.86
0.29

*Note
(1) Changes in Consolidated Subsidiaries (Changes in Scope of Consolidation): Yes
New Subsidiary : Funai Electric Cebu, Inc.
(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: No
4. Restatement: No(3) Number of Shares Outstanding (Ordinary Shares)
1. Number of shares outstanding (including treasury stock) as of March 31, 2014; 36,130,796 shares
as of March 31, 2013; 36,130,796 shares
2. Number of shares of treasury stock as of March 31, 2014; 2,011,615 shares
as of March 31, 2013; 2,011,615 shares
3. The Average number of outstanding shares on March 31, 2014; 34,119,181 shareson March 31, 2013; 34,119,186 shares

(Reference)
Summary of Non-consolidated Results for the Fiscal Year ended March 2014 (April 1, 2013– March 31, 2014)(1) Operating Results (Non-consolidated)
Net Sales

Operating Income

Million yen

Fiscal Year 2013
Fiscal Year 2012

177,848
157,549(% denotes year on year)%

12.9(19.6)

Million yen(2,823)(5,604)Yen(153.37)384.35

Million yen(Reference)

Shareholders’ Equity%

Million yen(5,232)
13,113

－
89.2

%

－
400.2

Yen

－

Total Assets
123,361
119,151(991)
19,235－(2) Financial Position (Non-consolidated)

Fiscal Year 2013
Fiscal Year 2012

Million yen

Net Income

Net Income
Per Shareon a Fully Diluted
Basis

Net Income
Per Share
Fiscal Year 2013
Fiscal Year 2012%－－

Ordinary Income

Net Assets

Shareholders’Equity Ratio

Million yen

83,16789,385
Fiscal Year ended March 31, 2014
Fiscal Year ended March 31, 2013

Net Assets
Per Share
%

67.3
74.9

Yen

2,433.69
2,616.22

83,035 million yen
89,263 million yen

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, 2014, the economy of the United States, which is the Funai Group’s mainstay
market, despite improvements job situation slower than expected, almost overall continued to grow mode. The
housing market observations a continuous recovery, and a recovery in personal consumption. The European
economy bottoming out, while the European Central Bank’s responses to the debt crisis to have several
countermeasures. But economic performance in China is seen some slowdown. In Japan, capital investment andhousing investment picked up as a result of improvement in business and consumer sentiment following the
introduction of monetary easing measures by the Bank of Japan, and gradual economic recovery continued, fueledin part by last‐minute demand before the consumption tax increase.
Within the consumer electronics industry, demand for smartphones and tablet devices has kept grown sharply.
On the other hand, mobile phone, PC, digital camera, LCD TVs and DVD/BD‐related products have declined indemand.
As a result of the above factors, the Funai Group posted net sales of JPY 234,042 million, a 21.9% increase
compared with the same period last year.
On the profit front, we had declined profit margin by losses in North America and Mexico in PHILIPS‐brand LCD
TVs, audio accessories products and other items. As a result, operating loss was JPY 5,465 million (the operating loss
for the same period last year was JPY 5,273 million); we posted a foreign exchange gain of JPY 3,477 million, but
ordinary loss was JPY 2,253 million (the ordinary loss for the same period last year was JPY 355 million); and a net
loss of JPY 6,745 million (the net loss for the same period last year was JPY 8,542 million).
Segment conditions by location were as follows:i) Japan
Sales of information equipment recorded increases in revenues due to printer order increase. In addition, sales
of LCD TVs and BD‐related products increased.
As a result, net sales were JPY 56,493 million, an increase of 9.3% year on year. Our segment loss (operatingloss) was JPY 1,328 million (the operating loss for this segment for the same period last year was JPY 4,294
million).
ii) North America
Revenues for LCD TVs increased year on year due to strong sales of large size products at a major mass retailer
in addition to strong sales in holiday selling season. Additionally, the Philips branded audio accessories productsthat started selling on September 2012 contributed to the sales, and DVD‐related equipment also increased as
the result of healthy sales of BD players.
As a result, net sales amounting to JPY 169,698 million, an increase of 24.6% year on year. In the other hand,
our segment loss (operating loss) was JPY 3,786 million (the operating income for this segment for the same
period last year was JPY 1,528 million) due to decrease in profitability of the PHILIPS branded LCD TVs, audio
and accessories products.
iii) Asia
The ink cartridges contributed to the sales. As a result, net sales came to JPY 4,563 million, an increase of
462.0% year on year. Our segment income (operating income) was JPY 408 million (the operating loss for thissegment for the same period last year was JPY 491 million).
iv) Europe
The ink cartridges contributed to the sales, but LCD TVs and DVD‐related products declined due to sluggish
market conditions. As a result, net sales down 2.0% year on year, to JPY 3,286 million, and an segment loss
(operating loss) of JPY 425 million (operating loss for the same period last year was JPY 389 million).

Sales by product segment were as follows:i) Audiovisual Equipment
In the audiovisual equipment sector, sales of LCD TVs increased revenue because of strong sales in holiday
selling season. Sales of BD‐related products also increased year on year.
As a result, net sales of this equipment were JPY 183,108 million, an increase of 17.6% year on year.
ii) Information Equipment
In the information equipment sector, sales of printer increased due to increase in orders and ink cartridges
contributed to the sales.

