February 6, 2018

Summary of Consolidated Financial Results
for the Third Quarter Ended December 31, 2017 [Japan GAAP]
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Quarterly earnings supplementary explanatory documents:
Quarterly earnings presentation:

KAGA ELECTRONICS CO., LTD.
8154
Tokyo Stock Exchange, First Section
http://www.taxan.co.jp/
President & COO
Ryoichi Kado
Managing Director, Administration Headquarters
Eiji Kawamura+81-(0)3-5657-0111
February 14, 2018

YesNone(Yen in millions, rounded down)
1. Financial results for the third quarter of the fiscal year ending March 2018 (April 1, 2017 – December 31, 2017)(1) Result of operations (Consolidated, year-to-date)(Percentage figures represent year on year changes)
Profit attributable
Net sales
Operating income
Ordinary income
to owners of parent
Million yen

Third quarter ended December 2017
Third quarter ended December 2016%

174,047
167,486

Million yen

3.9(8.1)

%

6,613
5,178

Note: Comprehensive income: 3Q of FY3/2018: 6,916 million yen (37.9%)

27.7(15.7)%

Million yen

7,093
5,500

29.0(14.6)
3Q of FY3/2017: 5,017 million yen (30.0%)

%

5,510
4,863

13.3
11.2

Earnings per share(diluted)

Earnings per shareYen

Third quarter ended December 2017
Third quarter ended December 2016

Million yen

Yen

200.86172.92-(2) Financial Position (Consolidated)
Total assets
As of December 31, 2017
As of March 31, 2017
Reference: Shareholders’ equity
As of December 31, 2017: 70,928 million yen

Net assetsEquity ratio

Million yen

Million yen%

128,937
125,751

71,00465,93255.0
52.4

As of March 31, 2017: 65,872 million yen

2. Dividends
Dividend per share

Fiscal year ended March 2017
Fiscal year ending March 2018
Fiscal year ending March 2018 (Forecast)

1Q

2Q

3Q

Year-end

Full year

Yen

Yen

Yen

Yen

Yen

-25.00
30.00

-

35.00

60.00

40.00

70.00

Notes: Change in the dividend forecast from the latest announcement: Yes
Breakdown of interim dividend for FY3/17: Ordinary dividend: 20.00 yen; Extraordinary dividend: 5.00 yenBreakdown of year-end dividend for FY3/17: Ordinary dividend: 20.00 yen; Extraordinary dividend: 15.00 yen
Breakdown of interim dividend for FY3/18: Ordinary dividend: 25.00 yen; Extraordinary dividend: 5.00 yen
Breakdown of year-end dividend for FY3/18 (forecast): Ordinary dividend: 35.00 yen; Extraordinary dividend: 5.00 yen
With regard to the revision of dividend forecast, please refer to “KAGA ELECTRONICS Revises Consolidated Performance Forecastand Dividend Forecast” announced on February 6, 2018.

3. Forecast for the fiscal year ending March 2018 (Consolidated, April 1, 2017 – March 31, 2018)(Percentage figures represent year on year changes)
Profit attributable toEarnings perNet sales
Operating income
Ordinary income
owners of parentshare
Full year

Million yen%

Million yen%

Million yen%

Million yen%

Yen

232,000

2.1

8,000

16.3

8,700

18.5

6,450

(7.5)

235.10Notes: Change in the forecast from the latest announcement: Yes
With regard to the revision of consolidated performance forecast, please refer to “KAGA ELECTRONICS Revises Consolidated
Performance Forecast and Dividend Forecast” announced on February 6, 2018.

* Notes(1) Changes in significant subsidiaries (Changes in specified subsidiaries accompanied by changes in the scope of consolidation):None(2) Use of accounting methods specifically for the preparation of the quarterly consolidated financial statements: None
(3) Changes in accounting policies, estimates, and retrospective restatement(a) Changes due to revision of accounting standards: None(b) Changes other than (a): None(c) Changes in accounting estimates: None(d) Retrospective restatement: None
(4) Number of shares outstanding (common stock)(a) Shares outstanding (including treasury shares)
As of December 31, 2017:(b) Treasury shares
As of December 31, 2017:

28,702,118

As of March 31, 2017:

28,702,118

1,267,325

As of March 31, 2017:

1,266,468

Period ended December 31, 2016:

28,126,870(c) Average number of shares (quarterly consolidated during the period)
Period ended December 31, 2017:27,435,262* The quarterly review procedures are not applicable to this Financial Results report.
* Cautionary statement regarding forecasts of operating results and special notes(Remarks on forward-looking statements)
Forward-looking statements in these materials are based on information currently available to the Company and certain
assumptions deemed reasonable. Actual results may vary from the forecast for a variety of reasons. For information about theforecasts, please see “1. Results of Operations (3) Qualitative information on consolidated earnings forecast” on page 3 ofSupplementary Information.
(Supplementary materials for financial results)
Supplementary materials for financial results will be made available on our website.

