Member, Financial Accounting Standards Foundation

Consolidated Financial Results for the First Quarter Ended June 30, 2018
August 6, 2018
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
Director and Officer
Makoto Ueshima
TEL: (072) 870-4395
Scheduled date of Quarterly ReportAugust 9, 2018
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, 2018 (April 1, 2018 – June 30, 2018)(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%
21,663 (32.5)(1,233)
(915)
(19)
－
－
－
1st Quarter FY2018
32,07127.8(2,328)(2,159)(1,517)－－－
1st Quarter FY2017(Reference) Comprehensive Income 1st Quarter FY 2018 ended June 30, 2018
494 million yen (－%)
1st Quarter FY 2017 ended June 30, 2017 (1,732) million yen(－%)
Net Income(loss)
Net Income(loss) Per SharePer Shareon a Fully Diluted Basis
Yen
Yen
st
(0.56)－
1 Quarter FY2018(44.49)－
1st Quarter FY2017(2) Consolidated Financial Position

As of June 30,2018
As of March 31,2018

Total Assets
Million yen
79,63880,265

Million yen
51,21550,717

Equity Ratio

Million yen
51,19350,699

%
64.3
63.2

2. Dividends
Dividend per Share
1st Quarter

2nd Quarteryen
Fiscal Year 2017－

Fiscal Year 2018－

3rd Quarteryen

Fiscal Year 2018
(Forecast)Year-Endyen

Annual
yen

yen

0.00

－

0.00

0.00

－

－

－

－

st

(Note) Revision of Annual Dividends Forecast in this 1 Quarter: No
The dividend for FY 2018 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 2018 (April 1, 2018 - March 31, 2019)
Net Sales
Six months
endedSep.30.2018
Full Year

Million yen%

45,000 (37.6)
103,000 (20.8)

Operating
Income(loss)

Ordinary
Income(loss)

Million yen

Million yen%(2,400) －400 －%(2,500) －(600) －(% shows year on year rates)Net
Net Income(loss)
Income(loss)
Attributable toowners of parent
Per Share
Million yen %Yen(2,300)(67.41)－(700)(20.52)－

(Note) Revision to consolidated financial forecast: No*Note(1) Changes in Consolidated Subsidiaries (Changes in Scope of Consolidation): Yes
In (Company name: －)Out (Company name: FUNAI CORPORATION,INC.)(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: Yes
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, 2018
As of March 31, 2018
As of June 30, 2018
As of March 31, 2018
On June 30, 2018
On June 30, 201736,130,796
36,130,796
2,011,829
2,011,829
34,118,967
34,119,031* 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, 2018, the United States, the Company’s main market,
although concerns about the impact on the US economy due to tariff strengthening measures of the Trump regime
are concerned, due to the fact that corporate capital investment and production are increasing and the employment
environment is improving, large tax cuts and The economy has been steady due to the push-up effect of expenditureexpansion. In Europe, the economic expansion is continuing due to improvements in wage growth rates and otherfactors. In China, although there is a concern about the impact of trade friction, there is a slowing pace of the economic
expansion, but the economy is steadily growing. In Japan, the current account surplus in the external balance ismaintained in surplus and employee income continues to recover, maintaining a moderate recovery trend.
As a result of the above factors, net sales amounted to ¥21,663 million, down 32.5% compared to the same quarterof the last fiscal year. Although sales declined, operating loss improved to ¥1,233 million (an operating loss of ¥2,328
million in the same quarter of the last fiscal year), for the following reasons. First, the reduction in manufacturing costand selling, general and administrative expenses due to the impairment of fixed assets carried out in the previous
consolidated fiscal year has come out on a certain scale. Second, as compared with the previous consolidated fiscal
year, the price of parts such as the liquid crystal panel of the liquid crystal TV, which is the main product, has declined.
Third, we reviewed the sale of unprofitable products, especially in the Mexican market and office solutions business.
And etc. Ordinary loss amounted to ¥915 million (an ordinary loss of ¥2,159 million in the same quarter of the last
fiscal year). Quarterly net loss attributable to owners of parent amounted to ¥19 million (a quarterly net loss
attributable to owners of parent of ¥1,517 million in the same quarter of the last fiscal year).
Results by regioni) JapanWith respect to the FUNAI brand which started exclusive sales at Yamada Denki from June 2 in the previous
consolidated fiscal year, since the introduction time of new products into July 14 was set for the current
consolidated fiscal year, the sales declined for the first quarter. As a result, net sales amounted to ¥7,478 million,
down 28.2% year on year, and segment loss (operating loss) amounted to ¥473 million (a segment loss of ¥137
million in the same quarter of the last fiscal year).
ii) Americas
As of the end of the previous consolidated fiscal year, overall North American markets were in excess inventory,
and major mass merchandisers focused on their inventory sales, and sales of LCD TVs declined due to sluggish
growth in our new sales. As a result, net sales amounted to ¥13,254 million, down 38.6% year on year, andsegment loss amounted to ¥257 million (a segment loss of ¥836 million in the same quarter of the last fiscal year).
iii) Asia
Sales of LCD TVs were terminated by reviewing sales of unprofitable products, but sales of parts related sales
increased. As a result, net sales amounted ¥922 million, net sales of ¥71 million in the same quarter of the last
fiscal year, segment loss (operating loss) amounted to ¥129 million (a segment loss of ¥1,366 million in the samequarter of the last fiscal year).
iv) Europe
Ink-cartridge decreased. As a result, net sales amounted ¥7 million, down 51.0% year on year, and segment loss
(operating loss) amounted to ¥5 million, (a segment loss of ¥21 million in the same quarter of the last fiscal
year).
Results by product Segmenti) Audiovisual Equipment
Particularly due to the influence of the distribution inventory adjustment phase of the North American market,
sales declined due to decreased sales of DVD and BD related products and LCD TVs. As a result net sales amounted
to ¥18,856 million, down 38.3% year on year.