As a result, net sales of JPY 18,876 million, an increase of 57.8% year on year.
iii) Other Products
Net sales were JPY 32,058 million, an increase of 31.6% year on year due to contribution of the audio
accessories products in North America.
2. Outlook for the next consolidated fiscal year
For the fiscal year ending March 31, 2015, 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 200,000 million
500 million
400 million
10 million(14.5% decrease year-on-year)
( － )
( － )
( － )

For its earnings estimates, the Funai Group has assumed an exchange rate of JPY 100 = 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 decreased by JPY 13,182 million as compared to the end of the previous consolidated fiscal year. This was
mainly due to an increase of JPY 4,488 million and JPY 2,575 million in notes and accounts receivable-trade, patentright, and a decrease of JPY 18,645 million in cash and deposits.
Total liabilities decreased by JPY 9,468 million as compared to the end of the previous consolidated fiscal year.
This was mainly due to an increase of JPY 6,121 million in long-term loans payable, and a decrease of JPY 6,236
million and JPY 8,455 million in notes and accounts payable-trade, short-term loans payable.
Net assets decrease by JPY 3,714 million as compared to the end of the previous consolidated fiscal year. This was
mainly due to a decrease of 7,939 million in the retained earnings and an increase of JPY 4,227 million in foreign
currency translation adjustment account.
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 1,251 million. Net cash used in investing activities was JPY 2,730 million. Net cash used in financing
activities was JPY 4,676 million. The balance of cash and cash equivalents at end of the consolidated fiscal year underreview was JPY 43,612 million.
The cash flow indicator trends for the Funai Group are provided below.
FY ended
FY ended
FY ended
March 2010
March 2011
March 2012
Shareholders’ equity ratio
69.6
67.1
69.5
Shareholders’ equity ratio on
a market capitalization basis
Ratio of cash flow tointerest-bearing debt
Interest coverage ratio

FY ended
March 2013
61.7

FY ended
March 2014
64.2

65.8

43.6

35.8

20.2

19.2

1.9

一

0.3

一

一

43.7

一

130.5

一

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 2011,
March 2013 and March 2014 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). If the Company pays an interim dividend, it makes a public announcement in advance.
Based on this policy, for the fiscal year ended March 31, 2014, 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, audio accessory-related products, etc.). Price competition in theseproduct areas is intense. Additionally, the life cycle of digital products is short and the competition to develop newtechnologies 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.
As a 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, fail to reach agreement on an acquisition and affiliate relationships
cannot be maintained, this may affect the Funai Group’s financial situation and operating results, as well as growthforecasts.
(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 68.9% 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 98.7% of our
products were produced overseas, with 60.4% produced in China (consignment manufacturing and in-houseproduction). 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 Thailand, ink cartridges are produced in Philippines.
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 thecurrent consolidated fiscal year. Likewise, overseas net sales accounted for 83.7% 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, since currency fluctuation risks cannot be completely eliminated and foreign currency-denominatedassets and liabilities are converted to yen using the exchange rates on the settlement date, significant currency
fluctuations may affect the Group’s financial situation and operating results.
(Other Risks)i) Statutory Regulations
The Funai Group is subject to various laws and regulations in the countries in which it operates pertaining to areas
including commercial transactions, import and export, antitrust, intellectual property rights, product liability,
environmental protection, consumer protection, financial transactions, and corporate 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

in these 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) Deferred tax assets
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 21, 2014).
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
Within the consumer electronics industry, demand for smartphones and tablet devices has kept grown sharply. On
the other hand, mobile phone, PC, digital camera, LCD TVs and DVD/BD-related products have declined in demand.
The challenge the Funai Group faces in this industry environment is to undertake sales expansion and profitability
recovery. To achieve this, the Group will proceed with optimal allocation of enterprise resources and further
cultivation of the FPS, a core competence of the Group, while placing greater importance on management speed,
realizing quality and price levels superior to competitors, and devoting itself to creating products that will sell. In
addition, the Group will expand into new businesses in the highly promising environment, energy, networks, devices
and modules, healthcare, and automotive sectors.
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, revenues for LCD TVs increased year on year due to strong sales of large size products at amajor mass retailer in addition to strong sales in holiday selling season. In addition, revenues increased year on year
as a result of higher orders for printers from OEM customers, entry into the ink cartridge business, and the full-year
contribution from Philips-brand audio accessories, which began shipping in September 2012. On the profit front,
however, sales subsidiaries P&F USA Inc. and P&F MEXICANA, S.A. DE C.V. faced difficult circumstances. They posted
operating losses as profitability deteriorated due to losses attributable to factors including disposal of inventory ofPhilips-brand LCD TVs and audio accessories in the United States, Canada, and Mexico that occurred from the third
quarter onward and were concentrated in the fourth quarter.
For this reason, the Funai Group is enhancing its PSI management (PSI standing for “purchase, sales andinventory”). Through this approach, we will continue to make our products more competitive pricewise throughredesigns and by restructuring our component sourcing system, with a view to augmenting sales and profitability.
In addition, the Group recognizes that product development in new business areas is a pressing issue. However,the LED lamp business didn’t deliver the expected results during the fiscal year under review, and withdrawal fromoverseas markets became unavoidable. In addition, succession of the business for Koninklijke Philips N.V. lifestyleentertainment products, such as Philips-brand audio accessories, is under adjudication at the International Court of
Arbitration. This is a difficult situation, and the anticipated commercialization on a global scale will become a very
difficult task.
In April 2013, we reached an agreement with Lexmark International, Inc., to acquire its inkjet-related technology
and assets. The acquisition enables us to production and distribution of own inkjet printer products (including
lucrative ink cartridges). Furthermore, in the fiscal year ending March 31, 2015, we plan to manufacture and sellcommercial and industrial ink cartridges. We will also proceed with preparations for a smooth start-up of thebusiness for self-developed printers.
(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, Thailand andIndia in addition to expansion in Mexico.
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. Additionally we are
addressing the improvement for provide products that meet market needs precisely in a timely manner.
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 have established a production subsidiary Funai
Electric Philippines Inc. and building the plant.
In the area of development, we continue to move forward with development in the Asia region, mainly in China,
to increase the Group’s overall efficiency. We are also focusing on new business fields. One result of this effort was
the selection in the fiscal year under review of the electric walking assistance cart, which is currently underdevelopment, for the Ministry of Economy, Trade and Industry’s Project to Promote the Development andIntroduction of Robotic Devices for Nursing Care.
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 2012
(As of March 31, 2013)

Fiscal year 2013
(As of March 31, 2014)ASSETS;
Current Assets
Cash and deposits

67,81349,167

Notes and accounts receivable-trade33,19337,681

Merchandise and finished goods

34,547

31,665Work in process

2,095

1,182

Raw materials and supplies

18,997

16,427

Deferred tax assets

2,886

2,504

Other

5,445

5,622

Allowance for doubtful accounts

(178)