Index for Supplementary Information
1. Results of Operations .................................................................................................................................................................... 2(1) Overview of consolidated business performance .................................................................................................................. 2(2) Overview of financial condition ........................................................................................................................................... 2(3) Qualitative information on consolidated earnings forecast ................................................................................................... 3
2. Quarterly Consolidated Financial Statements and Major Notes ................................................................................................... 4(1) Quarterly consolidated balance sheet .................................................................................................................................... 4(2) Quarterly consolidated statements of income and comprehensive income ........................................................................... 6For the third quarter (April 1, 2017 - December 31, 2017) ............................................................................................... 6(3) Notes to quarterly consolidated financial statements ............................................................................................................ 8(Notes to going concern assumptions).............................................................................................................................. 8(Significant change in shareholders’ equity) .................................................................................................................... 8(Additional information) .................................................................................................................................................. 8(Segment information, etc.) .............................................................................................................................................. 81

1. Results of Operations(1) Overview of consolidated business performance
In the third quarter of the fiscal year ending March 31, 2018, the Japanese economy witnessed a gradual recovery as yen’s
depreciation and the recovery of overseas economy improved corporate earnings and also resulted in steady growth ofcapital expenditures, although the recovery of consumer spending has slowed down.
In the electronics industry, the principal sector of operations of the KAGA ELECTRONICS Group (“the Group”), while
markets for PCs and amusement machines remained stagnant, the smartphone market showed a steady growth withexpanded demand in emerging countries and the needs for high functionality, and the automotive devices market also
showed a steady growth with an increasing use of electronics in automobiles. Meanwhile, innovative technology-related
markets including IoT (Note 1), big data, and artificial intelligence showed favorable growth.
Under such environment, based on our corporate philosophy of “Everything we do is for our customers,” the Groupfocused on increasing sales to existing major customers in Japan and expanding EMS (Note 2) businesses overseas.
Consolidated net sales increased 3.9% year on year to 174,047 million yen, operating income increased 27.7% to 6,613
million yen, and ordinary income rose 29.0% to 7,093 million yen. Profit attributable to owners of parent increased 13.3%
to 5,510 million yen.
(Note 1) Internet of Things: New services and business models, or technologies that connect all things through the Internet(Note 2) Electronics Manufacturing Service: Provision of product development and manufacturing services on an outsourcing basis

Business segment performance was as follows:(a) Electronic components (Development, manufacture and sale of semiconductors, general electronic components andother products, the electronics manufacturing service (EMS), and other activities)
EMS business for electronic equipment and sales of semiconductors showed a favorable growth. As a result, net sales
increased 1.4% to 129,058 million yen, and segment income rose 11.0% to 4,509 million yen.
(b) Information equipment (Sales of PCs, PC peripherals, home electric appliances, photograph and imaging products,
original brand products, and other products)
Sales of housing-related and commercial facilities-related products saw favorable growth. As a result, net sales
increased 13.4% to 34,745 million yen, and segment income rose 96.5% to 1,659 million yen.
(c) Software (Production of computer graphics, planning and development of amusement products, and other activities)
Orders for production of computer graphics animation and development of game software were sluggish. As a result,net sales decreased 22.6% to 1,541 million yen, and segment income decreased 69.5% to 91 million yen.
(d) Others (Repair and supports for electronics equipment, manufacture and sales of amusement equipment, and sales ofsports goods, and other activities)
Sales of arcade amusement machines and golf products in Japan showed solid growth. As a result, net sales increased
14.8% to 8,702 million yen, and segment income was 236 million yen (segment loss of 144 million yen one yearearlier).
(2) Overview of financial condition
Assets, liabilities and net assets
Total assets as of December 31, 2017 increased 3,185 million yen from March 31, 2017 to 128,937 million yen mainly
due to increase in cash and deposits.
Liabilities as of December 31, 2017 decreased 1,886 million yen from March 31, 2017 to 57,933 million yen mainly
due to a decrease in notes and accounts payable - trade.
Net assets as of December 31, 2017 increased 5,072 million yen from March 31, 2017 to 71,004 million yen as a resultof recording profit attributable to owners of parent.