ii) Information Equipment

Sales of inkjet printers of unprofitable products were narrowed down, but sales increased due to sales of coupon
printers and increased sales of commercial ink cartridges. As a result, net sales of information Equipment
amounted to ¥1,017 million, up 37.4% year on year.
iii) Other Products
Healthcare-related sales increased. As a result, net sales of other products amounted to ¥1,789 million, up 128.4%
year on year.

(2) Consolidated Financial Position
Total assets decreased by ¥30 million compared to the end of the last fiscal year. The primary components of thechange were as follows: Increase of ¥556 million in notes and accounts receivable - trade, and ¥398 million in property, plant andequipment.
 Decrease of ¥1,441 million in merchandise and finished goods.
Total liabilities decreased by ¥529 million compared to the end of the last fiscal year. The primary components of thechange were as follows: Increase of ¥2,634 million in notes and accounts payable-trade.
 Decrease of ¥2,575 million in accounts payable included in other.
Net assets increased by ¥498 million compared to the end of the last fiscal year. The primary components of the change
were decrease of ¥19 million in retained earnings and increase of ¥521 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 "FY2018 Financial Report" on May 14, 2018.
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 2017
(As of March 31, 2018)

1st Quarter FY2018(As of June 30, 2018)ASSETS;
Current Assets
Cash and deposits

32,39032,105

Notes and accounts receivable - trade

9,953

10,510

Merchandise and finished goods

13,251

11,809

516

732

9,841

9,653

Other

2,379

2,629

Allowance for doubtful accounts(1,021)(977)

Total current assets

67,31066,463

8,193

8,592

93

82

Net defined benefit asset

1,840

1,836

Other

3,065

3,547

Allowance for doubtful accounts

(239)

(287)

Work in process
Raw materials and supplies

Noncurrent Assets
Property, plant and equipment
Intangible assets
Investments and other assets

Total investments and other assets

4,667

5,096

12,954

13,77180,26580,234

Notes and accounts payable - trade

11,80814,442

Accounts payable included in other

10,372

7,796

Income taxes payable

664

220

Provision

990

817

Other

3,007

4,103

Total current liabilities

26,842

27,380

1,025

22

3

7

1,676

1,609

Total noncurrent assets
TOTAL ASSETSLIABILITIES;Current Liabilities

Noncurrent Liabilities
Provision
Net defined benefit liability
Other
Total noncurrent liabilities
TOTAL LIABILITIES

2,705

1,639

29,54829,019Fiscal year 2017
(As of March 31, 2018)

1st Quarter FY2018(As of June 30, 2018)

NET ASSETS;
Shareholders' equity
Capital stock

31,30731,307

Capital surplus

33,60333,603Retained earnings

21,97021,951

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

Total shareholders' equity

62,53962,520134Foreign currency translation adjustment(12,305)(11,783)

Remeasurements of defined benefit plans

451

451

(11,840)(11,327)

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

Total accumulated other comprehensive income
Subscription rights to shares
Total net asset
TOTAL LIABILITIES AND NET ASSETS

17

21

50,71751,21580,26580,234

(2) Consolidated Quarterly Statements of Income and Comprehensive Income(Consolidated Quarterly Statements of Income)(Units : Million Yen)
1st Quarter FY2017

1st Quarter FY2018( from April 1, 2017
to June 30, 2017)
32,071( from April 1, 2018
to June 30, 2018)
21,663