(210)

164,802

144,041

Buildings and structures

12,332

18,278

Accumulated depreciation(6,783)(9,251)

Buildings and structures, net

5,548

9,026

Machinery,equipment and vehicles

9,219

12,825

Accumulated depreciation(7,582)(9,132)

Machinery,equipment and vehicles, net

1,637

3,693

Tools, furniture and fixtures

21,55823,301

Accumulated depreciation(19,571)(21,247)

Tools, furniture and fixtures, net

1,986

2,053

Lands

6,169

6,178

Lease assets

697

490

Accumulated depreciation

(464)

(363)

Lease assets, net

233

127

1,099

825

16,675

21,905

Total current assets
Noncurrent assets
Property, plant and equipment

Other
Total property, plant and equipment
Intangible assets
Patent right

2,078

4,654

Other

1,028

1,920

3,107

6,574

Investment securities

4,973

4,364

Long-term prepaid expenses

1,473

1,976

436

400

－

335

Other

3,247

2,039

Allowance for doubtful accounts

(192)

(296)

Total investments and other assets

9,938

8,819

29,72137,300

194,524

181,341

Total intangible fixed assets
Investment and other assets

Deferred tax assets
Net defined benefit asset

Total noncurrent assets
TOTAL ASSETS

(Million Yen)
Fiscal year 2012
(As of March 31, 2013)

Fiscal year 2013
(As of March 31, 2014)

LIABILITIES;Current Liabilities
Notes and accounts payable-trade39,17832,942

Short-term loans payable

12,981

4,526

Accounts payable-other

11,124

11,571

163

88

Income taxes payable

1,690

414

Deferred tax liabilities

1－

Provision for bonuses

241

258

Provision for product warranties

927

1,033

Other

3,143

2,857

Total current liabilities

69,452

53,692

－

6,121

147

64

1,168

1,153

Deferred tax liabilities for land revaluation

226

226

Provision for retirement benefits

927

－

1,081

1,088

lease obligations

Noncurrent liabilities
Long-term loans payable
lease obligations
Deferred tax liabilities

Provision for directors' retirement benefits
Net defined benefit liability

－

775

121

535

3,672

9,964

73,12563,656

Capital stock

31,30731,307

Capital surplus

33,27233,272Retained earnings

101,135

93,196

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

Total shareholders' equity

141,374

133,435

451

672

Foreign currency translation adjustment(21,722)(17,495)

Remeasurements of defined benefit plans

－

(103)

(21,271)(16,925)

122

132

Minority interests

1,173

1,042

Total net assets

121,398

117,684

194,524

181,341

Other
Total noncurrent liabilities
TOTAL LIABILITIESNET ASSETS;
Shareholders' equity

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

Total accumulated other comprehensive income
Subscription right to shares

TOTAL LIABILITIES AND NET ASSETS

(2) Consolidated Statements of Income and Consolidated Statement of Comprehensive Income(Consolidated Statements of Income)(Million Yen)
Fiscal year 2013

Fiscal year 2012
( from April 1, 2012
to March 31, 2013 )192,008( from April 1, 2013
to March 31, 2014 )
234,042

Cost of sales

163,340

201,456

Gross profit
Selling, general and administrative expenses

28,66732,58633,94038,052

Operating income (loss)(5,273)(5,465)280

134

Net sales

Non-operating income
Interest income
Dividends income
Foreign exchange gains
Other

39

134

4,691

3,477

326

622

5,338

4,369

Interest expenses

111

193

Total non-operating income
Non-operating expenses
Equity in losses of affiliates

69

125

Provision of allowance for doubtful accounts－

119

Compensation expenses

－
70

529

Penalty
Other

168

－
189

Total non-operating expenses

420

1,156

(355)

(2,253)

423

0

－
2

8

425

10

Loss on disposal of noncurrent assets

89

170

Loss on valuation of investment securities
Impairment loss

413

513

Ordinary income (loss)
Extraordinary income
Gain on sales of noncurrent assets
Gain on bargain purchase
Other
Total extraordinary income

1

Extraordinary loss

※1

Integration expenses of consignment production base343

Business structure improvement expenses－

Advisory fees
Other

－
120

Total extraordinary loss
Income (loss) before income taxes
Income taxes
Income taxes for prior periods
Income tax adjustments

1,614

※4

※1

266

－
※2 1,281※3 1,165

2,581

－
3,397

(2,511)(5,640)

725

518

966

－
549

4,325

Total income taxes

6,017

1,068

Income (loss) before minority interests(8,528)(6,708)

Minority interests in income
Net income (loss)

13

37(8,542)(6,745)

(Consolidated Statement of Comprehensive Income)(Million Yen)
Fiscal year 2012

Loss before minority interests

Fiscal year 2013

( from April 1, 2012
to March 31, 2013 )(8,528)( from April 1, 2013
to March 31, 2014 )(6,708)

396

223

7,190

4,169

－

135

32

57

Other comprehensive income
Valuation difference on avaiable-for-sale securities
Foreign currency translation adjestment
Remeasurements of defined benefit plans, net of tax
Share of other comprehensive income of associates
accounted for using equity method
Total other comprehensive income
Comprehensive income

※1

7,619

※1

4,586

(909)

(2,122)Comprehensive income attributable to owners of the pa(952)(2,161)

Comprehensive income attributable to minority interest

43

39(Comprehensive income attributable to)(3) Consolidated Statements of Changes in Shareholders' Equity
Fiscal year 2012 (April 1, 2012 - March 31, 2013)(Units: Million Yen)
Shareholders' equity

Capital stock

Capital surplus

Retained earnings

31,30733,272

111,384

Balance at the end of
previous period

Treasury stock

Total
shareholders' equity(24,341)

151,623

Changes of items during theperiodDividends from surplus(1,705)(1,705)

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

Purchase of treasurystock
Net changes of items
other than shareholders'equityTotal changes of items
during the period
Balance at the end ofcurrent period

(0)

(0)

－

－

(10,248)(0)(10,248)

31,30733,272

101,135(24,341)