2(3) Qualitative information on consolidated earnings forecast(a) Revised consolidated performance forecast for the year ending March 31, 2018 (From April 1, 2017 to March 31, 2018)
ProfitEarnings perOrdinary
Operatingattributable toNet sales
share
incomeincomeowners of parent
Million yen

Million yen

Million yen

Million yen

Yen

Previous forecast (A)232,000

7,500

8,200

6,300

229.63

Revised forecast (B)232,000

8,000

8,700

6,450

235.10Difference (B)-(A)

－

500

500

150－

Difference (%)

－

6.7

6.1

2.4－

227,2096,8797,343

6,975

249.43(Reference) Results for theyear ended March 31, 2017(b) Reason for the Revision

The overview of the first nine months of the fiscal year ending March 2018 showed that EMS business for electronicequipment and sales of semiconductors, our core businesses, as well as housing-related products increased favorably
although the amusement machine-related market remained stagnant.
The Company reviewed its full-year forecast by taking into consideration such strong performance and carefullyreflecting future uncertainties and concluded that it is expected to exceed the previous forecast, and accordingly theCompany revised upward the full-year forecast as shown above.

32. Quarterly Consolidated Financial Statements and Major Notes(1) Quarterly consolidated balance sheet(Million yen)
Fiscal year ended March 2017
(As of March 31, 2017)

Third quarter ended December 2017
(As of December 31, 2017)

ASSETS
Current assets
Cash and deposits

26,42330,945

Notes and accounts receivable - trade

46,774

43,254

Electronically recorded monetary claims - operating

5,234

4,600

Securities
Merchandise and finished goods

188

203

14,675

15,990365

911

Raw materials and supplies

4,284

4,437

Deferred tax assets

1,340

721

Other

4,562

3,672

Allowance for doubtful accounts

(166)

(165)

103,684

104,571

Buildings and structures, net

4,859

4,638

Machinery, equipment and vehicles, net

2,014

2,264

742

742

4,126

4,036

Work in process

Total current assets
Non-current assets
Property, plant and equipment

Tools, furniture and fixtures, net
Land

3362

11,745

12,045

Goodwill

406

339

Software363

528

Other71

53

Total intangible assets

841

921

Investment securities

6,761

8,789

Deferred tax assets

240219

Guarantee deposits

735

668

Construction in progress
Total property, plant and equipment
Intangible assets

Investments and other assets

Insurance funds
Other936

948

1,529

1,359

Allowance for doubtful accounts

(723)

(587)

Total investments and other assets

9,479

11,399Total non-current assets
Total assets

4

22,06724,366

125,751

128,937(Million yen)
Fiscal year ended March 2017
(As of March 31, 2017)

Third quarter ended December 2017
(As of December 31, 2017)

LIABILITIESCurrent liabilities
Notes and accounts payable - trade37,55336,378

Short-term loans payable

4,883

5,136

Accrued expenses

3,387

2,793

888

686

Income taxes payable

204

140

Other

3,325

3,535

Total current liabilities

50,242

48,671Long-term loans payable

4,603

3,482

Deferred tax liabilities

1,213

1,941

Provision for directors’ retirement benefits

1,222

1,258

Net defined benefit liability

1,669

1,626

Asset retirement obligations

144

154

Other

723

798

Provision for directors’ bonuses

Non-current liabilities

9,576

9,262

59,81957,933

Capital stock

12,133

12,133

Capital surplus

13,912

13,853Retained earnings

40,47644,203

Treasury shares(2,040)(2,042)

Total shareholders’ equity

64,481

68,148

1,159

1,929

00

Foreign currency translation adjustment

421

980

Remeasurements of defined benefit plans

(190)

(130)