Cost of sales

29,132

20,113Gross profit

2,939

1,550

Selling, general and administrative expenses

5,267

2,783

Operating income (loss)(2,328)(1,233)

Interest income

53

106

Dividends income

24Foreign exchange gains

314

169

Other

36

63

Total non-operating income

406

343

3

5

225

12

8

6

237

25

(2,159)(915)

Gain on sales of non-current assets

25Gain on sales of investment securities

9

Other

1

0

Total extraordinary income

12

6

4

0

Net sales

Non-operating income

Non-operating expenses
Interest expenses
Compensation expenses
Other
Total non-operating expenses
Ordinary income (loss)
Extraordinary income-

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

Notes.1

15

-

19

0

(2,166)

(910)

(648)

(890)

Income (loss) before minority interests(1,517)(19)

Net income (loss) attributable to owners of parent(1,517)(19)

Income (loss) before income taxes
Income taxes

(Consolidated Quarterly Statement of Comprehensive Income)

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

1st Quarter FY2017

1st Quarter FY2018( from April 1, 2017
to June 30, 2017)( from April 1, 2018
to June 30, 2018)(1,517)

(19)

12

(8)

(254)

521

26

0

(214)

513

(1,732)494(1,732)494

Other comprehensive Income
Valuation difference on avaiable-for-sale securities
Foreign currency translation adjustment
Remeasurements of defined benefit plans, net of tax
Total other comprehensive Income
Comprehensive income(Comprehensive income attributable to)Comprehensive income attributable to owners of parent

(3) Consolidated Quarterly Statements of Income(Notes for Continuing Enterprises)
Not Applicable(Notes of remarkable changes in Shareholders Equity)
Not Applicable(Changes in scope of consolidation or scope of application of equity method)(Significant changes in scope of consolidation)
Since the first quarter consolidated accounting period, FUNAI CORPORATION, INC., which was a consolidated
subsidiary, was excluded from the scope of consolidation due to the disappearance of the consolidated subsidiary
P&F USA, Inc. as a surviving company.
The trade name of P&F USA, Inc. has been changed to FUNAI CORPORATION, INC.
(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.
(Changes in accounting policies)
Overseas consolidated subsidiaries except Americas apply IFRS No. 15 (Revenue from Contracts with Customers)
since the first quarter consolidated accounting period.
The impact of application of the accounting standards on consolidated financial statements is slight.
(Additional Information)[Application of Partial Amendments etc. to "Accounting standard for tax effect accounting"]
The company apply to Partial Amendments etc. to "Accounting standard for tax effect accounting" (Corporate
Accounting Standards No. 28, 16 February 2018) since beginning of the year of the first quarter consolidated
accounting period. Therefore, Deferred Tax Assets is presented division of Investments and other assets andDeferred Tax Liabilities is presented division of Noncurrent liabilities.
(Consolidated quarterly statements of income)*Notes.1 Impairment loss
The Group recorded losses on impairment in the following asset groups for first quarter of last 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, 2017 to June 30, 2017)
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

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 ¥ 2 million relating to thecancellation of inter-segment transactions, ¥ -212 million of overall Group expenses that are not apportioned toeach reporting segment, and ¥ -243 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, 2018 to June 30, 2018)
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

7,478
9,705

13,254502

922
11,520

7－

21,663
21,728－(21,728)

21,663－

Total

17,184

13,757

12,443

7

43,392(21,728)

21,663

(473)

(257)

(129)

(5)

(865)

(367)

(1,233)

Segment Income (Loss)Note:
1. ¥ -367 million adjustment amount under segment income includes items such as the ¥ -9 million relating to thecancellation of inter-segment transactions, ¥ -204 million of overall Group expenses that are not apportioned toeach reporting segment, and the ¥ -153 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 for some time, there is no
significant concern about fundraising.
Since the Group conducts the following countermeasures step by step based on the medium-term management
policy formulated in the previous consolidated fiscal year, the Group believes that a resolution of the matter can beachieved.
①

Display Business (LCD-TV business)②

・Increase sales at existing customers in the North American market and develop new customers.
・Concentration of management resources in developing FUNAI brand products and OEM products in theJapanese market.
Digital Media Business (DVD, BD business)③

・Development of product-focused niche strategy in the North American market.
・Enhancement of FUNAI brand products and development of new OEMs in the Japanese market.
Office Solution Business (information equipment-related business)④

・Improve profit margin by increasing sales of high value-added printer products.
・Development of derivative business utilizing of 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 ofthe end of the first quarter consolidated accounting period and has omitted the Notes on Going Concern
Assumption from the consolidated financial statements.