141,374

Accumulated other comprehensive income

Balance at theend of previous
periodChanges of items
during the period
Dividends
from surplus

Valuationdifference on
available-for-salesecurities

Foreigncurrencytranslation
adjustment

Remeasurementsof defined
benefit plans

Total
accumulated
othercomprehensive
incomeSubscription
rights toshares56(28,917)－(28,861)

106

Minority
interests

Total
net
assets974 123,843(1,705)

Net
income(loss)(8,542)

Purchaseoftreasury stock(0)

Net changes of
items
other
than
shareholders'equityTotal changes of
items during theperiodBalance at theend of current
period

394

7,195

394

7,195

451

(21,722)

7,589

15

198

7,803

－

7,589

15

198

(2,445)－(21,271)122

1,173 121,398

Fiscal year 2013 (April 1, 2013 - March 31, 2014)(Units: Million Yen)
Shareholders' equity

Capital stock

Capital surplus

Retained earnings

31,30733,272

101,135

Balance at the end of
previous period
Changes of items during theperiodTreasury stock

Total
shareholders' equity(24,341)

141,374

Dividends from surplus(1,194)(1,194)

Net income (loss)(6,745)(6,745)

Net changes of items
other than shareholders'equityTotal changes of items
during the period
Balance at the end ofcurrent period－－(7,939)－(7,939)31,30733,272

93,196(24,341)

133,435

Accumulated other comprehensive income

Balance at theend of previous
periodChanges of items
during the period

Valuationdifference on
available-for-salesecurities

Foreigncurrencytranslation
adjustment

Remeasurementsof defined
benefit plans

Total
accumulated
othercomprehensive
incomeSubscription
rights toshares451(21,722)－(21,271)

122

Minority
interests

Total
net
assets1,173 121,398

Dividends
from surplus(1,194)

Net
income(loss)(6,745)

Net changes of
items
other
than
shareholders'equityTotal changes of
items during theperiodBalance at theend of current
period

221

4,227

(103)

4,345

10

(130)

4,225

221

4,227

(103)

4,345

10

(130)

(3,714)672(17,495)(103)(16,925)132

1,042 117,684

(4) Consolidated quartely statements of cash flows(Million Yen)
Fiscal year 2012

Fiscal year 2013

( from April 1, 2012
to March 31, 2013)( from April 1, 2013
to March 31, 2014)

Cash flows from operating activities
Loss before income taxes and minority interests(2,511)(5,640)Depreciation

5,264

6,479

Impairment loss

1,614

266

Increase (decrease) in allowance for doubtful accounts

(66)

115

Increase (decrease) in provision for retirement benefits

(111)

-

-

(16)

Interest and dividend income

(320)

(268)

Interest expenses

111

193

Share of (profit) loss of entities accounted for using equity method

69

125

(421)

45

Loss (gain) on sales of investment securities

92

(0)

Loss (gain) on valuation of investment securities

413

513

－

1,044

4,388

(261)

(15,193)

11,037

Increase (decrease) in notes and accounts payable - trade

1,328(12,057)

Other, net(2,601)(1,258)Subtotal(7,944)319

Interest and dividend income received

363

299

Interest expenses paid

(115)

(195)

Income taxes paid

(1,010)(1,221)

Income taxes refund

684

747

－

(1,200)(8,022)(1,251)

Payments into time deposits(59,777)(5,500)

Proceeds from withdrawal of time deposits

80,15018,377Purchase of property, plant and equipment(5,384)(5,174)

Proceeds from sales of property, plant and equipment

497

68

Purchase of intangible assets(415)(4,320)Purchase of investment securities

(702)

(362)

Proceeds from sales of investment securities

356

220

－

(5,832)

Payments of loans receivable(1,073)(55)

Collection of loans receivable

85

7

(872)

(157)

12,863(2,730)

Increase (decrease) in net defined benefit liability

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

Business structure improvement expenses
Decrease (increase) in notes and accounts receivable - trade
Decrease (increase) in inventories

Payments for income taxes for prior periods
Net cash provided by (used in) operating activities
Cash flows from investing activities

Purchase of shares of subsidiaries resulting in change in scope of consolidation

Other, net
Net cash provided by (used in) investment activities

(Million Yen)
Fiscal year 2012

Fiscal year 2013

( from April 1, 2012
to March 31, 2013)( from April 1, 2013
to March 31, 2014)

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

6,900(9,391)

Proceeds from long-term loans payable

－

6,607

Repayments of long-term loans payable

－

(525)

Purchase of treasury shares(0)－(1,705)(1,194)

(65)

(173)

Net cash provided by (used in) financing activities

5,128(4,676)

Effect of exchange rate change on cash and cash equivalents

3,667

2,032

Net increase (decrease) in cash and cash equivalents

13,637(6,625)