Total accumulated other comprehensive income

1,391

2,780

59

75

65,93271,004

125,751

128,937

Total non-current liabilities
Total liabilities
NET ASSETS
Shareholders’ equity

Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges

Non-controlling interests
Total net assets
Total liabilities and net assets

5(2) Quarterly consolidated statements of income and comprehensive income
For the third quarter (April 1, 2017 – December 31, 2017)(Million yen)
Third quarter ended December 2016 Third quarter ended December 2017
(April 1, 2016 – December 31, 2016) (April 1, 2017 – December 31, 2017)
Net sales

167,486

174,047

Cost of sales

144,409

149,805

Gross profit

23,07624,242

Selling, general and administrative expenses

17,898

17,628Operating income

5,178

6,613Non-operating income
Interest income

4378

Dividends income

99

110

Commission fee

140

133

Foreign exchange gains

－80

Other

201

235

Total non-operating income

484

638

Interest expenses

99

99

Share of loss of entities accounted for using equity method－

44

Foreign exchange losses

25－

Other

36

13

Non-operating expenses

161

158

5,500

7,093

Gain on sales of non-current assets

2226

Gain on sales of investment securities

41591

Gain on bargain purchase

28－

Gain on sales of shares of subsidiaries－

467

Total non-operating expenses
Ordinary incomeExtraordinary income

Gain on transfer of business8912

Total extraordinary income

181

1,098

Loss on retirement of non-current assets

78

Loss on sales of investment securities

3123

Loss on valuation of investment securities－133

Impairment loss

10224

Business structure improvement expenses

10－

Loss on valuation of golf club membership

116

Other

00

Total extraordinary loss

73397

Profit before income taxes

5,608

7,795

Income taxes - current

1,073

1,254

Income taxes - deferred(339)1,015

Total income taxes

734

2,269

Profit4,8745,525

Profit attributable to owners of parent
Profit attributable to non-controlling interests

4,863

5,510

1114

Extraordinary loss

6

(Million yen)
Third quarter ended December 2016 Third quarter ended December 2017
(April 1, 2016 – December 31, 2016) (April 1, 2017 – December 31, 2017)
Other comprehensive income
Valuation difference on available-for-sale securities

425

Deferred gains or losses on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit plans, net of tax

771

280(376)

559

6460

142

1,391

Comprehensive income

5,0176,916

Comprehensive income attributable to owners of parent

5,004

6,900

1216

Total other comprehensive income

Comprehensive income attributable to non-controlling interests7(3) Notes to quarterly consolidated financial statements(Notes to going concern assumptions)Not applicable(Significant change in shareholders’ equity)
Not applicable(Additional information)(Adoption of consolidated taxation system)
From the first quarter of the fiscal year ending March 31, 2018, the Company and its certain domestic subsidiaries haveadopted the consolidated taxation system.

(Segment information, etc.)
Segment information
I. For the third quarter ended December 2016 (April 1, 2016 – December 31, 2016)
Information about net sales and income (loss) by reportable segments(Million yen)
Reportable segments
Adjustment(Note 1)

Consolidated(Note 2)

Electronic
components

Informationequipment

Software127,268

30,647

1,992

7,577

167,486－

167,486

611

368

1,249

1,975

4,204

(4,204)－

127,879

31,015

3,242

9,552

171,690(4,204)

167,486

4,061

844

300

(144)

5,061

116

5,178

OthersTotal

Net sales:
Sales to externalcustomers
Inter-segment sales
or transfers
Total
Segment income(loss)
Notes:

1.
2.

Adjustment in segment income of 116 million yen includes 116 million yen for elimination of inter-segment trade.
Segment income (loss) is adjusted for operating income on the quarterly consolidated statements of income and comprehensiveincome.

II. For the third quarter ended December 2017 (April 1, 2017 – December 31, 2017)
Information about net sales and income (loss) by reportable segments(Million yen)
Reportable segments
Adjustment(Note 1)

Consolidated(Note 2)

174,047－

174,047

449

2,767

(2,767)

－

2,197

9,151

176,815(2,767)174,047

91

236

6,497

115

6,613

Electroniccomponents

Informationequipment

Software129,058

34,745

1,541

8,702

793

867

656

129,851

35,613

4,509

1,659

OthersTotal

Net sales:
Sales to externalcustomers
Inter-segment sales
or transfers
Total
Segment income
Notes:

1.
2.

Adjustment in segment income of 115 million yen includes 115 million yen for elimination of inter-segment trade.
Segment income is adjusted for operating income on the quarterly consolidated statements of income and comprehensive income.

8