Cash and cash equivalents at beginning of period

36,56750,23833－

50,23843,612

Cash dividends paid
Other, net

Increase in cash and cash equivalents from newly consolidated subsidiary

Cash 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 : 21
The major consolidated subsidiaries are FUNAI CORPORATION, INC., FUNAI ELECTRIC (H.K.), LTD. and DX ANTENNA
CO., LTD.
The newly‐established Funai Electric Philippines Inc. and Funai Lexington Technology Corporation have also been
included within the scope of consolidation in the fiscal year. In addition, we acquired all shares of manufacturingsubsidiary where manufactures inkjet printer‐related products located in Philippines from Lexmark International, Inc.
And the newly‐established Funai Electric Cebu, Inc. has also been included within the scope of consolidation.
(Change in Accounting Policy)
Application of Accounting Standard for Retirement Benefits
Effective from the end of the fiscal year under review, the Company has applied Accounting Standard for Retirement
Benefits (ASBJ Guidance No. 26, May 17, 2012) and Guidance on Accounting Standard for Retirement Benefits (ASBJ
Guidance No. 25, May 17, 2012), except for the provisions set forth in the main clauses of Paragraph 35 of the
Accounting Standard for Retirement Benefits and Paragraph 67 of the Guidance on Accounting Standard for
Retirement Benefits. Accordingly, the Company has changed its accounting policy to one that recognizes the difference
between retirement benefit obligations and plan assets as net defined benefit liability and recorded unrecognizedactuarial differences, unrecognized prior service costs, and transition obligations under net defined benefit liability.
Application of the Accounting Standard for Retirement Benefits and Guidance on Accounting Standard for
Retirement Benefits conforms to the transitional treatment set forth in Paragraph 37 of the Accounting Standard for
Retirement Benefits, and the effect of the change has been added to or deducted from remeasurements of defined
benefit plans under accumulated other comprehensive income at the end of the fiscal year under review.
As a result of the change, at the end of the fiscal year under review, net defined benefit asset of JPY 315 million
and net defined benefit liability of JPY 642 million were recorded, and accumulated other comprehensive income
decreased by JPY 224 million. Net assets per share decreased by JPY 6.58.
New accounting standards not yet applied
・Accounting Standard for Retirement Benefits (ASBJ Guidance No. 26, May 17, 2012)
・Implementation Guidance on Accounting Standard for Retirement Benefits (ASBJ Guidance No. 25, May 17, 2012)(1) Outline
Matters such as the accounting treatment of unrecognized actuarial differences and unrecognized prior service costs,
the calculation method for retirement benefit obligations and service costs, and enhanced disclosure have beenrevised.
(2) Planned date of application
The Company will apply the revised calculation method for retirement benefit obligations and service costs from the
beginning of the fiscal year ending March 31, 2015. Further, as the transitional treatment for the accounting standard
has been specified, they will not be applied retroactively to the consolidated financial statements of past fiscal years.
(3) Impact of application of the accounting standard
The impact on the consolidated financial statements of the revision to the calculation method for retirement benefit
obligations and service costs is currently being assessed.

(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 claims

of 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.

(Consolidated balance sheets)
Fiscal Year 2013 (As of March 31, 2014)
Contingent liabilities
Funai Electric Co., Ltd. (hereinafter, “Funai”) resolved to acquire from Koninklijke PHILIPS N.V. (hereinafter, “PHILIPS”)
all shares in a company that will hold the operation of the PHILIPS’ Lifestyle Entertainment Business and concluded ashare purchase agreement on January 29, 2013. But PHILIPS filed against Funai a petition as of October 25, 2013 forarbitration to claim compensation for damages on the grounds of breach of the agreement by Funai and the petition
has been served on November 8, 2013 by the International Chamber of Commerce.
With regard to this matter, Funai recognizes there to have been no breach of contract on its behalf. Consequently,
on December 6, 2013, Funai filed with the International Chamber of Commerce a counterclaim for claiming
compensation for damages on the grounds of breach of the agreement and undue action by PHILIPS.
The results of these arbitral proceedings may affect the Funai Group’s operating performance, but given the
difficulty of making a rational estimate of this impact during this third quarter consolidated fiscal period, such impact
has not been reflected in the Funai Group’s operating performance or financial condition.
Following is the outline of arbitration filed against Funai and counterclaim filed by Funai.
1. Outline of arbitration filed against Funai(1) Institution and date of arbitrationi) Institution where petition for arbitration is filed: International Chamber of Commerceii) Date of petition for arbitration: October 25, 2013
(2) Petitioner of arbitrationiii) Name : Koninklijke PHILIPS N.V.
iv) Location : Eindhoven, The Netherlandsv) Title & name of representative : Chief Executive Officer

Frans van Houten(3) Details of petition and claimed amount for damagesi) Details of petition : A claim for damages on the grounds of breach of the agreement by Funaiii) Claimed amount : A specific claimed amount has not been stipulated
2. Outline of counterclaim filed by Funai(1) Institution with which counterclaim filed and date of filingi) Institution with which counterclaim filed : International Chamber of Commerceii) Date of counterclaim: December 6, 2013
(2) Other party to counterclaim filingi) Name : Koninklijke PHILIPS N.V.
ii) Location : Eindhoven, The Netherlandsiii) Title & name of representative : Chief Executive Officer

Frans van Houten(3) Details of petition and claimed amount for damagesi) Details of petition : Claim for damages on the grounds of breach of the agreement and undue action by PHILIPSii) Claimed amount : A specific claimed amount has not been stipulated
An overview of the above-mentioned share purchase agreement is as follows.
1. Name of other company and content of acquired businesses(1) Name of other company : Koninklijke PHILIPS N.V.
(2) Content of acquired businesses : Lifestyle Entertainment Business(Note) The Lifestyle Entertainment Business involves the development and design, sales and (partial) manufacture of the
PHILIPS-brand Audio Video Multimedia products, Home Communication products and Accessories products.

2. Reasons for Acquiring the Shares
In September 2008, Funai entered into a brand licensing agreement maintaining responsibility for the sourcing,
distribution, marketing and sales activities of PHILIPS consumer televisions in the United States and Canada. Following
this, in July 2012 Funai entered an agreement with PHILIPS involving the sale in the United States, Canada and Mexicoof products that PHILIPS designed and developed through the operation.
Funai has 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 toreinforcing existing management resources Funai has searched for growth opportunities through business alliances 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. Funai decided to acquire shares in the New Company, based on the belief that the acquisition
would foster sustained growth of the Funai Group's business.
3. Acquisition price and percentage of shares held after acquisition
Acquisition price : €150 million
Percentage of shares held after acquisition : 100%
(Consolidated statement of income)*1. Impairment loss
Fiscal Year 2012 (From April 1, 2012 to March 31, 2013)
During the fiscal year under review, the Funai Electric Group recorded losses on impairment in the following asset
groups.
Use
LocationType
Idle assets

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

Long-term prepaid expenses, etc.

In principle, the Funai Group groups 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.
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 amount collectible 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.

Fiscal Year 2013 (From April 1, 2013 to March 31, 2014)
During the fiscal year under review, the Funai Electric Group recorded losses on impairment in the following asset
groups.
Use
Location
Type
Business Assets

Zhong Shan Funai Electron Co.
(Guangdong, China)

Machinery, equipment and vehicles,
etc.

Business Assets

Zhong Yue Funai Electron Co.
(Guangdong, China)

Machinery, equipment and vehicles,etc.

In principle, the Funai Group groups 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.
Since the prospects for future profitability are expected to worsen due to factors including a decrease in orders for
information equipment, during the fiscal year under review, the Company reduced the book value of manufacturing
facilities, etc. to their recoverable amount and recorded the decrease in value (JPY 266 million) under extraordinary
losses. Details of the loss are JPY 149 million for machinery, equipment and vehicles, JPY 51 million for tools, furnitureand fixtures, and JPY 65 million for long-term prepaid expenses.
The recoverable amount of the assets has been determined using net realizable value, taking the net realizablevalue of long-term prepaid expenses as zero and calculating the net realizable value of assets other than long-term
prepaid expenses using reasonable estimates taking into account the market value.
*2. Business structure improvement expenses
Fiscal Year 2013 (From April 1, 2013 to March 31, 2014)
Expenses incurred on business restructuring stem mainly from costs incurred due to the shrinking of the overseas LED
business, principally including an inventory valuation loss of JPY 205 million, an impairment loss on investment in
subsidiaries and associated companies of JPY 651 million and impairment losses of JPY 393 million.
(Impairment loss)
During the fiscal year under review, the Funai Electric Group recorded losses on impairment in the following asset
groups.
Use

Location

Type

Business Assets

Zhong Shan Funai Electron Co.
(Guangdong, China)

Machinery, equipment and vehicles,
etc.

Business Assets

Zhong Yue Funai Electron Co.
(Guangdong, China)

Machinery, equipment and vehicles,
etc.

Business Assets

Funai Optical Electronics Co., Ltd.
(Guangdong, China)

Machinery, equipment and vehicles,etc.

In principle, the Funai Group groups 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.
Mainly as a result of the decision to downsize the overseas LED business, during the fiscal year under review, theCompany reduced the book value of manufacturing facilities, etc. with no prospects of future use to their recoverable
amount, and recorded the decrease in value (JPY 393 million) in business structure improvement expenses under
extraordinary loss. Details of the loss are JPY 238 million for machinery, equipment and vehicles, JPY 99 million fortools, furniture and fixtures, and JPY 55 million for long-term prepaid expenses.
The recoverable amount of the assets has been determined using net realizable value, taking the net realizablevalue of long-term prepaid expenses as zero and calculating the net realizable value of assets other than long-term
prepaid expenses using reasonable estimates taking into account the market value.
*3. Advisory fees
Fiscal Year 2013 (From April 1, 2013 to March 31, 2014)
Advisory fees were paid as specified compensation and fees to third-party advisors to determine an acquisition pricefor the intended acquisition of all shares in a company handling the Lifestyle business of Koninklijke Philips N.V.
(hereinafter, “PHILIPS”). However, we are treating these fees as expenses, as PHILIPS has terminated the sharepurchase agreement and submitted a request for arbitration with the International Chamber of Commerce, and wehave filed a counterclaim in this regard.

* 4. Income taxes for prior periods
Fiscal Year 2012 (From April 1, 2012 to March 31, 2013)
A consolidated subsidiary, FUNAI EUROPE GmbH, is under investigation by the German tax authorities with regard totransfer pricing taxation on transactions with FUNAI 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 anticipatedadditional 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)* 1. Reclassification adjustment and tax effect amount involved in other comprehensive income(Million Yen)
Fiscal year 2013
( from April 1, 2013
to March 31, 2014 )Fiscal year 2012
( from April 1, 2012
to March 31, 2013 )Valuation difference on available‐for‐sale securities:
Accrued amount on the current term
Reclassification adjustment amountPre‐adjustment of tax effectTax effect amount

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

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

Total other comprehensive income

201
413
614
(218)
396

262
87
349
(125)
223

7,190
－
7,190
－
7,190

4,163
－
4,163
5
4,169

－
－
－
－
－

142
－
142
(7)
135

32
7,619

57
4,586

[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 and devices. Within Japan, suchfunctions are the responsibility of DX Antenna Co., Ltd. Overseas, the areas of the United States, Asia and Europe aremanaged 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 anindependently 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 andsales 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.
3. Information of the amount of sales, income/loss, assets, liabilities and other in each reporting segment
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)

Fiscal year 2013 (April 1, 2013 - March 31, 2014)
Japan

N. America

Asia

56,493
135,566

169,698
0

4,563
148,6743,286
0

234,042284,241－(284,241)

234,042－

192,059(1,328)129,869

169,698(3,786)
61,921

153,237
408
70,795

3,287
(425)
3,392

518,284(5,130)265,978(284,241)(335)(84,637)

234,042(5,465)
181,341

2,032
3

47
－

4,317
－

83
－

6,480
3

(0)
－

6,479
3

Investment amount to equity
method affiliate

30

－

195

－

225

－

225

Increase in tangible fixed
assets and intangible assets

5,466

254

4,178

15

9,914

(54)

9,860

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
(0)
(885)
(739)

(Units: Million Yen)
Fiscal year 2013
1,071
(839)
(567)

(1,626)(335)

Fiscal year 2012
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
Adjustment of net defined benefit asset

37,615(1,697)(76,709)－(Units: Million Yen)
Fiscal year 2013
21,077(2,265)(103,765)
315

Total

(40,792)(84,637)

Fiscal year 2012

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

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

Information
Equipment
11,965(Units: Million Yen)
Other Equipment
24,356

2. Information every area
(1) SalesJapan
35,865

Total
192,008(Units: Million Yen)
N. America

U.S.

Other

127,327

5,982

Asia
3,541

Europe
6,200

Other

Total

13,090

192,008(Note) Geographical sales are groupings of nations and regions based on geographical location of customers.
(2) Property, plant and equipment
Japan
9,693
3.

N. America
95(Units: Million Yen)
Asia
China
1,965

Thailand
2,439

Other
1,032

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

Europe

Total

1,448

16,675(Units: Million Yen)
Sales

Associated segment
93,918

N. America

Fiscal year 2013 (April 1, 2013- March 31, 2014)
1. Information every product and service
Audiovisual
Equipment
Sales to outside customers
183,108(Units: Million Yen)

Information
Equipment
18,876

Other Equipment
32,058

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

38,109234,042(Units: Million Yen)
N. America

Japan

Total

Asia

Other

155,207

6,034

Europe

2,635

Other

7,735

Total

24,320234,042(Note) Geographical sales are groupings of nations and regions based on geographical location of customers.
(2) Property, plant and equipment
Japan

3.

Asia

N. America

9,787(Units: Million Yen)

Philippines

115

Thailand

6,668

Europe

Other

2,663

1,076

Information every main customer
Sales

N. America

1,614

Asia

－

－

(Units: Million Yen)
All of thecompanies
Total
Elimination
－
1,614

－

(Units: Million Yen)
All of thecompanies
Total
Elimination－
659

Europe－Fiscal year 2013 (April 1, 2013 - March 31, 2014)
Japan
Impairment loss

21,905

Associated segment
N. America

121,529[Information of impairment loss in each reporting segments]
Fiscal year 2012 (April 1, 2012 - March 31, 2013)

Impairment loss

1,593

(Units: Million Yen)

Name of the customer
WAL-MART STORES, INC.

Japan

Total

N. America－

Asia

Europe659－[Information of amortization of goodwill and unamortized balance in each reporting segments]
Fiscal year 2012 (April 1, 2012 - March 31, 2013)(Units: Million Yen)
All of theJapan
N. America
Asia
Europecompanies
Total
Elimination
9
－
－
－
－
9
Amortization ofcurrent year
4
－
－
－
－
4
Balance at the endof current year
Fiscal year 2013 (April 1, 2013 - March 31, 2014)
Japan
Amortization ofcurrent year
Balance at the endof current year

N. America

Asia

Europe

3

－

－

－

0

－

－

－

(Units: Million Yen)
All of thecompanies
Total
Elimination
－
3
－

0

(Relationships, etc., in the Corporate Combination)
Corporate Combination through Acquisition
1. Overview of the Corporate Combinationi) Name of other company and content of acquired businesses
Name of other company
Lexmark International, Inc. (hereinafter, “Lexmark”)
Content of acquired businesses Inkjet-related technologies and assets, including patent rightsii) Reason for conducting the corporate combination
As a contract manufacturer, Funai has supplied inkjet hardware to Lexmark since July of 1997. Funai has
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 Funai 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 aresult, Funai believes it will be able to expand its business going forward sustainably.
iii) Date of the corporate combination
April 30, 2013iv) Legal form of the corporate combination
Acquisition of patent rights and development facilities, and acquisition of shares in manufacturing subsidiaryv) Name of company after combination
Funai Electric Cebu, Inc.
vi) Percentage of voting rights acquired : 100%2.

Performance Period of Acquired Business Included in Quarterly Consolidated Income Statement for the Quarterly
Fiscal Period under Review
From May 1, 2013 to March 31, 20143.

Acquisition Cost and Content of Acquired Business
Consideration for acquisition
Expenses directly associated with acquisition
Acquisition cost

Cash
Advisory fees, etc(million yen)
10,036242
10,2784.

Amount of Goodwill Generated, Source of Generation, Amortization Method and Amortization Periodi) Amount of goodwill generated : JPY 8 millionii) Source of generation
Because the net amount of acquired assets and assumed liabilities exceeded the acquisition cost, thedifference was recorded as negative goodwill.

5.

Amounts of Assets Received and Liabilities Assumed on the Date of the Corporate Combination and Their Principal
Content(million yen)
Current asset
544
10,397
Noncurrent assets
Total asset
10,942Current liability
402
Noncurrent liability
252
Total liability
655

from 2013.4.1
to 2014.3.31
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
FY2012%

Amount（Units : 100 million yen, %）FY2014 (Projection)

FY2013
ChangeAmount%ChangeAmount%Change

1920

100.0

(22.0)

2,340

100.0

21.9

2,000

100.0

(14.5)

Operating Income (Loss)

(52)

(2.7)

－

(54)

(2.3)

－

5

0.3

－

Ordinary Income (Loss)

(3)

(0.2)

－

(22)

(1.0)

－

4

0.2

－

Net Income (Loss) after Tax

(85)

(4.4)

－

(67)

(2.9)

－

0

0.0

－

Total Assets

1,945

－

－

1,813

－

－

－

－

－

Net Assets

1,213

－

－

1,176

－

－

－

－

－

Net Sales（※） Yen-Dollars / Exchange rate
FY2012FY2013

Average Rate in each Period

100.4983.32（Units : Yen / Dollars）
FY2014 (Projection)
100.00(2) Profitability and Per Share Data etc.
FY2012FY2013

FY2014 (Projection)

（％）

14.9

13.9

16.0

Operating Income Ratio （％）

(2.7)

(2.3)

0.3

Ordinary Income Ratio （％）

(0.2)

(1.0)

0.2

Shareholders' Equity Ratio （％）

61.7

64.2

－

Gross Profit Ratio

Net Assets Per Share（yen）

3520.113,414.77－

Net Income Per Share（yen）(250.38)(197.70)0.29

Return on Assets

（％）

(4.6)

(3.6)

－

Return on Shareholders' Equity （％）

(7.0)

(5.7)

－

Number of Total Employees

4,776

5,112

－

(3) Capital Expenditures, Depreciation, R&D Expenses
FY2012
AmountChange53

Capital Expenditures

Amount%Change109

32.5

FY2012
Amount（Units : 100 million yen, %）FY2014 (Projection)

FY2013105.7

FY2013
ChangeAmountAmount%Change(55.0)

49

FY2014 (Projection)
ChangeAmount%ChangeDepreciation Expenses

40

2.1

(18.4)

52

2.2

30.0

58

2.9

11.5

R&D

93

4.8

(11.4)

84

3.6

(9.7)

84

4.2

－

－1－

(4) CashFlow

Cash flows from operating activities

(80)

(12)

（Units : 100 million yen）
FY2014 (Projection)－

Income Before Income Taxes

(25)

(56)

－

Depreciation Expenses

52

64

－

(107)

(20)

－

Cash flows from investing activities

128

(27)

－

Free cash flows

48

(39)

－

Cash flows from financing activities

51

(46)

－

36

20

－

136

(66)

－

FY2012Others

Effect of exchange rate changes oncash and cash equivalents
Net increase (decrease) in cash andcash equivalents

FY2013

2．Operating Activities (Consolidated)(1) Sales by Equipment
FY2012
AmountAudio Visual Equipment%（Units : 100 million yen, %）FY2014 (Projection)

FY2013
ChangeAmount%ChangeAmount%Change

1,557

81.1

(15.2)

1,831

78.2

17.6

1,574

78.7

(14.0)

DVD

184

9.6

(16.0)

174

7.4

(5.4)

108

5.4

(37.9)

BD

141

7.3

(62.9)

168

7.2

19.1

136

6.8

(19.0)LCD TV

1,199

62.5

(0.8)

1,436

61.4

19.8

1,278

63.9

(11.0)

Others

33

1.7

22.2

53

2.2

60.6

52

2.6

(1.9)

Information Equipment

119

6.2

(60.1)

189

8.1

57.8

127

6.4

(32.8)

Others244

12.7(25.3)

320

13.7

31.6

299

14.9

(6.6)

Total

1,920

100.0

(22.0)

2,340

100.0

21.9

2,000

100.0

(14.5)－2－

(2) Sales by Areas in Equipment

FY2012
AmountAudio Visual Equipment%（Units : 100 million yen, %）FY2014 (Projection)

FY2013
ChangeAmount%ChangeAmount%Change

1,557

81.1

(15.2)

1,831

78.2

17.6

1,574

78.7

(14.0)

1,213

63.2

(0.7)

1,364

58.3

12.4

1,178

58.9

(13.6)

Europe432.2(35.8)

32

1.4(25.6)

38

1.9

18.8

Asia and Others

117

6.1

172.1

218

9.3

86.3

176

8.8

(19.3)

Japan

184

9.6

(63.4)

217

9.2

17.9

182

9.1

(16.1)

119

6.2(60.1)

189

8.1

57.8

127

6.4

(32.8)

North America

53

2.8

(48.5)

112

4.8

111.3

89

4.5

(20.5)

Europe19

1.0(67.8)

45

1.9

136.8

30

1.5

(33.3)

Asia and Others

42

2.2

(67.9)

30

1.3(28.6)

8

0.4(73.3)

Japan

5

0.2

(28.6)

2

0.1(60.0)

0

0.0－

Others244

12.7(25.3)

320

13.7

31.6

299

14.9

(6.6)

Total

1,920

100.0

(22.0)

2,340

100.0

21.9

2,000

100.0

(14.5)

North America

Information Equipment(3) Sales by Equipment in Areas

FY2012
AmountNorth America%（Units : 100 million yen, %）FY2014 (Projection)

FY2013
ChangeAmount%ChangeAmount%Change

1,333

69.4

(0.6)

1,612

68.9

21.0

1,370

68.5

(15.0)

Audio Visual Equipment

1,213

63.2

(0.7)

1,364

58.3

12.4

1,178

58.9

(13.6)

Information Equipment

53

2.8

(48.5)

112

4.8

111.3

89

4.5

(20.5)

Others

67

3.4

318.8

136

5.8

103.0

103

5.1

(24.3)

Europe623.2(50.8)

77

3.3

24.8

68

3.4

(11.7)

Audio Visual Equipment

43

2.2

(35.8)

32

1.4(25.6)

38

1.9

18.8

Information Equipment

19

1.0

(67.8)

45

1.9

136.8

30

1.5

(33.3)

Others

0

0.0

－

0

0.0

－

0

0.0

－

166

8.7

(8.3)

270

11.5

62.7

217

10.8

(19.6)

Audio Visual Equipment

117

6.1

172.1

218

9.3

86.3

176

8.8

(19.3)

Information Equipment

42

2.2

(67.9)

30

1.3(28.6)

8

0.4(73.3)

Others

7

0.4

－

22

0.9

214.3

33

1.6

50.0

359

18.7

(55.9)

381

16.3

6.3

345

17.3

(9.4)

Audio Visual Equipment

184

9.6

(63.4)

217

9.2

17.9

182

9.1

(16.1)

Information Equipment

5

0.2(28.6)

2

0.1(60.0)

0

0.0

－

170

8.9

(43.9)

162

7.0

(4.7)

163

8.2

0.6

1,920

100.0

(22.0)

2,340

100.0

21.9

2,000

100.0

(14.5)

Asia and Others

Japan

OthersTotal－3－

3．Summary of 4Q (January to March) Financial Statements (Consolidated)(1) Operating Results（Units : 100 million yen, %）FY2012FY20134Q (Jan.-Mar.)

4Q (Jan.-Mar.)%

Amount%AmountChangeChangeNet Sales

450

100.0

5.4

485

100.0

7.9

Operating Loss

(34)

(7.6)

－

(59)

(12.2)－

Ordinary Loss

(4)

(1.1)

－

(70)

(14.5)－Net Loss after Tax(62)(13.9)－(84)(17.5)－（※） Yen-Dollars / Exchange rate
（Units : Yen / Dollars）

Average Rate in each Period

FY2012FY20134Q (Jan.-Mar.)

4Q (Jan.-Mar.)

92.56

102.57(2) Sales by Equipment（Units : 100 million yen, %）FY2012FY20134Q (Jan.-Mar.)

4Q (Jan.-Mar.)%

AmountChange%AmountChange

346

76.9

6.8

374

77.1

8.1

DVD

41

9.1

20.6

37

7.6

(9.8)

BD

34

7.6

(48.5)

49

10.1

44.1

LCD TV

265

58.9

21.0

272

56.1

2.6

Others

6

1.3

20.0

16

3.3

166.7

Information Equipment

44

9.8

(10.2)

41

8.5

(6.8)

Others

60

13.3

11.1

70

14.4

16.7

Total

450

100.0

5.4

485

100.0

7.9

Audio Visual Equipment－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